United States District Court, D. Arizona
Paula C. Lorona, Plaintiff,
Arizona Summit Law School, LLC; Infilaw Corporation; Jane and Johns Doe 1-100; Black Corporation 1-100; White Partnership 1-100, Defendants.
V. Wake United States District Judge
the Court is Defendant Arizona Summit Law School, LLC’s
Motion to Dismiss (Doc. 35) and the parties’
accompanying briefs. For the reasons that follow, the motion
will be granted in part and denied in part.
March 2, 2015, Paula Lorona filed a complaint pro se
in state court against Arizona Summit Law School, LLC
(“Arizona Summit Law School” or “the Law
School”), Infilaw Corporation (“Infilaw”),
and various individuals and entities. (Doc. 1-1 at 1-18.)
Lorona then amended her complaint to include federal
statutory claims. (Doc. 1-1 at 56-80.)
28, 2015, the defendants removed to federal court. (Doc. 1.)
Lorona then obtained counsel (Doc. 14) and amended her
complaint again (Doc. 20). That second amended complaint
named only Arizona Summit Law School, Infilaw, and fictitious
entities as defendants. (Doc. 20 at 1.) It claimed violations
of federal employment laws and state fraud laws.
(Id. at 18-49.) The Court dismissed many of the
employment claims and all the fraud claims for failure to
state a claim upon which relief may be granted, but permitted
Lorona to amend her complaint again. (Doc. 33 at 27-28.)
January 14, 2016, Lorona filed a third amended complaint.
(Doc. 34.) The revised complaint contains federal employment
claims against all defendants and state-law fraud and
negligent misrepresentation claims against Arizona Summit Law
School only. (Id. at 14-28.) The Law School moves to
dismiss the fraud and negligent misrepresentation claims.
(Doc. 35.) Oral argument was held on May 13, 2016.
relevant allegations in the third amended complaint are
summarized below. They are presumed true at this stage.
Arizona Summit Law School’s Representations to
considering whether and where to attend law school, Lorona
reviewed Arizona Summit Law School’s “Viewbook,
” a marketing brochure about the Law School. (Doc. 34
at ¶¶ 37-38.) She read a paper copy of the Viewbook
on campus, as well as an online copy on the Law
School’s website. (Id.) The Viewbook contained
enrollment statistics about the Law School’s students,
including their median Law School Admission Test
(“LSAT”) scores and undergraduate grade point
averages (“GPAs”). (Id. at ¶¶
38, 49.) LSAT scores and undergraduate GPAs are commonly
accepted indicators of a student’s likelihood to
succeed in law school and pass the bar exam. (Id. at
¶ 48.) As of spring 2008, the Viewbook reported a median
LSAT score of 153 and median undergraduate GPA of 3.18.
(Id. at ¶ 49.) The Law School also reported
this information to a third party, the Law School Admission
Council, which posted the information on its website.
(Id. at ¶ 38.)
also reviewed other statements by the Law School about its
program. She read on the Law School’s website that more
than 80% of its graduates passed the bar exam. (Id.
at ¶ 41.) She read in the Law School’s application
packet that only two out of 70 graduates who were actively
seeking employment were unemployed and that graduates had a
median salary of $60, 000 and a median student loan debt of
$101, 310. (Id. at ¶ 39.) She read in the Law
School’s application instructions that the Law School
is governed by an American Bar Association standard
prohibiting the admission of applicants “who do not
appear capable of satisfactorily completing its educational
program and being admitted to the bar.” (Id.
at ¶ 40.)
on this information, Lorona decided the Law School would be a
good school to attend. (Id. at ¶¶ 42, 89.)
In August 2009, she applied for traditional enrollment and
was accepted as a traditional evening student. (Id.
at ¶ 44.)
student, Lorona kept track of the Law School’s
enrollment statistics, which the Law School updated each
year. (Id. at ¶¶ 45-47.) In particular,
she noted that the Law School’s median LSAT scores and
undergraduate GPAs remained stable while she was a student
and compared favorably to other law schools. (Id. at
¶ 48.) Through 2014, the Law School continued to report
an “Ultimate” bar pass rate of over 80%.
(Id. at ¶¶ 61-62.) This rate was based on
the number of Law School graduates who passed the Arizona Bar
Exam on the first or subsequent attempts. (Id. at
¶ 61.) The Law School also continued to report
graduates’ employment status and average salaries.
(Id. at ¶ 67.) From 2010 through 2013, the Law
School’s website stated that the school “places
97% of its graduates into jobs within nine months of
graduation.” (Id. at ¶ 68.) Based on this
information, Lorona decided to remain at the Law School.
