LLM Bar Exam, LLC v. Barbri, Inc. et al
OPINION AND ORDER: re: 91 JOINT MOTION to Dismiss the First Amended Complaint. For the reasons set forth above, Defendants' motion to dismiss LBE's First Amended Complaint is GRANTED. LBEs First, Second, Third, and Ninth Caus es of Action are DISMISSED WITH PREJUDICE. LBE's Fourth, Fifth, Sixth, Seventh, Eighth, Tenth, Eleventh, Twelfth, and Thirteenth Causes of Action are DISMISSED WITHOUT PREJUDICE. The Clerk of Court is directed to terminate all pending motions, adjourn all remaining dates, and close this case. (Signed by Judge Katherine Polk Failla on 9/25/2017) (js)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
LLM BAR EXAM, LLC,
BARBRI, INC., COLUMBIA LAW
SCHOOL, NEW YORK UNIVERSITY
SCHOOL OF LAW, HARVARD LAW
SCHOOL, BENJAMIN N. CARDOZO
SCHOOL OF LAW, ST. JOHN’S
UNIVERSITY SCHOOL OF LAW, DUKE
UNIVERSITY SCHOOL OF LAW,
UNIVERSITY OF SOUTHERN
CALIFORNIA GOULD SCHOOL OF LAW,
FORDHAM UNIVERSITY SCHOOL OF
LAW, GEORGETOWN UNIVERSITY LAW
CENTER, EMORY UNIVERSITY SCHOOL
OF LAW, THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA, SYLVIA
T. POLO, and NITZA ESCALERA,
DOC #: _________________
DATE FILED: September 25, 2017
16 Civ. 3770 (KPF)
OPINION AND ORDER
KATHERINE POLK FAILLA, District Judge:
This is a dispute between two companies that prepare law school
graduates for a time-honored (and seemingly Sisyphean) rite of legal passage:
the bar examination. Each year, thousands of foreign attorneys obtain Master
of Laws (“LL.M.”) degrees from American law schools. Since 2009, Plaintiff LLM
Bar Exam, LLC (“LBE”) has sought to train many of these foreign LL.M.
graduates to take and pass the New York and California bars. But LBE claims
that it has been thwarted in its efforts by Defendant Barbri, Inc. (“Barbri”) — a
far older, and far larger, rival. Barbri, LBE alleges, stole LBE’s proprietary idea
for a bar review course catered to foreign LL.M. graduates. Its representatives
disparaged LBE to would-be clients. And, critically, LBE claims that Barbri
has colluded with law schools nationwide in order to monopolize the bar
In 2016, LBE sued Barbri, several law schools located in New York
(collectively, the “New York Law Schools”), 1 and several other law schools
located outside of New York (collectively, the “Non-New York Law Schools”). 2
The First Amended Complaint — the operative complaint in this case — seeks
relief under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1-2; the
Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c)
(“RICO”); the Copyright Act, 17 U.S.C. §§ 101 et seq.; and a battery of state
Barbri, the New York Law Schools, and the Non-New York Law Schools
(collectively, “Defendants”) have filed a combined motion to dismiss the First
Amended Complaint and three supporting briefs: (i) an omnibus brief on behalf
of all Defendants; (ii) a brief on behalf of Barbri; and (iii) a brief on behalf of the
These Defendants include Columbia Law School (“Columbia”) and its Dean of Graduate
Legal Studies, Sylvia T. Polo; Fordham University School of Law (“Fordham”) and its
Assistant Dean of Student Affairs, Nitza Escalera; New York University Law School
(“NYU”); Benjamin N. Cardozo School of Law (“Cardozo”); and St. John’s University
School of Law (“St. John’s”).
These Defendants include Harvard Law School (“Harvard”); Duke University School of
Law (“Duke”); the University of Southern California Gould School of Law (“USC”);
Georgetown University Law Center (“Georgetown”); and Emory University School of Law
(“Emory”). Previously, LBE sued The Regents of the University of California. (Dkt. #1,
#85). On December 1, 2016 — before Defendants moved to dismiss the First Amended
Complaint — LBE voluntarily dismissed the Regents from this action. (Dkt. #89, 90).
Non-New York Law Schools. The first two of these briefs argue that LBE has
failed to state a claim for relief, and urge the Court to dismiss the First
Amended Complaint under Federal Rule of Civil Procedure 12(b)(6). The third
brief contends that the Court lacks personal jurisdiction over the Non-New
York Law Schools, and thus that the Court should dismiss the First Amended
Complaint as to these defendants pursuant to Rule 12(b)(2).
The First Amended Complaint is 78 pages long and contains 63 exhibits.
But it pleads no facts that plausibly support LBE’s federal antitrust, RICO, or
copyright claims. The Court declines to exercise supplemental jurisdiction over
LBE’s state-law causes of action, though it shares Defendants’ skepticism as to
the viability of these claims. Thus, and for the reasons set forth below, the
Court grants Defendants’ motion to dismiss.
Broadly, the First Amended Complaint alleges that Defendants have
committed misconduct along two axes — one vertical, and one horizontal.
First, LBE claims that Barbri has entered into agreements with the New York
Law Schools and the Non-New York Law Schools (the “Law School
Agreements”). (See, e.g., FAC ¶ 44). Pursuant to the Law School Agreements,
This Opinion draws on facts from the First Amended Complaint (“FAC” (Dkt. #85)) and
the Exhibits (“Ex.”) attached thereto. For purposes of this Opinion, the Court assumes
that the First Amended Complaint’s allegations are true. E.g., Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009).
For ease of reference, the Court will refer to LBE’s opposition brief as “LBE Opp.” (Dkt.
LBE alleges, Barbri donates money to these schools and hires their faculty
members to teach bar review courses; in exchange, the law schools ensure that
Barbri remains the country’s preeminent provider of bar preparation courses.
(Id.). Second, LBE alleges that the New York Law Schools and the Non-New
York Law Schools — enticed by Barbri’s financial support — have conspired
with each other to prevent LBE from challenging Barbri. (See, e.g., id. at
¶¶ 197-99). The result, LBE claims, is that Barbri has monopolized the market
for preparing foreign LL.M. graduates to take the bar (what LBE terms the
“LLM Market”). (Id. at ¶¶ 29-31, 196).
Understanding this case requires the Court to take stock of the
relationships between and among these parties. And given the First Amended
Complaint’s length, that task involves several steps. The Court will begin by
listing the parties to this suit. Then, the Court will review LBE’s allegations
about the LLM Market. The Court will next turn to LBE’s allegations about
Barbri. And finally, the Court will consider LBE’s allegations about the New
York Law Schools and the Non-New York Law Schools.
