IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, CHANCERY DIVISION JORIE JOHNSON, et al.

, on behalf of themselves and all others similarly situated, Plaintiffs, v. THE JOHN MARSHALL LAW SCHOOL, et al., Defendant. ) ) ) ) ) ) ) ) ) )

Case No. 12-CH-03494 Judge Mikva

PLAINTIFFS’ RESPONSE TO DEFENDANT’S COMBINED MOTION TO DISMISS AND MEMORANDUM OF LAW IN SUPPORT Plaintiffs Jorie Johnson, et al., by and through their attorneys, The Clinton Law Firm, respond to Defendant The John Marshall Law School’s Combined Motion to Dismiss Plaintiffs’ First Amended Class Action Complaint1 (“MTD”) and Memorandum of Law in Support (“Def.Mem”). Plaintiffs respectfully request that this Court deny John Marshall Law School’s Motion. INTRODUCTION Although the Defendant is unusually prominent, this case is really no more than a classic, garden-variety consumer fraud case in which a business misrepresented itself in order to increase sales. Here, a law school misrepresented its graduates’ employment statistics in order to induce prospective students to enroll. As a result, Plaintiffs paid tens of thousands of dollars in tuition and fees to that law school (The John Marshall Law School (“JMLS”)), frequently taking on a substantial amount of debt, and now have learned that the odds of their obtaining legal positions adequate to justify their investment were much less than what had been represented to them when they were choosing to enroll at that particular law school. The Plaintiffs are asking for narrowly tailored compensatory relief that is directly based upon Defendant’s own false and misleading employment numbers. Plaintiffs are also requesting that Defendant be enjoined from reporting false, misleading or incomplete employment data and ordered to provide full and honest disclosures to the public.

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A copy of the Amended Complaint is attached as Exhibit A.

In contrast to Plaintiffs’ narrowly tailored relief, JMLS asks this Court for the extraordinary relief of a finding that students do not have standing to even bring a claim against their law school and that a law school, unlike other service providers, can never be liable for making misrepresentations, even when the information is in its sole control. JMLS asks this Court to find that it has no responsibility or duty to ensure that its disclosures are accurate and complete; that even if they are false or misleading no student is ever justified in relying on them; that as a matter of law no student can ever be damaged by such misrepresentations; and that, therefore, there is no remedy or deterrent for such conduct by a law school. 2 Such a finding, immunizing law schools from a liability for injurious conduct that everyone else is subject to, would severely stretch customary and equitable legal principles. As stated in Giammanco v. Giammanco, 253 Ill.App.3d 750, 763 (1993); app.den. 156 Ill.2d 552: [W]e are mindful of the fact that damages in fraud cases serve an admonitory function (see Restatement (Second) of Torts [Sec.] 549, Comment I, at 115 (1977)) which would be severely undermined if the harm which we have identified were held to be noncompensable as a matter of law. Such a holding would put those who conduct themselves honestly in such business dealings at a distinct disadvantage. THE COMPLAINT Preliminarily, while there are “similar” law school cases pending around the country: (1) the Complaint in this case is not a “cookie-cutter” copy of the other complaints, as Defendant alleges; (2) the Plaintiffs in this case have made different allegations than those in other cases, and have not made admissions or concessions made in those cases; (3) the Employment Information published by this defendant, JMLS, is not the same as the information published by each of the other law schools; and (4) the laws of the various states are different, and this Complaint is based solely on Illinois statutes and case law. Thus, the fact that Motions to Dismiss have been granted in two cases, Gomez-Jiminez v. New York Law School, 943 N.Y.S.2d 834 (Sup.Ct,, No. 652226/2011, March 21, 2012) in New York (hereinafter “Gomez”), MacDonald v. Thomas M. Cooley Law School, U.S.D.C. SD MI, Case No. 1:11-CV-831 (July 20, 2012) in Michigan (hereinafter

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The feasibility of an equitable remedy is evidenced by the University of Chicago’s School of Law Employment Disclosures online at http://www.law.uchicago.edu/prospective/employmentdata (copy attached as Exhibit B).

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“Cooley”),3 both being interim orders subject to petitions for reconsideration or appeal, does not mandate a similar ruling from this Court. That is especially true, as defendants’ Demurrers were overruled (the equivalent of denying a Motion to Dismiss) in two other cases, in California, on July 19, 2012, Arring v. Golden Gate University, No. CGC-12-517837 (Calif. Superior Ct) (the “GSU case”), and Hallock v. University of San Francisco, No. CGC-12-517861 (Calif. Superior Ct) (the “USF case”). Those latter two Orders are attached as Exhibits D and E, respectively. One ironic and sad feature of the JMLS Memorandum in support of its Motion is that JMLS, which so energetically recruited applicants like Plaintiffs by emphasizing the economic advantages to be had if they got their J.D. degree from JMLS instead of another law school, is now mocking and denigrating them for being concerned about their economic prospects, for being unable to obtain jobs sufficient to let them pay off their law school loans.4 THE MOTION TO DISMISS When ruling on a motion to dismiss, the court must accept “as true all well-pleaded facts and all reasonable inferences that may be drawn from those facts.” Simpkins v. CSX Transp., Inc., 2012 IL 110662, ¶ 13 (internal citations omitted). The allegations are construed in the light most favorable to the non-moving party or plaintiff. Id. Most importantly, “[a] cause of action should not be dismissed pursuant to section 2-615 unless it is clearly apparent that no set of facts can be proved that would entitle the plaintiff to recovery.” Id. BACKGROUND AND ARGUMENT Plaintiffs enrolled in JMLS between 2005 and the present to obtain a Juris Doctorate (JD) degree, which is a prerequisite for the practice of law. (Plaintiffs’ Amended Complaint (“AC”) ¶¶ 5, 69). In seeking to induce Plaintiffs and prospective students to enroll in JMLS, Defendant published Employment Information on its website and through U.S. News & World Report (“U.S. News”) (AC ¶ 27) and elsewhere. The Employment Information purported to

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A copy of the Cooley Opinion is attached as Exhibit C. For example: “Plaintiffs want to hold JMLS responsible for their inability to obtain jobs to their liking at some undefined pay level within some undefined time after graduation,” (Def.Mem p.1); “[Plaintiffs] primarily complain that they did not get jobs fast enough or lucrative enough to suit them.” (Def.Mem p.4); “[Plaintiffs] make no bones about their narrow view of a legal education (Def.Mem p.4).” “Notwithstanding Plaintiffs’ personal preferences, many law school graduates have objectives other than to make as much money as possible, as fast as possible.” (Def.Mem p.9, fn. 6)

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provide the post-law school employment history of its recent graduates. (AC ¶ 27). Defendant understood that Plaintiffs and prospective students would utilize the Employment Information in comparing JMLS to other law schools and in determining whether to enroll in JMLS. The Employment Information published by JMLS was deceptive and misleading (AC ¶ 30) and, as a consequence, led students to believe that their prospects upon graduation were likely to be much greater than accurate non-misleading data would have indicated, and therefore to enroll in JMLS rather than elsewhere (AC ¶31). Defendant’s main contentions – (I) that Plaintiffs have not suffered a legally cognizable injury and (II) that Plaintiffs fail to state legally cognizable claims – cannot stand, because they are based on a total misreading of what Plaintiffs alleged. This Court needs to focus on precisely what these Plaintiffs actually alleged, not on what Defendant claims they alleged. This Court may take judicial notice, and common sense and expert testimony will confirm -- that students go to law school to prepare for careers as lawyers. -- that the imprimatur of a degree from a particular law can be a significant determinant in a graduate’s job prospects, immediately upon graduation and over the course of a lifetime, -- that a key indicator of the value of that imprimatur compared to that of other law schools is the employment record of its graduates immediately following graduation. -- that a law school whose grads have an immediate employment rate 20% or 10%, or even 5%, above those of a competing law school has a significant advantage in attracting students. Plaintiffs enrolled in JMLS, years ago, on the basis that coming from a school with a higher post-graduation employment track record (indicating how employers viewed the school compared to others) would give them a better chance to get jobs than coming from a school with a lesser success rate – and that would be true in BOTH good times and bad. Likewise, coming from JMLS with JMLS’s professed higher rate would have given them a better chance than they now have coming from JLMS with its lower actual rate. Past performance is never a guarantee of future success, but is one of the main indicators of likelihood. That is why law schools tout their success rates, why it makes a difference to applicants. Applicants who graduate from a school (in this case, JMLS) with a worse employment history than represented end up at a disadvantage they had not bargained for. They are saddled with that disadvantage – ttheir

