PHILADELPHIA – The U.S. Court of Appeals for the Third Circuit recently backed the rejection of class certification in a lawsuit filed over allegations that Widener University School of Law purposely overstated its graduates’ employments status.
The plaintiffs’ tried to make a case that the alleged misrepresentation resulted in them paying an inflated tuition rate, which would be in violation of New Jersey and Delaware consumer fraud statutes.
The denial mainly centered on damages as the plaintiffs claimed they could show, on a class-wide basis, an estimate of the amount of tuition that was inflated as a result of false statistics provided by the school.
The district court still denied class certification because it found the plaintiffs could not show the damages with standard evidence in light of the fact students' employment outcomes varied.
“Even where plaintiffs are not required to prove that all class members relied on a defendant's alleged misrepresentations, the case highlights the difficulty plaintiffs may face proving ascertainable loss on a class-wide basis in the consumer fraud context,” Carlton Fields associate Christine Stoddard told Legal Newsline.
“Thus, the Third Circuit’s rejection of plaintiffs’ argument that the district court effectively turned a class certification decision into a ruling on the merits by closely scrutinizing their proof of damages affirms that seriousness with which courts take the Supreme Court’s mandate to conduct a rigorous analysis of Rule 23’s requirements before certifying a class, even when this analysis overlaps with the merits.”
It turns out cases like this one aren’t that uncommon. According to Stoddard, a wave of similar cases began emerging in 2011. At least 15 cases have reached a resolution.
Other lawsuits that have been brought nationwide occurred in states like Michigan, Illinois, New York and Florida. Stoddard said plaintiffs in these cases rely on allegations like the ones brought up in Widener's case.
Schools are alleged to have published fraudulent statistics that misled students about their future employment prospects. None of these cases found much success - some were dropped after class certification was denied while others continued on individually and resulted in dismissal.
“Although plaintiffs have not found success in the courts, the cases have had some impact,” Stoddard said. “The American Bar Association has revised its requirements to provide greater transparency in such statistical reporting.”
In the Widener case, once the plaintiffs couldn’t show proof of a loss based on Widener’s alleged misrepresentation, the Third Circuit panel had no choice to affirm the court’s holding that individual issues would predominate and that class could not be certified.
From here, Widener law students can try an individual lawsuit, but their chances for success won’t be much greater, according to Stoddard. The same goes for an appeal to the U.S. Supreme Court.
“Of the tuition lawsuits that continued individually after courts refused to certify the class, nearly all were dismissed before reaching trial, courts finding the plaintiffs were sophisticated consumers who had not been misled,” she said.
“It seems unlikely the Supreme Court would grant a petition to hear the case — particularly given the lack of a circuit split of authority on this issue.”