Henry v. Brown University

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

FRANK CARBONE, ANDREW CORZO, )

SAVANNAH ROSE EKLUND, SIA HENRY, )

ALEXANDER LEO-GUERRA, MICHAEL )

MAERLANDER, BRANDON PIYEVSKY, )

KARA SAFFRIN, and BRITTANY TATIANA )

WEAVER, individually and on behalf of )

all others similarly situated, )

)

Plaintiffs, )

)

vs. ) Case No. 22 C 125

)

BROWN UNIVERSITY, CALIFORNIA )

INSTITUTE OF TECHNOLOGY, )

UNIVERSITY OF CHICAGO, THE )

TRUSTEES OF COLUMBIA UNIVERSITY )

IN THE CITY OF NEW YORK, CORNELL )

UNIVERSITY, TRUSTEES OF DARTMOUTH )

COLLEGE, DUKE UNIVERSITY, EMORY )

UNIVERSITY, GEORGETOWN )

UNIVERSITY, THE JOHNS HOPKINS )

UNIVERSITY, MASSACHUSETTS )

INSTITUTE OF TECHNOLOGY, )

NORTHWESTERN UNIVERSITY, )

UNIVERSITY OF NOTRE DAME DU LAC, )

THE TRUSTEES OF THE UNIVERSITY OF )

PENNSYLVANIA, WILLIAM MARSH RICE )

UNIVERSITY, VANDERBILT UNIVERSITY, )

and YALE UNIVERSITY, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Frank Carbone, Andrew Corzo, Savannah Rose Eklund, Sia Henry, Alexander

Leo-Guerra, Michael Maerlander, Brandon Piyevsky, Kara Saffrin, and Brittany Tatiana

Weaver, on behalf of themselves and all others similarly situated, have sued seventeen

private universities for antitrust violations under section 1 of the Sherman Act. The

defendants include Brown University (Brown), California Institute of Technology

(CalTech), University of Chicago (Chicago), the Trustees of Columbia University in the

City of New York (Columbia), Cornell University (Cornell), Trustees of Dartmouth

College (Dartmouth), Duke University (Duke), Emory University (Emory), Georgetown

University (Georgetown), the Johns Hopkins University (Johns Hopkins), Massachusetts

Institute of Technology (MIT), Northwestern University (Northwestern), University of

Notre Dame Du Lac (Notre Dame), the Trustees of the University of Pennsylvania

(Penn), William Marsh Rice University (Rice), Vanderbilt University (Vanderbilt), and

Yale University (Yale).

This opinion concerns three motions to dismiss filed by the defendants: (1) a

motion joined by all of the defendants; (2) a motion by Brown, Chicago, Emory, and

Johns Hopkins; and (3) a motion by Yale. For the reasons below, the Court denies the

defendants' motions.

Background

The defendants are private universities that have been consistently ranked by

the U.S. News & World Report as among the top twenty-five of such schools in the

nation. On January 9, 2022, the plaintiffs filed suit against the defendants, who they

allege have "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." Am. Compl. ¶

1. The plaintiffs seek class certification under Federal Rules of Civil Procedure 23(a),

(b)(2), and (b)(3); a permanent injunction prohibiting the defendants from "continuing to

illegally conspire regarding their pricing and financial-aid policies"; and damages in the

form of actual damages or restitution. Id. at 70.

Each defendant is alleged to be or have been a member of the 568 Presidents

Group (the 568 Group). According to its website, the 568 Group "is an affiliation of

colleges and universities . . . [that] works together in an effort to maintain a need-based

financial aid system that is understandable and fair and will bring greater clarity,

simplicity, and equity to the process of assessing each family's ability to pay for

college." 568 Presidents Group, http://www.568group.org/home/. In line with this goal,

members of the 568 Group develop, adopt, and implement the Consensus Approach

(CM), a set of common standards for determining a family's ability to pay for college.

The plaintiffs allege that "[u]nder the Consensus Methodology, an applicant's ability to

pay is a substantial determinant of the net price . . . charged to the applicant for

attendance." Id. ¶ 5. They further allege that, by developing and adopting the CM, "the

568 [Group] has intended to reduce or eliminate, and in fact succeeded in reducing or

eliminating, price competition among its members." Id. ¶ 7.

Discussion

This opinion concerns three motions to dismiss the plaintiffs' amended complaint:

one filed by the defendants collectively; one filed by Brown, Chicago, Emory, and Johns

Hopkins; and one filed by Yale. To survive a motion to dismiss under Federal Rule of

Civil Procedure 12(b)(6), the complaint must state a claim to relief that is plausible on its

face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The court must view the complaint

"in the light most favorable to the plaintiff, taking as true all well-pleaded factual

allegations and making all possible inferences from the allegations in the plaintiff's

favor." AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). Even so, the

plaintiff must provide "some specific facts to support the legal claims asserted" and

cannot rely on conclusory allegations to make his claim. McCauley v. City of Chicago,

671 F.3d 611, 616 (7th Cir. 2011).

A. The joint motion to dismiss

The defendants have collectively moved to dismiss the plaintiffs' claims, arguing

that (1) their actions fall within an antitrust exemption in section 568 of the Improving

America's Schools Act of 1994 (the 568 Exemption); (2) the plaintiffs fail to plausibly

allege a violation of the Sherman Act; (3) the plaintiffs' alleged injuries are too

speculative to satisfy the antitrust injury and antitrust standing requirements; and (4)

several of the plaintiffs' claims are time-barred under the four-year antitrust statute of

limitations.

