For Opinion See 5 F.3d 658

Briefs and Other Related Documents

United States Court of Appeals,Third Circuit.
UNITED STATES OF AMERICA, Plaintiff,
v.
BROWN UNIVERSITY, et al., Defendants.
Massachusetts Institute of Technology, Appellant.
No. 92-1911.
1992.

Appeal from the Judgment of the District Court for the Eastern District of Pennsylvania at No. 91-3274 Entered September 2, 1992, Judgment for the Plaintiff

Brief of Amici Curiae The School District of Philadelphia, et al.
The School District of Philadelphia, Sally Akan, Esquire, General Counsel, 2130 Arch Street, Philadelphia, PA 19103, (215) 299-7000.

*i TABLE OF CONTENTS

INTRODUCTION ... 1

I. STATEMENT OF INTEREST ... 2

 A. The School District of Philadelphia ... 2

 B. The Urban League of Philadelphia ... 3

 C. The Greater Philadelphia Urban Affairs Coalition ... 4

 D. The Barristers' Association of Philadelphia, Inc. ... 6

 E. The Hispanic Bar Association of Pennsylvania ... 7

 F. The Asian American Bar Association of the Delaware Valley ... 8

 G. The National Bar Association, Women Lawyers Division ... 9

II. STATEMENT OF THE ISSUES ... 11

III. STATEMENT OF THE CASE ... 11

 A. The Purpose of Overlap ... 11

 B. Non-Economic Considerations Are of Paramount Importance in Competition Among Institutions of Higher Education ... 14

 C. The Negative Social Impact of the District Court's Injunction of Overlap ... 17

IV. SUMMARY OF ARGUMENT ... 21

V. ARGUMENT ... 22

 A. The District Court Erroneously Limited Its Rule of Reason Analysis to Commercial Standards of Competition ... 22

 B. Overlap Promotes and Fosters Academic Competition Among MIT and the Ivy Schools ... 29

 C. The Trial Court's Finding That Overlap Has Unlawfully Suppressed Competition Between MIT and the Ivy Schools on the Basis of Price Is Unsupported By the Evidence ... 31

VI. CONCLUSION ... 34

*ii TABLE OF AUTHORITIES

PRIMARY AUTHORITIES

Chicago Board of Trade v. United States, 246 U.S. 231, 240-41 (1918) ... 22, 29

Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 50 (1977) ... 22

FTC v. Superior Court Trial Lawyers, 493 U.S. 411 (1990) ... 26

Gandee v. Glaser, 785 F. Supp. 684 (S. D. Ohio 1992) ... 14

Goldfarb v. Virginia State Bar Ass'n, 421 U.S. 773, 788-89 (1975) ... 23

McCormack v. Nat'l Collegiate Athletic Ass'n, 845 F.2d 1338, 1344 (5th Cir. 1988) ... 23

NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85, 101 (1984) ... 27

Nat'l Society of Professional Engineers v. United States, 435 U.S. 679 (1978) ... 26

Regents of the University of California v. Bakke, 438 U.S. 265, 312 (1978) ... 24

Standard Oil Co. v. United States, 211 U.S. 1 (1911) ... 22, 23

United States v. Pretlow, 779 F. Supp. 758 (D. N.J. 1991) ... 14

SECONDARY AUTHORITIES

Larry Gordon, The California College Guide; A Guide to the College Guides, Los Angeles Times, May 19, 1991 (Special Section) ... 14

Beth Sherman, Prepping for College; A Guide for First-Time Parents Negotiating the Academic Maze that Leads Their Children to College, Newsday (New York), March 31, 1990, (Part II) ... 15

*iii Brooke A. Masters, High School Seniors Face the Big Choice; Money Isn't the Only Factor Students Weigh When Selecting Which College to Attend, The Washington Post, April 29, 1990 (Metro Section) ... 15, 16

Kristina Lindgren, The California College Guide; A Primer on Making Choices -- And Making Arrangements -- For a College Education, Los Angeles Times May 19, 1991 (Special Section) ... 16

Don Trivette, Finding the Right College, Paying for It, and Choosing the Right Courses, 11 PC No. 2, January 28, 1992 ... 16

Book Review, The Common Sense Guide to American Colleges, The Nation, v. 254, No. 7, (February 24, 1992) ... 16

U.S. News & World Report, America's Best Colleges ... 16, 17

United States Department of Commerce, Bureau of the Census, Current Population Reports - Consumer Income, (March 1992) ... 19, 20, 21

INTRODUCTION

Friends of the Court, the School District of Philadelphia, the Urban League of Philadelphia, the Greater Philadelphia Urban Affairs Coalition, the Hispanic Bar Association of Pennsylvania, the Barristers' Association of Philadelphia, Inc., the Asian American Bar Association of the Delaware Valley and the National Bar Association Women Lawyers Division, Philadelphia Chapter, respectfully submit this Brief of Amici Curiae urging the Court of Appeals to reverse the trial court's Decision and Order, entered September 2, 1992 (“Decision and Order”), which erroneously enjoins agreements between Defendant Massachusetts Institute of Technology (“MIT”) and other institutions of higher education to arrive at uniform need-based academic financial aid assessments.[FN1] 

FN1. The School District amici sought leave to file a post-trial brief addressing substantially the same issues with the trial court. The court below denied the motion.
The Friends of the Court support MIT's policies of need-blind admissions and need-based financial aid and urge this Court to reject the Antitrust Division's efforts to eliminate them by allowing the Overlap program (or “Overlap”) to continue. The Antitrust Division did not meet its burden of proving that Overlap is an unreasonable restraint on competition that results in an economic injury. Indeed, if it were, how could the Antitrust Division justify its agreement with the eight Ivy League universities (“the Ivy Schools”) in the Final Judgment (consent decree) that an agreement to provide need-based aid is permissible when applied to student-athletes? Overlap, being a reasonable means of allocating limited resources to a greater number of students, should be allowed to continue in its entirety not only for the student-athletes, but for the economically disadvantaged as well. The Friends of the Court submit this Brief on their behalf.

