Ambrose v. New England Assoc. of Schools

• Decision Date: 02 April 2001
• Docket Number: No. 00-2176,00-2176
• Citation: 252 F.3d 488,154 Ed. Law Rep. 745
• Parties: (1st Cir. 2001) JAMIE AMBROSE ET AL., Plaintiffs, Appellants, v. NEW ENGLAND ASSOCIATION OF SCHOOLS AND COLLEGES, INC., Defendant, Appellee. Heard
• Court: U.S. Court of Appeals — First Circuit

Page 488

252 F.3d 488 (1st Cir. 2001)

JAMIE AMBROSE ET AL., Plaintiffs, Appellants, v. NEW ENGLAND ASSOCIATION OF SCHOOLS AND COLLEGES, INC., Defendant, Appellee.

No. 00-2176

United States Court of Appeals For the First Circuit

Heard April 2, 2001

Decided June 8, 2001

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE

[Hon. Gene Carter, U.S. District Judge]

[Copyrighted Material Omitted] Ralph A. Dyer, with whom Law Offices of Ralph A. Dyer, P.A., was on brief, for appellants.

Margaret Coughlin LePage, with whom Ann L. Rudisill and Pierce Atwood were on brief, for appellee.

Martin Michaelson, Alexander E. Dreier, and Hogan & Hartson L.L.P. on brief for Council for Higher Education Accreditation and American Council on Education, amici curiae.

Before Selya, Circuit Judge, Stahl, Senior Circuit Judge, and Lynch, Circuit Judge.

SELYA, Circuit Judge.

Under the distinct impression that their post-secondary schooling, in the Dickensian phrase, left them with "a smattering of everything, and a knowledge of nothing," Charles Dickens, Sketches by Boz (1839), seven erstwhile students brought suit against the organization that had accredited the college at which they had matriculated. Their complaint raises novel questions anent an accreditor's tort liability to third persons. The district court granted summary judgment in favor of the accreditor. We affirm.

I. BACKGROUND

We recount the facts in the light most favorable to the nonmovants (here, the plaintiffs), consistent with record support. See Nieves v. McSweeney, 241 F.3d 46, 50 (1st Cir. 2001).

Thomas College (the College) is a private institution of higher education in Waterville, Maine. Plaintiffs-appellants Jamie Ambrose, Kimberly Bonneau, Monica Bryant, Heather Cool, Lorna Goodwin, Laurie Pelletier, and Brenda Tracy all attended the College between 1994 and 1999. Defendant-appellee New England Association of Schools and Colleges, Inc. (NEASC) is an independent nonprofit organization that accredits degree-granting institutions. NEASC first accredited the College in 1969. The College has maintained its accreditation continuously from that date forward.

Each of the appellants enrolled in the College's two-year associate degree program in medical assisting expecting to be qualified, upon graduation, for an entry-level position as a medical assistant. But the program had myriad shortcomings; most conspicuously, it contained no clinical component. Since clinical tasks comprise an important part of a medical assistant's job description, six of the seven appellants were unable to find work as medical assistants after they graduated. The only exception -- Ambrose -- was hired as a medical assistant but was cashiered in short order due to perceived inadequacies in her knowledge and training.

Disgruntled by this sad state of affairs, the appellants banded together and brought suit against the College in a Maine state court. They sued NEASC in a separate action. See Ambrose v. NEASC, 100 F. Supp. 2d 48, 49 (D. Me. 2000) (describing the two actions). In their suit against NEASC, the plaintiffs alleged that the accreditation statements which appeared in the College's course catalogs were actionable under three distinct theories: (1) fraud, (2) negligent misrepresentation, and (3) deceptive business practices. NEASC promptly removed the case against it to the federal district court based on diversity of citizenship and the existence of a controversy in the requisite amount. See 28 U.S.C. §§ 1332(a)(1), 1441(a). This left the case against the College pending in a different forum, but the district court quite properly refused to order a remand. Ambrose, 100 F. Supp. 2d at 49-53.

After the parties had engaged in some discovery, NEASC moved for summary judgment. See Fed. R. Civ. P. 56. Judge Carter referred the motion to a magistrate judge. Concluding that no misrepresentation had been made and that the appellants, at any rate, failed to show that they had relied justifiably on the accreditation statements, the magistrate judge recommended brevis disposition. Judge Carter reviewed the magistrate judge's recommended ruling de novo, accepted it, and entered judgment accordingly. This appeal followed.

