USC faces lawsuit over Rossier rankings misreports

Plaintiffs through a university student advocacy group filed a class action lawsuit Tuesday against USC and 2U, Inc., an educational technology firm hired by the University, alleging that the defendants knowingly advertised fraudulent school rankings to students and over-enrolled students into the Rossier School of Education’s online programs to maximize profit.

“USC — in concert with its partner and for-profit, publicly-traded corporation, Defendant 2U — aggressively advertised [the Rossier School of Education’s] fraudulent rankings to grow enrollment in the school’s online programs,” the initial complaint read. “Fraud is exactly what happened here.”

Listed as plaintiffs in the lawsuit are Iola Favell, Sue Zarnowski and Mariah Cummings — all of whom are 2021 Rossier graduates — represented by the Washington, D.C.-based National Student Legal Defense Network and the law firm Tycko & Zavareei.

“Time and time again, we see that when Wall Street gets involved in higher education, students lose,” said Kristen Simplicio, Tycko & Zavareei partner and legal counsel for the plaintiffs, in a press release Tuesday. “We hope that with this lawsuit, 2U and USC are ultimately held accountable to the teachers and other educational professionals that they harmed with this rankings scheme.”

The suit follows a series of revelations in the spring regarding Rossier’s misreporting of data to the U.S. News & World Report’s annual graduate school rankings. In March, Rossier announced it would not participate in this year’s rankings. 

In April, law firm Jones Day confirmed in an independent investigation that Rossier knowingly misreported data on its doctorate programs to influence its rankings. In its report, Jones Day found the practice had taken place since at least 2013 under former dean Karen Gallagher and continued under current dean Pedro Noguera until 2021. 

U.S. News issued a letter in June notifying the University of a new requirement that it provide letters certifying data submitted for future rankings, signed by the Rossier dean or top academic, the president and the USC Board of Trustees chair. The requirement will tentatively be in place until 2026.

In their complaint filed Tuesday, the plaintiffs alleged that USC intentionally engaged in fraud in violation of the California Business and Professions Code by advertising Rossier’s falsely obtained rankings on its homepage, social media, press releases and in targeted advertisements purchased by 2U to attract prospective students. 

Each of the plaintiffs — Favell, Zarnowski and Cummings — stated that Rossier’s ranking was an important factor in their decision to apply to, and attend, the school. Since attending, the plaintiffs incurred tens, if not hundreds, of thousands of dollars in debt.

The complaint also alleges the University did not set or enforce limits to student enrollment, allowing 2U to over-enroll students in Rossier’s online programs in pursuit of maximum profit. 2U, under its agreement with the University, received 60% of tuition for every student it enrolled at Rossier — totaling just under $70,000 per student for one Ed.D. program alone. The complaint estimated 2U’s profits from this arrangement at $14 million per year. 

The agreement additionally allowed 2U to increase its share of the profits if it recruited more students, and actively discouraged the University from imposing restrictions. Since rankings positively correspond to higher enrollment, USC and 2U “had every incentive to advertise the ranking far and wide,” the complaint read.

USC also arranged for prospective Rossier students to meet with “admissions counselors” who, according to the complaint, were employed by 2U, not Rossier. Both USC and 2U failed to disclose this affiliation and instead allowed “counselors” to continue operating under the false identification and work with students on their applications.

“It’s not hard to see the throughline here — USC intentionally falsified data to inflate their U.S. News ranking, and 2U used the false numbers to pad their profits,” said Eric Rothschild, litigation director at Student Defense and legal counsel for the plaintiffs, in a press release. “Both USC and 2U’s actions have hurt countless students who thought this data would help them make an informed enrollment decision. Instead, they were lured into a manufactured profit-making scheme at the expense of their financial and educational futures.”

“We disagree with the claims asserted in the lawsuit, which are mostly based on facts that the university already shared with the community,” the University wrote in a statement Thursday to the Daily Trojan. “We stand by our handling of this matter and look forward to defending against these claims in court.”

The alleged rankings fraud is one in a series of similar cases at universities across the country, such as Temple University, Rutgers University and Columbia University. 

“These revelations underscore the industry-wide understanding, shared by Gallagher and Noguera, as well as 2U, that U.S. News rankings were critically important to the perception of a school, and to students’ decisions regarding where to enroll,” the complaint read.

The plaintiffs are seeking an unspecified monetary sum in damages, to be proven and specified in trial. The suit, Favell v. University of Southern California, is pending at the time of publication, with no proceedings yet held or set to take place. Judge Elihu M. Berle will preside over the case.

This article was updated at 9:49 p.m. PST to include statements from a joint press release from law firm Tycko & Zavareei and the National Student Legal Defense Network.