1. The 568 Exemption

The defendants claim that their actions are exempt from antitrust liability under

the 568 Exemption, which covers agreements between "2 or more institutions of higher

education at which all students are admitted on a need-blind basis." 15 U.S.C. § 1 note.

The plaintiffs dispute that the Exemption applies because, they allege, the defendants

do not admit all of their students on a need-blind basis.

The parties discuss several issues related to the 568 Exemption. First, the

parties dispute who has the burden of persuasion and, accordingly, whether the

Exemption is a proper basis for dismissal for failure to state a claim. Second, the

parties dispute the proper interpretation of the term "need-blind"—namely, whether the

term prohibits consideration of all financial circumstances or prohibits only consideration

of an applicant's need for financial aid. Lastly, the parties dispute whether the plaintiffs

have sufficiently alleged that the defendants do not admit all their students on a need-

blind basis.

Resolution of this dispute does not require addressing all of these issues. The

Court finds that, even taking the defendants' position on the first two issues, the

plaintiffs have sufficiently alleged that the defendants are not covered by the 568

Exemption and thus denies the defendants' motion on this basis. Although the Court

declines to rule on the other two points of contention, it discusses those points briefly.

a. Basis for motion to dismiss

The plaintiffs contend that applicability of the 568 Exemption is not an

appropriate basis for a motion to dismiss because the burden is on the defendant to

prove. The defendants disagree, arguing that "Section 568 imposes elements that a

plaintiff must plead and prove to overcome it." Defs.' Reply at 3. Although the Court

declines to rule on the issue, the Court notes that the defendants' interpretation runs

contrary to the "general rule of statutory construction that the burden of proving

justification or exemption under a special exception to the prohibitions of a statute

generally rests on one who claims its benefits." NLRB v. Ky. River Cmty. Care, Inc.,

532 U.S. 706, 711 (2001) (quoting FTC v. Morton Salt Co., 334 U.S. 37, 44–45 (1948)).

This rule has been restated and applied numerous times by the Seventh Circuit. See

EEOC v. Chicago Club, 86 F.3d 1423, 1429 (7th Cir. 1996) (collecting cases). Although

it may be that the present case is an exception to the general rule, as in the defendants'

cited cases, the defendants carry the heavier burden here to convince the Court that a

departure from the general rule is warranted. See, e.g., Mid-Am. Reg'l Bargaining Ass'n

v. Will Cnty. Carpenters Dist. Council, 675 F.2d 881, 886 (7th Cir. 1982) (concluding

that the plaintiffs needed to plead around the statutory labor exemption to state an

antitrust claim).

b. Meaning of "need-blind"

Under the statute, "on a need-blind basis means without regard to the financial

circumstances of the student involved or the student's family." 15 U.S.C. § 1 note

(internal quotation marks omitted). The defendants contend that the term "financial

circumstances" in this definition refers only to financial information in a student's

financial aid application or other proxies for a student's need for financial aid. The

plaintiffs argue, in contrast, that the exemption applies only to universities who do not

consider any aspect of an applicant's financial circumstances.

As stated above, the Court need not rule on this issue at this time. The Court

does, however, make one note regarding an argument on which the defendants heavily

rely. The defendants contend that the Court must adopt their proposed interpretation of

the term, otherwise schools would be forced "to choose between receiving the

protections of Section 568 and recognizing the unique potential of applicants from less

financially fortunate families." Defs.' Mem. at 14. In other words, the defendants

contend that the plaintiffs' interpretation would prohibit schools from considering an

applicant's financial hardship in a positive way, thus "inhibit[ing] schools' efforts to shape

economically diverse classes for the benefit of the entire student body." Id. at 13. The

defendants say that because this would lead to an absurd result, the Court should adopt

their position instead.

The Court finds this argument unpersuasive. Courts give statutes their plain

meaning "where the disposition required by the text is not absurd." Sebelius v. Cloer,

569 U.S. 369, 381 (2013) (citation omitted). The absurdity doctrine allows courts to

make "modest adjustments to texts that do not parse," but it does not give courts

license to make "substantive changes designed to make the law 'better.'" Soppet v.

Enhanced Recovery Co., 679 F.3d 637, 642 (7th Cir. 2012). In other words, the

absurdity doctrine is confined to "linguistic, as opposed to substantive, absurdity."

United States v. Stands Alone, 11 F.4th 532, 536 (7th Cir. 2021); see also United States

v. Logan, 453 F.3d 804, 806 (7th Cir. 2006) (stating that the absurdity doctrine "is

limited to solving problems in exposition, as opposed to the harshness that a well-

written but poorly conceived statute may produce").