(Id. at ¶¶ 48, 63, 69, 90.)
unspecified time and place, the Law School described its
legal education program as follows:
We believe by graduation, lawyers should enter the workforce
professionally prepared to practice law in a variety of
diverse settings and industries. Summit Law partners with
local law firms, courts, municipalities, businesses and
non-profits to provide real-world work experiences that
foster our students’ desire to learn, grow and succeed
while creating well-rounded lawyers who add immediate value
to their firms and employers.
(Id. at ¶ 93 (emphasis in original).)
Shortcomings in Arizona Summit Law School’s
Summit Law School’s enrollment statistics did not
reflect the LSAT scores or undergraduate GPAs of all its
students. In 2005, the Law School began admitting some
students via an “Alternative” admissions program
that did not require LSAT scores or undergraduate GPAs within
the traditional range. (Id. at ¶¶ 50-51.)
The Law School did not include these Alternative
students’ LSAT scores or undergraduate GPAs in the
enrollment statistics reported in its Viewbook, on its
website, or to the Law School Admission Council.
(Id. at ¶ 52.) The Law School did not specify
that its statistics omitted Alternative students, and Lorona
did not know of this omission. (Id. at ¶¶
School substantially increased its percentage of Alternative
students from 2005 to spring 2011. (Id. at ¶
53.) During the time Lorona was enrolled, most of the
students at the Law School were Alternative students.
(See Id. at ¶¶ 53, 57.) The Law School
knew that students’ LSAT scores and undergraduate GPAs
correlate with their likelihood of passing the bar exam.
(Id. at ¶¶ 46, 70-71.) Thus, the Law
School predicted that the more Alternative students it
admitted, the fewer of its graduates would pass the bar exam.
(Id. at ¶¶ 72-73.) The Law School did not
disclose this prediction to its students. (Id.)
prediction proved true. In recent years, the percentage of
Law School graduates who pass any given administration of the
Arizona Bar Exam has fallen, from 72.9% of those who took the
February 2013 exam, to 63.3% of those who took the July 2013
exam, to 48.8% of those who took the February 2014 exam, to
49.5% of those who took the July 2014 exam, to 52.6% of those
who took the February 2015 exam, to 26.4% of those who took
the July 2015 exam. (Id. at ¶¶ 59-60.)
2014, the Law School began to pay graduates who it predicted
would fail the bar exam not to take the exam. (Id.
at ¶¶ 74-75.) The predictions were based on
students’ LSAT scores, undergraduate GPAs, law school
GPAs, and other factors. (Id. at ¶ 71.) In
February 2015, for example, the Law School offered students
predicted to fail the exam $5, 000 and other benefits to
defer taking it. (Id. at ¶ 77.) Eliminating
these students from the pool of examinees artificially skewed
pass rates in the Law School’s favor. (Id. at
¶ 78.) These more favorable pass rates enabled the Law
School to maintain its reputation, accreditation, and federal
funding. (Id. at ¶¶ 78-80.)
Lorona’s Inability to Find Employment
graduated from the Law School in December 2014 and passed the
Arizona Bar Exam in 2015. (See Id. at ¶ 86;
Doc. 33 at 4-5.) She incurred over $200, 000 in student
loan debt. (Doc. 34 at ¶ 81.) Based on the Law
School’s representations, she believed that upon
graduating she would find gainful employment at a law firm or
in the public sector with a salary sufficient to repay this
debt. (Id. at ¶ 82.)
belief turned out to be overly optimistic. While awaiting bar
exam results, Lorona applied for positions that did not
require a law license, such as bailiff, clerk, and paralegal.
(Id. at ¶ 85.) She did not receive an
interview. (Id.) After being admitted to the bar,
she applied for positions at private law firms and in the
public sector, and she enlisted the services of employment
placement firms. (Id. at ¶ 86.) She received
one interview but no callback. (Id.) She is
currently attempting to establish a solo practice, without
the support or client base she would expect at a private firm
or in the public sector. (Id. at ¶ 88.)
attributes her plight to the Law School’s reputation,
which has recently plummeted due to its graduates’ low
bar pass rates. (Id. at ¶ 87.) Had she known
the true value of her law degree, she would not have enrolled
in the Law School or would have withdrawn from the Law School
and, if necessary, pursued a different career. (Id.
at ¶¶ 89-90.) She accuses the Law School of
common-law fraud, statutory consumer fraud, and negligent
misrepresentation (collectively, “fraud claims”).
(Id. at ¶¶ 91-116.)
Summit Law School moves to dismiss Lorona’s fraud
claims for failure to state a claim under Federal Rule of