A federal judge has determined some of the country’s top colleges and universities can’t quickly end a class action lawsuit alleging they colluded on financial aid distribution.
Ten named plaintiffs sued 17 private universities under the Sherman Antitrust Act in January.
U.S. District Judge Matthew Kennelly issued an opinion Aug. 15 addressing three motions to dismiss — one from all 17 defendants; one from Brown University, University of Chicago, Emory University and Johns Hopkins University; and one from only Yale University.
Edward Normand
| Roche Freedman
Other defendants are Brown, California Institute of Technology, Columbia University, Cornell, Dartmouth College, Duke, Georgetown, Massachusetts Institute of Technology, Northwestern, Notre Dame, Penn, Rice and Vanderbilt.
In their complaint, the plaintiffs alleged the schools “participated and are participating in a price-fixing cartel that is designed to reduce or eliminate financial aid as a locus of competition, and that in fact has artificially inflated the net price of attendance for students receiving financial aid.”
The allegations center on institutional membership in the 568 Group, a university consortium that developed common standards for determining the ability to pay for colleges known as the Consensus Methodology.
Under the joint motion to dismiss, the schools said the 1994 Improving America’s Schools Act created an antitrust exemption under section 568, argued the alleged injuries lack the specificity to establish standing and further said several claims are too old to be allowed. The plaintiffs countered by saying the 568 exemption doesn’t apply because the defendant schools don’t meet the obligation to admit all students on a “need-blind basis.”
“Regardless of which interpretation of ‘need-blind’ (the court) adopts,” Kennelly wrote, “the plaintiffs have plausibly alleged that the defendants do not admit all students on a need-blind basis.”
The plaintiffs had to plausibly allege the schools considered financial need in admissions decisions. Kennelly said the amended complaint “contains several categories” of such allegations, and while the schools challenged those assertions, the “criticisms go to the weight of the plaintiffs' evidence; they arguably provide reasons to discredit the evidence but not a basis to find the plaintiffs' allegations implausible,” Kennelly wrote. “Taking all of the plaintiffs' allegations together, there is more than enough to plausibly allege that the various enrollment management strategies described in the amended complaint violate the requirements of the 568 Exemption.”
The parties also differed on the issue of the definition of which market the alleged collusion controlled. While the defendant schools argued they should be lumped in with liberal arts colleges or public universities, the plaintiffs defined the market as elite, private universities, noting all 17 defendants had an average rank 25th or higher in the U.S. News & World Report rankings from 2003-2021.
Kennelly again said the colleges' argument isn’t suitable for a motion to dismiss because the plaintiffs needed only to plausibly allege a market, not stake an irrefutable position. He said the plaintiffs had successfully claimed the Consensus Method meant the schools didn’t compete for students through financial aid offers. The judge said that position “is supported by evidence cited in the amended complaint from Yale and Harvard that suggests that these schools left or declined to join the 568 Group because they concluded that doing so would hinder their ability to provide larger aid awards.”
Although Kennelly agreed the universities correctly cited a four-year statutory limitation for antitrust claims, he explained that alone can’t be grounds for dismissal “because there is a conceivable (and plausible) set of facts in this case under which the fraudulent concealment exception to the statute of limitations would apply.”
The four universities that filed a separate dismissal motion did so by contending they weren’t in the 568 group during the relevant time. Johns Hopkins didn’t join until 2021, while Brown, Emory and University of Chicago say they withdrew in 2012 or 2014. But Kennelly said the complaint doesn’t concede a factual withdrawal from and disavowal of the alleged conspiracy. Johns Hopkins cannot win dismissal, Kennelly explained, because the plaintiffs plausibly alleged it understood the 568 Group’s conduct before joining.
Yale’s motion similarly failed, as it rested on the school’s assertion the plaintiffs conceded it wasn’t using the Consensus Methodology. But the complaint alleges Yale is currently a 568 Group member and, regardless of if it used the methodology, could still be liable for co-conspirators’ alleged conduct.
Kennelly directed the universities to answer the complaint by Sept. 9.
Plaintiffs are represented in the case by attorneys Robert D. Gilbert and Elpidio Villarreal, of Gilbert Litigators & Counselors, of New York; Eric L. Cramer, Caitlin Coslett, Hope Brinn, Robert E. Litan and Daniel J. Walker, of Berger Montague, of Philadelphia and Washington, D.C.; Kyle W. Roche, Edward Normand and Peter Bach-y-Rita, of Roche Freedman, of New York; and Elizabeth A. Fegan, of Fegan Scott, of Chicago.
The defendant colleges and universities are represented by attorneys Kenneth M. Kliebard, Jon R. Roellke, Sujal Shah and Noah J. Kaufman, of Morgan, Lewis & Bockius, of Chicago, San Francisco, Boston and Washington, D.C.; Deepti Bansal, Alexander J. Kasner and Matthew Kutcher, of Cooley LLP, of Washington, D.C., and Chicago; James L. Cooper, Michael Rubin, Leah Harrell and Valarie Hays, of Arnold & Porter Kaye Scholer, of Chicago, New York and Washington, D.C.; Patrick Fitzgerald, Amy Van Gelder and Karen Hoffman Lent, of Skadden Arps Slate Meagher & Flom, of Chicago and New York; Norm Armstrong, Christopher C. Yook, Zachary T. Fardon and Emily T. Chen, of King & Spalding, of Chicago, New York and Washington, D.C.; Terri L. Mascherin, Reid J. Schar, Ishan K. Bhabha, Douglas E. Litvack and Lauren J. Hartz, of Jenner & Block, of Chicago and Washington, D.C.; Derek Ludwin, of Covington & Burling, of Washington, D.C.;
Christopher D. Dusseault, Rachel S. Brass and Jacqueline Sesia, of Gibson Dunn & Crutcher, of Los Angeles; Casey T. Grabenstein, of Saul Ewing Arnstein & Lehr, of Chicago; Tina M. Tabacchi, Craig A. Waldman, Hashim M. Mooppan and Christopher N. Thatch, of Jones Day, of Chicago and Washington, D.C.; Britt M. Miller, Jed W. Glickstein and Stephen M. Medlock, of Chicago and Washington, D.C.; Jeffrey J. Bushofsky, Chong S. Park and Samer M. Musallam, of Ropes & Gray, of Chicago and Washington, D.C.; Eric Mahr, Jan Rybnicek and Daphne Lin, of Freshfields Bruckhaus Deringer US LLP, of Washington, D.C.; Rami Fakhouri and Jennifer L. Greenblatt, of Goldman Ismail Tomaselli Brennan & Baum, of Chicago; Scott D. Stein, Benjamin R. Brunner and Kelsey Annu-Essuman, of Sidley Austin, of Chicago; Robert A. Van Kirk, Jonathan Pitt, Sarah F. Kirkpatrick and Matthew D. Heins, of Williams & Connolly, of Washington, D.C.; James Peter Fieweger, of Michael Best & Friedrich, of Chicago;
Seth Waxman, David Gringer and Alan Schoenfeld, of Wilmer Cutler Pickering Hale and Dorr, of Washington, D.C. and New York; Edward W. Feldman and Daniel Martin Feeney, of Miller Shakman Levine & Feldman, of Chicago; J. Mark Gidley, Robert A. Milne and David H. Suggs, of White & Case, of Washington, D.C., and New York; Charles A. Loughlin, Benjamin F. Holt, Jamie Lee and Molly Pallman, of Hogan Lovells US LLP, of Washington, D.C.; and Stephen Novack, Stephen J. Siegel and Serena G. Rabie, of Novack and Macey, of Chicago.