The defendants do not show that the plaintiffs' interpretation of the statute is

linguistically absurd. Their argument does not actually fit the absurdity doctrine: they

contend that the plaintiffs' reading of the 568 Exemption would discourage schools from

considering an applicant's disadvantaged financial background in a positive way. If

that's right, it arguably might make for bad policy, but it wouldn't render the 568

Exemption absurd. Whether a statute is bad policy, and thus ought to be modified, is

not for courts to decide. "That would give the judiciary entirely too much law-making

power." Soppet, 679 F.3d at 642.

c. Sufficiency of the allegations

The Court concludes that, regardless of which interpretation of "need-blind" it

adopts, the plaintiffs have plausibly alleged that the defendants do not admit all students

on a need-blind basis. For purposes of this section, the Court adopts the narrower

definition of need-blind provided by the defendants: that is, to show that the defendants

are not protected under the 568 Exemption, the plaintiffs must plausibly allege that the

defendants consider some applicants' need for financial aid in their admissions

decisions. The plaintiffs have met this burden.

The amended complaint contains several categories of allegations that support

the plaintiffs' contention that the defendants do not admit all students on a need-blind

basis. In summary, the plaintiffs allege:

[A]ll Defendants have considered the financial circumstances of students

and their families in deciding whether to admit waitlisted and transfer

students; at least several Defendants maintain admissions systems that

favor the children of wealthy past or potential future donors; at least

several Defendants preference wealthy applicants through the largely

secretive process known as “enrollment management”; and Columbia

considers the financial circumstances of students and families in making

admission decisions for its School of General Studies.

Am. Compl. ¶ 8. The defendants take issue with each of the above statements,

disputing the sufficiency of the plaintiffs' allegations.

First, the plaintiffs allege that all the defendants consider the financial need of

students and their families in deciding whether to admit waitlisted or transfer students.

With respect to the former, the defendants criticize the evidence cited by the plaintiffs as

too general or too old to support the contention that the defendants admitted waitlisted

students on a need-aware basis during the relevant time period. These arguments do

not fly on a motion to dismiss. The defendants' 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. At summary judgment and trial, the

plaintiffs may need to present additional evidence to prevail. At this stage, however, the

allegations in the amended complaint are sufficient; the plaintiffs' allegations on this

point are plausible.

The defendants also contend that the plaintiffs' allegations concerning transfer

students are insufficient because "[a]ll of Plaintiffs' allegations . . . are based solely 'on

information and belief,' with no facts alleged to indicate why this supposed belief is

plausible." Defs.' Mem. at 18. The Court disagrees. The plaintiffs are permitted to

make allegations "on information and belief." Frerck v. Pearson Educ., Inc., No. 11 C

5319, 2012 WL 1280771, at *2 (N.D. Ill. Apr. 16, 2012) (collecting cases). This is

especially true where, as in this case, the "pleadings concern matters peculiarly within

the knowledge of the defendants." Huon v. Denton, 841 F.3d 733, 743 (7th Cir. 2016).

And the allegations in the complaint, taken as true as required on a Rule 12(b)(6)

motion, are sufficient to allege plausibly that the defendants consider financial need

when admitting transfer students.

The defendants also contend, in a footnote, that the need-blind requirement does

not apply to waitlisted students. The Court rejects this argument because it is

inconsistent with the language of the exemption, which expressly states that "all"

students must be admitted on a need-blind basis. Additionally, as the plaintiffs point

out, the legislative history of the 568 Exemption suggests that the need-blind

requirement applies to waitlisted students. The language of the Exemption was

modeled on the Standards of Conduct negotiated between MIT and the Justice

Department in 1993. See H.R. Conf. Rep. 103–761, 911–12; H.R. Rep. 105-144

("Section 568 in most respects mirrors the settlement reached in 1993."). The

Standards of Conduct expressly excluded waitlisted students from the need-blind

requirement, but this language was removed during the drafting of the 568 Exemption.

This omission suggests that Congress intended for the need-blind requirement to apply

to waitlisted students.

The amended complaint also contains allegations that at least several of the

defendants favor children of wealthy past or potential future donors in their admissions

decisions. As with the allegations regarding waitlist admissions, the defendants

contend that the plaintiffs' evidence is too old or too general to support their allegations.

As previously stated, these arguments are inappropriate bases for dismissal under Rule

12(b)(6).

The defendants further contend that, even if the plaintiffs' allegations are

plausible, they are irrelevant because the preferential treatment of children of wealthy

donors does not amount to consideration of an applicant's need for financial aid.1

According to the defendants, such preferential treatment is based on the increased

likelihood that the school will receive a donation, not on the decreased likelihood that

the student will require financial aid. Not so. The amended complaint alleges that the

defendants adopt these policies for both reasons: "Such Defendants understand that

these applicants . . . have no need for financial aid and that their admission could

generate a substantial financial return for the university." Am. Compl. ¶ 163 (emphasis

added). These alleged facts thus support the plaintiffs' contention that the defendants

are not need-blind.