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damage – from the moment they enroll, and it is irrelevant whether the post-graduation job market is good or bad. In either economy, they will be starting from a comparatively worse position than JMLS had led them to believe they would be starting from. Their earning capacity was effectively lessened. In Illinois, plaintiffs can recover damages for lost earning capacity. Recovery can be had without regard to prior earnings, Singh v. Air Illinois, Inc., 165 Ill.App.3d 923 (1st Dist. 1988), referencing Baird v. Chicago, Burlington & Quincy, 63 Ill.2d 463 (1976), even “a youth with no earnings history,” Fakhoury by Fakhoury v. Vapor Corp., 154 Ill.App.3d 531 (1st Dist. 1987), and need only furnish “some evidence” to submit the claim to the jury, LaFever v. Kemlite, 185 Ill. 2d 380 (1998). Expert testimony based on a database of a large determinable class is admissible and sufficient, e.g., Valiulis v. Scheffels, 191 Ill.App.3d 775 (2nd Dist. 1989), and happens all the time in personal injury cases. Additional discussion of damages follows later in this Response. Just as “multiple factors” affect any particular person’s future legal career (Def.Mem. p.9), multiple factors are also are present in all those other kinds of cases. But they do not prevent the proof and recovery of damages. It is against this background that the flaws in Defendant’s arguments become apparent. I. PLAINTIFFS SUFFERED A LEGALLY COGNIZABLE INJURY. A. Plaintiffs’ Injury is Not Job Dependent.

As explained above, Plaintiffs’ injury was not dependent upon not getting a particular job. The damage was reduction in their comparative chances of getting a job. B. Plaintiffs Do Not Lack Standing, As their Damage is Directly Traceable to Their Reliance on Defendant’s False Employment Information.

Contrary to Defendant’s suggestion (Def.Mem p.5), even if Plaintiffs have a grievance against the American Bar Assn, this Complaint is not against the ABA. It is against JLMS for its own conduct. Their claim meets all the elements identified in I.C.S. Ill. V. Waste Mgmt. of Ill., Inc., 403 Ill.App.3d 211, 221 (1st Dist. 2010)(“I.C.S.”) (Def.Mem p.5) for standing, viz., that to be legally cognizable the injury must be “(i) distinct and palpable; (ii) fairly traceable to the defendant’s actions; and (iii) substantially likely to be prevented or redressed by the grant of the requested relief.” Id. The injury is loss of earning capacity, not “dissatisfaction with their postgraduate employment,” as Defendant mischaracterizes it (Def.Mem p.6). That is a distinct injury that occurred upon

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Plaintiffs’ enrolling in JMLS, not one that depends on what employment was actually secured after graduation. As it was alleged that it was on account of Defendant’s Employment Information that Plaintiffs enrolled in JMLS, the injury is clearly traceable to defendant’s actions. Damages can be proved – as discussed below – and injury can be redressed by the payment of money and, in addition, the repetition of Defendant’s misrepresentations can be prevented by the injunctive relief requested. As Defendant notes (Def.Mem pp.5-6), in a class action, the court must focus on the named Plaintiffs rather than the purported class. Although the requirement of standing is meant to preclude uninterested persons from suing, it is not meant to preclude a valid controversy from being litigated. Messenger v. Edgar, 157 Ill.2d. 162, 171 (1993). In this case, though, the injury to the named Plaintiffs is the same as the injury to all members of the Class – in reliance on Defendant’s false Employment Information they all ended up graduating from a law school with a lower chance of employment than JMLS had represented. The cases cited by JMLS to support its position that Plaintiffs lack standing are not applicable here, because, unlike in this case, the plaintiffs were not alleging direct and personal harm as a result of defendant’s actions. For example, in ICS Ill. v. Waste Mgmt of Ill. Inc., supra, plaintiffs asserted that they were harmed when Defendant hired subcontracting companies owned by a Caucasian male that had been fraudulently certified as minority or female owned businesses: Plaintiffs did not have standing to bring a claim because they could not show that they had either bid on the contracts or that bidding would have been futile; thus the plaintiffs were not linked to Defendant’s actions in any way. In Griffith v. Wilmette Harbor Ass’n Inc., 378 Ill.App.3d 173 (1st Dist. 2007), the proposed class representative brought a claim on behalf of “all persons on the [Wilmette Harbor] slip waiting list,” but plaintiff was never on the waiting list. In Warth v. Sedin, 422 U.S. 490 (1975), plaintiffs claimed that the local zoning ordinances prevented them from finding affordable housing. However, the plaintiffs could not point to the city’s denial of any housing projects that would have provided plaintiffs adequate and affordable housing). As Plaintiffs have identified a real injury directly traceable to JMLS, JMLS’ motion to dismiss for lack of standing should be denied. 5

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JMLS also confuses the issue by relying upon federal standing jurisprudence. In Illinois, the issue of standing is an affirmative defense with the burden on the defendant to prove lack of standing. Greer v. Illinois Housing Development Authority, 122 Ill.2d at

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C.

There is Proximate Cause.

It is ironic for an institution like JMLS, on the one hand, to go to great lengths to craft its marketing materials so as to maximize the likelihood that a potential applicant will decide to enroll, and then turn around and argue that there was no cause and effect relationship between those materials and the applicant’s decision to enroll, and that there is no set of facts that the applicant can present to show that those materials were a factor in his/her decision. Defendant argues that Plaintiffs’ Consumer Fraud Act, Common Law Fraud/Fraud by Omission and Negligent Misrepresentation claims must be dismissed for failure to allege causation. (Def.Mem pp.7-8.) In its discussion of this issue (Def.Mem pp.8-10), JMLS misconstrues the injury which in turn affects the causation analysis. Plaintiffs do not link the deceptive Employment Information to obtaining “the jobs they wanted years later” which JMLS points out could be affected by multiple factors. (Def.Mem., p.7). Rather, Plaintiffs relied upon and were deceived by JMLS’s Employment Information. As a result, they enrolled in and paid JMLS, only to later learn that the Information was misleading. Had Plaintiffs known, they would not have enrolled. They are now committed to a degree from JMLS that is worth less than it might be had the Employment Information actually been what it seemed to be. Plaintiffs have been irreparably harmed. (e.g., AC ¶¶ 60-62, 64). Plaintiffs’ injury is neither indirect nor remote as Plaintiffs have alleged a direct nexus between Defendant’s wrongful actions and the injury That JMLS knows that the prospects for future employment are material in applicants’ decisions to attend a particular law school is further illustrated elsewhere in JMLS’s marketing efforts. On its website JMLS boasts that its “rigorous education offers you the dynamic academic and real-world experiences needed to stand out among other graduates.” (AC, ¶ 21) JMLS continues on to claim that “we’ve developed our courses, taught by the leading academics and practicing authorities in every area of law, to ensure you remain competitive in any job market.” (AC, ¶ 21 (emphasis added)). In addition, Defendant each year voluntarily provides employment information to U.S. News and permits U.S. News to publish it, with the obvious understanding that prospective students will rely upon that information in considering JMLS over another institution. (AC ¶33). Defendant would not boast about its alumni, nor promote its career services, nor publish employment

494. In Federal cases, the opposite is true, whereby the burden is on the plaintiff due to the limited jurisdiction of Article III courts. Warth v. Sedin, 422 U.S. at 518.

