Justice Dept. Backs Student Antitrust Lawsuit Against Elite Colleges

The Justice Department wrote in a court filing that plaintiffs have “adequately alleged” a violation of antitrust law as part of a lawsuit against 17 elite colleges.
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  • A lawsuit contends that members of the 568 Presidents Group violated antitrust laws by not uniformly adhering to need-blind admissions as required by law.
  • The lawsuit alleges that some of the schools give preference to full-paying students on waitlists.
  • The Department of Justice pushed back on a motion to dismiss in a Thursday court filing.

Seventeen of the nation's top private universities are being sued over allegations of price fixing — and on Thursday, the U.S. Department of Justice pushed back on the universities' motion to dismiss the case.

The lawsuit centers around 17 institutions that were part of the 568 Presidents Group at some point since 2003 and charges that those schools violated antitrust laws because they shared a financial aid formula but weren't truly need-blind to students' financial situations, BestColleges.com previously reported.

The 568 Presidents Group derives its name from Section 568 of the Improving America's Schools Act. That provision allows competing colleges to decide on a financial aid formula as a group but requires schools in such a group to use a need-blind admissions policy.

Universities included in the lawsuit include some of the most prestigious private institutions in the country. Defendant schools include Brown University, 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.

The antitrust lawsuit, brought by several law firms on behalf of five former students in the U.S. Northern District Court of Illinois, charges that some of the schools didn't use need-blind admissions policies despite belonging to the 568 Presidents Group. The lawsuit also contends that other universities in the group, which did use need-blind admissions policies, are liable as part of the overarching group.

In April the schools filed motions to dismiss the lawsuit, arguing that they were still exempt from antitrust laws under Section 568's definition of need-blind and further argued that "when a 568 Group member is need-blind as to its own admissions and lacks actual knowledge that any other member is not, its only conscious commitment is to enter an agreement that is expressly ‘not …unlawful under the antitrust laws.'"

But in a Thursday court filing, the U.S. Department of Justice challenged the schools' motion to dismiss. In a "statement of interest," the Justice Department said the Section 568's exemption "does not immunize agreements between entities that fulfill the exemption's prerequisites and those that do not."

"Defendants 'actual knowledge' of their coconspirators' admissions policies is not relevant to whether the 568 exemption applies or whether their conduct violates the Sherman act," the statement of interest reads.

The Sherman Antitrust Act of 1890 outlaws "every contract, combination, or conspiracy in restraint of trade," according to the Federal Trade Commission.

The Department of Justice added that it "offers no view on Plaintiffs' antitrust standing, their factual claims, the proper definition of 'need-blind,' the application of any applicable statute of limitations."

The lawsuit alleges that some of the schools give preference to full-paying students on waitlists. Section 568's exemption requires that need-blind admissions apply to all students "regardless of whether they are admitted from a waitlist or through a transfer process,"according to the statement of interest.

Robert D. Gilbert, managing partner of Gilbert Litigators and Counselors, one of the lead firms for the plaintiffs, said in a statement that his firm was "extremely pleased" by the Justice Department's statement of interest.

The lawsuit contends that the 568 Presidents Group "effectively raised the net price of attendance, harming in the aggregate more than 200,000 students from working and middle-class families," according to a release from the plaintiffs.