Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Court approves settlement agreement with ten elite universities over price fixing allegations, (Jul 22, 2024)

By Martin A. Steinberg, J.D.

Settling universities agreed to pay Plaintiffs a combined total of $284 million.

The federal court in Chicago entered final judgment giving final approval to the settlement between a class of students and ten Defendant universities in a suit that alleged Defendants illegally fixed tuition prices. The settling Defendants were Brown University, University of Chicago, Trustees of Columbia University in the City of New York, Trustees of Dartmouth College, Duke University, Emory University, Northwestern University, William Marsh Rice University, Vanderbilt University, and Yale University (collectively, “Settling Defendants”). An additional seven Defendant universities have not settled: California Institute of Technology, Cornell University, Georgetown University, The Johns Hopkins University, Massachusetts Institute of Technology, University of Notre Dame du Lac, and University of Pennsylvania (collectively, “Non-Settling Defendants”). Each of the Settling Defendants will contribute anywhere from $13 million to $55 million. Settling Defendants also agreed to complete certain limited discovery, as detailed in their respective Settlement Agreements (Corzo v. Brown University, No. 1:22-cv-00125 (N.D. Ill. July 20, 2024)).

Background. A group of university students alleged that seventeen prestigious private universities colluded through a cartel called the "568 Presidents Group" and an "illegal horizontal agreement to fix prices," whereby tuition prices were set through common "agreed-upon formulas." The complaint alleged that the schools (1) favored the children of wealthy donors; (2) did not qualify for the so-called Section 568 “need-blind basis” financial assistance exemption, as provided under the Improving America’s Schools Act of 1994; and (3) violated 15 U.S.C. § 1 which prohibits illegal restraints of trade.

The settlement classes. The court determined the settlement class to include all U.S. citizens or permanent residents who have during the Class Period (a) enrolled in one or more of Defendants’ full-time undergraduate programs, (b) received at least some need-based financial aid from one or more Defendants, and (c) whose tuition, fees, room, or board to attend one or more Defendants’ full-time undergraduate programs was not fully covered by the combination of any types of financial aid or merit aid (not including loans) in any undergraduate year. The class, however, did not include students for whom the total cost of attendance, including tuition, fees, room, and board for each undergraduate academic year, was covered by any form of financial aid or merit aid (not including loans) from any of Defendants.

The Class Period was defined as follows:

1. For Chicago, Columbia, Cornell, Duke, Georgetown, MIT, Northwestern, Notre Dame, Penn, Rice, Vanderbilt, Yale—from Fall Term 2003 through February 28, 2024.

2. For Brown, Dartmouth, Emory—from Fall Term 2004 through February 28, 2024.

3. For CalTech—from Fall Term 2019 through February 28, 2024.For Johns Hopkins—from Fall Term 2021 through February 28, 2024.

4. The named Plaintiffs were certified as class representatives. Freedman Normand Friedland LLP, Gilbert Litigators & Counselors, and Berger Montague PC were certified as Settlement Class Counsel under Fed R. Civ. P. 23(g). The court appointed Angeion Group as settlement claims administrator and Huntington National Bank will continue as the previously appointed escrow agent.

Settlement amounts. Settling Defendants agreed to pay Plaintiffs a combined total of $284 million. Each university agreed to pay: Chicago - $13.5 million; Emory - $18.5 million; Yale - $18.5 million; Brown - $19.5 million; Columbia - $24 million; Duke - $24 million; Dartmouth - $33.75 million; Rice - $33.75 million; Northwestern - $43.5 million; and Vanderbilt - $55 million.

Distribution. The court directed the settlement administrator to distribute the Net Settlement Fund pro rata, based on estimates of the total amount that each claimant paid to a Defendant during the Settlement Class Period. The Revised Plan of Allocation delineated the applicable formula. Should excess funds exist after distribution, the parties may seek leave of court to distribute any excess funds to a court-approved cy pres recipient if it were determined that further distributions would not be cost-effective.

Within 60 days of the order, the administrator will mail or email a notice with a link to a pre-populated claim form to the Settlement Class and post the claim form on the Settlement Website. All members of the Settlement Class will then have 150 days from the order to submit their claim form. After the deadline for submissions of claim forms, the administrator will prepare a final report for the court’s review and approval, detailing the distribution schedule. Upon court approval, members of the Settlement Class will receive payment from the Net Settlement Fund.

Attorney fees. The court granted Settlement Class Counsel’s motion for costs and fees by finding them to be reasonable. Counsel requested reimbursement of expenses in the amount of $3,508,995.25 and an award of attorneys’ fees 33.33% of the settlement amount of $284 million, or $94,666,666.70, plus one-third of accrued interest.

Award to Plaintiffs. The court further approved Settlement Class Counsel’s request for service awards of $20,000 to each of the eight Class Representatives.

Exclusion. The court found that 14 purported members of the Settlement Class validly excluded themselves. They were listed in the exhibit to the order. One member of the Settlement Class had objected to the Settlements; however, the court overruled the objection because the Settlements and the Allocation Plan Process were fair, reasonable, adequate, and consistent with all applicable standards and due process of law.

Conclusion. The Order and Final Judgment disposed of all claims against the Settling Defendants in this Action and terminated the case with prejudice.

The Case is No. 1:22-cv-00125.

Judge: Kennelly, M.

Attorneys: Daniel John Walker (Berger Montague PC) for Andrew Corzo. Devin Freedman (Freedman Normand Friedland LLP) for Sia Henry. Ellen Noteware (Berger Montague PC) for Benjamin Shumate. Kenneth Michael Kliebard (Morgan Lewis & Bockius LLP) for Brown University. Deepti Bansal (Cooley LLP) for California Institute of Technology. Amy Lynn Van Gelder (Skadden, Arps, Slate, Meagher & Flom LLP) for Columbia University. Daniel E. Laytin (Kirkland & Ellis LLP) for Cornell University.

Companies: Brown University; California Institute of Technology; Columbia University; Cornell University

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