LBE “is a limited liability company” based in New York City. (FAC ¶ 9).
It “offers test preparation courses for the New York State and California State
bar examinations, designed for and marketed exclusively to internationally
trained/educated lawyers who obtain or are in the process of obtaining [LL.M.
degrees] in law schools across the United States.” (Id.). The bulk of the First
Amended Complaint’s allegations concern LBE’s courses that prepare foreign
LL.M. graduates to take the New York bar. (See, e.g., id. at ¶¶ 24, 26-27, 37,
48). LBE began marketing these courses — which “offer several unique
features to assist [f]oreign LL.M. [s]tudents in passing the NY Bar Exam” — in
spring 2009. (Id. at ¶¶ 25-26). And LBE enjoyed success after that point:
Indeed, in a February 2016 e-mail to an administrator at USC, LBE’s founder,
Emanuele Tosolini, wrote that LBE “ha[d] over 500 enrolled students.” (Ex. 57;
see also FAC ¶¶ 27, 48, 64, 68, 96, 135, 144, 159)). But as a result of
Defendants’ “collective actions … all instigated and directed by Barbri, … LBE
was forced out of business” at a time not specified in the First Amended
Complaint. (FAC ¶ 61).
Barbri “is a Delaware corporation” that provides bar review classes to
both LL.M. and Juris Doctor (“J.D.”) graduates. (FAC ¶ 10). Barbri is “a direct
competitor of LBE.” (Id.). And by LBE’s account, Barbri holds “a monopoly
within the bar review marketplace”: LBE “assume[s]” that Barbri has an “over
80% market share” of that marketplace and enjoys “$110 million [in] revenue.”
(Id. at ¶ 43). “1.2 million” students have taken Barbri’s courses “[o]ver the past
fifty [ ] years.” (Id.).
The New York Law Schools and the Non-New York Law Schools are all
law schools “accredited by the American Bar Association.” (FAC ¶¶ 11-20).
LBE alleges that foreign attorneys pursuing LL.M. degrees matriculate in high
numbers at these ten schools. (Id. at ¶ 32). Polo is Columbia’s Dean of
Graduate Legal Studies. (Id. at ¶ 22). And Escalera is an Assistant Dean of
Student Affairs at Fordham. (Id. at ¶ 23).
The LLM Market
The linchpin of LBE’s antitrust claims is the existence of the LLM
Market — “the U.S. market for bar examination review courses for [f]oreign
LL.M. [s]tudents.” (FAC ¶ 29). LBE posits that the LLM Market is one of “[t]wo
markets … relating to bar examination review,” with the other being the “JD
Market.” (Id.). And LBE alleges that “[t]he LLM Market is far more limited than
the JD Market in part because … significantly” fewer foreign LL.M. graduates
“sit for a bar examination.” (Id. at ¶ 31). In 2015, for example, foreign LL.M.
graduates comprised 44% of those who sat for the February administration of
the New York bar, and 29% of those who sat for the July administration. (Id. at
¶ 24). Because “many jurisdictions require internationally trained/educated
lawyers to obtain LL.M. degrees from law schools accredited by the American
Bar Association … in order to sit for the bar examination, the relevant
geographic market” for the LLM Market “is the United States.” (Id. at ¶ 38).
For many reasons, LBE alleges, foreign LL.M. graduates fare worse on
the bar exam than J.D. graduates. (FAC ¶¶ 33-34). Of note, both LL.M.
graduates and J.D. graduates take the same bar exam: They “are in direct
competition.” (Id. at ¶ 34). But most LL.M. programs do not cover the subjects
“tested in a bar examination.” (Id. at ¶ 33). Moreover, most foreign LL.M.
graduates are not native English speakers; most J.D. graduates are. (Id. at
34). “[T]raditionally,” only 30-40% of foreign LL.M. graduates pass the New
York bar. (Id. at ¶ 27). Foreign LL.M. graduates who took LBE’s course, in
contrast, passed at “significantly high[er] … rates compared to those of [LBE’s]
competitors.” (Id.; see also id. at ¶¶ 70, 75, 128).
LBE alleges that there are “exceedingly high” “[b]arriers to entry in both
the JD Market and the LLM Market.” (FAC ¶ 39). “A potential provider of bar
examination review courses and related services must develop an extensive
network of relationships with universities, law schools, and students across the
country … to even enter the market.” (Id.). Further, in order to attract law
students to sign up for its courses, a bar review company must maintain an
active presence on law school campuses. (Id. at ¶ 41). And LBE claims that
the cornerstone of every bar review company’s on-campus marketing is
“tabling” — setting up a table to “meet with students.” (Id.).
The First Amended Complaint’s description of the LLM Market leaves two
questions unanswered. First, apart from LBE and Barbri, who competes (or in
LBE’s case, competed) in the LLM Market? LBE alleges that “there are a very
limited number of bar preparation providers in the JD Market and even [fewer]
in the LLM Market.” (FAC ¶ 42). But other than Barbri and LBE, the First
Amended Complaint does not mention any of these companies by name. The
First Amended Complaint’s exhibits, in contrast, mention two other companies
that appear to offer bar review courses for foreign LL.M. graduates: Pieper
(Ex. 38) and Kaplan (Ex. 20-21, 37). Complicating matters, LBE alleges that
after “LBE was forced out of business” due to “the collective actions of
Defendants, … Barbri retained the entire LLM Market for itself.” (FAC ¶ 61).
Second, how old is the LLM Market? LBE asserts that the LLM Market
comprises “the U.S. market for bar examination review courses for [f]oreign
LL.M. [s]tudents.” (FAC ¶ 29). But such courses did not exist before LBE came
around: LBE alleges that it was “the first company to offer” a bar review course
“that catered directly to the needs of [f]oreign LL.M.” graduates. (Id. at ¶ 37).
Foreign LL.M. graduates took bar examinations (at the very least, the New York
bar) before LBE began operating in 2009; by LBE’s account, it “developed [its]
bar review course” because foreign LL.M. graduates traditionally fared poorly
on the bar. (Id. at ¶¶ 36-37). And yet, according to the First Amended
Complaint, the LLM Market did not exist until LBE began offering its courses.
LBE’s Allegations about Barbri
Barbri, LBE claims, has monopolized the LLM Market. (See, e.g., FAC
¶ 212). And it has accomplished this goal through three means: First, LBE
alleges that for years before this case began, “Barbri engaged in an aggressive
campaign of harassment, disinformation, defamation, and unfair competition
against LBE at any school where LBE actively marketed.” (Id. at ¶¶ 47, 50).
