Plaintiff, an unaccredited law school, sued the American Bar Association (ABA), the American Association of Law Schools (AALS), and a plethora of other defendants on numerous state and federal law grounds in the Eastern District of Pennsylvania and in the District of Massachusetts.

For the state law claim in Massachusetts, the plaintiff relied on a Massachusetts statute. "Any person who engages in the conduct of any trade or commerce and who suffers any loss of money or property, real or personal, as a result of the use or employment by another person who engages in any trade or commerce of an unfair method or competition or an unfair or deceptive act or practice . . . may . . . bring an action . . . for damages." Id. Plaintiff alleged that the two associations had conspired to drive plaintiff out of business.

The ABA and AALS are independent associations within the legal profession. Both have accreditation programs for legal education institutions. Frequently, the two associations cooperate and have similar goals and protected interests. Plaintiff applied for accreditation with the ABA, which was denied on several grounds (discussed in more detail below.) After an appeal within the ABA, which was denied, plaintiff brought suit.

The Massachusetts District Court was not impressed with plaintiff’s argument either theoretically or in practice. Plaintiff’s complaint was unwieldy and confusing, and, in some places, self-contradictory. Because plaintiff was litigating two separate suits (the Third Circuit suit on price fixing and antitrust conspiracy and the District of Massachusetts suit for fraud and tortious interference), the Court noted that plaintiff cannot use the facts as alleged in the Third Circuit suit as a basis for its suit against the AALS. General conspiracy claims belong to the suit in the Third Circuit, whereas plaintiff had to prove specific accreditation conspiracy to the plaintiff on the state law claim. But plaintiff had never even sought accreditation with the AALS; thus, the claim failed, despite plaintiff’s insistence on the cooperation between the ABA and the AALS. The Court noted that there was nothing inherently wrong when two associations cooperated, especially in a professional-education field such as the law. For there to be a conspiracy, plaintiff had to show not just cooperation, but evil intent. They failed to do so.

Plaintiff’s theory on this issue rested on the fact that some AALS accreditation personnel were also ABA accreditation personnel. The Court did not find this to be germane. Overlapping membership was not enough to establish conspiracy; in fact, members of both organizations quite often wear two distinct hats. Joint inspections are allowable, whenever the school had applied for membership and accreditation from both organizations, just as it was plain that the inspectors could easily represent either the ABA or the AALS.

On appeal, 142 F.3d 26 (1st Cir. (1998)), the Court of Appeals decided jurisdictional and res judicata issues. The Court of Appeals resolved all issues in favor of the defendants and, in doing so, affirmed the judge’s decision enumerated above.

107 F.3D 1026 (3rd Cir. (1997))

The facts of this case, although heard in the Third Circuit Court of Appeals, are essentially the same as those above but the legal theory is different. Instead of state statutory grounds, the plaintiff, Massachusetts School of Law (MSL), challenged the ABA, AALS, and other defendants on Federal antitrust grounds; namely, §§1-2 of the Sherman Antitrust Act. The grounds for MSL’s complaints were that the ABA and AALS conspired for: 1) price fixing faculty salaries; 2) reduction of teaching hours; 3) "requiring paid sabbaticals;" 4) mandating hiring of more faculty; 5) dictating the use of adjunct faculty; 6) prohibition of academic credits for certain courses; 7) mandating a limit on student working hours; 8) prohibition on transfer credits; 9) mandating a more extensive law library; and 10) requiring the use of the Law School Admissions Test.

The first argument addressed by the Court of Appeals dealt with plaintiff’s price-fixing argument. MSL contended that the ABA’s standards for faculty salaries was vague and ambiguous, and that the district Court for the Eastern District of Pennsylvania should have allowed the per se test, rather than the rule of reason test. The Court agreed that the standard was vague, but did not equate to price-fixing. Significantly, the Court noted that such an arrangement was tolerated within professional societies and that the rule of reason analysis was appropriate.

Next, plaintiff argued conspiracy allegations. MSL contended that the district Court had erred when it denied MSL discovery of certain ABA materials. Concurrent with the MSL litigation against the ABA, the United States Department of Justice (DOJ) had also instituted a suit against the ABA, which later resulted in a settlement and consent decree. The DOJ had acquired some 544,000 pages of discovery evidence. The Court had set certain discovery limits on MSL, who commenced their investigation of the ABA prior to the DOJ’s investigation. The DOJ did not have the same discovery limits as the one placed on MSL, and MSL wished to acquire the same evidence as possessed by the DOJ. The Court of Appeals examined that decision under an abuse-of-discretion standard and determined that the district Court had acted within its allowable purview, because MSL could have discovered all of the documents even through its more restricted discovery framework.

MSL next alleged three types of injuries from the ABA’s conduct: 1) A competitive disadvantage from being unaccredited insofar as MSL’s students ineligibility in most states to sit for the bar examination; 2) stigma as a result of the accreditation denial; 3) the increase in salaries and other expenses injured MSL financially and, in effect, creates a boycott of the unaccredited law schools. A resolution of the issues depended upon a finding of whether MSL’s injuries were a result of state action, which can have no antitrust liability, or private action, which does have such liability.

The Court of Appeals determined that even though the ABA had set the standards for bar-examination eligibility, state governments had specifically enforced it. A state is not under any compulsion by the ABA to adopt ABA standards; the final decision rests within state authorities. Therefore, this was a government action, rather than a private action, and no antitrust liability could lie with the ABA, insofar as the bar-examination requirements.