Third, the plaintiffs allege that at least several of the defendants consider the

1 The Court also notes that the defendants' contention here depends upon acceptance

of their proposed reading of the 568 Exemption's use of the term "need-blind." If they

are wrong about that, they are wrong about this too, as a family's wealth certainly falls

within "the financial circumstances of the student involved or the student's family." 15

U.S.C. § 1 note (emphasis added).

financial need of applicants through a process known as "enrollment management."

According to the amended complaint, "[e]nrollment management is the systematic

integration of the functions of admissions, the relationship between tuition and fees

(pricing) and financial aid, and student retention, along with the use of research to

inform institutional policies and practices." Id. ¶ 154 (citation and internal quotation

marks omitted). The plaintiffs allege that "[o]ne of the key purposes of enrollment

management is to limit the number of financial-aid-eligible applicants who are admitted

to the institution to achieve financial and budgetary objectives." Id. ¶ 155. In support of

these allegations, they point to statements and other evidence that suggests that the

defendants consider financial need and purposefully "maintain a shroud of secrecy

over" their enrollment management practices to avoid legal scrutiny. Id. ¶¶ 157–58.

The evidence the plaintiffs cite is more than sufficient to make plausible their

allegation that the defendants engage in enrollment management strategies that

consider financial need in admissions decisions. The defendants attempt to criticize

each individual item of evidence, but their arguments do not make the plaintiffs'

allegations implausible. 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.2

2 The plaintiffs also allege that Columbia considers financial need when making

admissions decisions for its School of General Studies. The only specific fact pleaded

with respect to this allegation is a quotation from the undergraduate student newspaper

stating that "General Studies admissions are not need-blind." Am. Compl. ¶ 149. The

defendants argue that this is a conclusory statement that cannot support the plaintiffs'

allegations on a motion to dismiss. This specific point may have some merit, but the

Court need not adjudicate this definitively, as it has found that the plaintiffs have

otherwise plausibly alleged the non-applicability of the 568 Exemption.

The defendants also argue that the plaintiffs have failed to make specific

allegations with respect to seven of the defendants—CalTech, Chicago, Cornell, Emory,

Johns Hopkins, Rice, and Yale—and that the plaintiffs' general allegations are

insufficient to meet the plaintiffs' burden on a motion to dismiss. The Court disagrees.

The plaintiffs are not required to cite evidence specific to each defendant in their

complaint. They must, of course, state a claim against each defendant, but that does

not require citing specific evidence regarding each defendant. The plaintiffs have

alleged—plausibly—that all of the defendants engage in non-need-blind admissions

decisions, and they have cited evidence specific to certain schools as examples.

Taking all of their allegations together, the plaintiffs have plausibly alleged that each

defendant fails to meet the requirements of the 568 Exemption.

But even if this were not the case, the fact that at least one member of the

conspiracy is plausibly alleged not to be, or not to have been, need-blind means that the

plaintiffs have plausibly alleged that none of the schools are protected under the 568

Exemption. The Exemption applies only when all schools in an agreement admit all

students on a need-blind basis. Under antitrust law, courts are required to strictly

construe Sherman Act exemptions. See Fed. Mar. Comm'n v. Seatrain Lines, Inc., 411

U.S. 726, 733 (1973). The language of the statute is clear: "It shall not be unlawful

under the antitrust laws for 2 or more institutions of higher education at which all

students are admitted on a need-blind basis to agree or attempt to agree . . . ." 15

U.S.C. § 1 note (emphasis added). The statute applies to agreements among schools.

Only agreements among schools where "all students are admitted on a need-blind

basis" are protected. Therefore, because the plaintiffs plausibly allege that at least one

(and possibly all) of the defendants admitted students on a need-aware basis, they

plausibly allege that none of the defendants are protected under the 568 Exemption.

The defendants' arguments to the contrary are unavailing. First, they argue that

the Court must read the 568 Exemption in conjunction with the proposition that section 1

requires a conscious commitment to enter an agreement that is expressly unlawful.

See Marion Healthcare, LLC v. Becton, Dickinson & Co., 952 F.3d 832, 841 (7th Cir.

2020) (stating that, to show an antitrust conspiracy, the plaintiffs must plead that each

defendant "had a conscious commitment to a common scheme designed to achieve an

unlawful objective"). Under the defendants' interpretation, even if there are non-need-

blind schools that are parties to the agreement, need-blind schools are protected if they

lack actual knowledge that other schools are not need-blind. The Court rejects this

argument; it adds an actual knowledge requirement that does not exist in the text of the

statute. See Dean v. United States, 556 U.S. 568, 572 (2009) (noting that courts

"ordinarily resist reading words or elements into a statute that do not appear on its face)

(citation omitted).