Second, LBE claims that in 2013, Barbri developed a course for foreign LL.M.
graduates that was and remains “identical to LBE’s course.” (Id. at ¶¶ 58-60).
Third, LBE alleges that Barbri has maintained “long standing financial
relationship[s] with” the New York Law Schools and the Non-New York Law
Schools by entering into Law School Agreements with all of them. (Id. at ¶ 44).
Barbri’s Alleged Defamation of LBE
The First Amended Complaint alleges — repeatedly — that Barbri has
spread “false, misleading, and derogatory statements … [about] LBE’s bar
preparation program.” (FAC ¶ 51; see also id. at ¶¶ 50, 52-53, 61, 64-65, 67,
192, 209, 220). Those false statements concerned “LBE’s methodology,
materials, and professors, … the financial strength of the company, and … the
business experience of the company.” (Id. at ¶ 51). And LBE claims that
Barbri made these statements to “dissuade … [f]oreign LL.M. [s]tudents from”
signing up for LBE’s courses, and to convince foreign LL.M. students who had
signed up for LBE’s courses “to break their enrollment contracts and withdraw
from the LBE program.” (Id.; see also id. at ¶¶ 192, 209, 220, 240, 249).
Here, too, the First Amended Complaint leaves an important question
unanswered — what false statements did Barbri make about LBE? The First
Amended Complaint identifies one statement that appears to have been an
outright falsehood: During a recruiting event at Columbia, Natalie Urrea,
Barbri’s Director of International Business Development, “claimed that she was
a [f]oreign LL.M. [s]tudent who [was] an alumna of Barbri who successfully
passed the NY Bar Exam on her first try by following Barbri’s LLM [c]ourse.”
(FAC ¶ 74). In fact, LBE claims, “Urrea obtained a [J.D.] from Temple
University … is not a [f]oreign LL.M. [s]tudent[,] and … did not pass the NY Bar
Exam until July 2014.” (Id.). In any event, the First Amended Complaint does
not allege that Urrea said anything about LBE.
Apart from this allegation, LBE principally takes issue with the fact that
Barbri disparaged LBE to foreign LL.M. students (see FAC ¶ 61) — although it
is unclear if these disparaging remarks were in fact falsehoods. For example,
LBE alleges that on an unspecified date, Erica B. Fine, who has held various
management positions with Barbri, “advised NYU [f]oreign LL.M. [s]tudents to
complain about LBE to their law school administration in a blatant effort to
undermine LBE’s ability to market and sell its course to NYU [f]oreign LL.M.
[s]tudents.” (Id. at ¶¶ 80-81). LBE also alleges that Fine “advised various” NYU
faculty members and administrators “to bar LBE from marketing at NYU.” (Id.
at ¶ 82). Likewise, sometime in 2016, while Barbri and LBE were attempting to
settle a dispute involving students who had signed up for both companies’
courses, “Barbri’s representatives … stated to [some of] the students that LBE
was not a reputable course, and indeed was kicked out of major law schools for
poor performance and problems with students.” (Id. at ¶¶ 54-56). As the
Court will explain infra, it seems that some of these disparaging statements
had a kernel of truth in them. (Cf. id at ¶ 313 (“Defendants knowingly stated
and published false and derogatory statements about LBE, including that LBE
is a disreputable business.”)).
In any case, in the spring of 2014, Tosolini met with Barbri’s President,
Mike Sims, “to discuss Barbri’s predatory marketing activities against LBE.”
(FAC ¶ 53; see id. at ¶ 57). At first, Sims “denied any disparagement.” (Id. at
¶ 53). But Sims eventually conceded to Tosolini “that all personnel at Barbri
connected with the disparaging actions against LBE [were] being ‘let go by
Barbri.’” (Id.). And when “Tosolini brought up specific instances and actions
by [ ] Fine with the administration at Harvard, Sims apologized and offered to
‘make a phone call to Harvard’ and relay that ‘Barbri ha[d] no issues with
LBE’s presence at Harvard.’” (Id.). Tosolini declined Sims’s offer. (Id.).
Barbri’s Course for Foreign LL.M. Graduates
In December 2012, Sims and Stephen Fredette, Barbri’s Chairman and
CEO, approached LBE “to discuss a possible buyout.” (FAC ¶ 57). Tosolini
“met with[ ] Sims and Fredette,” and later provided them with information
about LBE’s business and “other proprietary information.” (Id.; see Ex. 4).
Ultimately, Barbri opted not to purchase LBE. (FAC ¶ 57).
Instead, LBE claims, Barbri copied LBE’s course. Before 2012, “Barbri
did not have a dedicated review course specifically designed for [f]oreign LL.M.
[s]tudents.” (FAC ¶ 45). Instead, Barbri sold only “one type of bar review
course to both the JD Market and the LLM Market.” (Id. at ¶ 46). But in the
spring of 2013, Barbri started to develop and market a course targeted towards
foreign LL.M. graduates. (Id. at ¶ 58). And that fall, Barbri released this
course, which “is identical to LBE’s course.” (Id. at ¶¶ 59-60). Like LBE’s
course, Barbri’s version offers:
[A] personalized study plan that is tailored by the
student but guided by Barbri (same as LBE’s
fundamentals course that provides an overview of the
multistate subjects (similar to LBE’s early subject
matter review course); legal writing workshops … ; an
MBE foundation course … and an MBE course …
(similar to LBE’s intensive review course and advanced
test-taking techniques course); and Free Repeat
Guarantee where a student may repeat the [bar review
course] by attending lectures or online for the same
state the next time the [bar review course] is offered by
[Barbri], without paying additional fees (similar to LBE’s
(Id. at ¶ 60 (internal quotation marks omitted)). LBE alleges that by creating a
bar review course identical to LBE’s, “Barbri has infringed LBE’s copyrights in
violation of [the] Copyright Act.” (Id. at ¶ 304). The First Amended Complaint
does not allege that LBE holds, or has applied for, a copyright of any sort.
The Law School Agreements
Finally, LBE alleges that Barbri has used the Law School Agreements “to
exclude and restrain competition in the JD Market and the LLM Market.” (FAC
¶ 44; see also id. at ¶¶ 197, 200, 207). It is unclear whether the Law School
Agreements are oral or written. It is also unclear when Barbri entered into the
Law School Agreements.