II. THE ACCREDITATION STATEMENTS

Since the accreditation statements lie at the epicenter of the dispute between the parties, we pause to place them into perspective. NEASC wrote two "approved" versions of an accreditation statement and supplied both versions to accredited institutions of higher education. It permitted those institutions to publish either or both of the statements, but did not require them to do so.

Six of the appellants claim that, prior to matriculating at the College, they read course catalogs which contained the "long-form" version of the accreditation statement (used in the College's 1993-94, 1994-95, and 1995-96 catalogs). This statement reads in pertinent part:

Thomas College is accredited by the New England Association of Schools and Colleges, Inc., a non-governmental, nationally recognized organization whose affiliated institutions include elementary schools through collegiate institutions offering post-graduate instruction. Accreditation of an institution by the New England Association indicates that it meets or exceeds criteria for the assessment of institutional quality periodically applied through a peer group review process. An accredited school or college is one that has available the necessary resources to achieve its stated purposes through appropriate educational programs, is substantially doing so, and gives reasonable evidence that it will continue doing so in the foreseeable future. Institutional integrity is also addressed through accreditation. Accreditation by the New England Association is not partial but applies to the institution as a whole. As such, it is not a guarantee of the quality of every course or program offered or the competence of individual graduates. Rather, it provides reasonable assurance about the quality of opportunities available to students who attend the institution.

The remaining appellant (Pelletier) claims to have consulted the 1996-97 catalog, which contained the "short-form" version of the accreditation statement. That version provides in pertinent part:

Thomas College is accredited by the New England Association of Schools and Colleges, Inc., a non-governmental, nationally recognized organization whose affiliated institutions include elementary schools through collegiate institutions offering post-graduate instruction.

III. ANALYSIS

Maine law controls in this diversity case. See Crellin Techs., Inc. v. Equipmentlease Corp., 18 F.3d 1, 4 (1st Cir. 1994). We review the lower court's application of that law and its entry of summary judgment de novo. Nieves, 241 F.3d at 50. In that review, we focus on whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c).

The appellants' complaint is composed of three substantive counts (the fourth count is nothing more than a prayer for punitive damages, and need not be addressed). In the last analysis, all of those counts depend upon the existence of a false or misleading representation. We explain briefly.

Under Maine law, a party alleging fraud must make a five-part showing which encompasses (1) a false representation (2) of material fact (3) with knowledge of its falsity or in reckless disregard of whether it is true or false (4) for the purpose of inducing another to act in reliance upon it, as well as a showing that (5) the plaintiff justifiably relied upon the representation as true and acted upon it to his detriment. Diversified Foods, Inc. v. First Nat'l Bank, 605 A.2d 609, 615 (Me. 1992). In contrast, a negligent misrepresentation occurs when

[o]ne who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

Chapman v. Rideout, 568 A.2d 829, 830 (Me. 1990) (emphasis omitted) (citing Restatement (Second) of Torts § 552(1) (1977)); see also Jordan-Milton Mach., Inc. v. F/V Teresa Marie, II, 978 F.2d 32, 36 (1st Cir. 1992). Thus, these two torts, though distinct, possess a common element: a false representation.

The appellants' third count, as pleaded and pressed, shares this element, albeit in a slightly altered form. That count alleges a violation of Maine's Deceptive Trade Practices Act, Me. Rev. Stat. Ann. tit. 10, §§ 1211-1216. The appellants' brief focuses this count on two subsections of section 1212(1) of that statute. Under the first subsection, a party is guilty of a deceptive trade practice if it "[r]epresents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they do not have." Id. § 1212(1)(E). The other subsection renders a party liable for a deceptive trade practice if it engages in conduct of any kind that "creates a likelihood of confusion or misunderstanding." Id. § 1212(1)(L). Thus, liability under this count turns on the existence of a false or misleading representation.¹

The foregoing discussion suggests an appropriate analytic framework for our consideration of this appeal. We will begin by examining the representations contained in the accreditation statements. If we find that those representations are true and not misleading, it follows inexorably that the district court did not err in entering summary judgment for NEASC on all the appellants' claims. Only...