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Financial aid antitrust lawsuit can move ahead, judge says

Brown remains a defendant in case after rejected motions to dismiss

A late August ruling by a federal judge in Illinois is allowing a lawsuit alleging that Brown was part of a group that ignored its commitment to need-blind admission policies to move ahead.
A late August ruling by a federal judge in Illinois is allowing a lawsuit alleging that Brown was part of a group that ignored its commitment to need-blind admission policies to move ahead.

A lawsuit alleging that Brown was part of a group of colleges that ignored its commitment to need-blind admission policies can move ahead, a federal judge in Illinois ruled in late August. 

The suit claims that 17 schools, including the University, violated federal antitrust law by failing to maintain need-blind admissions while collaborating on their financial aid policies as members of a group of top-ranked private colleges, The Herald previously reported. Colleges that institute need-blind policies do not consider financial aid as part of their admission decisions. 

In the complaint, the plaintiffs alleged that some of the colleges in the group — which include most of the Ivy League and other highly-ranked private institutions — factored in financial need when admitting students off the waitlist or as transfers. The complaint also accuses some schools of “wealth favoritism” for children of potentially significant donors and using software that collects data on zip codes or parental occupation. 

By implementing these practices — or collaborating with schools that use them — every school in the group violated an exemption to antitrust law in the Improving America’s Schools Act of 1994, the suit claims. The exemption allows colleges to calculate financial aid in the same way, so long as they practice need-blind admissions.

The University claims that its financial aid policies are set without considering other institutions’ offerings. University Spokesperson Brian Clark wrote in an email to The Herald that Brown plans to make that case in court.

Members and former members of that group of colleges, known as the 568 Presidents Group, collectively filed a motion to dismiss in April. But on Aug. 15, U.S. District Court Judge Matthew F. Kennelly denied the motion to dismiss in its entirety and ordered the parties involved to set a schedule for a discovery period — an exchange of information between parties that can include depositions and subpoenaed documents — leading to a trial. 

“Although Brown is disappointed that it was not dismissed from the case, the University is confident that it will prevail in this matter,” Clark wrote. 

On Sept. 2, Kennelly ordered the parties to come to an agreement on the timeline by mid-November. The plaintiffs’ proposed timeline suggests that the final hearings before a trial occur after May 2025; the defendants offer a slightly faster timeline overall.

In the next phase of the case, the plaintiffs “look forward to taking the depositions under oath of the decision makers at each university who participated in this antitrust conspiracy,” Robert D. Gilbert, managing partner of Gilbert Litigators and Counselors, one of three lead law firms for the plaintiffs, wrote in an email to The Herald.

“We look forward to winning substantial restitution for the 200,000 students who have been harmed by the collusion of these 17 elite universities and to ending their unlawful practices,” Gilbert wrote. 

In the motion to dismiss, the defendant universities and colleges claimed that they are “exempt from the antitrust laws” the plaintiffs allege they have violated. They also criticized the plaintiffs’ interpretation of need-blind admissions for ignoring the term’s “structure, history and purpose.” 

Along with Emory University and the University of Chicago, Brown claimed that charges against them should be dismissed as they withdrew from the group more than four years ago, beyond the statute of limitations for antitrust suits. Brown left the group in 2012, according to court documents. Kennelly rejected this claim, noting that Brown did not “establish their withdrawal.”

A motion to dismiss indicates “the complaint is legally insufficient,” Daniel Crane, a professor at the University of Michigan at Ann Arbor’s law school, wrote in an email to The Herald. Judges do not look at evidence or hear from witnesses, and instead only engage with lawyers, he wrote.

A statement submitted to the court by the U.S. Department of Justice in July disputed the colleges’ definition of need-blind. Need-blind admissions must occur for all applicants, “regardless of whether they are admitted from a waitlist or through a transfer process,” the statement said.

Kennelly, in his opinion, agreed with the plaintiffs and the Justice Department. “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,” the opinion said.

The motion to dismiss also reiterated Brown’s stance that it did not violate the conditions of its antitrust exemption “if, unbeknownst to them, another member of the (568 Group) was not need-blind.” 

But the Department of Justice disagreed, stating that the 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,” an antitrust law. 

To maintain its antitrust exemption, the University would have needed to publicly disavow the 568 Group, Gilbert said in an interview. By not doing so, Gilbert argued they became liable to students and their families for damages that date as far back as 2003.

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“Brown is fully committed to making admission decisions for U.S. undergraduate applicants independent of ability to pay tuition, and we meet the full demonstrated financial need of those students who matriculate,” Clark wrote.

Kennelly sided with the plaintiffs in his opinion, writing that “the burden to show withdrawal in civil antitrust cases is the same as in criminal cases — on the defendant.”

The original suit also claimed that the group’s method of determining financial aid awards violated the Sherman Antitrust Act by disincentivizing competition, known as the Consensus Methodology within the 568 Group. That methodology, Gilbert said, consists of a common formula that asks families to contribute as much as possible. 

The Justice Department’s statement agreed that the Consensus Methodology “eliminates an important dimension of price competition among schools — whether the offers are identical or the differences are simply narrowed — in the same way that an agreement on the minimum net price of attendance eliminates price competition.”

While the defendants’ motion to dismiss argued that they lacked market power in any defined market and the methodology primarily offers recommendations for uncommon financial situations, Kennelly did not deem that either claim could lead to dismissal of the case.

“Brown University’s financial aid is set without any specific knowledge or regard for how other colleges are setting their financial aid,” Clark wrote in his email, “and we will demonstrate this through the legal process.”



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