Second, the defendants argue that the plaintiffs' interpretation would deter need-

blind schools from entering into such agreements. Specifically, they contend that the

need to ensure that all other schools in the agreement are need-blind would be so

onerous that schools would be discouraged from entering such agreements. There are

two ways to understand the defendants' argument. Both are unavailing. If the

defendants' argument is that the result of the plaintiffs' interpretation is so absurd as to

make it unlikely that it was Congress's intention in passing the statute, the Court

disagrees. As the plaintiffs point out, Congress has made similar policy judgments

regarding other antitrust exemptions. See National Broiler Mktg. Ass'n v. United States,

436 U.S. 816, 827–29 (1978) ("[T]o enjoy the limited exemption of the Capper-Volstead

Act . . . all its members must be qualified to act collectively.") (emphasis in original). If

the defendants' argument is instead that the plaintiffs' interpretation represents bad

policy, then their argument is better directed towards Congress, not the Court. Even if a

statute represents bad policy, it is the role of the Court to effectuate the text of the

statute, at least when it is unambiguous. Barnhart v. Sigmon Coal Co., 534 U.S. 438,

450 (2002).

Lastly, the defendants argue that the plaintiffs' interpretation contravenes the

courts' practice of construing laws to avoid imposing strict liability. See Gordon v.

Softech Int'l, Inc., 726 F.3d 42, 50 (2d Cir. 2013) (refusing "to write strict liability into [the

statute] absent a clear indication in the text or the legislative history"). But this principle

applies only when the language of the statute is unclear. Here, the text of the 568

Exemption does not include or suggest a knowledge requirement. The Court thus

overrules the defendants' argument.

2. Antitrust violation

The defendants contend that the plaintiffs fail to state a claim for a violation of

section 1 of the Sherman Act. Under section 1, "[a] restraint is unreasonable if it falls

within the category of restraints held to be per se unreasonable, or if it violates what is

known as the 'Rule of Reason.'" Wilk v. Am. Med. Ass'n, 895 F.2d 352, 358 (7th Cir.

1990). An antitrust plaintiff can also state a claim under the "Quick Look" framework, a

standard that applies when "an observer with even a rudimentary understanding of

economics could conclude that the arrangements in question would have an

anticompetitive effect on customers and markets." California Dental Ass'n v. FTC, 526

U.S. 756, 770 (1999).

The parties spill much ink disputing the proper framework for evaluating the

plaintiffs' claims. The defendants argue that the Rule of Reason applies; the plaintiffs

argue that their claims should be given per se treatment. At this point, the Court finds it

unnecessary to resolve this issue. Because it concludes that the plaintiffs state a claim

for a section 1 violation even if the Rule of Reason applies, it defers the question of

which framework to use for later in the litigation.

"Under a Rule of Reason analysis, the plaintiff carries the burden of showing that

an agreement or contract has an anticompetitive effect on a given market within a given

geographic area." Agnew v. Nat'l Collegiate Athletic Ass'n, 683 F.3d 328, 335 (7th Cir.

2012). This requires the plaintiffs to "identify a relevant product and geographic market

in which [the defendants] have or were dangerously likely to obtain monopoly power."

Sharif Pharmacy, Inc. v. Prime Therapeutics, LLC, 950 F.3d 911, 916 (7th Cir. 2020).

Under the Sherman Act, a relevant market consists of "commodities reasonably

interchangeable by consumers for the same purposes." Id.

The plaintiffs' alleged market is the "Market for Elite, Private Universities," which

they define as the market "for undergraduate education at private national universities

with an average ranking of 25 or higher in the U.S. News & World Report rankings from

2003 through 2021." Am. Compl. ¶ 241. The alleged market does not include liberal

arts colleges, which the plaintiffs contend "are generally regarded as having different

characteristics and services." Id. ¶ 242. Additionally, the market as alleged by the

plaintiffs excludes public universities because the "[c]ompetition between public

universities and elite, private institutions . . . is limited in the national market for students

seeking financial aid." Id. ¶ 247.

The defendants argue that the plaintiffs' alleged relevant market is not plausible.

They criticize the fact that the plaintiffs use only one publication's rankings; their alleged

market excludes public universities and liberal arts colleges; and it excludes schools

with even slightly lower average rankings. These may be fair criticisms, but they do not

provide a basis for dismissal of the complaint under Rule 12(b)(6). Although the

defendants' arguments suggest that the proper relevant market may differ from what the

plaintiffs propose, they do not suggest that there is no plausible relevant market. All

that is required, on a motion to dismiss, is for the plaintiffs to plead sufficient factual

allegations that, when taken as true, make plausible the existence of a relevant market.

See Vasquez v. Ind. Univ. Health, Inc., 40 F.4th 582, 585 (7th Cir. 2022) (discussing the

motion to dismiss standard in the context of pleading a geographic market).

That the plaintiffs have done. Nothing on the face of the amended complaint

suggests that the U.S. World & News Report ranking is not an adequate approximation

of a university's elite status. And the plaintiffs have plausibly alleged that public

universities and liberal arts schools are sufficiently different from the schools in the

alleged market that they are not interchangeable. Lastly, it is plausible that the top-25-

ranked schools constitute a separate market from lower-ranked schools. Although there

is always some arbitrariness involved in any act of line-drawing, it is not implausible that

consistently higher-ranked schools are not interchangeable with consistently lower-

ranked schools. The defendants are not entitled to dismissal on this basis.