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information, unless it believed that employment and career opportunities were material to Plaintiffs and prospective students. Consequently, it cannot claim in this case that the Employment Information they published was not material and does not have a causal relationship to Plaintiffs’ injury. Furthermore, although Plaintiffs must allege facts asserting that the deception caused their injury, the issue of causation is ultimately one for the trier of fact and not appropriate for resolution on a motion to dismiss. Chandler v. American Gen. Fin., Inc., 329 Ill.App.3d 729, 736 (2002) (The required allegation of proximate causation is minimal, because that determination is best left to the trier of fact.) Proximate cause need not be the sole cause, or the last or the nearest cause. Capiccioni v. Brennan Naperville, Inc., 339 Ill.App.3d 927 (2003). D. Plaintiffs’ Damages Are Not Speculative. 1. Plaintiffs Do Not Claim That JMLS Guaranteed Them a Job

JMLS asserts Plaintiffs were not promised future employment and that Plaintiffs have received what they were promised: a law school education. (Def. Mem., p. 10). Plaintiffs have not alleged that JMLS made a “promise” about future employment. What Plaintiffs have alleged is that Defendant deceptively misrepresented Plaintiffs’ chances, their odds, of getting employment as a lawyer if they had a JMLS degree. That is a crucial distinction. Defendant’s reliance on Blane v. Ala. Commercial Coll., Inc., 585 So.3d 866 (Ala. 1991) is misplaced. While the plaintiff argued that defendant had guaranteed her a job after graduation, defendant merely had stated that it would teach her to type at 35 words per minute in order to compete in the job market; a specific contractual promise that defendant fulfilled. By contrast in this case, the deceptive Employment Information in question – the data which applicants were to use immediately in considering their odds of employment and the value of a JMLS degree -- was false, not sometime in the future, but when the misrepresentations were made. A more apt analogy would be a contest or a lottery. Key elements in a person’s decision whether or not to enter or buy a ticket are the value of the prize and odds of winning. That fact is the basis for the many statutes and regulations requiring that the odds of winning be disclosed to participants. E.g., 20 ILCS 1605/10.6 (The Illinois Lottery is required to force each ticket agent “to display a placard stating the odds of winning for each game.”) There never is a guarantee of winning, but one is more likely to buy a ticket if the reward is high and the odds are good. If a potential applicant is given to understand that one out of every three tickets will be a winner, he is more apt to buy a

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ticket than if he is told that only one out of 100 will win. In the law school situation, if an applicant is given to understand, for example, that 98% of those who previously purchased a JMLS education had obtained full-time jobs as lawyers within nine months after graduation, he/she is more likely to enroll there than at a competing law school whose previous graduates had obtained such employment, for example, only 78% of the time. Past employment history is no guarantee of future employment, but it IS a reasonable, and perhaps the best, way of estimating, compared to alternative law schools, the value of the degrees and the current odds (as of the time of applying to law school) of obtaining such employment later. Whether the economy four years later will be better or worse than at the time of application, it is a reasonable extrapolation for an applicant to conclude that a degree from the 98% law school will leave him better positioned than a degree from the 78% school. That is why law schools tout their past employment history, so students can extrapolate from it. What Plaintiffs have alleged is that JMLS’s Employment Information substantially misrepresented JMLS’s past employment history, leading them to a course of action that left them with immediate and lifetime job prospects substantially less than if they had enrolled at a law school whose employment history was actually as good as the employment history that JMLS had misrepresented that it had. The Consumer Fraud Act is not limited to false promises, but also bases liability upon the “misrepresentation, concealment, suppression or omission of any material fact.” 815 ILCS 505/2; See Moy v. Adelphi Institute, Inc., 866 F. Supp.696 (E.D.N.Y. 1994) (wherein the court denied Defendant’s motion to dismiss where “[d]efendants’ actions ‘evidences an intent to create a false impression concerning the education offered at its school which would certainly affect a reasonable person’s decision.’”). In the non-educational field, see, e.g., Garcia v. Overland Bond & Inv. Co., 282 Ill.App.3d 486 (1st Dist. 1996) (Test under ICFA is net impression that it is likely to make on general populace; it is immaterial that given phrase considered technically may be construed so as not to constitute misrepresentation or that deception is accomplished by innuendo rather than by affirmative misstatement); Hengel, Inc. v. Hot ‘N Now, Inc., 825 F.Supp. 1311 (N.D. IL 1993) (Allegations that franchisor’s financial statements were misleading and geographically insignificant because they showed results for company-owned stores in Michigan only, and not in Illinois, and that projections in statements were representative and they could expect similar success stated claim for ICFA violation with sufficient specificity, despite franchisor’s claims that allegations did not

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indicate how they were misleading, or time, place and manner of fraud); Warren v. LeMay, 142 Ill.App.3d 550 (5th Dist. 1986) (Submission of only one page of termite inspection report was deceptive); Rice v. Snarlin, Inc., 131 Ill.App2d 434 (1970) (Claim that defendant promised to put plaintiff’s name on directory and send it to 500 companies but failed to inform plaintiff as to nature and type of directory listing and method of selecting the 500 companies, sufficiently alleged violation of ICFA.) Facts are material “where a buyer would have acted differently knowing the information or if it concerned the type of information upon which a buyer would be expected to rely in making a decision whether to purchase.” Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 675 N.E. 2d 584, 595 (1996). Under the Illinois Consumer Fraud Act, “materiality is tested with a reasonable person standard—i.e., whether the omission ‘concerned the type of information upon which a buyer would be expected to rely in making a decision.’” Kitzes v. Home Depot U.S.A., Inc., 374 Ill. App. 3d 1053, 872 N.E. 2d 53, 50 (1st Dist., 2007) (internal citations omitted). 2. Plaintiffs Alleged Actual Damage Which Us Not Speculative

One of the elements that a plaintiff must prove is “damage” or “actual damage,” both under the Illinois Consumer Fraud Act, 815 ILCS 505/2, Sklowdowski v. Countrywide Home Loan, Inc., 358 Ill.App.3d 606, 703 (1st Dist. 2005), and for common law fraud, Board of Education v. A, C and S, Inc., 131 Ill.2d 428, 452 (1989); Connick v. Suzuki Motor Co., 174 Ill.2d 482, 496 (1996). There is an important distinction between “damage” and damages. As explained in Giammanco v. Giammanco, 253 Ill.App.3d 750, 758: “Damage” (an element of the tort of common law fraud) is to be distinguished from “damages” (a remedy). It has been noted that, “although the words, ‘damage,’ ‘damages,’ and ‘injury,’ are sometimes treated loosely as synonyms, there is a material distinction between them. Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from the injury; and damages are recompense or compensation awarded for the damage suffered. * * * In determining whether Joseph’s allegations were sufficient to survive a motion to dismiss for failure to state a cause of action, the correct inquiry is whether damage [Emphasis added] has been alleged. It is likewise true that damages must be proved to be recovered. [Citation omitted.] If a party proves the right to damages but fails to provide a proper basis for computing those damages, only nominal damages can be recovered. [Citations omitted.] If a party proves the right to damages but fails to provide a proper basis for computing those damages, only nominal damages can be recovered.” [Citation omitted.] However, liability for nominal damages is sufficient to sustain a cause of action. [Emphasis added] [Citation omitted.] Plaintiffs have adequately pleaded facts showing that they have suffered damage, and at a minimum are entitled to at least nominal damages and, potentially, the equitable relief also sought.