The Law School Agreements, LBE alleges, are symbiotic. Barbri donates
money to the New York Law Schools and the Non-New York Law Schools; gives
“large overpaid contracts to law school faculty members”; and makes “personal
bribes via gifts and significant financial gain” to these schools’
“administration[s], staff[,] and personnel.” (FAC ¶ 44). In return, the New York
Law Schools and the Non-New York Law Schools give Barbri “direct access [to]
and control of … these schools” in order “to promote and sell [Barbri’s]
products on campus directly to the JD Market and LLM Market”; allow Barbri
to “use campus facilities for lecture space”; and let Barbri “utilize law school
faculty, including professors and deans.” (Id.). The effect of the Law School
Agreements, LBE alleges, “is to exclude and restrain competition in the JD
Market and the LLM Market and to maintain supracompetitive prices of bar
review courses for the common benefit of” Defendants. (Id.).
LBE also alleges that the Law School Agreements allowed Barbri to
become “the exclusive provider of bar review courses” at the New York Law
Schools and the Non-New York Law Schools. (FAC ¶ 196). Other parts of the
First Amended Complaint contradict this claim. For one, from 2009 through at
least 2015, LBE provided bar review courses to foreign LL.M. graduates of the
New York Law Schools and the Non-New York Law Schools. (See, e.g., id. at
¶¶ 48, 135, 159; see also id. at ¶ 27 (“Since its inception, LBE has grown very
attractive among [f]oreign LL.M. [s]tudents[.]”)). And as the Court mentioned
supra, there are at least two other companies — Pieper (Ex. 38) and Kaplan
(Ex. 20-21, 37) — that seem to offer bar review courses for foreign LL.M.
And other allegations in the First Amended Complaint’s belie LBE’s claim
that the Law School Agreements allow Barbri “to maintain supracompetitive
prices.” (FAC ¶ 44). Indeed, it seems that Barbri made a practice of
discounting its rates to attract foreign LL.M. students to sign up for its courses.
(Id. at ¶¶ 56, 99, 161; see also Ex. 11 (“[I]n other schools where [LBE was]
permitted to market [its] course, competitors were pressured to offer an
additional $1,000 discount to compete with [LBE].”)). 4
In its opposition brief, LBE argues that Barbri “was able to effectively control and fix the
prices charged to [f]oreign LL.M. [s]tudents, nearly $600.00 more than Barbri’s product
in the JD Market.” (LBE Opp. 17). In support of this claim, LBE relies on a Barbri
LBE’s Allegations About the New York Law Schools and the
Non-New York Law Schools
Most of the First Amended Complaint’s allegations, and nearly all of its
exhibits, concern the New York Law Schools and the Non-New York Law
Schools. The gist of those allegations is that all ten of these schools have
impeded LBE’s efforts to market its courses on their campuses. Below, the
Court considers LBE’s allegations about these schools, following the same
order as the First Amended Complaint: Columbia, NYU, Fordham, St. John’s,
Cardozo, Harvard, Georgetown, Duke, USC, and Emory.
A global note before embarking down this road: LBE makes an identical
allegation about all ten of these law schools: “More than one time, [school] and
its representatives stated that it was constantly exchanging information about
LBE’s bar review program, business[,] and access to various other law schools,
among others, with the other Defendants.” (FAC ¶¶ 62, 79, 93, 111, 119, 125,
134, 143, 158, 174). The First Amended Complaint’s 309 other paragraphs do
not provide additional support, or context, for this claim. Nor do the First
Amended Complaint’s exhibits. Instead, the First Amended Complaint alleges
that some representatives of some of the New York Law Schools and the Non-
“Enrollment Application” that is attached as an exhibit to LBE’s brief. (Id. (citing Dkt.
#102-1)). The Court cannot consider this document — which was neither attached to,
nor cited in, the First Amended Complaint — in adjudicating Defendants’ motion to
dismiss. See, e.g., Goel v. Bunge, Ltd., 820 F.3d 554, 559 (2d Cir. 2016) (limiting
“universe of materials” a court can consider when deciding a Rule 12(b)(6) motion to
“facts stated on the face of the complaint, … documents appended to the complaint or
incorporated in the complaint by reference, … matters of which judicial notice may be
taken,” and documents that are “integral to the complaint” (internal quotation marks
and citations omitted)). For the same reasons, the Court will not consider the Affidavit
of Rebecca Patterson in Opposition to Motion to Dismiss. (Dkt. #102-2).
New York Law Schools communicated with each other about LBE. The Court
will address those allegations below, and consider their import in the
“Discussion” section of this Opinion.
Barbri enjoys “a long-standing relationship with Columbia.” (FAC ¶ 62).
Three Columbia faculty members teach Barbri bar review classes. (Id.). Barbri
has made “numerous donations and gifts to Columbia,” and Columbia has
granted Barbri “exclusive and privileged access to Columbia.” (Id.). 5
LBE began marketing its course to Columbia’s foreign LL.M. students in
2009. (FAC ¶ 63). “Within a few weeks,” roughly 20 of those students signed
up to take LBE’s course, “putting LBE in immediate competition with Barbri in
the LLM Market.” (Id.). “In the spring of 2010, LBE conducted a few live,
interactive lectures … for New York law students,” and reactions to those
lectures “were mostly favorable and … generally successful.” (Id. at ¶ 64). But
sometime thereafter, Barbri made “disparaging and untrue statements … about
LBE for the sole purpose of misinforming” foreign LL.M. students at Columbia
“who were already enrolled with LBE to breach their enrollment agreement[s]
with LBE to enroll with Barbri.” (Id. at ¶¶ 64-65). To this end, Barbri advised
LBE also repeats this allegation — “In exchange for such gifts [or ‘gifts and donations’],
Barbri enjoyed and continues to enjoy exclusive and privileged access to [school].” — for
all ten of the law school defendants. (FAC ¶¶ 62, 79, 93, 111, 119, 125, 134, 143, 158,
174). As the Court explained earlier, the First Amended Complaint belies LBE’s
repeated assertion that Barbri is the exclusive provider of bar review courses at these
schools. (See supra at 13).
students who had already signed up for LBE’s course “to meet with [Polo] to
seek refunds that were not due or owing to these students.” (Id. at ¶ 66).
LBE alleges that, because of Barbri’s “disparaging and untrue
statements,” “Polo coerced [ ] Tosolini to give refunds to students.” (FAC ¶ 67).
