Cornell, MIT, Notre Dame, Georgetown, Penn
Five universities can appeal the class action status of a price-fixing lawsuit, a move that could reduce their potential liability from over $1.7 billion.
Cornell University, Georgetown University, the Massachusetts Institute of Technology, the University of Notre Dame, and the University of Pennsylvania can appeal the class action certification in a long-running antitrust lawsuit. The 7th U.S. Circuit Court of Appeals ruled on Monday that the five remaining defendant institutions may challenge a single issue related to the lower court's handling of expert testimony.
According to a report from Higher Ed Dive, the appeal centers on whether the district court "adequately analyzed expert testimony" when it certified the case as a class action in June. This certification dramatically increased the schools' potential financial exposure.
The Stakes of Class Certification
When the district court certified the class action against the five universities, their total potential liability in damages reportedly rose from $100,000 to at least $1.7 billion. This increase is tied to the size of the potential plaintiff class, which the defendants' court filings state became 220,000 people.
The lawsuit was originally filed in early 2022 by a group of former students. They alleged that over a dozen highly selective private institutions participated in a price-fixing scheme that lowered financial aid offers and drove up tuition costs. Most of the originally named colleges have since settled.
The Core of the Appeal
The colleges' attorneys argued in a July appeal petition that the decision to certify the plaintiff class relied on a flawed data model. They contended the model was "untethered from the challenged conduct and common sense."
The plaintiffs' case included a statistical regression model intended to demonstrate the financial damage caused by the alleged antitrust behavior. However, the colleges alleged this model included students who paid no tuition as examples of those who were overcharged. They also pointed to what they called "wild and inexplicable year-to-year swings in individual students’ purported overcharges and undercharges." The appellate court will now consider whether the district court properly evaluated this expert testimony.
Background of the "568 Cartel" Case
The former students sued 17 institutions that were part of the 568 Presidents Group. This was a now-defunct consortium of need-blind colleges that collaborated on their financial aid formulas. Plaintiffs branded the group the "568 Cartel" and alleged it "explicitly aimed to reduce or eliminate price competition among its members."
The original complaint claimed the member institutions collectively overcharged approximately 170,000 students by at least hundreds of millions of dollars. In recent years, the majority of the original defendant colleges have settled with the plaintiffs, agreeing to pay a total of nearly $320 million.
This antitrust case is not the only one currently involving higher education institutions. Earlier this month, a federal judge ruled that a separate lawsuit could proceed against 32 institutions over their use of early decision admission processes. For the five universities appealing the class action status, the upcoming appellate decision offers a chance to significantly lower the financial stakes of the litigation.