I. STATEMENT OF INTEREST

A. The School District of Philadelphia

The School District of Philadelphia is one of the largest public school systems in the nation.[FN2] For the 1990-1991 school year, approximately 50,000 students were enrolled in grades 9 through 12. By racial group, Philadelphia's high school enrollment is 25% white, 60% African-American, 9% Latino and 6% Asian. Like those in most large urban centers in this country, many of Philadelphia's school age children come from economically disadvantaged backgrounds. Fully 40% of Philadelphia's high school enrollment come from low income families, those whose income makes them eligible to receive A.F.D.C. or food stamps.

FN2. The facts contained in the statement of interest of the School District of Philadelphia are found in the record testimony of Janis Somerville. See Somerville Direct, N.T. 1555-56.

Despite their often difficult circumstances, about 29% of the graduating classes from Philadelphia's comprehensive high schools continue their education at a four year college. Last year alone, 26 students from the Philadelphia schools were admitted to the Ivy League Schools. Over the last five years, *3 eleven students from the District have attended MIT. The inevitable retreat from need-based aid and need-blind admissions caused by the relief requested by the Antitrust Division in this case would undoubtedly have the effect of excluding many of Philadelphia's academically talented but financially disadvantaged students from attending MIT and the Ivy Schools in the future.

B. The Urban League of Philadelphia

The Urban League is a non-profit, community organization, with national headquarters in New York City, and affiliates in cities throughout the nation. The mission of the Urban League is to enable blacks and other minority group members to cultivate and exercise their full human potential on a par with all other Americans. To achieve this goal, the Urban League conducts programs in education, employment, housing and urban affairs, economic development, community development, law and consumer affairs, social welfare, and citizenship education. These programs are designed to:
• strengthen the growth and development of individuals and families;
• conduct in-depth research to identify the social welfare needs of the League's constituency and establish plans for corrective action;
• work with existing institutions - public and private - to make them more responsive to, and provide services that will meet the needs of all groups in the community;
• mobilize and organize minority communities to work for the development of alternatives to systems which have been identified as inadequate, and
*4 • where there is need, to develop new, and strengthen existing black institutions committed to assuring the effective delivery of community services to blacks.

To accomplish this mission, the Urban League intervenes at all points in the social and economic structure where the interests of blacks, other racial minorities and the poor are at stake, to train members of these communities in the strategies and techniques for securing change in the status quo and to challenge the major sources of power, both public and private, in order to bring about positive and rewarding changes in the daily lives of blacks and other minorities. The Urban League believes that any retreat from need-blind admissions and need-based aid policies at MIT and like institutions will make this mission a more difficult one than it is at present.

C. The Greater Philadelphia Urban Affairs Coalition

The Greater Philadelphia Urban Affairs Coalition (“GPUAC”) was created in 1991 through the merger of The Philadelphia Urban Coalition and the Urban Affairs Partnership. The Urban Affairs Partnership can be traced to 1949, when Philadelphia business leaders established a new organization to serve as an “instrument of reform for the betterment of conditions in the community.” The Philadelphia Urban Coalition was established in 1968 and began in the city's African-American community as an organization with extensive grass-roots ties and substantial support from the business community. Over the years, it expanded its services to reach all economically disadvantaged *5 communities in Philadelphia, and currently provides resources and assistance to Latinos, Asians as well as poor whites.

The mission of the GPUAC is to improve the quality of life for the disadvantaged, and in doing so, improve the quality of life for all. It seeks to bring together the diverse elements of the community; promotes education and youth employment; supports neighborhood development; pursues social justice and racial harmony; fosters a healthy environment for business; and encourages and supports responsible and effective government.

In carrying out this mission, the GPUAC operates over thirty-five programs designed to impact on social and economic problems falling across a wide range of categories. Education, homelessness, public policy, crime and drug abuse, community development, AIDS, minority and women business development, are but some of the areas in which the GPUAC operates programs.

The GPUAC is guided by a Board of Directors of nearly 100 members. They represent a broad cross-section of business, civic, community, educational, and labor leadership in the region. On the board are a dozen corporate CEOs, four university presidents, three leaders of labor unions, two foundation presidents, a superintendent of public schools, banking and professional leadership, and civic and community activists, all bringing diverse perspectives to the issues.

The GPUAC advocates on behalf of the economically disadvantaged, convenes diverse leaders, operates and manages *6 programs, and acts as a catalyst in developing innovative approaches to urban problems.

D. The Barristers' Association of Philadelphia, Inc.

The Barristers' Association of Philadelphia, Inc., is an affiliate of the National Bar Association. The National Bar Association has a network of over 15,000 African-American lawyers, judges, law faculty and administrators and law students across the country. The Barristers' Association was formed in 1950 by a group of five African-American lawyers from Philadelphia as a collective vehicle to serve their professional needs and as a means of effectively mobilizing to address the complex issues facing the African-American community in Philadelphia. The mission of the Barristers' Association has evolved from one of “survival” in reaction to a hostile legal profession to one of pro-active service to the profession and the African-American community by promoting professional excellence, charitable and community service, economic and political empowerment and justice and equal opportunity in the American legal process. The Barristers' Association now boasts a membership of close to 1,000 lawyers, judges, law faculty and students and continues to promote aggressively the advancement of African-Americans in this community.

