Temple Fox Reaches $5.5 Million Settlement Over Rankings Scandal

After a rankings scandal that has severely impacted the reputation of Temple University’s Fox School of Business, the university today (Dec. 21) said it has agreed to pay students of its MBA and other business programs nearly $5.5 million in a settlement of a class action suit. The scandal cost Dean M. Moshe Porat, who led the school for 22 years, his job and forced the school to withdraw from a number of rankings.

Temple said that $4 million has been set aside to settle the claims from online MBA students, while another $1,475,000 will be used to settle the claims of students in its Executive MBA, Global MBA, part-time MBA and master’s degrees in human resources management and digital innovation in marketing. Undergraduate students in the school’s business programs also will receive settlements out of this latter bucket.

The school also agreed to create a $5,000 ethics scholarship for a student with a demonstrated interest in the study of ethics in business who is enrolled in any of the programs that are part of the settlement.

CLASS ACTION SUIT FILED BY A CHEMICAL ENGINEER IN FOX’S ONLINE MBA PROGRAM

The class action suit was first brought by Kyle Smith, a chemical engineer who racked up nearly a decade of work experience at PPG Industries, Sika and BASF. When he wanted to get an MBA, he preferred to keep his full-time job as a senior project engineer for BASF in Iselin, N.J., so he enrolled in 2017 what he thought was the No. 1 online MBA program in the U.S. at nearby Fox School of Business in Philadelphia (see Online MBA Student Files Class Action Suit Against Temple).

After U.S. News tossed Temple out of its online ranking for misreporting critical data, Smith filed his lawsuit, alleging that the school submitted false data to U.S. News to gain its No. 1 standing in that ranking for four consecutive years. Smith, who earned his bachelor’s degree in chemical engineering from Rowan University in 2007, says he enrolled in the Fox Online MBA program in the Spring 2017 because he wanted to be able to complete coursework on his own schedule while maintaining a full-time job. The Temple class action lawsuit asserted that most hiring managers have a “lack of enthusiasm for online MBA programs,” but understand that online courses from top programs are credible.

Smith filed the Temple University class action lawsuit on behalf of himself and a proposed Class of people who enrolled in Temple’s Fox School of Business and Management’s online MBA program since 2015. His lawyer, Jason Brown of Brown, LLC, in Jersey City, N.J., could not be reached for comment.

TEMPLE RELEASES NEWS AT 4:40 P.M. ON FRIDAY BEFORE CHRISTMAS HOLIDAY

According to the university, the class action settlements resolve the claims of students in those programs where misreporting occurred. Temple released the news near the end of a work week on a Friday at 4:40 p.m. EST right before the Christmas holiday.

A spokesperson for the school, Ray Betzner, did not know how many current or former students were eligible to apply for a settlement nor what years they had to be enrolled at the school that would allow students to make a valid claim. He also said he did not know how the scandal has impacted enrollment in the school’s online program.

The agreements have been submitted to the U.S. District Court for the Eastern District of Pennsylvania for its review and approval and will include both monetary and non-monetary terms. How much each member of the class will receive as part of the settlement will be approved by the court. The method of allocation will be proposed by plaintiffs’ counsel.

U.S. NEWS KICKED FOX’S ONLINE MBA PROGRAM OFF ITS RANKING IN JANUARY

U.S. News removed the Fox School of Business off its online ranking in January of 2018 after finding out that the school misreported critical data on its program. Temple had reported that all 255 of the program’s latest incoming class submitted GMAT scores to get into the program with the average score being 619. In fact, the school acknowledged that only 50 students, or 19.6%, submitted GMAT scores. As a result, Temple’s online MBA program, ranked first in the nation by U.S. News, for four consecutive years, has been moved to unranked status for 2018.

“That score put Temple among the five online MBA programs with the highest test scores in U.S. News’ Top 50,” according to the lawsuit. “In truth and fact, the school acknowledged that only 50 students, or 19.6%, submitted GMAT scores, indicating that the reported average may have been significantly inflated.”

A subsequent investigation by the Jones Day law firm, however, found that scandal to be much deeper than initially thought. In addition to the misreporting of the number of students who took the GMAT from 2015 to 2018, the average undergraduate GPA was overstated, and there were inaccuracies in the number of offers of admission as well as in the degree of student indebtedness.

CULTURE OF SCHOOL CONTRIBUTED TO THE REPORTING OF INACCURATE INFORMATION

The Jones Day investigative team interviewed 17 Fox employees and reviewed more than 32,000 documents. It concluded  that, over the past several years, “Fox provided U.S. News with inaccurate information across multiple data metrics that are part of the publication’s OMBA rankings methodology. And while Jones Day focused on information that Fox provided to U.S. News relating to the school’s OMBA program, the investigation revealed that Fox provided U.S. News with erroneous information relating to other programs as well. On certain occasions, Fox’s reporting of inaccurate information to U.S. News was done knowingly and intentionally for the purpose of improving or maintaining Fox’s standing in the relevant U.S. News rankings (see MBA Rankings: Why Schools Are Willing To Cheat).”

The firm’s investigators discovered that Dean Porat and other Fox personnel made clear that improving or maintaining Fox’s position in rankings was a key priority.  “Fox had in place a concerted, rankings-focused strategy including detailed analyses of U.S. News’s rankings methodology and strategies tied to specific U.S. News data metrics, which strategy was promoted internally by the Dean and other Fox personnel,” the investigation found. “The environment fostered by the school’s emphasis on rankings contributed to the reporting of inaccurate information to U.S. News. Moreover, the Dean’s focus on rankings, coupled with his personal management style, caused Fox personnel who interacted with the Dean on ranking-related matters to feel pressure to perform in this regard.” The dean was fired in July of this year (see Temple Dean Sacked Over Rankings Scandal).

According to the university’s statement, “the settlement does not constitute an admission of liability. While the university believes that it could have ultimately prevailed in the litigation, Temple nonetheless chose settlement in the best interests of the university and its students.”

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