Because the Court concludes that the plaintiffs have sufficiently plead a relevant

market, it need not address the plaintiffs' argument that they have sufficiently alleged

direct anticompetitive effects. See Republic Tobacco Co. v. N. Atl. Trading Co., 381

F.3d 717, 736 (7th Cir. 2004) (noting that "there are some circumstances where to

establish a violation of antitrust laws it is unnecessary to prove that defendant wielded

market power in a properly defined product and geographic market, and may rely

instead on direct evidence of anticompetitive effects").

3. Antitrust injury and standing

"[C]ourts have developed the doctrine of 'antitrust standing' and the subsidiary

doctrine of 'antitrust injury' in order to assure efficient use of the resources of the courts

towards achieving these goals." Kochert v. Greater Lafayette Health Servs., Inc., 463

F.3d 710, 715 (7th Cir. 2006) (citation omitted). To show that they have suffered an

antirust injury, the plaintiffs must demonstrate that their injuries are "of the type the

antitrust laws were intended to prevent" and "reflect the anticompetitive effect of either

the violation or of anticompetitive acts made possible by the violation." Id. at 716

(citations omitted). To establish antitrust standing, the plaintiffs must show that they are

the parties "who can most efficiently vindicate the purposes of the antitrust laws." Id. at

718 (citation omitted).

The defendants argue that the plaintiffs do not plausibly allege an antitrust injury

or antitrust standing. Specifically, they contend that the "Plaintiffs' conclusory

allegations that their net price of attendance would have been lower but for the

Consensus Methodology rely on a series of unsupported and implausible inferences,

rendering the causal connection between their alleged injuries and the alleged

anticompetitive conduct overly speculative as a matter of law." Defs.' Mem. at 35. The

Court disagrees. The plaintiffs' allegations are not too speculative to support an

antitrust injury or antitrust standing. The amended complaint alleges that the claimed

conspiracy decreased competition in the relevant market by allowing the defendants to

work together to provide the same aid awards. Am. Compl. ¶ 234. Without the

conspiracy, the plaintiffs allege, the defendants would have competed for students by

providing more competitive aid packages. Id. ¶ 237. This 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. Id. ¶¶ 123–25. For these reasons, the

Court overrules the defendants' arguments concerning antitrust injury and antitrust

standing.

4. Statute of limitations

The defendants argue that the plaintiffs' claims that accrued before January 9,

2018 are time-barred under the four-year antitrust statute of limitations. 15 U.S.C. §

15b. Under Seventh Circuit law, "a complaint need not anticipate and overcome

affirmative defenses, such as the statute of limitations." Sidney Hillman Health Ctr. of

Rochester v. Abbott Labs., Inc., 782 F.3d 922, 928 (7th Cir. 2015). "As long as there is

a conceivable set of facts, consistent with the complaint, that would defeat a statute-of-

limitations defense, questions of timeliness are left for summary judgment (or ultimately

trial)." Id.

The Court rejects the defendants' argument as a basis 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. Fraudulent

concealment requires that a defendant acted affirmatively to conceal an offense and

that the plaintiff "neither knew nor, in the exercise of due diligence, could reasonably

have known of the offense." Klehr v. A.O. Smith Corp., 521 U.S. 179, 194–95 (1997).

The defendants argue that the plaintiffs "do not sufficiently plead any claim of fraudulent

concealment, much less with the particularity required under Rule 9(b)." Defs.' Mem. at

38. This argument misunderstands the law. The plaintiffs do not have the burden of

pleading that an exception to a possible affirmative defense applies; rather, the

defendants have the burden, on a Rule 12(b)(6) motion, to show that there is no

"conceivable set of facts, consistent with the complaint" in which the defense would

apply. The defendants have not met this burden. Judging solely from the allegations of

the complaint, the Court has no basis to conclude that the doctrine of fraudulent

concealment could not apply.

The parties also dispute whether two other doctrines relating to the statute of

limitations apply. First, the plaintiffs invoke the discovery rule, "which postpones the

beginning of the limitations period from the date when the plaintiff is wronged to the date

when he discovers he has been injured." Vasquez, 40 F.4th at 588. The defendants

argue that recent Supreme Court "precedent abrogates the Seventh Circuit's prior

holding that the Sherman Act's statute of limitations is atextually qualified by a default

discovery rule." Defs.' Mem. at 37 (citing In re Copper Antitrust Litig., 436 F.3d 782, 789

(7th Cir. 2006)). Specifically, the defendants cite Rotkiske v. Klemm, 140 S. Ct. 355,

360–61 (2019), where the Court held that it is "Congress's decision [not the courts'] to

include a . . . discovery provision." They also cite Gabelli v. SEC, 568 U.S. 442, 448–49

(2013), for the proposition that the statutory term "accrued" means when a claim "comes

into existence," not when it is "discovered."