As one of its historical concerns, the Barristers' Association is keenly interested in the unrestricted access to higher education for academically inclined African-American students. The Barristers' Association maintains, supports and *7 promotes programs that increase the number of African-American students recruited, admitted and graduated from college and law school. It encourages placement, career counseling and financial aid offices to give increased attention to programs specifically designed to assist African-American students.

The Barristers' Association also maintains close, supportive and cooperative relationships with African-American pre-law societies and local and national Black Law Students Associations. It sponsors several programs through which members of the Barristers' Association serve as role models and mentors and provide much-needed advice, support, encouragement and financial assistance to a new generation of African-American leaders.

A number of Barristers' Association members have benefitted from the Overlap Program and believe that but for its policies they would not have been able to attain the financial resources necessary to attend college. Overlap is a legitimate and common sense means of addressing the historical impediments to open access to educational opportunities for all economically disadvantaged students.

E. The Hispanic Bar Association of Pennsylvania

The Hispanic Bar Association of Pennsylvania (“HBA of PA”) was formed in 1983 to provide a forum for attorneys interested in promoting the social, economic and educational advancement of Latinos. The Association serves as the exclusive professional organization of the Hispanic legal community in *8 Pennsylvania. Its membership has more than doubled since the Association began and includes members from many national and state bars, including Puerto Rico, Mexico, New York, New Jersey, Florida, California, the District of Columbia, Texas and Delaware. It also offers associate memberships to law students.

One of the HBA's primary goals is to increase the number of Hispanic lawyers in the Commonwealth of Pennsylvania. The Association recognizes the urgency of providing the Hispanic community with skilled, knowledgeable and dedicated individuals who can render a full range of legal services. In this context, the HBA of PA has sponsored programs to encourage Latinos to consider a career in the legal profession and related fields.

The HBA of PA has a particularly strong and continuing interest in promoting equal educational opportunity. It is critical, therefore, that private educational institutions of higher learning provide access to such opportunity to people of color and the economically disadvantaged. It is the considered view of the HBA of PA that need-blind admissions and need-based financial aid policies further opportunities for Hispanic and other minority students.

F. The Asian American Bar Association of the Delaware Valley

The Asian American Bar Association of the Delaware Valley (“AABADV”) was founded in 1984 as a social, professional and educational organization designed to meet the needs of Asian American attorneys and the Asian American community at large. Its members are practicing attorneys from Pennsylvania, New *9 Jersey and Delaware. The Asian American Bar Association of the Delaware Valley, through its members, has been on the cutting edge of advocating greater educational opportunities for disadvantaged Asian Pacific American students. The Association is concerned about keeping open avenues to overcoming under representation of Asian Pacific Americans in the legal profession. Because the Asian Pacific American community is diverse in language, culture and heritage, need-blind admissions policies are essential to a balance in Asian ethnic representation, particularly recent refugees.

The AABADV urges dismissal of the Antitrust Division's complaint against MIT seeking to enjoin agreements between MIT and the Ivy Schools to formulate uniform need-based academic financial aid assessments. The AABADV strongly supports the Overlap program sponsored by MIT and the Ivy Schools because it provides a mechanism by which they are able to promote the broadest possible educational choices for talented students and confine the distribution of finite financial aid resources to the more needy students. The Overlap program allows a greater number of deserving but economically disadvantaged students, who are often minorities or from households headed by single women, access to an education at some of the nation's best schools.

G. The National Bar Association Women Lawyers Division Philadelphia Chapter

The National Bar Association, organized in 1925, is the oldest and largest association of African American attorneys. With the entry of more women into the legal profession, the Women *10 Lawyers Division was formed as part of the NBA in 1972. The Women Lawyers Division operates on a national level with officers and board of directors representing African American women attorneys across the nation and on a local level through its affiliates.

The Philadelphia Chapter of the National Bar Association, Women Lawyers Division, was founded in 1981. Its purpose is to maintain a viable presence of African American women lawyers in the Commonwealth of Pennsylvania by assisting them in obtaining a legal education, bar admission, and employment. The Philadelphia Chapter's membership consists of over 450 African American women attorneys who are distinguished jurists, entrepreneurs, elected officials, and partners in or founders of law firms.

To ensure that all members of the community have an equal educational opportunity, the Philadelphia Chapter awards annually book scholarships to minority students in the honor of the late Sadie T. M. Alexander, the first African woman to graduate from the University of Pennsylvania Law School and to practice law in the Commonwealth of Pennsylvania. Moreover, a tuition scholarship has been created in the honor of the Honorable Juanita Kidd Stout, the first and only African American woman attorney to preside on the Pennsylvania Supreme Court and any supreme court nationwide. Moreover, a Law Student Outreach Buddy Mentor Program was established to provide assistance to students in their pursuit of a legal education. Accordingly, it *11 is the position of the Philadelphia Chapter that need-blind admission and need-based financial aid policies are indeed necessary to further the opportunities of minority and underprivileged students.

II. STATEMENT OF THE ISSUES

A. Whether the trial court erred in disregarding social and academic factors in its evaluation of the competitive effects of Overlap.

B. Whether the trial court erroneously concluded that Overlap impaired competition among academic institutions.

C. Whether the trial court erroneously concluded that the Overlap unlawfully suppressed competition on the basis of price between MIT and the Ivy Schools.

III. STATEMENT OF THE CASE

A. The Purpose of Overlap.

At one time, the opportunity to attend the nation's leading colleges and universities was a privilege reserved for children of only the wealthiest American families. This is, of course, no longer true. Now, students from a wide range of social and economic backgrounds can attend even the most prestigious of American colleges. Less than half of those who qualify academically, however, have the financial resources necessary to attend private institutions such as MIT and the eight Ivy League universities (“the Ivy Schools”). Hudson Direct, N.T. 1267.