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“[W]here the existence of damage is established; the evidence need only tend to show a basis for the computation of damages with a fair degree of probability.” Application of Busse, 124 Ill.App.3d 433, 438-39 (1984). Although not necessary at this stage, Plaintiffs have provided alternate methods of reasonably calculating those damages (AC ¶¶ 57-60). The first is based on JMLS’s own numbers, both already published and available through discovery. Plaintiffs paid JMLS tuition in order to have the chance to obtaining the post-graduate employment as lawyers that projections based on the Employment Information indicated was reasonably obtainable. However, because JMLS’s statistics were inflated by, call it X %, Plaintiffs’ actual chances, their odds, were X% less than advertised. Thus, Plaintiffs did not receive value for the last X% of the tuition they paid, and are entitled to have that amount returned to them. The nexus between the misrepresentations and the damages is clear. Alternatively, damages may be calculated based upon lifetime earnings. (AC ¶¶ 66-69.) Evidence of such earning capacity is frequently presented in personal injury and many other kinds of cases by experts, who take into account “multiple factors” like those Defendant has noted. The law is clear that testimony about future earning capacity or earnings based on a database of a large determinable class is admissible and some sufficient. See, e.g., Valiulis v. Scheffels. In this case, Plaintiffs expect to be able to provide a sufficient database, possibly the PINC-04 table of the U.S. Census Bureau’s Current Population Survey6 could be used, as it frequently is in other kinds of cases, with expert witnesses describing where Plaintiffs with the JMLS degree are reasonably likely to fall in comparison. Or Plaintiffs could use the available income data from JMLS for just its alumni, or after discovery for all law school alumni – the “average JMLS or law school graduate” rather than, e.g, the average Illinois male worker” – as the base for calculations, either immediately post-graduation or lifetime, in which case damages might be as easily calculable as the percentage by which JMLS’s misrepresented base exceeded its actual base. Or they could use data from other law schools as a base to show the difference between the earnings of alumni from law schools who had a track record similar to that which JMLS had claimed and the actual earnings of JMLS’s graduates. One further analogy would be to cases involving reputational damages. Juries all the time give awards for diminution of earnings capacity; the possible “variables” are no more than those here.
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http://www.census.gov/hhes/www/cpstables/032011/perinc/toc.htm

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Again it is to be noted that Plaintiffs at this stage do not have to actually specify a method, but all of the above options would be deemed as not speculative and other measures are possible. While the “benefit-of-the-bargain: or, in appropriate circumstances, “out-of-pocket” loss is the usual measure by which compensation is quantified, we do not believe they are in all cases a perfect litmus test for the existence of compensable damages. “General damages measures are only ‘guides to common sense’ to begin with.” (D. Dobbs, remedies [Sec.] 9.2, at 595 n.8 (1973). These particular measures have been formed and forged in cases that did not involve the unusual circumstances of the case at bar, and we believe an excessively rigid adherence to those measures would be unjust here. Courts administering justice should not be outpaced by creative wrongdoers. Giammanco, 253 Ill.App.3d at 763: "Mathematical precision is not required in proof of loss, especially in the determination of consequential damages.” McGrady v. Chrysler Motors Corp.,46 Ill.App.3d 136, 139-40 (1977). Rather, the amount of damages is determined by the trier of fact in the exercise of sound discretion and in any manner reasonable under the circumstances, as long as the award is not punitive. McGrady, Id. at 139-40. "Where the right to recovery exists[,] the defendant cannot escape liability because the damages are difficult to prove." Kim v. Mercedes-Benz, U.S.A., Inc., 353 Ill.App.3d 444, 458 (1st Dist. 2004) (citing Burrus v. Itek Corp., 46 Ill. App. 3d 350, 357 (1977)). As stated in Giammanco, 253 Ill.App.3d at 765: As a general rule, damages may not be predicated on mere speculation, hypothesis, conjecture or whim [Citation omitted.] However, once the existence of damage has been established, evidence tending to reasonably approximate the extent of damage is admissible. [Citation omitted.] Absolute certainty as to the amount of the damage in such cases is not required to justify a recovery; it is only necessary that the evidence tend to establish a basis for the assessment of damages with a fair degree of probability. [Citation omitted.] We believe the allegations of Joseph’s amended complaint are sufficient with regard to the damage requirement of the tort of fraudulent misrepresentation and Joseph is entitled to attempt to establish a basis for assessment of damages. It is premature at the pleading stage to conclude damages are speculative, as defendant argues. [Emphasis added.] Likewise, in LaFever v. Kemlite, 185 Ill. 2d 380 (1998), the court stated: The quantum of proof necessary to prevail on a claim is different, however, from the measure of evidence needed merely to send an issue to the jury. See Patel v. Brown Machine Co., 264 Ill.App.3d at 1062, 201 Ill.Dec. 902, 637 N.E.2d 491. As stated above, plaintiff need only furnish "some evidence" probative of his claim to earn a jury instruction on that claim, and neither the trial court nor a court of review must be convinced of the persuasiveness of that evidence before the issue may be submitted to the jury for its deliberations. Plaintiffs have pleaded sufficient facts to allow them to proceed to trial on the issue of damage. II. PLAINTIFFS HAVE STATED A LEGALLY COGNIZABLE CLAIM

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A.

Plaintiffs Have Alleged Specific Facts to Support Their Claim – And They Need Not “Establish” Them Until Trial

Facts necessary to support all the elements needed to be proven, set forth in Def.Mem. pp.11-13, are alleged in the Amended Complaint sufficiently to withstand a motion to dismiss. However, Defendant’s contention that Plaintiffs will not be able to “establish” them need not be tested until trial. B. JMLS’s Statistics Are False, Deceptive or Misleading 1. It is Irrelevant Whether Plaintiffs Allege That JMLS’s Employment Information Was False as Opposed to Deceptive, Materially Misleading Or Contained Material Omissions

JMLS asserts that “Plaintiffs never allege that any statistic or calculation is untrue or incorrect. [sic] thereby dooming their claims . . . .” (Def.Mem. p.13). Although Plaintiffs actually do allege that Defendant’s Employment Information was false (AC, ¶¶ 30, 82, 97, 107), Plaintiffs need not allege that the allegations were untrue or incorrect to state a claim under the Consumer Fraud Act, Common Law Fraud/Fraud by Omission, or Negligent Misrepresentation. Plaintiffs merely need to allege that Defendant engaged in a deceptive act or practice.

Sklowdowski v. Countywide Home Loan, Inc., 358 Ill.App.3d 696,703 (1st Dist., 2005). In the fraud counts (Count II and Count IV), Plaintiffs allege that Defendant committed fraud by publishing and disseminating Employment Information that was incomplete, false or materially misleading. (AC, ¶¶93-103,118124). In other words, Defendant concealed material facts that they were under a duty to disclose. Plaintiffs are not required to allege that the Employment Information was “untrue or incorrect” but rather that “the defendant concealed a material fact when he was under a duty to disclose that fact to plaintiff.” Connick v. Suzuki Motor Co., Ltd., 174 Ill. 2d 482, 500 (1996). As the elements of negligent misrepresentation or concealment are the same as fraudulent misrepresentation or concealment with the exception of intent, the same is true as to Count III.. Wigod v. Wells Fargo Bank, 673 F.3d 547, 573 (7th Cir. 2012). Regardless, Plaintiffs have alleged that Defendant Employment Information was false: At all relevant times, the Employment Information was incomplete, in that it omitted or concealed material information, was false or materially misleading . . . (AC, ¶ 30) Defendant knowingly and intentionally made false representations and omission of material facts,