In exchange, Columbia “allow[ed] LBE to continue marketing its product and
conduct[ing] presentations on Columbia’s campus.” (Id.). As part of this
agreement, LBE was “allowed to table” on Columbia’s campus “once a week for
the entire [Fall 2010] [S]emester.” (Id. at ¶ 68). And that effort bore fruit:
“During the first day of tabling” alone, “over  students stopp[ed] by the
LBE table, leaving their contact information and expressing an overwhelming
interest in LBE.” (Id.).
But in September 2010, Columbia suspended LBE from marketing on its
campus. (FAC ¶¶ 68-69). Tosolini and another LBE employee, Rebecca
Patterson, met with Polo to find out why they had been banned from Columbia.
(Id. at ¶ 69; see Ex. 5). Polo told them “that she would only recommend and
endorse Barbri because Barbri was and is a powerful friend of Columbia, … the
oldest bar review course[,] and [that Columbia] students are smart and do not
need any other course.” (FAC ¶ 69). Polo also questioned whether Tosolini, “as
a foreign-educated student[,] [had] the necessary knowledge and expertise to”
prepare students to take an American bar exam. (Id.).
Columbia students “became wary of” LBE after it was barred from
marketing on campus. (FAC ¶ 68). But eight of the students who stopped by
LBE’s table in fall 2010 stuck with LBE’s course — and all eight passed the
July 2011 administration of the New York bar. (Id.). Buoyed by these results,
in August 2011, Tosolini wrote a letter to Michelle Greenberg-Kobrin,
Columbia’s Dean of Students, to see if LBE could return to Columbia’s
campus. (Id. at ¶ 70; Ex. 5). Greenberg-Kobrin asked for a list of all Columbia
students who had signed up for LBE’s course in the preceding two
years — “including students who ha[d] enrolled but then dropped out” — and
Tosolini complied. (Ex. 5). But “[d]espite the 100% pass rate provided to
Columbia by LBE,” Columbia opted to wait one year before making a decision
on whether to allow LBE back on its campus. (FAC ¶ 70; Ex. 6).
On September 28, 2012 — after LBE again unsuccessfully attempted to
return to Columbia’s campus — Tosolini wrote a letter to Dean David Schizer.
(FAC ¶ 71; Ex. 9). In it, Tosolini complained of the “active and ongoing case of
discrimination against [him] and [LBE] by certain members of the [Columbia]
administration.” (Ex. 9). He also, perhaps unwittingly, undercut LBE’s current
arguments regarding the singularity of its competition. In the First Amended
Complaint, LBE alleges that Tosolini’s letter took issue with “Polo’s continued
favoritism toward Barbri.” (FAC ¶ 71). In fact, Tosolini wrote that “Dean Polo
stated to [him] ... that she would recommend a major competitor over [LBE] to
her students,” but the letter does not identify that competitor by name. (Ex. 9).
And Tosolini added that he was “aware of … favoritism that continuously takes
place in favor of other major bar review companies at” Columbia. (Id.
(emphasis added)). Tosolini wrote that students had told LBE “about the other
bar review companies disparaging [LBE] to students, while they have display
tables on [Columbia’s] campus.” (Id. (emphasis added)). On October 5, 2012,
Lynn Beller, an Assistant Dean at Columbia, wrote Tosolini an e-mail in which
she explained that the decision to bar LBE from Columbia was made by a
committee that included Polo. (Ex. 10). Beller added that this committee had
decided to ban LBE from Columbia’s campus for the upcoming year. (Id.).
Undeterred, in July 2013, LBE sent to Greenberg-Kobrin a petition
requesting that LBE be allowed back on Columbia’s campus. (FAC ¶ 73; Ex.
11). Over 50 foreign students who received LL.M. degrees from Columbia in
2013 signed the petition. (FAC ¶ 73; Ex. 11). In December of that year, a
foreign student who received an LL.M. from Columbia in 2013, then passed the
New York bar after taking LBE’s course, e-mailed Polo to ask that LBE be let
back on campus. (FAC ¶ 73; Ex. 12). Neither the petition, nor the e-mail,
worked. (FAC ¶ 73).
Columbia continued to bar LBE from marketing on its campus through
the 2014 academic year. (FAC ¶ 75). To be clear, LBE still marketed its course
to Columbia students: For example, LBE held “an event off-campus”
(presumably in 2014) for interested students. (Id.). But because LBE was not
allowed on Columbia’s campus, it had difficulty “effectively compet[ing] with
LBE does not explain when it began marketing its course to NYU
students. But it claims that on an unspecified date, “[Erica] Fine advised NYU
[f]oreign LL.M. [s]tudents to complain about LBE to their law school
administration in a blatant effort to undermine LBE[ ].” (FAC ¶ 81). As a
result of Fine’s subterfuge, LBE was “foreclosed from selling its course at NYU.”
(Id. at ¶ 83).
Instead, in October 2012, LBE hosted an off-campus recruiting event for
NYU students. (FAC ¶ 83). The event was successful: Many of NYU’s foreign
LL.M. students signed up for LBE’s course. (Id.). But the next day, “NYU’s
Office of Graduate Affairs sent an email/newsletter directly to NYU [f]oreign
LL.M. [s]tudents” which stated, in relevant part:
We urge you to be careful consumers and to exercise
due diligence in selecting a commercial [b]ar review
course. It is advisable to seek counsel from alumni who
have taken [b]ar [r]eview preparation courses. In the
past, students have had bad experiences with at least
one company. In short, ask around! Do not simply rely
on the representations of a course provider[ ] — it is
advisable, before signing on to a course, at a minimum
to speak to several NYU … alumni who actually took the
(Ex. 16). LBE alleges that, “[u]pon information and belief, NYU” discouraged its
foreign LL.M. students from signing up for LBE, and advised those students
“who were already enrolled with LBE to drop the course and enroll with
Barbri.” (FAC ¶ 84).
On January 11, 2013, LBE e-mailed NYU’s Director of the Office of
Graduate Affairs, Barbara Landress, to request that LBE “regain access to the
NYU … campus and bi-weekly display tables.” (FAC ¶ 85; Ex. 17). Landress
replied about two weeks later, writing that LBE had yet to “establish[ ] enough
of a track record for tabling at” NYU. (Ex. 18). When LBE asked what it could
do to “re-establish[ ] … tabling and presentation privileges … at NYU,”
Landress “refused to provide such information.” (Ex. 19; see also FAC ¶ 85).