To ensure that talented students are not denied the opportunity to select the right school for them on the basis of socio-economic status or ability to pay, MIT and the Ivy Schools long ago adopted need-blind admissions policies. Manual of the Council of Ivy Group Presidents, Trial Exhibit G-387 at pp. X30-X31; Widmer Cross, N.T. 1495-1496; Bowen Direct, N.T. 1040-1041; Gray Direct, N.T. 906. In essence, the need-blind admissions policy consists of two components. First, it is a commitment by MIT and the Ivy Schools to determine each applicant's admission qualifications strictly on merit, without regard for the student's financial capacity. Second, the schools adhering to need-blind admissions guarantee they will provide sufficient resources to finance every student's tuition, room, board and expenses to the extent the student and his/her family are unable to do so. Bowen Direct, N.T. 1041-1042; Gray Direct, N.T. 880.

In the real world, a policy of need-blind admissions requires much more than a philosophical commitment by a given school. A major institutional commitment to provide sufficient financial resources to meet the full financial need of an admitted class is also required. Hudson Direct, N.T. 1265. Realizing that it would otherwise be impossible to sustain their commitment to need-blind admissions in the face of intra- and inter-institution financial and competitive pressures, MIT and the Ivy Schools agreed to award student financial assistance only on the basis of student need. Widmer Direct, N.T. 1469; Bowen Direct, N.T. 1040-1041. MIT and the Ivy Schools thus agreed to eliminate all non-need based financial assistance. Bowen Direct, N.T. 1040.

As a practical matter, cooperation and sharing information on or about cross-admitted students is essential to make these policies work. Bowen Direct, N.T. 1045-1046. For instance, without such cooperation, completely independent financial aid assessments could result in variations of need calculation for the same student from one school to the next. Bowen Adverse, N.T. 491-492. To avoid this inequity, MIT and the Ivy Schools agreed to share information and reach a uniform calculation of financial need for students accepted to more than one of the schools. Manual of the Council of Ivy Group Presidents, Trial Exhibit G-387 at pp. X30-X31; Widmer Cross, N.T. 1495-1496; Hudson Direct, 1339-1340. This is the Overlap program.

The end result of Overlap has been more consistent financial awards, based strictly upon need, for students accepted to more than one participating school. In a world of limited financial resources, Overlap assures that need-blind admissions and need-based aid policies will work in fact as well as in theory. Overlap provides the mechanism by which MIT and the Ivy Schools maintain the broadest possible educational choices for talented students and limits the distribution of finite financial resources only to needy students. Bowen Direct, N.T. 1042; Gray Direct, 906-908. By eliminating cost as a consideration for cross-admitted students, Overlap effectively removes their ability to pay as an obstacle to choice. Overlap thus enhances competition among MIT and the Ivy Schools for the best needy students because it enables these students to choose from among more colleges to which they have been admitted. Manual of the Council of Ivy Group Presidents, Government Exhibit 387 at pp. X30-X31; Widmer Cross, N.T. 1495-1496. Overlap further allows a greater number of deserving but economically disadvantaged students -- who are more often American minority students or students from households headed by single women -- access to an education at some of the nation's best schools. Bowen Adverse, N.T. 498.

B. Non-Economic Considerations Are of Paramount Importance in Competition Among Institutions of Higher Education.

A vast body of popular literature and how-to guides outline the range of factors that aid students' (and parents') evaluation of the pros and cons of attendance at the nation's thousands of colleges and universities.[FN3] There are literally hundreds of such guides in print. See generally, Larry Gordon, The California College Guide; A Guide to the College Guides, Los Angeles Times May 19, 1991 (Special Section) at p. 6, Exhibit “A”. The principal aim of these materials, succinctly stated,

FN3. The School District amici urge the Court to take judicial notice of the many commonly recognized factors, highlighted in attached Exhibits “A” through “G”, that affect students' college selection decisions. Both federal case law a the Federal Rules of Evidence permit the Court to consider these adjudicative facts. Gandee v. Glaser, 785 F. Supp. 684, 686 (S. D. Ohio 1992); U.S. v. Pretlow, 779 F. Supp. 758, 761 (D. N.J. 1991); Fed. R. Evid. 201(c).
is [to] find the best possible match for students. That doesn't necessarily mean putting them in Harvard or Stanford, but in a school where they will thrive.

Beth Sherman, Prepping for College; A Guide for First-Time Parents Negotiating the Academic Maze that Leads Their Children to College, Newsday (New York), March 31, 1990, (Part II) at p. 1 (emphasis added), Exhibit “B”. As a first step to this end, most authors “stress the importance of gathering as much information as possible” from guidebooks, printed literature, campus visits, and other resources. Id.

According to these materials, many non-cost considerations shape high school students' college or university selection decision:

- the availability of specialized programs and individualized instruction;

- the strength of the academic program in the student's desired course of study;

- athletic specialties;

- proximity to home;

- the size of the school;

- public or private affiliation;

- the racial composition of the student body;

- urban or rural location;

- on-campus housing accommodations;

- reputation and prestige; and,

- class size.