MSL contended that the stigma coming from the ABA’s denial of accreditation was based on the allegation that "ABA accreditation is the sine qua non of quality and that the ABA is the most . . . competent organization to judge law schools." Id. Therefore, MSL’s denial was a loss of prestige, which does not equate to an antitrust violation. The Court reasoned that the ABA was not declaring that MSL was an inferior institution, but only that MSL did not meet the ABA’s requirements for accreditation. This was predicated on the "petitioning" issue, where an organization such as the ABA could be immune from antitrust violations since it acted in concert with the government. The Court held that the ABA’s activities did constitute the requisite petitioning, and therefore the ABA was immune.

MSL’s third claim rested on direct injury from the ABA standards: the standard of faculty salary and the issue of transfer students from unaccredited law schools. The Court of Appeals held that these standards were independent of any governmental consent, and therefore the ABA could be liable.

The faculty-salary issue was in heavy factual dispute and MSL’s own contentions about its faculty salary scheme was self-contradictory. MSL stated on one hand that it consciously defied the ABA’s salary requirements, and that MSL attempted to raise salaries to assist them in procuring ABA accreditation. The Court held that "[t]here has not been sufficient explanation of [this] contradiction to create a genuine issue of material fact and justify reversing the summary judgment [of the district Court]." Id. MSL also attacked the salary standard issue on market-cost grounds. The Court was dissatisfied with MSL’s evidence in this regard, noting that MSL’s faculty, mostly adjunct, was not even in the same market as the full-time faculty market of other law schools.

The non-acceptance of transfer students from unaccredited law schools was also a point tried by MSL, but the Court of Appeals dismissed it. "MSL has done nothing more than state the [ABA’s] standards [for transfer students] and allege that they injured MSL . . .. There is no factual support for these allegations . . .. Further, the evidence shows that MSL actively opposed its students transferring." Id.

MSL leveled another boycott claim against the AALS. "The allegations regarding the AALS are simply incorrect." The Court reiterated the fact that the AALS was independent of the ABA, and MSL had never applied for AALS membership. The AALS never banned MSL from attending AALS conferences, and MSL actually did attend AALS conferences.

MSL also alleged that the Law School Admissions Council (LSAC) had engaged in a boycott of MSL, because LSAC had failed to invite MSL to a LSAC conference. MSL stated only that LSAC had denied MSL’s participation and LSAC had no monopoly over access to law students, nor had LSAC actively attempted to dissuade students from attending MSL. MSL’s allegations could not meet the standards.

The Court further discussed jurisdiction over the other defendants, and affirmed the district Court’s dismissal of the charges. The Court of Appeals affirmed the district Court judge’s refusal to recuse and the disqualification of counsel.

Plaintiff was the owner and operator of a horse and harness race track located in Saratoga, New York. Defendants were assorted groups of associations and horse owners who raced horses at Saratoga. After the parties’ contract expired and renewal negotiations failed, plaintiff filed suit alleging that defendants had organized a boycott in contravention of §1 of the Sherman Antitrust Act and that the same defendants had procured some type of "tying" operation, whereby the defendants "threatened to withhold their consent to simulcasting of . . . other tracks’ races if those other tracks simulcasted races to Saratoga." Id.

After a preliminary hearing where the Court denied plaintiff’s motion for a preliminary injunction and defendant’s motions for dismissal for lack of jurisdiction, plaintiff moved to amend their complaint to add more defendants. The motion was granted. All defendants answered the amended complaint and asserted various defenses. Plaintiffs then filed a motion to strike all of the affirmative defenses plead by defendants.

Plaintiff relied on Rule 12(c) of the Federal Rules of Civil Procedure, stating that it was not seeking summary judgment. The Court, however, stated that the plaintiffs had fashioned their work in such a way so as to convert their own motion into one for summary judgment. However, the Court held that "despite plaintiff’s reliance on Rule 12(c), the [C]ourt will treat plaintiff’s motion as one to strike defendants’ affirmative defenses pursuant to Rule 12(f)." A Court may also strike a defense on its own initiative.

For plaintiffs to succeed in striking the defenses, the evidence must meet a three-prong test: "1) that there is no question of fact which would allow the defense to succeed; 2) that there is no question of law which would allow the defense to succeed; and 3) that the plaintiff would suffer prejudice from inclusion of the defense." Id.

The Court struck the equitable defenses of waiver, estoppel, laches, and voluntary consent. Defendants’ general denials of assertions in the plaintiff’s complaint were not stricken. The defense of dismissal for failure to state a claim was not stricken either. The Court noted that such a defense is "perfectly appropriate" for a defendant to state in the answer to the complaint. The defenses of lack of jurisdiction were stricken for the defendants’ failure to state them in a timely fashion.

Plaintiff next requested that the Court strike the defenses of implied antitrust immunity and implied repeal of antitrust laws. Plaintiffs had predicated their motion to strike the antitrust defenses on the prior ruling of the Court, which had denied defendants’ motions to dismiss for lack of jurisdiction. The Court admonished the parties and noted that they had not ruled on any antitrust issue, but only used the analytical framework of implied repeal and antitrust in terms of whether the Court could retain jurisdiction.

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