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with the intent to deceive and fraudulently induce reliance by Plaintiffs and the members of the Class. These false representations and omission were uniform and identical in nature, and include, without limitation, the following: Providing the incomplete, false or materially misleading Employment Information to the Plaintiffs and the members of the Class and to various third-party data clearinghouse and publications, such as the ABA, NALP and U.S. News. (AC, ¶ 82) The Employment Information was incomplete, false or materially misleading. (AC, ¶ 97, 107). Thus, Plaintiffs have alleged that the Employment Information was false, misleading or omitted material information under the Consumer Fraud Act, common law fraud, and negligent misrepresentation. 2. Defendant’s Employment Information is Deceptive and Misleading

JMLS goes to great lengths to defend its Employment Information and assert its interpretation of the statistics. (Def.Mem. p. 13-14). However, under a 2-615 Motion to Dismiss standard, if facts can be interpreted differently, the Court must construe them in the light most favorable to the Plaintiff. Both named Plaintiffs allege they relied upon Defendant’s Employment Information when enrolling or deciding to remain enrolled in JMLS. (AC, 7, 8). Each year JMLS, on its website, discloses the number of graduates who have found jobs within nine months of graduation and the median salary for its graduates. (See AC, ¶ 27; Ex. 1, 2, 3). For the class of 2004, JMLS provided Employment Information to U.S. News but omitted the material fact that that number includes non-legal, part-time and temporary positions. (AC, 27). In its 2006 statistics, JMLS simply provided the total number of students from the 2006 class that were employed. JMLS omitted the number of total class members or the number that reported not being employed or being underemployed. JMLS included all jobs types without disclosing that the statistics included non-legal, part-time and temporary positions. Additionally, JMLS reported that the average salary was $71,103 and the median salary was $60,500. The Employment Information is misleading in that it appears that a large number of graduates obtained full-time legal employment when that was not the case. (AC, 30). Worse, the salary information is false. JMLS’s 2009 Employment Information omitted the same information as the 2006 Employment Information and thus was equally misleading (See Def.Mem Exhibit 2). Plaintiffs allege that the same type of information was provided for the classes of 2005, 2007 and 2008, omitting the same material information. For these reasons, JMLS’s Employment Information is material misleading and omits material information. For the class of 2010, JMLS changed the disclosures on its website. (See Def.Mem Exhibit 3). However,

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even with the changes, the disclosures remain misleading in that they omit material information and are confusing.7 And, of course, data from 2010 is not the Employment Information on which Plaintiffs relied, and so is only peripherally relevant, perhaps on the issue of injunctive relief.8 For the purpose of a Motion to Dismiss, it is Defendant who must show that there is no way that its Employment Information could create a likelihood of deception or had the capacity to deceive. While it is possible that some readers might not have been deceived, it certainly is likely that many could have been deceived, and Plaintiffs allege they actually were deceived. In any event, defendant’s assertion that that no reasonable person would have been deceived by JMLS’s Employment Information is simply not plausible, and, accordingly, it would be improper to prevent the trier of fact from making that determination after hearing all the evidence. C. Plaintiffs Do Allege That They Relied Upon Defendant Representations

JMLS claims that Plaintiffs have failed to adequately allege that they viewed the Employment Information and relied upon it or were deceived by it. Although Plaintiff need not allege reliance to state a claim under the Consumer Fraud Act, (White v. DaimlerChrysler Corp., 368 Ill.App.3d 278, 283 (2006); Siegel v. Levy Organization

7

At first glance, Defendant’s Exhibit 3 appears to provide relevant employment information. However, looking more closely, JMLS is utilizing a number of techniques to manipulate data to make it appear that the “2010 Graduate Employment Rate: 90.2%.” That statement is followed by several “asterisks” or “caveats” that one would hope would clarify the meaning of the 90.2% value but actually confuses the issue. First, JMLS states that “384 students were sent our employment survey.” Then JMLS breaks down the survey responses into “Bar Admission Required,” “JD Preferred,” “Professional Degree” and “NonProfessional Degree,” but fails to define these categories and fails to disclose temporary positions. Presumably one could assume that “Bar Admission Required” meant that the individual was actually “practicing law as an attorney,” but that is such a wide field that could include attorneys conducting document review on a temporary abeit full-time basis or individuals that choose to become solo practitioners and are not making enough money to even touch their loan debt or make law school a worthwhile investment. Even giving JMLS the benefit of the doubt, the 90.2% number is so grossly inflated as compared to the more significant statistics that it is inherently deceptive and misleading. Of the 366 students that reported, 55% reported full time employment requiring bar admission. Furthermore, JMLS reports its 90.2% number to U.S. News, which in turn publishes the information without the various “asterisks” that JMLS apparently attempts to include in at least its 2010 disclosures. Frankly, although JMLS purports to provide non-misleading disclosures by stating that they include legal and non-legal, a potential JMLS applicant has no way of determining the actual number of graduates who obtained full-time permanent attorney positions within nine months of graduation and is forced to rely upon JMLS’s convoluted disclosures or the materially misleading information that JMLS reports to U.S. News or the ABA. JMLS attaches various Exhibits to its Memorandum including three pamphlets entitled “The John Marshall Law School: At Work In Chicago.” For the purposes of a 2-615 Motion to Dismiss these documents cannot be considered. But even if the court does review the documents, they support Plaintiff position that John Marshall’s Employment Information is materially misleading and deceptive because even though JMLS states “[d]ate reflects . . . both legal and non-legal jobs,” applicants, students and Plaintiffs still have no way to determine the number of graduates who obtained full-time, permanent legal employment. 8 JMLS also quibbles that Plaintiffs did not attach the 2005 statistics to the Complaint. JMLS removed this information from its website and did not keep a copy of it. Plaintiffs inferred it would be substantially the same as other JMLS disclosures. See Ex. I.

15

Development Co., 153 Ill.2d 534, 607 N.E. 2d 194, 198 (1992)(“Significantly, the Act does not require actual reliance.”)), JMLS correctly asserts that, in order to state a claim for common law fraud and negligent

misrepresentation, Plaintiffs must allege that they actually relied upon and were deceived by the representations. Board of Education v. A, C, and S, Inc., 131 Ill. 2d 428, 452 (1989); Connick v. Suzuki Motor Co., 174 Ill.2d 482, 496 (1996); DeBouse v. Bayer AG, 235 Ill.2d 544, 555 (2009). In this case, each named Plaintiff alleges that he or she actually relied upon the “Employment Information” has defined in the complaint when he or she decided to enroll or decided to remain enrolled at the school. For example, Jorie Johnson enrolled at JMLS in 2005 and “[i]n deciding to apply to, enroll and continue to be enrolled at [JMLS] Johnson relied on the ‘Employment Information,’ hereinafter defined, including the 2004 employment statistics.” (AC ¶ 7). Erum Mohammed enrolled in JMLS in 2006 and “[i]n deciding to apply to, enroll and continue to be enrolled at [JMLS], Mohammed relied on the “Employment Information,’ hereinafter defined, including the 2004 and 2005 employment statistics.” (AC, ¶ 8). Plaintiffs define the Employment Information that they relied upon: “For the class of 2004, JMLS provided employment statistics to U.S. News & World Report (US News). JMLS stated that 89% of its graduates had secured employment within 9 month of graduation. JMLS stated that 54% of its graduates were working in law firms, 21% were working in ‘business,” and 17% were working government. JMLS stated that the median salary in the private sector was $65,000.” (AC, ¶ 27(c)). Moreover, JMLS reported the Employment Information to the ABA and U.S. News, who then in turn reported it to the public and Plaintiffs relied upon the Employment Information. (AC, ¶¶ 32, 53). As both named Plaintiffs have alleged that they relied upon the Employment Information when applying, enrolling and deciding to stay enrolled at JMLS, Defendant’s motion to dismiss on those grounds should be denied. D. Plaintiffs Reasonably Relied Upon Defendant Deceptive Employment Information 1. Reliance and the Reasonableness of the Reliance Is a Question of Fact

JMLS asserts that the Employment statistics “expressly disclose that they include legal and non-legal jobs” and thus cannot be deceptive. (Def.Mem p.16) Defendant Employment Information is deceptive even with the disclosure. JMLS, relying upon Gomez, which will be discussed later in this section, asserts that the Plaintiffs could not have reasonably relied upon Defendant’s Employment Information. (Def.Mem.. 16-17).