That summer, NYU “harassed [f]oreign LL.M. [s]tudents who [had]
already enrolled with” LBE and encouraged them to drop the course. (FAC
¶ 86). NYU did not target students who registered for classes with bar review
companies other than LBE. (Id.). Attached to the First Amended Complaint is
a signed declaration from a 2013 NYU LL.M. graduate from Mexico who signed
up with LBE in fall 2012. (Ex. 20, ¶¶ 1, 5). She claims that after enrolling with
LBE, an NYU representative called her and “encouraged [her] to cancel [her
LBE] enrollment.” (Id. at ¶ 6). During this same conversation, this NYU
representative mentioned that LBE “ha[d] ongoing litigation with students.” (Id.
at ¶ 7). Lourdes Marshall, an NYU employee, similarly told this LL.M. student
that LBE had “had problems with some NYU students in the past, and that
[LBE] had bad materials.” (Id. at ¶ 9; see FAC ¶ 88).
Although “LBE has received tremendous praise and recommendation
from its students who are NYU alumni,” NYU has refused to let LBE on its
campus. (FAC ¶ 90). “LBE’s goodwill and business operations” have been
“severely damaged” as a result. (Id. at ¶ 91).
LBE’s relationship with Fordham began in 2009, when it hired Assistant
Dean of International and Non-JD Programs Toni M. Jaeger-Fine to serve as an
instructor for its bar review course. (FAC ¶ 94). Barbri, concerned that LBE
might “mak[e] a dent in [its] monopoly at Fordham,” tried to convince Fordham
to fire Jaeger-Fine. (Id. at ¶ 95). The effort failed, and LBE successfully
marketed its course to Fordham students for years. (Id. at ¶¶ 95-96). Indeed,
LBE was so successful that in 2011, Fordham offered Tosolini an adjunct
professorship. (Id. at ¶ 96). Tosolini’s class — Fundamental Principles of New
York Law — mirrored “LBE’s methodology, faculty[,] and materials,” and
“quickly became the most popular, non-mandatory course among [f]oreign
LL.M. [s]tudents at Fordham.” (Id.).
Things changed in 2015, when “there were substantial administrative
changes at Fordham” and Matthew Diller became the school’s Dean. (FAC
¶ 97). For the first time, LBE alleges, it was obstructed in its efforts to market
its course at Fordham. (Id.). In February 2015, for example, Tosolini e-mailed
Rebecca Gruia, Fordham’s Manager of Program Operations, to ask about rates
for booking classrooms that summer. (Id. at ¶ 98; Ex. 22). In previous
summers, LBE paid Fordham $400 per day to rent a single classroom. (FAC
¶ 98). But Gruia informed Tosolini that, for summer 2015, LBE would have to
pay $1,250 per day, and that this fee would cover “1 to 3 classrooms.”
(Ex. 23). LBE was thus forced “to seek alternative spaces for its summer
lectures.” (FAC ¶ 98). The First Amended Complaint does not suggest that
Barbri was offered a different or discounted rate, but rather appears merely to
allege that Barbri was able to afford Fordham’s increased summer 2015 rate.
Fordham also offered Barbri opportunities to market its courses to
foreign LL.M. students before LBE could do so. In August 2015, Barbri hosted
two information sessions about the New York bar exam for Fordham students.
(Ex. 25). LBE alleges that Fordham “sponsored” the sessions (FAC ¶ 99),
although an e-mail from Fordham’s Student Bar Association advertising the
sessions makes no mention of the school’s official involvement (see Ex. 25). Of
note, that e-mail is titled “Barbri Information Sessions on the NEW BAR
EXAM.” (Id.). These sessions, LBE alleges, “were a blatant tactic by Fordham
to bar LBE and promote Barbri.” (FAC ¶ 99). Though billed as information
sessions about the bar exam, these events were really “promotion[s]” for Barbri:
At the sessions, Barbri “handed out” “enrollment forms” to attendees and
offered them “special discounts.” (Id.). Moreover, Fordham’s “[f]oreign LL.M.
[s]tudents were told” (LBE does not say by whom) that these sessions “were
mandatory for LL.M. students.” (Id.).
On September 3, 2015, Tosolini wrote an e-mail to Escalera and the
Office of Law Student Affairs at Fordham in which he raised concerns about
Barbri’s information sessions. (FAC ¶ 100; Ex. 26). Tosolini lodged a similar
complaint with Jaeger-Fine in a September 11, 2015 e-mail. (FAC ¶ 101;
Ex. 27). In this latter e-mail, Tosolini wrote that “at least [two] students told
[him] that they felt misle[d] as they were told that [Barbri] was the course for
LLM students and believed Fordham endorsed it.” (Ex. 27). Tosolini never
heard back from Escalera or Fordham’s Office of Law Student Affairs. (FAC
On February 8, 2016 — one “day before the first tabling day scheduled at
Fordham for the [S]pring [S]emester” — Tosolini learned from Jaeger-Fine that
Fordham had barred LBE from marketing on its campus. (FAC ¶ 102). In an
e-mail, Jaeger-Fine wrote: “I am sorry to have to pass this along but there
apparently have been many complaints about [LBE] in recent weeks and last
semester as well … . [A]pparently there has been a decision to disallow you
from tabling at Fordham.” (Ex. 30 (alterations omitted)). Jaeger-Fine also told
Tosolini that Fordham had decided “to discontinue [his] for-credit class.”
(Ex. 30). Jaeger-Fine explained that she had “gotten a lot of reports over the
years that the course was too focused on [Tosolini’s] commercial interests,” and
that Fordham was concerned that Tosolini had used the “class as a platform to
distribute information about [LBE] and get students to sign up.” (Id.). LBE
deems these allegations about Tosolini using his Fordham class to promote
LBE “false and unfounded.” (FAC ¶ 102).
LBE tried to arrange a meeting with Fordham to discuss the school’s
“decision to disavow LBE.” (FAC ¶ 103). For weeks, Fordham declined. (Id.).
And as time wore on, rumors about LBE’s “possible permanent removal”
percolated on Fordham’s campus, and foreign LL.M. students who had
registered for LBE’s course sought to cancel their enrollments. (Id.).
Tosolini finally met with Escalera on February 29, 2016. (FAC ¶ 104).
Tosolini asked Escalera to describe the complaints she had received from
Fordham students about LBE, but “Escalera could not provide any names of
students or specific incidents of student complaints.” (Id.). Instead, “[t]he only
issue that Dean Escalera” brought up “was LBE’s use of an affidavit,” which
LBE alleges it “was forced to use to stay competitive with Barbri.” (Id.). The
affidavit is a form titled “Course Cancellation Request”; it appears to be an
affidavit students must execute in order to cancel their enrollments with LBE.
