January 10, 2022 News
Firm Files Class Action Alleging That 16 Elite, Private Universities Have Illegally Conspired to Reduce Financial Aid for Almost Two Decades
CHICAGO, IL – January 10, 2022: Price-fixing has overcharged, harmed more than 170,000 students from working and middle-class families. Four highly experienced national law firms with extensive expertise in complex and antitrust class action litigation filed an antitrust class-action lawsuit today against 16 of the country’s most elite private universities, which the suit alleges arose from their allegedly unlawful conspiracy to reduce the amount of financial aid they provide to admitted students.
The complaint alleges that these 16 elite universities have engaged in what amounts to a price-fixing cartel. In summary, the defendant universities are alleged to have:
(1) Colluded to fix prices and thereby enhance their endowments
(2) Used an exemption from the antitrust laws to which they are not entitled
(3) Have made incomplete and misleading statements that impeded discovery of those violations and of the resulting injury to the class
The complaint was filed in the United States District Court, Northern District of Illinois, Eastern Division.“We have conducted a multi-year investigation of the practices of these sixteen elite universities, which we allege are unlawful, and we plan to vindicate the rights of more than 170,000 financial aid students and their families whom we believe have been overcharged by these universities,” said Robert D. Gilbert, a highly experienced litigator with more than three decades representing major corporate clients.
The Complaint alleges that the named universities engaged in conduct that was not protected by a very limited antitrust exemption Congress enacted in 1994, allowing only those universities using need-blind admissions policies to “to use common principles of analysis for determining the need of such students for financial aid.” The statute creating the exemption, Section 568 of the Higher Education Act, defines the term “need-blind” to mean “without regard to the financial circumstances of the student involved or the student’s family.”
However, the Complaint alleges that at least nine of the institutions did not comply with the need-blind requirement of the exemption, by systematically taking into account the financial circumstances of applicants in making admissions decisions and that the others were part of same alleged cartel. The Complaint alleges that the Defendants used a “Consensus Methodology” for determining financial aid that is unprotected by the antitrust exemption and amounts to an unlawful price-fixing conspiracy, which has suppressed the amounts of financial aid the universities awarded to their students over nearly two decades.
“We look forward to fighting for the rights of thousands of students and their families, who we allege have been improperly deprived of the fruits of competition in the provision of financial aid,” said Eric Cramer, one of the nation’s leading and most experienced class action antitrust attorneys. The lawsuit seeks to hold the Defendant universities accountable for their misconduct, put a halt to the alleged unlawful activities, and obtain damages to make the class members whole. As the Complaint alleges, elite private universities such as the Defendants “are gatekeepers to the American Dream” and provide a “acritical pathway to upward mobility that admission to their institutions represents.” But by putting the burden of the alleged overcharges “in particular on low- and middle-income families struggling to afford the cost of college and to achieve the American Dream for their children,” the Complaint alleges that Defendants have unlawfully narrowed that pathway.
“Varsity Blues took on the ‘side door’ of admissions. This case takes on the ‘back door’—alleging that, while conspiring together on a method for awarding financial aid, which raises net tuition prices, defendants also consider the wealth of applicants and their families in making admissions decisions. The law does not allow them to do both,” said Eric Rosen, former federal and state prosecutor who led the Varsity Blues prosecution team and who is now a partner at Roche Freedman, one of the law firms filing this action. Named Defendants The 16 defendants named in the case include Brown University, California Institute of Technology, University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University,
Georgetown University, Massachusetts Institute of Technology, Northwestern University, Notre Dame, University of Pennsylvania, Rice University, Vanderbilt University and Yale University.
For more information on the litigation, go to 568Cartel.com
About Plaintiffs’ Legal Team
The plaintiffs are represented by four experienced, national law firms. Roche Freedman lawyers have litigated antitrust, securities and market manipulation claims for both plaintiffs
and defendants for more than a decade. Over the past two years the firm has been appointed as lead or colead counsel in over fifteen class actions.
Gilbert Litigators & Counselors is a national litigation boutique. The Firm focuses on domestic and international litigation and arbitration, and the resolution of large, complex commercial disputes when the amounts in controversy range from tens of millions to several billions of dollars, with a particular emphasis on fraud and business tort cases, antitrust litigation and litigation involving significant public policy issues. Berger Montague is one of the nation’s most experienced and successful complex litigation firms, having pioneered the antitrust class action. Included among the more than $40 billion the firm has recovered in verdicts and settlements for class members over 50 years, the firm has achieved one of the largest antitrust class action settlements in US history (nearly $6 billion).
FeganScott is a national litigation firm, based in Chicago, has successfully led nationwide class actions, been recognized by courts in the Northern District of Illinois for its experience, and has been appointed by Illinois federal and state courts to Special Master teams overseei