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With respect to reasonable reliance, “the question of whether a plaintiffs’ reliance was reasonable is usually a question of fact,” (Kopley Group v, Sheridan Edgewater, 376 Ill.App.3d 1006, 1018, Zimmerman v. Northfield Real Estate, Inc., 510 N.E.2d 409, 156 Ill. App.3d 154 (1986) (reasonable reliance is a question of fact involving many circumstances); Miller v. William Chevrolet/Geo, Inc., 326 Ill. App. 3d 642 (1st Dist. 2001)), except “where it is apparent from the undisputed facts that only one conclusion can be drawn, the question becomes one for the court.” Id. In Illinois, the rule is “that one is justified in relying upon the representations of another, without independent investigation, where the person to whom the representations are made does not have the same ability to discover the truth as the person making the representations.” Gerill Corp. v. Jack L. Hargrove Builders, Inc., 128 Ill. 2d 179, 195 (1989). Here, Plaintiffs have alleged sufficient facts to show reasonable reliance or in the alternative have alleged sufficient facts to raise the question for the trier of fact. The Employment Information disseminated by Defendant was the only source of school-specific employment data. The only way for Plaintiffs to compare JMLS to other law schools was to utilize JMLS’s own information. Consequently, it was reasonable for them to rely on the Employment Information. Also as noted, JMLS, as a law school, held itself out as a trustworthy source and a pillar of the legal community whose words did not have to be parsed under a microscope. 2. This Court Should Not Follow the Gomez or Cooley Decisions.

JMLS asserts that its Employment Information can never be deceptive, citing the following points from Gomez (Def Mem., pp. 16-17): (1) The reasonable consumers—college graduates seriously considering law schools-are particularly sophisticated and capable group. (2) [Consumers] have a wealth of public information available from a variety of sources regarding law schools, including NALP employment reports, studies, initiatives, and news articles, as well as US News rankings. This includes both general ranking as well as specific breakdowns of law schools according to their graduates’ ability to obtain jobs, salary earned, how much tuition they pay, and how much debt they take on. . . . . (3) The reasonable law school consumer would understand the correlation between law school rankings, employment, and salary, and the effect of attendance at a lower-ranked school on employment opportunities and expected salary. (4) The reasonable law school consumer would understand that ‘a goodly number of law school graduates toil (perhaps part-time) in drudgery or have less than hugely successful careers,” and that some graduates do not practice law, but instead go into business or other non-legal fields (where a J.D. Remains valuable). (5) The reasonable law school consumer would have taken into account the “impact of the 2008 Great Recession on the legal job market.” . . . The Gomez judge’s reasoning is neither very reasoned nor applicable to this case. As to point (1), there is

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no case law in this State that holds that the acquisition of a college degree makes a consumer “sophisticated.” In fact, Illinois Supreme Court has stated: “it is clear that purchasers of educational services may be as much in need of protection against unfair or deceptive practices in their advertising and sales as are purchases of any other service.” Scott v. Ass’n for Childbirth at Home, Int’l, 88 Ill. 2d 279, 285 (1981). Also, as previously noted, any question as to their degree of “sophistication” should be left to the trier of fact. More relevantly, the Illinois Consumer Fraud Act makes no distinctions between groups of consumers in prohibiting deceptive practices. See 815 ILCS 505/1 et seq. (Notably Defendant does not cite, nor could Plaintiffs locate, any case law holding that “sophisticated” consumers are held to a different standard under the Consumer Fraud Act.). As to point (2), the Gomez judge was simply wrong. Legal commentators have been particularly critical of this portion of Gomez. They have noted that the Gomez opinion used information available in 2011 and 2012 to draw false conclusions about what students knew in 2004-2007. The Cooley decision makes the same error. Plaintiffs and prospective students did not have available to them the data, on a school by school basis, that would have allowed them to learn the data -- about JMLS -- that JMLS failed to disclose in its Employment Information. The Gomez judge never suggests anywhere that they might have looked to find the information NYLS concealed. The Consumer Fraud Act does not impose upon an intended victim of deceptive practices the burden of undertaking obscure research or time travel to the future to learn facts not available in the past. Cappicioni v. Brennan Naperville, 274 Ill. Dec. 461, 467, 791 N.E.2d 553 (Ill. App. 2d Dist. 2003) (Consumer Fraud Act eliminates requirement of plaintiff’s diligence in checking representations of defendant). It simply is not likely that an applicant would even think that he needed to undertake such extra scrutiny of published data when dealing with a law school. As to point (3) the judge was correct but missed the point. Of course, law school rankings have a relationship to future success. What the judge ignored is that a significant basis for those rankings is the employment success of the schools’ alumni and further the data indicating such success comes only from the schools themselves. In fact, the judge in Gomez even acknowledged that “all data collection starts with the law schools themselves.” (Gomez, No. 652226/2011 p. 33.) If the school reported misleading (and thereby inflated) employment statistics, the rankings – and the conclusions applicants would be expected to draw from those rankings -- would be based on that misleading self-provided data.

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Point (4) is irrelevant; the potential for drudgery or success applies to careers in any field. Point (5) is also irrelevant, because when deciding which law school to attend, applicants could not know whether the job market would be better or worse four years later. As noted above, what they were considering was whether, whatever that job market, they would have a better chance with a degree from JMLS or some other law school. Their best way of estimating that was to see how well or not well previous graduates had done in previous job markets. What JMLS did was to make it appear that its alumni were more successful than they really were, thus leading applicants to eschew schools that had actually been more successful and enroll in JMLS instead. The decision in Cooley is equally flawed and poorly reasoned. It displays the same haughty and

contemptuous tone for the students that JMLS displays in its brief and implies that no reasonable person would ever attend Cooley. The decision illogically argues, based upon facts known in 2011, that students who attended Cooley in 2006-08 should have known that Cooley’s disclosures were “inconsistent, confusing and inherently untrustworthy.”9 As to the fraud count, the judge held that under Michigan law there could be no fraud because Cooley’s statistics did not constitute a false representation and it was not reasonable for plaintiffs to rely on them. He found that plaintiffs relied on only “two uniform, written misrepresentations” (Cooley, p.3) and had alleged that Cooley’s statistics were “‘demonstrably false’ for three reasons.” (Cooley, p.4) The Plaintiffs in this case have alleged multiple misrepresentations and not for any of those three reasons set forth in Cooley. As to falsity, Judge Quist held that Cooley’s statistic of “percentage of graduates employed” was not fraudulent because not “objectively false” (Cooley, p.12) – for the reason that on its face that descriptor did not “differentiate between part-time, legal, or non-legal jobs.” (Id.) He concluded that as a matter of law, no reasonable person could understand that statistic to be referring only to full-time legal jobs. The judge’s lengthy mathematical calculations and reasoning with respect to the “percentage of graduates employed” do not bear up on analysis (as could be demonstrated with more pages). But from the complexity of his discussion alone it should be apparent that

9

As to its Consumer Fraud Act count, the Cooley Complaint was deemed not actionable under the Michigan Act, because plaintiffs purchased a legal education for “business or commercial rather than personal purposes.” (Cooley, pp.8, 8-9.) Defendant did not make a similar claim in this case. The Illinois statute does apply to the sale of educational services.