Neither Rotkiske nor Gabelli control here. In Rotkiske, the Supreme Court

addressed the Fair Debt Collection Practices Act's (FDCPA) limitations statute which

"clearly states that an FDCPA action 'may be brought . . . within one year from the date

on which the violation occurs.'" Rotkiske, 140 S. Ct. at 360. This language expressly

states that the limitations period begins on the date the violation occurs, making the

discovery rule inconsistent with the text of the statute. In contrast, the antitrust statute

of limitations runs for four years "after the cause of action accrued." 15 U.S.C. § 15b

(emphasis added). This difference in the language of the statutes distinguishes this

case from Rotkiske.

Next, Gabelli does not control here because it concerned whether the

government could invoke the discovery rule in SEC enforcement actions. Gabelli, 568

U.S. at 449–51. Thus although Gabelli addresses the proper term, "accrued," it does

not address the term in the relevant context. Whether a plaintiff can invoke the

discovery rule in a civil action is an entirely separate issue from whether the government

can invoke the rule in an enforcement action. The Court further notes that the Seventh

Circuit has continued to apply the discovery rule in antitrust cases as recently as this

year. See Vasquez, 40 F.4th at 588.

The discovery rule provides a second reason to reject the defendants' statute of

limitations arguments. Taking the plaintiffs' allegations as true as required, the Court

finds it conceivable (and plausible) that the claims were not discoverable until two years

ago and are thus not time barred. The plaintiffs allege that the complexity of financial

aid, combined with the fact that the information publicly available had to be pieced

together "like a jigsaw puzzle," made it such that a reasonably diligent person would not

have been able to discover the injury until a date within the limitations period. Pls.'

Resp. at 48. The defendants have not provided any basis to reach a conclusion, on a

Rule 12(b)(6) motion, that this is not conceivable or plausible.

The parties also dispute the applicability of the continuing violation doctrine,

which "allows a plaintiff to get relief for a time-barred act by linking it with an act that is

within the limitations period." Selan v. Kiley, 969 F.2d 560, 565 (7th Cir. 1992). The

defendants argue that the doctrine is inapplicable to each and every one of the plaintiffs,

with possible exception of Maerlander, who is alleged to have graduated in 2019. The

plaintiffs contend that the doctrine applies to Maerlander, Carbone, Corzo, and Saffrin,

all of whom are alleged to have enrolled in one of the defendant universities prior to and

continuing into the four-year period.

The Court agrees with plaintiffs that the continuing violation doctrine conceivably

and plausibly could apply to Maerlander, Carbone, Corzo, and Saffrin. The defendants

contend that there is no overt act within the limitations period with respect to these

plaintiffs because the alleged conspiracy is "to restrain competition for only the initial

award to admitted applicants" and none of the plaintiffs are alleged to have received

their initial award within the limitations period. Defs.' Reply at 27 (emphasis in original).

This is incorrect. The amended complaint alleges a conspiracy to fix financial aid

awards generally. See Am. Compl. ¶¶ 262–69. Although it occasionally references

awards given to newly admitted students specifically, it is clear that the plaintiffs' claims

are directed to financial aid awards generally. The defendants also argue that the

doctrine cannot apply to Carbone, Corzo, and Saffrin because they received their last

aid award no later than the fall of 2017, outside the applicable limitations period. But

this fact is not stated in the amended complaint. As such, the Court finds that it is

conceivable—and plausible—that the continuing violation doctrine applies to these three

plaintiffs.

B. The nonmember defendants' motion

Four of the universities—Brown, Emory, Chicago, and Johns Hopkins

(collectively, the "nonmember defendants")—have filed a separate motion contending

that the claims against them should be dismissed because the plaintiffs have failed to

plausibly allege that they were members of the conspiracy during the relevant time

period. According to the nonmember defendants, the plaintiffs concede that Brown,

Emory, and Chicago withdrew from the 568 Group in either 2012 or 2014, and the

claims against these schools are time-barred because the statute of limitations lapsed

four years from the date of withdrawal. The defendants also contend that the plaintiffs

concede that Johns Hopkins joined the 568 Group in 2021, and they argue that Johns

Hopkins cannot be held liable for the prior acts of its coconspirators.

1. Brown, Emory, and Chicago

The parties dispute who has the burden to show withdrawal. The plaintiffs

contend that, as in criminal conspiracy cases, withdrawal is an affirmative defense that

must be proved by the defendant. In contrast, the nonmember defendants cite Krause

v. Perryman, 827 F.2d 346, 350 n. 5 (8th Cir. 1987), for the proposition that in civil

antitrust cases it is the burden of the plaintiff to show that the defendant did not

withdraw. The Court in Krause reasoned that, because antitrust plaintiffs must show

that their injury was a result of the defendant's actions, it is the burden of the antitrust

plaintiff to show that the defendant was part of the alleged conspiracy.

