Dive Snapshot:
- Five highly selective colleges can appeal the class action status of an antitrust lawsuit filed nearly five years ago after an appellate court ruling Monday.
- A group of former college students sued in early 2022, alleging that over a dozen defendant institutions took part in a price-fixing scheme that lowered financial aid offers and drove up tuition costs. A majority of the named colleges have since settled.
- The 7th U.S. Circuit Court of Appeals ruled Monday that the remaining five colleges can appeal on a single issue related to a district judge's analysis of expert testimony in deciding to certify the case as a class action in June.
The impact: When the district court certified the case against the remaining plaintiffs — Cornell University, Georgetown University, the Massachusetts Institute of Technology, the University of Notre Dame and the University of Pennsylvania — their total potential liability in damages rose from $100,000 to at least $1.7 billion. That’s because the size of the potential plaintiff class became 220,000 people, according to court filings by the defendants.
Attorneys for the colleges argued in a July appeal petition that the decision to certify the plaintiff class relied on a data model that was “untethered from the challenged conduct and common sense.”
The plaintiffs' case included a statistical regression model meant to show the damage caused by the colleges’ alleged antitrust behavior. But the colleges alleged the model included students who paid no tuition as examples of those who were overcharged as well as “wild and inexplicable year-to-year swings in individual students’ purported overcharges and undercharges.”
Whether the district court “adequately analyzed expert testimony” around the model is the sole issue the 7th Circuit will consider regarding the appeal of class action status, according to Monday's order.
The context: In 2022, the former students sued 17 highly selective private institutions that were part of the 568 Presidents Group, a now-defunct consortium of need-blind colleges collaborating on their financial aid formulas.
Plaintiffs branded the consortium the “568 Cartel” and alleged it “explicitly aimed to reduce or eliminate price competition among its members.” Overall, the member institutions collectively overcharged some 170,000 students by at least hundreds of millions of dollars, according to the complaint.
The majority of the original defendant colleges have settled with plaintiffs in recent years, agreeing to pay a total of nearly $320 million.
What we’re watching: The remaining colleges will have a chance to significantly lower the stakes of the lawsuit on appeal, though the case could still go one of several directions from here.
Nor is it the only antitrust case currently playing out in higher education. A federal judge ruled earlier this month that a lawsuit can proceed against 32 institutions over their use of early decision admission processes.