See, e.g., Brooke A. Masters, High School Seniors Face the Big Choice; Money Isn't the Only Factor Students Weigh When Selecting Which College to Attend, The Washington Post, April 29, 1990 (Metro Section) at p. C3, Exhibit “C”; Kristina Lindgren, The California College Guide; A Primer on Making Choices -- And Making Arrangements -- For a College Education, Los Angeles Times May 19, 1991 (Special Section) at p. 8, Exhibit “D”; Don Trivette, Finding the Right College, Paying for It, and Choosing the Right Courses, 11 PC No. 2, January 28, 1992, at p. 407, Exhibit “E”. Indeed, the factors that affect student educational choices are undeniably as diverse as the entering students themselves.[FN4] Among these, the socioeconomic diversity of the student body is especially significant. Widmer Direct, N.T. 1470.

FN4. One conservative college selection guide, for example, counsels parents whose concern is locating a “safe” school where their child is not going to “come back after one semester a Marxist.” Book Review, The Common Sense Guide to American Colleges, The Nation, v. 254, No. 7, at p. 236 (February 24, 1992) (quoting The National Review College Guide), Exhibit “F”.
Without addressing the wisdom of one or the other of the college selection guides, they collectively demonstrate that “competition” among institutions of higher learning encompasses a much broader range of consumer concerns than simple cost, as argued by the Antitrust Division. Bowen Adverse, N.T. 503. In fact, the national “bible” on competitive rankings among institutions of higher education, U.S. News & World Report, America's Best Colleges, does not even include cost among its fifteen crucial indicators. See Exhibit “G”. The principal ranking of the nation's top universities is, not surprisingly, based upon the type and range of programs offered at these schools as well as their commitment to academic priorities such as instruction, research, high-quality faculty and high-quality student bodies. Id. Consistent with students' desire to evaluate colleges and universities on the basis of academic and social factors, the Overlap program assures that ability to pay will not dictate college selection decisions for talented but needy students who comprise the majority of students applying to MIT and the Ivy Schools. Hudson Direct, N.T. 1267.

C. The Negative Social and Competitive Impact of the District Court's Injunction of Overlap.

The district court's injunction of Overlap, if allowed to stand, will seriously detract from MIT's and the Ivy Schools' continuing ability to assure talented but needy students that ability to pay will not be the overriding factor in their choice of institution. Gray Direct N.T. 906-908. First, the elimination of the schools' agreement not to compete for students by means of non-need based financial awards will almost certainly cause a diversion of financial resources from needy students to non-needy students.[FN5] Gray Direct, N.T. 907-908. In all probability, the resulting pressure on the schools' limited financial resources will cause a retreat from true need-blind admissions. Id. Because the amount of money available each year for financial assistance is limited, larger financial aid offers to the most outstanding students will mean, at a minimum, less aid to other talented needy students or aid to fewer students overall. Widmer Direct, N.T. 1460, 1464-65. Consequently, fewer talented needy students will have the opportunity to attend MIT and the Ivy Schools. Id. at 1465. The loss of that opportunity will have a negative and disproportionate impact on American minority students and students from families headed by single women. The diversity of the student bodies at MIT and the Ivy Schools, an important component of the students' overall educational experience, will surely suffer as a result. Gray Direct, N.T. 908. Moreover, MIT and the Ivy Schools will revert to economically segregated havens, demarcated by income and race -- hardly a competitive advance from the point of view of student “consumers”. Bowen Direct, N.T. 1046B.

FN5. The nation's top colleges and universities have a long history of “bidding” for the most talented students in the absence of mutual agreement. Fleming Direct, N.T. 835.
Indeed, it is beyond dispute that need-based financial aid programs have been instrumental in promoting access to higher education for talented but economically disadvantaged students. Fleming Direct, N.T. 806-807. Over the last three decades, MIT has made great strides in improving the minority composition of its student body. The undergraduate population at MIT for the 1991-92 academic year, for example, was comprised of over 30% women and 44% from American minority groups. Behnke Direct, N.T. 1431-1432; Trial Exhibit D-3 at p. 37. By contrast, thirty years ago, American minorities made up only 3% of the undergraduate class. Id..

Not surprisingly, recent income data released by the Census Bureau clearly show that these groups, and particularly children of families headed by a single female, will suffer the most if the Antitrust Division prevails in this case. See United States Department of Commerce, Bureau of the Census, Current Population Reports - Consumer Income, (“Consumer Income Report”) at p. 3 (March 1992), Exhibit “H”. In 1990, 18% of year-round, full-time workers in the United States had gross money earnings below the poverty level for a family of four (the “low earning rate”). Consumer Income Report at p. 2. As might be expected, given long-standing socio-economic patterns in this country, the low earning rate among all females, at 24.3%, was almost twice that for all males, at 13.9%. Consumer Income Report at p. 3. Breakdown of earnings of full-time workers below the poverty level for a four person family by race and gender further exposes the glaring disparities between the nation's traditional “haves” and “have-nots”:

Full-Time Workers		
Grouped by Race and Sex	Percentage with Low Earnings	
White Males	13.0%	
Black Males	22.4%	
White Females	23.6%	
Hispanic Males	28.2%	
Black Females	28.5%	
Hispanic Females	37.0%	

Consumer Income Report at p. 2.

According to Census Bureau figures, any decrease in educational access for talented yet economically disadvantaged women and minority students, which will likely occur if Overlap is terminated, will only extend the nation's shameful pattern of income disparity into the future. The Census Bureau found a significant inverse correlation between college education and the likelihood of low earnings. In 1990, persons without a high school diploma had a low earnings rate of 36.1%. Consumer Income Report at p. 5. For those workers who had completed high school, the rate was 21.6%. Id. Workers with one year or more of college education had by far the lowest rate at 10.5%. Id.