The Court disagrees. It is inappropriate to use the requirements of antitrust

standing to shift what is typically a defendant's burden onto the plaintiff. Under the

reasoning of the court in Krause, every affirmative defense would be the burden of the

antitrust plaintiff to disprove—even in the plaintiff's complaint—as the plaintiff would be

unable to establish that the defendant caused his injury without first disproving the

application of any possible affirmative defense. This cannot be so. The Court

concludes that the burden to show withdrawal in civil antitrust cases is the same as in

criminal cases—on the defendant.

The Court concludes that Brown, Emory, and Chicago are not entitled to

dismissal of the claims against them, as the complaint does not establish their

withdrawal from the claimed conspiracy. The amended complaint states that some of

the defendants have claimed to withdraw, but this does not amount to a concession that

they did, in fact, withdraw. See Am. Compl. ¶ 107 ("Certain Defendants claim to have

stopped participating in the 568 Cartel at various points in time since 2003, but Plaintiffs

are unaware of any evidence that any Defendant has in fact withdrawn from the

conspiracy alleged herein."). All that the plaintiffs concede—if anything—is that these

defendants are claiming a withdrawal defense. They do not allege that the defendants

have done what is required under Seventh Circuit law to actually withdraw. See United

States v. Nagelvoort, 856 F.3d 1117, 1128–29 (7th Cir. 2017) (noting that a withdrawal

defense requires the conspirator to both inform co-conspirators of his withdrawal and

disavow the criminal objectives of the conspiracy).

2. Johns Hopkins

Johns Hopkins argues that the claims against it should be dismissed because it

is alleged to have joined the 568 Group in 2021, after all of the alleged illegal acts

occurred in this case. As a matter of conspiracy law, however, "[i]t is well recognized

that a co-conspirator who joins a conspiracy with knowledge of what has gone on before

and with an intent to pursue the same objectives may, in the antitrust context, be

charged with the preceding acts of its co-conspirators." Havoco of Am., Ltd. v. Shell Oil

Co., 626 F.2d 549, 554 (7th Cir. 1980).

The parties dispute the meaning of the requirement that a defendant have

"knowledge of what has gone on before." The nonmember defendants contend that the

defendant must know that its coconspirators' prior actions were illegal; the plaintiffs

contend that the defendant need only know what prior acts its coconspirators engaged

in, even if it did not know that those acts were illegal.

The Court finds it unnecessary to resolve this dispute at this time. Even under

the defendants' interpretation, the plaintiffs plausibly meet the requirement. The

amended complaint contains sufficient allegations to make plausible a contention that

Johns Hopkins had actual knowledge of the illegal conduct of the 568 Group when it

joined. The plaintiffs allege that the members of the 568 Group monitored the actions of

other members through Certificates of Compliance and that the defendants knew that

not all members were need-blind. At the very least, the plaintiffs allege that Johns

Hopkins itself did not admit all students on a need-blind basis, suggesting that it knew

that the 568 Group did not meet the requirements of the 568 Exemption and was thus

subject to antitrust liability.

C. Yale's motion

Yale has also filed a separate motion to dismiss, contending that the claims

against it should be dismissed because the plaintiffs concede that Yale does not use the

disputed Consensus Methodology in determining a student's need for financial aid. The

Court disagrees. The amended complaint alleges that "Yale claims not to have

participated in the 568 Cartel from 2008 until 2018" and that it implemented a new

financial aid policy in early 2009. Am. Compl. ¶ 123. Contrary to Yale's contentions,

these allegations do not amount to a concession that Yale does not use the CM. In fact,

the plaintiffs allege that Yale is currently a member of the 568 Group and that all

members of the 568 Group are required to adopt the CM. See id. ¶ 124 (alleging that

"Yale understood that active members of the 568 Cartel were required to agree to and

impose the Consensus Methodology").

In addition, even if the amended complaint was understood to allege that Yale

stopped using the CM in 2008, it can still be held liable for the acts of its alleged

coconspirators. Marion Healthcare, 952 F.3d at 839. The amended complaint alleges

that Yale joined the 568 Group in 1998. Yale contends that the plaintiffs concede that

Yale withdrew from the conspiracy in 2008, but this is inaccurate. As with Brown,

Chicago, and Emory, the amended complaint states that Yale claims to have withdrawn

from the conspiracy, but it does not concede that Yale actually withdrew. The Court

thus denies Yale's motion to dismiss.

Conclusion

For the foregoing reasons, the Court denies the defendants' motions to dismiss

[dkt. nos. 145, 146 & 148]. The defendants are directed to answer the amended

complaint by no later than September 9, 2022. The parties are directed to promptly

confer regarding a discovery and pretrial schedule, and they are to file by August 26,

2022 a joint status report with an agreed proposal, or alternative proposals if they

cannot agree. The case is set for a telephonic status hearing on September 2, 2022 at

9:10 a.m., using call-in number 888-684-8852, access code 746-1053. The Court

reserves the right to vacate the hearing if it determines a hearing is not needed.

United States District Judge

Date: August 15, 2022

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