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reasonable persons could disagree with him. He did grant that Cooley’s “average starting salary” statistic was false, but held that because Cooley itself could not possibly have known that number, plaintiffs should have recognized that fact, too, and therefore it was inherently unreasonable for them to rely on that statistic. (Cooley, p.16.)

3.

This Court Should Follow the Two California Rulings.

In contrast, in the Golden State (at p.2) and University of San Francisco (at p.2) cases, the Judge concluded the opposite of the judges in Gomez and Cooley: California case law establishes that ordinarily the issue of whether a statement is likely to deceive a reasonable consumer is a question of fact. Relying heavily on the reasoning of a New York trial court decision, defendant argues that a reasonable prospective or current law student would surely understand that the statements attributed to the defendant did not pertain only to jobs requiring or preferring a law school degree. Accepting the truth of plaintiffs' well-pleaded allegations, as I am required to do at this stage of the case, I disagree. Each of the plaintiffs allege that they were in fact deceived by the statements they attribute to the defendant, and there is nothing before me to suggest that any of the plaintiffs were not reasonable consumers of a law school education. Moreover, the statements attributed to defendant were allegedly made in a context (i.e. in materials designed to attract and retain law students to defendant's law school) where a reasonable prospective or current law student could reasonably believe that the statements pertained only to jobs for which a law school education is a requirement or preference and did not include jobs for which a law school education is irrelevant or of minimal utility. This issue is simply not amenable to resolution on a demurrer and must await factual development by the parties. [Emphasis added.] What is apparent is that when even judges cannot agree whether a representation was false, 10 or whether reliance was reasonable, the issues of proximate cause and reliance are ones for the jury and are not to be decided by the Court as a matter of law. See also, Miller v. William Chevrolet, 326 Ill. App.3d 642, 647 (1st Dist., 2001).11 E. Plaintiffs Have Sufficiently Plead Fraud By Omission

Defendant claims that Plaintiffs cannot claim fraud by omission in Counts II and IV “unless defendant has a duty to inform plaintiff of any allegedly omitted material fact” (Def.Mem, p.11). Plaintiffs have alleged facts sufficient

10

Further testimony as to how inaccurate data is “misleading to law school applicants” can be found in the American Bar Association’s June 2012 (announced July 24) Censure (attached as Exhibit F) of the University of Illinois College of Law for inflating in its published information the LSAT and Grade Point Averages of its entering students as part of a strategic plan to move the school back into the top 20 law schools as ranked by U.S. News. The ABA similarly sanctioned Villanova University School of Law in 2011 for similar “misrepresentations and misleading conduct” that “was damaging to law school applicants.” That ABA statement is attached as Exhibit G. 11 Miller also stated, in discussing the Consumer Fraud Act, that the existence of a genuine issue of material fact as to reliance also satisfies the requirement for “proximate cause.” 326 Ill.App.3d at 649-50.

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to show such a duty – first, a duty by virtue of the nature of the relationship between Plaintiffs and Defendant, and, alternatively, even if Defendant may not have had such a duty, by their assumption of it by their conduct. 1. Either Defendant Had a Fiduciary Duty To Plaintiffs, Or, Even If Defendant Did Not Have a Fiduciary Duty, Defendant Had a Duty By Virtue Of The Nature Of Its Relationship To Plaintiffs.

A special relationship or fiduciary duty that gives rise to the attendant duties may be “the result of special circumstances of the parties’ relationship, where one party places trust in another so that the latter gains superiority and influence over the former.” Prime Leasing, Inc. v. Kendig, 332 Ill. App. 3d 300, 314 (2002). Factors to consider when “determining whether a fiduciary relationship exists include: the degree of kinship between the parties; the disparity in age, health, mental condition and education and business experience between the parties; and the extent to which the ‘servient’ party entrusted the handling of its business affairs to the ‘dominant party’ and placed trust and confidence in it.” Id. “The relationship may be moral, social, domestic, or merely personal.” Taino v. Snachez, 147 Ill. App. 3d 871, 874 (1986) (quoting Anderson v. Lybeck, 15 Ill. 2d 227, 232, 154 N.E.2d 259, 262. (1958)). Even in the absence of a fiduciary relationship, fraudulent concealment “may be shown where ‘plaintiff places trust and confidence in defendant, thereby placing defendant in a position of influence and superiority over plaintiff.’” Benson v. Stafford, 407 Ill.App.3d 902 (2010), citing Connick v. Suzuki Motor Co., supra. While this standard is very similar to the standard for creation of a fiduciary relationship, it is possible for defendant to owe a duty to speak under the “trust and confidence” standard while not being in a fiduciary relationship with the plaintiff. See, e.g., Schrager, 328 Ill.App.3d at 708-09.” Id. The facts alleged by Plaintiffs, including the allegation that Defendant is the only source of the information, is a pillar in the community and has duty to be truthful, clearly set forth a sufficient “trust and confidence” relationship to allow this action to proceed against Defendant. (AC ¶42-46). 2. Even If Defendant Did Not Initially Have a Duty, It Assumed a Duty By Its Conduct.

As noted in W.W. Vincent & Co. v. First Colony Life Ins. Co., 351 Ill.App.3d at 762, a party who otherwise may not have had a duty can assume one. (“By representing that Vincent was a party to the general agents contract, Lincoln National not only misled the plaintiffs, but imposed upon itself a duty to disclose the assignment.” [internal citation omitted.] (Emphasis added)). In Union National Bank & Trust Co. v. Carlstrom, 134 Ill.App.3d 985, 989:

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However, as the trial court correctly found, a party may assume a duty to disclose information accurately by its conduct. That clearly was the case here. The bank voluntarily gave a detailed description of Carlstrom’s dealings with the bank. In so doing, it undertook a duty not to deliberately conceal or misrepresent. Dace v. Gilbert (1981), 96 Ill.App.3d 199, 421 N.E.2d 377. Mere silence in a business transaction does not amount to fraud. “Yet, silence accompanied by deceptive conduct or suppression of material facts gives rise to active concealment”; it is then the duty of the party which has concealed information to speak. Russow, 2 Ill.App.3d at 841.” Heider v. Leewards Creative Crafts, Inc., 245 Ill.App.3d 258, 269 (1993). Fraudulent misrepresentation in the education arena “bespeaks an abuse of the trust imparted to our educators and should be entertained by the courts. Deception has no place in the educational process. While negligent misrepresentation and judgmental errors ought not be actionable . . . misrepresentations coupled with the element of scienter should result in the imposition of liability.” Paladino v Adelphi Univ., 89 A.D. 2d 85, 94 (1982).12 JMLS asserts that there is no fiduciary relationship between the parties and thus they cannot be liable for fraud. (Def.Mem., pp. 18-19) None of the cases cited by JMLS dispositively holds that a fiduciary relationship can never exist between a school and its students or applicants. (See Univ. Bd of Trustees v. Smith, 132 Ohio App. 3d 211 (Ohio Ct. App. 1999); Maas v. Corp. of Gonzaga Univ., 27 Wash. App. 397 (Wash. Ct. App. 1980). JMLS is the sole source of Employment Information and is much more experienced and knowledgeable as to the post-law school employment of its own graduates and even graduates of all law schools. As with all law schools, JMLS wants to attract the best students and is aware that its employment statistics and ranking are key components of attracting the best and the brightest. Defendant has a huge incentive to keep on top of the legal market and its place in it. Therefore, it would have significantly more knowledge and experience in comparing its Employment Information to that of other schools and was thus in a dominant position as compared to the Plaintiffs. Plaintiffs, being less experienced and less knowledgeable, trusted JMLS and were confident that legal educators would provide truthful and accurate Employment Information.

