Price-fixing lawsuit against 568 Group of top-ranked universities can continue, judge rules

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Dive Brief:

  • A lawsuit accusing 17 wealthy universities of price fixing can continue, a federal judge said Monday, ruling against efforts by the top-ranked institutions to dismiss the case.
  • The universities criticized evidence filed by plaintiffs — who were mostly students who have attended or are attending one of the institutions. But the institutions didn’t show the allegations are implausible, U.S. District Judge Matthew Kennelly wrote in court documents.
  • “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,” Kennelly wrote, referencing an antitrust exemption for colleges that’s at the heart of the case.

Dive Insight:

The 17 universities filed several motions to dismiss a lawsuit first filed in January by students who alleged the institutions violated antitrust law by participating in the 568 Presidents Group without practicing true need-blind admissions.

The 568 Group is made up of colleges that coordinate their financial aid practices. It’s named after an antitrust exemption that allows it to exist, Section 568 of the Improving America’s Schools Act of 1994. The exemption shields universities using need-blind admissions, meaning they don’t consider students’ financial need when deciding whether to accept or reject applicants.

Plaintiffs alleged the universities conspired to use a common financial aid methodology, cutting competition in the marketplace. They argued students would have paid less in a market with more competition for students.

The universities have argued that they do in fact practice need-blind admissions and follow antitrust law.

The lawsuit has drawn interest in the competitive world of college admissions, which has come under increasing antitrust scrutiny in recent years. Last month, the U.S. Department of Justice weighed in, suggesting the case should continue.

All of the universities signed on to one motion to dismiss the case. They argued their activity was covered under Section 568, that the plaintiffs hadn’t plausibly alleged violations of antitrust law, that the plaintiffs’ claims were speculative, and that the claims fell outside of a four-year statute of limitations.

In a separate motion to dismiss, Brown, Emory, Chicago and Johns Hopkins universities argued claims against them should be thrown out because they weren’t members of the 568 Group during a relevant time period. Brown, Emory and Chicago said they withdrew from the group between 2012 and 2014, while Johns Hopkins said it joined in 2021.

Yale University also filed a motion to dismiss, arguing it doesn’t use a consensus financial aid methodology used to determine an applicant’s ability to pay and that it didn’t take part in the 568 Group from 2008 to 2018. 

But the judge was persuaded to allow the case to continue. He doesn’t need to rule on many of the arguments made at this point, he wrote.

Kennelly left open the possibility that many of the universities’ arguments could hold water later on in proceedings. 

The judge’s 26-page ruling contains several other notable excerpts. Kennelly rejected an argument that the 568 exemption doesn’t require waitlisted students to be admitted on a need-blind basis. That interpretation is inconsistent with the law’s language, and it doesn’t match legislative history, he wrote.

He also wrote that if one of the institutions plausibly didn’t meet the need-blind requirements of the 568 exemption, then it’s plausible that none of them did.

“The Exemption applies only when all schools in an agreement admit all students on a need-blind basis,” Kennelly wrote. 

Kennelly ordered the universities to respond to the lawsuit by Sept. 9.

The plaintiffs are seeking restitution for some 200,000 students, as well as a change to the universities’ practices, one of their lawyers, Robert Gilbert, said in a statement.

“In this next phase of the case, we also look forward to taking the depositions under oath of the decisionmakers at each university who participated in this antitrust conspiracy which has inflicted harm on so many middle-class and working-class families,” said Gilbert, who is managing partner at Gilbert Litigators & Counselors.

The full list of institutions named in the lawsuit is: Brown University, the California Institute of Technology, the University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University, Georgetown University, Johns Hopkins University, Massachusetts Institute of Technology, Northwestern University, the University of Notre Dame, the University of Pennsylvania, Rice University, Vanderbilt University and Yale University.

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