(Ex. 31). By signing the affidavit, a student agrees not to “sit[ ] for any bar
exam for the next two years,” and in exchange LBE “release[s] [that student]
from any further financial obligation under the course purchase agreement.”
(Id.). “Barbri uses an identical affidavit for their enrolled students who do not
want to continue with Barbri’s course[.]” (FAC ¶ 104; see Ex. 32).
Tosolini’s meeting with Escalera concluded “with the understanding that
Fordham would evaluate student complaints received by Fordham that led to
Fordham’s decision to disallow LBE from Fordham’s campus.” (FAC ¶ 104).
LBE alleges, “[u]pon information and belief,” that nobody at Fordham had
actually received any complaints about LBE. (Id.). “Within an hour after” the
meeting ended, [Matthew] Diller sent a group e-mail to Fordham’s LL.M.
students that stated, in relevant part:
In recent weeks, I have become aware of concerns raised
by students with regard to the practices and policies of
The issues students have raised concern me greatly.
Students must be treated fairly, and we have a
responsibility to demand this of any company we permit
Fordham … students. …
While we have already heard from several of you, I ask
that any others who have had issues with [LBE] please
contact … the Office of Student Affairs.
(FAC ¶ 105; Ex. 33). In what can fairly be described as an aggressive
deduction, LBE contends that this e-mail “clearly shows that Fordham never
received any complaints against LBE” before Tosolini’s meeting with Escalera.
(FAC ¶ 105). A week later, Kandice Thorn, Fordham’s Director of International
and Non-JD Programs, “sent a follow-up e-mail” about Diller’s request for
student “complaints against LBE.” (Id. at ¶ 106; Ex. 34).
These e-mails “ultimately harmed LBE.” (FAC ¶ 107). In March 2016,
“Escalera demanded [that] LBE … refund two Fordham students.” (Id.). LBE
alleges that these two students’ “concerns and desire for refunds were directly
caused by Fordham’s solicitation” of complaints about LBE, “since the students
specifically asked LBE why LBE was ‘suspended from campus.’” (Id.). Tosolini
again asked Escalera why LBE was banned from Fordham’s campus, and she
responded that “the decision … was taken in response to LBE’s use of” the
Course Cancellation Request affidavit. (Id.). When Tosolini retorted that
Barbri had used an identical affidavit “since at least 2015,” Escalera told him
that Barbri’s affidavit “‘was not [Tosolini’s] concern’ and that it was a ‘different
project’ for Fordham’s deans to handle.” (Id. (alterations omitted)). In an effort
to return to Fordham’s campus, LBE gave into Escalera’s demand and
refunded these two students. (Id. at ¶ 108). But it appears that Tosolini’s
gesture was futile: LBE alleges that it still cannot table or hold classes on
Fordham’s campus. (Id. at ¶ 109).
Barbri, it is alleged, has deep roots at St. John’s. “Many St. John’s
faculty” members teach Barbri bar review courses. (FAC ¶ 111). And Fine, in
addition to being a St. John’s alumna, is “an adjunct professor at” the school
and “has had personal relationships with various Deans” there. (Id.).
In 2012, a St. John’s professor who had taken LBE’s course — Luca
Melchionna — advised St. John’s foreign LL.M. students to enroll with LBE.
(FAC ¶ 113). Melchionna “continue[d] to advocate for LBE” even after receiving
“heavy pressure to advocate for Barbri.” (Id.). The First Amended Complaint
does not explain who exerted this pressure. (Id.). But LBE claims that St.
John’s terminated Melchionna because “of his sponsorship and
recommendation of LBE.” (Id.). Since Melchionna left, “LBE has not been
invited back to St. John’s,” although it is not clear from the First Amended
Complaint that LBE ever tabled at St. John’s in the first place. (Id.).
Indeed, LBE alleges that in 2014 and 2015, it made multiple requests to
table at St. John’s — but St. John’s never responded. (FAC ¶¶ 114-15). LBE
alleges that “Fine’s close ties with Barbri” and St. John’s explain why LBE has
been “completely shut out from St. John’s campus.” (Id. at ¶ 116). As things
stand, LBE can only enroll “[f]oreign LL.M. [s]tudents who were referred to LBE
by St. John’s alumni and/or … those [f]oreign LL.M. [s]tudents who will take
[LBE’s course] once they fail the NY Bar Exam after studying with Barbri.”
LBE alleges that Cardozo has “foreclos[ed] on LBE’s ability to promote
and sell its course,” without specifying when Cardozo did so. (FAC ¶ 120). In
December 2011, Tosolini e-mailed Amy Sugin, Cardozo’s Assistant Dean for
Graduate and International Programs, about “certain concerns that some of
[Cardozo’s] students had with [LBE the preceding] summer.” (Id.; Ex. 35).
Tosolini sought to allay those concerns, writing that Cardozo’s “students
received the best possible assistance.” (Ex. 35). Sugin had heard otherwise.
She responded to Tosolini the next day, writing: “I’m sorry but our students
were disappointed with your course, and had concerns about the materials and
about the integrity of your system, and I am afraid that we cannot invite you
back to Cardozo at this time.” (Ex. 36). Tosolini replied, promising to provide
Sugin “testimonials from [Cardozo] students that loved [LBE’s] program.”
(Ex. 37). And Tosolini added that although LBE is “not a multinational
company like Kaplan or Barbri … [its] overall product is second to none.” (Id.).
Sugin “refused to discuss the situation further.” (FAC ¶ 120).
In 2013, a Cardozo LL.M. student wrote to Tosolini to ask about LBE.
(FAC ¶ 121; Ex. 38). Her classmates had spoken to Sugin, who told them “that
there had been complaints from past Cardozo LL.M. students who ha[d] taken
[LBE’s] bar preparation course, did not pass the bar exam[,] and did not receive
a full refund.” (Ex. 38). After hearing these stories, some of these classmates
“opted to go to Pieper and Barbri.” (Id.). Sugin’s statements, LBE claims, were
false: “LBE had not received complaints,” and had fully refunded the lone
Cardozo student who asked for a refund. (FAC ¶ 121). Worse still, LBE alleges
that “Sugin’s false accusations regarding LBE resulted in many Cardozo
[f]oreign LL.M. [s]tudents enrolling with Barbri.” (Id. at ¶ 122).
In addition to having close relationships with administrators at St.