Household relationship also had a significant correlation with the likelihood of low earnings. In 1990, female headed households had a low earning rate of over 35% -- over 39% for female-headed households with children under six. Consumer Income Report at p. 21. In sharp contrast, the comparable rates for white married couple families were 19.8% and 19.3%, respectively. Consumer Income Report at p. 22. Consequently, the talented children of single-parent, female-headed households, who already suffer disproportionate economic deprivation, will lose one of few existing avenues of escape from a future of poverty if need-based financial aid is lessened or eliminated.

In reporting these figures, the Census Bureau noted a disturbing trend. The Bureau found a “sharp rise” of workers with low earnings between 1979 and 1990, notwithstanding the unprecedented economic expansion in this country during this time. Consumer Income Report at p. 2. The Census Bureau admonished readers of the importance of this data as a measure of social well-being:

Wage rates have a direct effect on living standards and can affect labor force and social behavior. Declining wage rates can be a source of economic and social stress.

Id. at 8. In a time of tangible anger and despair among many of the nation's women and minority groups over continuing economic inequality in this country, the Antitrust Division's efforts to outlaw MIT's and the Ivy Schools' attempt to redress social and economic inequalities in access to quality education, if successful, will undeniably compound this social and economic distress.

IV. SUMMARY OF ARGUMENT

In reaching its conclusion that Overlap constitutes an impermissible restraint of trade or commerce under the Sherman Act, the trial court improperly limited its analysis to Overlap'.s economic effect upon the price of education for a small number of non-needy students. In so doing, the court erroneously concluded that the proper measure of competition among institutions of higher education is an economic or commercial one, as opposed to a social or an academic one. By limiting its analysis to commercial standards, the trial court erroneously disregarded Overlap's significant and substantial pro-competitive justifications.

*22 V. ARGUMENT

A. The District Court Erroneously Limited Its Rule of Reason Analysis to Commercial Standards of Competition.

Since the early years of this century, federal courts have established the “rule of reason” as the prevailing standard of analysis under Section 1 of the Sherman Act. Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49 (1977) (citing Standard Oil Co. v. United States, 211 U.S. 1 (1911)). Under this rule, the factfinder examines all the circumstances of the case to determine whether the challenged practice should be prohibited as an unreasonable restraint on competition. Continental T.V., 433 U.S. at 49.
The true test of illegality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.

Continental T.V., 433 U.S. at 49 n.15 (quoting Chicago Board of Trade v. United States, 246 U.S. 231, 238 (1918)). To make this determination, the factfinder must ordinarily consider numerous facts peculiar to the business in which the restraint applies, including:
- the condition of the business before and after the restraint;
- the nature of the restraint and its actual and probable effect on competition;
- the history of the restraint;
- the evil which the restraint is intended to cure;
- the reason for adopting the particular remedy; and,
*23 - the purpose or end sought to be attained.

Id. Evidence of intent is an important aid to the interpretation and evaluation of these factors. Id.

The controlling test of legality under the rule of reason is whether a challenged practice is “unreasonably restrictive of competitive conditions.”  Standard Oil Co. v. United States, 221 U.S. 1, 65 (1910) (emphasis added). The economic (price-based) focus of antitrust analysis of competitive conditions relevant to commercial business agreements, however, does not control the situation where a challenged restraint involves non-commercial, educational, or professional enterprises. Goldfarb v. Virginia State Bar Ass'n, 421 U.S. 773, 788-89 (1975); McCormack v. Nat'l Collegiate Athletic Ass'n, 845 F.2d 1338, 1344 (5th Cir. 1988). The proper rule of reason analysis in the latter contexts must take account of significant differences in the nature of commercial and non-commercial competition. Goldfarb, 421 U.S. at 788-89.

In this case, the trial court's conclusion that the rule of reason prohibits the Overlap agreement is erroneous for at least two compelling reasons. In the first place, there is simply no principled basis for the lower court's determination that higher education is, in any sense, a “commercial commodity” that the market allocates on the basis of price. Such a notion is anathema to society's traditional treatment of post-secondary education as a public good to which all citizens should have access and from which society receives substantial benefit. *24 Regents of the University of California v. Bakke, 438 U.S. 265, 312 (1978). See also, Bowen Direct, N.T. 1041.

In furtherance of the public good derived from broad based public access to higher education, it is beyond dispute that MIT and the Ivy Schools, as well as most other private institutions of higher education, underwrite the cost of education with substantial infusions of private donations. Fleming Direct, N.T. 815; Bowen Direct, N.T. 1021. Public institutions, as well, receive substantial subsidies from state tax receipts, resulting in below-cost pricing of public post-secondary education. On this evidence alone, it is implausible to suggest that higher education in this country is a commodity that society allocates according to commercial ideals.

Second, the trial court's price-limited analysis of the field of competition in this case ignores the realities of the college selection process - the process that defines “competition” among institutions of higher education. Bowen Adverse, N.T. 503, 506. To begin with, the lower court completely ignored a critical distinction between commercial competition and academic competition. In the arena of academic competition, the student consumers compete with each other to qualify for admission to the nation's premier institutions of higher education. As a matter of incontrovertible public policy, the focus of competition among the nation's talented students for admission to the nation's top institutions should be centered not on a student's ability to pay, but rather on the student's *25 qualifications and expected contributions to his or her class. The Antitrust Division's apparent zeal to limit competition among students for the limited spaces at institutions such as MIT and the Ivy Schools to those students who can independently afford to pay is nothing less than outrageous. Contrary to the district court's Decision and Order, the student selection and admission process is not a matter of dollars and cents.

The same is true for competition among institutions of higher education to attract the most talented students. Indeed, the trial court itself acknowledged that the evidence in this case established that student (and parent) “consumers” consider a wide range of factors and benefits in selecting among the nation's many colleges and universities. Decision and Order at 41. The proper definition of “competition” must, therefore, include the many non-cost factors that influence consumer selection. See, e.g., NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85, 101 (1984).