3.

Lawyers and Law Schools Have a Special Duty

As a law school and as lawyers, JMLS and the lawyer defendants are held to a different ethical and moral
12

See Tamanaha, The Turn Against Law Schools, April 7, 2012 (Presentation at DePaul University) Ex. H.

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standard by the public and as required under the Illinois Rules of Professional Responsibility. (AC, ¶¶ 43-48; Illinois Rules of Professional Conduct, Rule 4.1, Rule 8.1) The preamble to the Illinois Rules of Professional Conduct make it clear that lawyers, legal professional and legal educators have responsibilities to the judicial system, to clients and to the general public, stating pertinent parts: A lawyer, as member of the legal profession is . . . an officer of the legal system and a public citizen having a special responsibility for the quality of justice. * * * A lawyer’s conduct should conform to the requirements of the law, both in professional service to clients and in the lawyer’s business and personal affairs. * * * As a member of a learned profession, a lawyer should cultivate knowledge of the law beyond its use for clients, employ that knowledge in reform of the law and work to strengthen legal education. Illinois Rule of Professional Conduct 8.4(c) specifically states: It is professional misconduct for a lawyer to: ... (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation.” That Rule applies generally and is not limited to conduct representing clients (Rule 4.1) or in bar admission (Rule 8.1), which apply the same principles. It is a rule setting forth a duty to the public. Although the Illinois Rules of Professional Responsibility do not give rise to a separate cause of action for their breach, the rules are certainly relevant as to the duties of lawyers and law schools, and what the public expects of them, and can provide the foundation for other causes of action such as fraud and misrepresentation. Furthermore, Rule 4.1 sets forth a duty to the general public in addition to a lawyer’s duties to the client or court. Plaintiffs could reasonably rely on the integrity of such an institution and its personnel. JMLS was the sole source and holder of the information. (AC, ¶ 32). JMLS was in a position of trust, as it was more experienced and educated than Plaintiffs, and is held to different standard of conduct than the general public. (AC, ¶¶ 39-48). For these reasons, there was a fiduciary relationship or one of trust and confidence created between Defendant and Plaintiffs. 4. The Existence of a Fiduciary Relationship is a Question of Fact Not Appropriate for Resolution on a Motion to Dismiss

Defendant’s argument that, as a matter of law, it is not in a fiduciary or equivalent relationship with Plaintiff is not a proper basis to dismiss this Amended Complaint. Whether or not a fiduciary relationship exists between the parties depends on the facts in each case and “therefore, frequently inappropriate for resolution on a motion to

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dismiss.” Trustmark Insurance Company v. Harrington Benefit Services, Inc. 2010 U.S. Dist. LEXIS 65625 (citing Taino v. Snachez, 147 Ill.App.3d 871, 874 (1986); See E & J Gallo Winery v. Morand Bros. Beverage Co., 247 F.Supp.2d 979, 985 (N.D. Ill. 2003)). F. Plaintiffs Have Stated a Claim for Negligent Misrepresentation 1. Plaintiffs have Pleaded the Necessary Elements

In order to state a claim for negligent misrepresentation, Plaintiffs must plead the same elements as for fraudulent misrepresentation, except that (a) the defendant need not know the statement is false and (b) the plaintiff must also allege that the defendant owes a duty to the plaintiff to communicate accurate information. Board of Education v. A, C and S, Inc., 131 Ill.2d 428, 452 (1989). For the reasons stated elsewhere in this Response, Plaintiffs have alleged sufficient facts to establish all the elements of this Cause of Action, other than the issues of whether the claim was barred by the Moorman doctrine. 2. The Cause of Action Is Not Barred By the Economic Loss Doctrine.

Defendant argues that under the Economic Loss or Moorman Doctrine they cannot be liable for negligent misrepresentation because they are not suppliers of information. (Def.Mem. p.20) Generally, a plaintiff cannot recover in tort for a purely economic loss. Country Mutual Insurance Co. v. Carr, 366 Ill.App.3d 758, 767-78 (2006). However, the economic loss doctrine “does not apply when a duty arises that is extracontractual.” Id. In other words, the Economic Loss Doctrine does apply if “the duties that plaintiff alleges were violated arose outside of any contract between the parties.” See Golf v. Henderson, 376 Ill.App.3d 271, 279 (1st Dist. 2007). In this case, the Plaintiffs are alleging that the Defendant breached their duty to disclose material information. That duty arose, not from the contractual relationship of the parties, but rather from the fiduciary and special relationship between the parties. Therefore, the Economic Loss Doctrine is inapplicable to this case. III. THE ABA RULES DO NOT EXEMPT DEFENDANT FROM SCRUTINY UNDER THE ILLINOIS CONSUMER FRAUD ACT. A. Defendant’s Statements Do Not Fall Within The Consumer Fraud Act’s Safe Harbor Provision

JMLS argues that Defendant’s misrepresentations are exempted from liability under the Consumer Fraud Act’s safe harbor provision because they allegedly complied with the ABA’s reporting requirements. (Def.Mem.,

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p.21). Notably, JMLS provides no case law to establish that Illinois Courts (or any court) have recognized an exemption for schools that comply with an accrediting body’s requirement. The “Safe Harbor” provision to which the Defendant refers, 815 ILCS 505/10b(1), states: Nothing in this Act shall apply to any of the following: (1) Actions or transactions specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States. The safe harbor provision does not apply because the ABA is a private voluntary “association” and not a regulatory body or officer. Nor were JMLS’ employment statistics “specifically authorized” by any law. Thus, JMLS does not meet either of the two requirements to establish the safe harbor. JMLS claims that Defendant’s representations are “actions or transactions” that are specifically authorized by ABA regulations which they argue are “laws administered by a regulatory body or officer under the statutory authority of . . . the United States.” However, the Department of Education recognizes the ABA as an accrediting body for the limited purpose of establishing an institution’s eligibility to participate in the programs implemented by the Department of Education under the Higher Education Act. (20 USC § 1099b). The ABA is not an official department, division or commission of the United States. moreover, JMLS’s voluntary reports of employment information to U.S. News and its distribution of Employment Information in its marketing materials and on its website does not fit within the provision. IV. THE CLAIMS AGAINST THE DOE DEFENDANTS ARE PROPERLY PLEADED AND SHOULD NOT BE DISMISSED. Preliminarily, Plaintiffs would assert that Defendant JMLS does not have the standing to raise this issue on behalf of the Doe Defendants. In any event, JMLS’s argument that the claims against the Doe Defendants should be dismissed is not ripe at this stage in the litigation. This argument is ripe only when there is a statute of limitations issue. Illinois Courts allow liberal amendments to pleadings. Thomas v. Davenport, 196 Ill App. 3d 1040 (1990). Until the limitations period has passed, Plaintiffs are liberally allowed to amend their pleadings to substitute Doe Defendants with actual parties to the action to be identified after appropriate discovery in this case. Defendant’s argument is irrelevant. Further, the cases disallowing “fictitious” Defendants seem to involve situations where the only defendant or

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all Defendants were fictitious. Where there is at least one “real” defendant, the joinder of a “John Doe” is permissible. Bogseth v. Emanuel, 166 Ill.2d 507, 516-517. WHEREFORE, Plaintiffs respectfully request that this Court deny Defendant’s Motion to Dismiss and for such further relief that this Court deems just. Dated: August 2, 2012 Respectfully submitted,

By: _______________________ One of Plaintiffs’ Attorneys Edward X. Clinton Sr., Edward X. Clinton Jr., Julia C. Floyd The Clinton Law Firm 111 West Washington St., Suite 1437, Chicago, Ill. 60602 Phone: (312) 357-1515 Cook County Atty. No. 35893

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