Plaintiff appeals from an order of the Supreme Court, New York County (Melvin L. Schweitzer, J.), entered March 21, 2012, which granted defendant New York Law School's motion to dismiss the complaint.
The opinion of the court was delivered by: Acosta, J.
Gomez-Jimenez v New York Law Sch.
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on December 20, 2012
David Friedman, J.P. Rolando T. Acosta Sheila Abdus-Salaam Sallie Manzanet-Daniels Nelson S. Roman, JJ.
This appeal involves the propriety of the disclosures of post-graduate employment and salary data by defendant New York Law School to prospective students during the period August 11, 2005 to the present. Plaintiffs allege that the disclosures cause them to enroll in school to obtain, at a very high price, a law degree that proved less valuable in the market-place than they were led to expect. We hold that defendant's disclosures, though unquestionably incomplete, were not false or misleading. We thus affirm the dismissal of the complaint.
Plaintiffs are graduates of the law school who attended the school between 2004 and 2011. They assert, individually and on behalf of all others similarly situated, a claim for deceptive acts and practices in violation of General Business Law (GBL) § 349 and claims for common-law fraud and negligent misrepresentation. These claims are based on allegations that the employment and salary information published by defendant during the relevant time period concealed, or failed to disclose, that the employment data included temporary and part-time positions and that the reported mean salaries were calculated based on the salary information submitted by a deliberately small selected subset of graduates. In addition, plaintiffs allege that defendant enhanced its numbers by, among other things, hiring unemployed graduates as short-term research assistants so that they could be classified as employed. Plaintiffs assert that defendants engaged in this fraud to increase its class size and use the high tuition demanded of its students to lavish perks and exorbitant salaries on its administration and large faculty. The complaint seeks damages and equitable relief, including refund and reimbursement of plaintiffs' tuition.
Defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(1) and CPLR 3211(a)(7), arguing, among other things, that its employment reports were not materially misleading because they 1) complied with the then applicable disclosure rules of the American Bar Association (ABA); 2) made no representation or implication that they included only full-time, permanent employment that required or preferred a law degree; and 3) explicitly revealed that the reported salary ranges were based on a small sample of graduates.
Supreme Court granted the motion to dismiss the complaint. With respect to the GBL 349 claim, the court first rejected defendant's argument that it had a complete defense pursuant to GBL 349(d) because, although the regulations with which it complied were written by the United States Department of Education, the interpreting party, the Council of the Section of Legal Education and Admissions to the Bar of the ABA, is not an "official department, division, commission or agency of the United States." The court then found that defendants' post graduate employment statistics were not misleading in a material way and that the salary data was not misleading because the school disclosed the sample size upon which the data was based. The court further found that the GBL 349 claim failed to identify the actual injury sustained by each plaintiff as a result of the allegedly misleading statements. With respect to the fraud claim, the court found that defendant had no duty to clarify its marketing materials. Further, while the court rejected defendant's argument that plaintiffs failed to plead reliance on the alleged misrepresentations, it found any reliance unreasonable as a matter of law. With respect to the claim for negligent misrepresentation, the court again found that any reliance would have been unreasonable. This appeal followed.
When considering a motion to dismiss pursuant to CPLR 3211(a)(7), "the court must accept the facts as alleged in the complaint as true and accord the plaintiff the benefit of every possible favorable inference, and must determine whether the facts as alleged fit within any cognizable legal theory" (Phillips v City of New York, 66 AD3d 170, 174 [1st Dept 2009] internal quotation mark omitted]; see also CPLR 3026). Pursuant to CPLR 3211(a)(1), dismissal may be "granted only where the documentary evidence [tendered by defendant] utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 ).
We begin our analysis by first considering plaintiffs' GBL 349 claim. To state a cause of action under that statute, a plaintiff "must, at the threshold, charge conduct that is consumer oriented. The conduct need not be repetitive or recurring but defendant's acts or practices must have a broad impact on consumers at large; [p]rivate contract disputes unique to the parties . . . would not fall within the ambit of [GBL 349]" (New York Univ. v Continental Ins. Co., 87 NY2d 308, 320 , quoting Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25 ). "If a plaintiff meets this threshold, its prima facie case may then be established by proving that defendant is engaging in an act or practice that is deceptive in a material way and that plaintiff has been injured by it" (id.). Whether a representation or omission is a "deceptive act or practice" depends on the likelihood that it will "mislead a reasonable consumer acting reasonably under the circumstances" (Oswego, 85 NY2d at 26). "In the case of omissions in particular . . . [GBL 349] surely does not require businesses to ascertain consumers' individual needs and guarantee that each consumer has all relevant information specific to its situation" (id.). However, ...