As reflected in the myriad factors guiding a student's college selection process, for most students many factors, such as school reputation, academic programs, quality of faculty, student body composition, the student's desired field of study and campus characteristics, are more significant than cost in choosing a college or university. Bowen Adverse, N.T. 506. Contrary to the trial court's conclusions, the determination whether Overlap is manifestly anticompetitive', must include analysis of more than just cost.

*26 In this regard, the undisputed effect of Overlap is to remove, within existing financial constraints, financial obstacles for the greatest possible number of talented needy students applying to MIT and the Ivy Schools. In so doing, Overlap promotes and fosters competition among MIT and the Ivy schools on non-cost factors, i.e., on the strength of each school's academic programs and social attributes. With Overlap, then, MIT and the Ivy Schools compete on an academic basis for the nation's talented students -- an undeniably appropriate and socially desirable level of competition for academic institutions.

Relying on FTC v. Superior Court Trial Lawyers, 493, U.S. 411 (1990) and Nat'l Society of Professional Engineers v. United States, 435 U.S. 679 (1978), however, the trial court held that the aspects of non-commercial competition fostered by Overlap are irrelevant to the controlling antitrust analysis. Contrary to the standards enunciated in Goldfarb, the lower court's opinion totally disregards the differences between commercial competition and academic competition and the beneficial relationship of Overlap to the latter. In so doing, the court below misapprehends the nature and significance of Overlap's social, academic and economic benefits in the competitive arena of higher education.

Unlike the circumstances in Superior Court Trial Lawyers Ass'n, and Nat'l Society of Professional Engineers, the social benefits achieved through Overlap cannot be divorced from *27 the reality of competition among institutions of higher education. As in NCAA v. Board of Regents of the University of Oklahoma, academic and social characteristics are the very focus in this field of competition. Overlap effectively enhances competition among talented students in the admissions process, who are rewarded by admission based strictly on merit and a guarantee that they will not be financially barred. Without Overlap, academic competition will diminish in importance in the selection process and be supplanted by financial competition.

Notwithstanding the district court's Decision, this would not be so for student-athletes. Under the terms of the Final Judgment negotiated between the Antitrust Division and the Ivy Schools, the Ivy Schools are permitted to agree to provide need-based aid for talented student-athletes, but no others. The Antitrust Division apparently believes that student-athletes are entitled to greater educational access than economically disadvantaged students, an elitist position Overlap seeks to avoid. Although it treats student athletes differently, the Antitrust Division has proffered no justification under the antitrust laws for doing so. Succinctly stated, under present law, none exists. The application of the anti-trust laws should be the same whether a student is athletically talented or “merely” academically gifted.

It is appalling that the Antitrust Division sanctions Overlap-type cooperation through a need-based financial aid agreement for student athletes, but not the economically *28 disadvantaged. There is simply no rational basis for such a distinction in the arena of higher education. Many more talented but economically disadvantaged students seek admission to MIT and the Ivy Schools than student-athletes. By definition, these students require need-blind admissions and need-based financial aid policies in order to have any choice among academic institutions on the basis of academic criteria. Unless overturned by this Court, the district court's Decision would effectively prohibit these institutions from affording the full range of educational choices to many of their applicants.

Because Overlap is, in practice, the only mechanism that enables MIT and the Ivy Schools to continue their commitment to need-blind admissions and need-based aid for all students, Overlap's demise will effectively limit competition among MIT and the Ivy Schools for the majority of talented students to arguably the least relevant factor for college selection among such students, cost. According to the Census Bureau's figures, any reduction in MIT's and the Ivy Schools' ability to meet every admitted student's financial needs will disproportionately affect talented minority candidates and candidates from families headed by single women. The district court, therefore, erroneously failed to consider Overlap's purpose and social benefits when assessing the reasonableness of Overlap's effect on overall competition among MIT and the Ivy Schools.

*29 B. Overlap Promotes and Fosters Academic Competition Among MIT and the Ivy Schools.

In this case, measured against the factors first enunciated in Chicago Board of Trade, Overlap demonstrably promotes academic competition among MIT and the Ivy Schools and, not coincidentally, advances important social policies as well. To begin with, in the years before the inception of Overlap, colleges and universities competed for students by offering non-need based financial awards, dissipating limited resources on students who did not need them. In line with developing national educational policies, in and after the 1950s MIT and the Ivy Schools created and cultivated the Overlap program to ensure that their resources were used to provide broadest possible educational access for the nation's talented students regardless of their economic status. The ability of institutions such as MIT and the Ivy Schools to effectuate this goal is vital to this country's future success in the current climate of world economic competition.

The results of Overlap in achieving greater student diversity and broader access to higher education simply cannot be disputed by credible evidence. More women attend MIT and the Ivy Schools now than twenty years ago; more minority students attend MIT and the Ivy Schools now than twenty years ago; and, more economically disadvantaged students attend MIT and the Ivy Schools now than twenty years ago. As the trial court acknowledges, the composition of a school's student body, diverse or otherwise, is undeniably a factor upon which colleges and *30 universities compete for students. The history and purpose of Overlap are directly related to enhancing non-cost competition between MIT and the Ivy Schools.

In this regard, the undisputed evidence shows that Overlap promotes academic competition among MIT and the Ivy Schools. Under the particular circumstances of academia, cost is not and should not be the primary measure of competition among well-respected institutions of higher education. Overlap, in fact, is a reasonable means to assure for most students continued choices on academic criteria among MIT and the Ivy Schools. Without Overlap, important academic criteria will simply be pushed aside in favor of purely economic factors. If cost becomes the primary factor in students' selection process, academic competition will suffer, as will the majority of talented students enrolling at MIT who benefit from the need-blind admissions policy that Overlap promotes.

