Dismissal of Class Action vs. Shuttered College Affirmed
Education Partner Paul Lannon represented the Mount Ida College board and several administrators in a case determining whether the allegations that the school assured current and prospective students of its financial stability while concealing its financial distress constitutes a fiduciary breach. U.S. District Court Judge Richard G. Stearns had previously dismissed a class action brought by a group of former students against the now-defunct college, finding no such duty exists under Massachusetts law. The First U.S. Circuit Court of Appeals affirmed on appeal. The defense team said that in refusing to recognize a fiduciary relationship between a college and its students, the 1st Circuit properly rejected the extraordinary expansion of fiduciary duties urged by the plaintiffs.
Mr. Lannon added that the decision “reinforces the point that lawsuits are not an effective means of addressing the financial challenges facing private education today.”
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