Faced with the strong proof of enhanced educational access and increased student diversity achieved through need-blind admissions and need-based aid policies -- principles which the Overlap program seeks to advance -- the trial court simply abdicated the required consideration of these facts. Had the lower court properly analyzed the proffered competitive justifications for Overlap, it would have found that the undisputed effect of Overlap is to remove, within existing financial constraints, financial obstacles for the greatest possible number of talented needy students applying to MIT and *31 the Ivy Schools. In so doing, Overlap promotes and fosters competition among MIT and the Ivy schools on non-cost factors, i.e., on the strength of each school's academic programs and social attributes. With Overlap, then, MIT and the Ivy Schools compete on an academic basis for the nation's talented students - - an undeniably appropriate and socially desirable level of competition for academic institutions. Overlap cannot be said to be utterly “without redeeming value” or “manifestly anticompetitive.”

C. The Trial Court's Finding that Overlap Has Unlawfully Suppressed Competition Between MIT and the Ivy Schools on the Basis of Price Is Unsupported by the Evidence.

Relying solely upon the evidence that the Overlap program sought to standardize the assessment of the family contribution component of the financial aid award process, the trial court held that Overlap unlawfully deprived students of the ability to consider price differences when choosing a school. Decision and Order at 35. The lower court's finding, however, is unsupported by the evidence at trial. Indeed, the evidence at trial demonstrates that price-based competition among MIT and the Ivy Schools, although not completely unfettered by Overlap, nevertheless provided real and significant choices for talented needy and minority students.

In the first place, the uncontroverted evidence before the trial court establishes that Overlap affected only those cross-admitted students whose family contribution assessments differed by more than $500. Finding of Fact No. 75, Decision and *32 Order at p. 16. In addition, the evidence shows that each institution determines its own self-help level. Finding of Fact No. 46, Decision and Order at p. 10. Further, undisputed evidence demonstrates that, unlike the other Overlap participants, MIT does not require a minimum parental contribution from some families. Finding of Fact No. 63, Decision and Order at p. 14. Each of these factors produces differing financial aid determinations among MIT and the Ivy Schools, even assuming complete uniformity of a student's family contribution assessment. The trial court's conclusion that Overlap's acknowledged effect on some students' financial aid awards deprived all students of the benefit of price competition among MIT and the Ivy Schools is thus contrary to and unsupported by the evidence of record.

Accepting, for the sake of argument, the trial court's conclusion that Overlap did, in fact, result in a uniform family contribution determination for all financial aid recipients, family contribution does not reflect the full payment that students on financial aid and their families contribute to the cost of education. Gray Cross, N.T. 578, Carlton Direct, N.T. 1623. In addition to family contribution, the price a student actually pays for his or her education is determined by MIT's assessment of the amount of student self-help, which includes loans and the student's contribution from school year work opportunity, and grants from other sources. Somerville Direct, N.T. 1560; Bowen Adverse, N.T. 535.

*33 In this regard, the record shows that MIT and the Ivy Schools differ substantially in the way they allocate and assign student self-help contributions. Gray Adverse, N.T. 569. The differences in these allocations can dramatically alter the “price” students pay for education at MIT and the Ivy Schools. Id. Without knowing each school's allocation of self-help among school year work, loans and grants, it is impossible to say with certainty that the total cost to the student and his or her family actually increased.

As an example, assume that during Overlap discussions, MIT and the Ivy Schools agree to increase a particular student's family contribution by $2,000 based upon the determination of the family's financial ability. When the total financial aid package is determined later at Harvard and at MIT, however, both schools raise the student's grant amount and lower the student's self-help amount, MIT by $3,000 and Harvard by $2,000. Notwithstanding the Overlap agreement to raise the family contribution for this student at MIT and Harvard, the “price” at Harvard has not changed at all. The “price” for this student at MIT has actually decreased.

By failing to take account of the full range of factors that affect the price students pay for their education, the trial court improperly concludes that Overlap necessarily eliminates price competition among the Overlap participants. Assuming, arguendo, that competition among MIT and the Ivy Schools could or should be measured purely on the basis of price, the lower court *34 has erroneously determined that Overlap has had any anticompetitive effect on price.

VI. CONCLUSION

For all the above-stated reasons, the Friends of the Court respectfully urge the Court to reverse the Decision and Order of the trial court enjoining Overlap cooperation among MIT and the Ivy Schools.

Appendix not available.

UNITED STATES OF AMERICA, Plaintiff, v. BROWN UNIVERSITY, et al., Defendants. Massachusetts Institute of Technology, Appellant.
1992 WL 12132456 (C.A.3) 

Briefs and Other Related Documents(Back to top)

• 1993 WL 13120271 (Appellate Brief) Brief for Appellee United States of America (Jan. 20, 1993) Original Image of this Document (PDF)
• 1992 WL 12132453 (Appellate Brief) Brief Amicus Curiae for Twelve Non-Profit Higher Education Associations in Support of the Massachusetts Institute of Technology (Dec. 14, 1992)
• 1992 WL 12132454 (Appellate Brief) Brief for the Defendant-Appellant Massachusetts Institute of Technology (Dec. 14, 1992)
• 1992 WL 12132455 (Appellate Brief) Brief Amicus Curiae for the Association of Alumni and Alumnae of the Massachusetts Institute of Technology in Support of Appellant (Dec. 14, 1992) Original Image of this Document (PDF)

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