John’s, Fine knows many “Deans, faculty members[,] and administrators at
Harvard, including Ellen Cosgrove, the Dean of Students.” (FAC ¶ 126). At a
time unspecified in the First Amended Complaint, Fine made “negative
comments” (presumably about LBE) “to the various Deans at Harvard.” (Id. at
¶ 127). Consequently, “LBE was barred from on-campus marketing at
Harvard” without being given an “explanation or reason.” (Id.).
The First Amended Complaint’s exhibits suggest that at one point in
time, LBE was allowed to market on Harvard’s campus. It appears that
Tosolini met with Cosgrove in fall 2010. (See Ex. 39). On October 4, 2010,
Tosolini sent Cosgrove an e-mail to follow up on that meeting, and to see if LBE
could “reschedule [a] presentation of [its] program for Harvard students.” (Id.).
Cosgrove responded that day:
I have discussed this with a number of people inside
and outside Harvard … and have determined it is best
to hold off on any future tabling events and speaking
engagements until we see what the results were for the
I continue to be concerned that the concerns are
broader than the one professor you mentioned. I have
also heard multiple concerns about the late arrival of
materials and the incompleteness of the materials.
On a personal note, I was also concerned about the
litigious posture you mentioned against the NYU
students during our meeting.
I hope you can appreciate that at this time, you have no
track record and the complaints are significant enough
that it would be inappropriate for us to continue to allow
access to our tables and classrooms. 6
(Id.). In January 2011, Tosolini e-mailed Cosgrove again, writing that LBE had
achieved “an extremely high pass rate of 76.5%” (for students who took the
New York bar, the Court assumes). (Ex. 40). Tosolini asked that LBE be let
back on Harvard’s campus — a request he repeated “regularly” thereafter, to no
avail. (Id.; FAC ¶ 129).
LBE alleges that “Fine’s personal relationship[s] with the Deans and
faculty at Harvard has provided Barbri unlimited access directly [to] the school
and Harvard students.” (FAC ¶ 131). The result is that LBE is “foreclosed from
marketing and selling its products and services to [f]oreign LL.M. [s]tudents at
LBE’s marketing efforts at Georgetown got off to a promising start. In fall
2015, LBE tabled and held presentations on Georgetown’s campus. (FAC
¶ 135). LBE also “garner[ed] … positive testimonials from previous Georgetown
[f]oreign LL.M. [s]tudents who studied with LBE and successfully passed the”
New York bar. (Id.). As a result, LBE “enroll[ed] the largest number of
Georgetown [f]oreign LL.M. [s]tudents in the history of LBE.” (Id.).
The First Amended Complaint recounts Cosgrove’s e-mail as follows: “Cosgrove …
revoked LBE’s permission to table at Harvard because she wanted to see the results of
LBE’s pass rate for the July 2010 bar examination[.]” (FAC ¶ 128). The First Amended
Complaint does not address Cosgrove’s concerns about LBE’s “incomplete[ ]” and “late”
materials, and LBE’s “litigious posture … against … NYU students.” (Ex. 39).
But it appears that LBE hit a snag sometime in 2015 or 2016. On
February 25, 2016, Caryn Voland, Georgetown’s Assistant Dean of Graduate
Programs, e-mailed Tosolini. (Ex. 42; FAC ¶ 136). Copied on Voland’s e-mail
was Mitchell Bailin, Georgetown’s Dean of Students. (Ex. 42; FAC ¶ 136). It
appears that Voland was writing to follow up on a phone call with Tosolini
concerning “LL.M. students’ confusion with the terms of the enrollment
agreement with [LBE], and their ability to discontinue their enrollment in the
[LBE] course.” (Ex. 42; see also Ex. 46). The remainder of Voland’s e-mail set
terms for LBE to provide refunds to these students — including LBE’s promise
to “not require these students to sign the release agreement that prohibits
them from taking the bar for two years or discussing the release with others.”
(Ex. 42). Voland added that she and Bailin were “concerned about all of the
bar review companies’ use of this type of binding language with students who
may not be clear on what they are signing, and [that] Bailin w[ould] be looking
at this issue across the board.” (Id.).
Tosolini replied to Voland and Bailin later that day. (Ex. 41). He
“confirm[ed] … the terms in” Voland’s e-mail. (Id.). And he added: “I have
reached out to Barbri and offered to reduce both of our fees in half and let the
student pick one of the 2 courses. … Barbri did not accept my offer instead
they started an aggressive targeting o[f] students that paid enrollment fees to
both companies[.]” (Ex. 41). The First Amended Complaint does not explain
why Barbri was involved with LBE’s decision to refund certain Georgetown
It seems that there was a misunderstanding between LBE and
Georgetown about these refunds. Tosolini was under the impression that
Georgetown wanted LBE to provide refunds only to “Chinese speaking
students.” (Ex. 43; see FAC ¶ 137). Voland responded that Georgetown “did
not agree to limit the terms of the refund opportunity to only Chinese
students.” (Ex. 44). Tosolini pushed back, writing to Voland that LBE would
make a “good faith effort” (presumably to pay all LL.M. students who demanded
a refund), and requesting in exchange that Georgetown “waive the fee for
renting a room for [the upcoming] summer.” (Ex. 45). Voland demurred,
writing that Georgetown had conditioned its agreement to let LBE market on its
campus on LBE’s promise to provide refunds. (Ex. 46). Voland added:
“Rather than adding new terms at this point, we would appreciate your closing
the loop on the students who contacted you within the specified timeframe, so
that we can put this year’s experience behind us.” (Id.). LBE alleges that,
“[u]pon information and belief, Georgetown has” never asked Barbri to refund
students “who may have misunderstood Barbri’s Terms and Conditions, which
are identical to LBE’s Terms and Conditions.” (FAC ¶ 139).
The First Amended Complaint does not disclose whether LBE provided
refunds to any Georgetown LL.M. students. But it does allege that “LBE is
currently and continues to be unfairly barred from Georgetown,” and “cannot
rent any classrooms or conduct any presentations to sell and market its
products” there. (FAC ¶ 140).
Beginning in 2012, LBE tabled and held presentations at Duke. (FAC
¶ 144). LBE’s marketing succeeded: That fall, LBE “enroll[ed] the largest
number of Duke [f]oreign LL.M. [s]tudents in the history of LBE.” (Id.). And
LBE alleges that it “helped Duke [f]oreign LL.M. [s]tudents successfully pass
the NY Bar Exam.” (Id. at ¶ 145).
But in 2013, Duke denied LBE access to its campus “without any
explanation.” (FAC ¶ 146). As a result, “LBE was forced to rent a room in
another building off-campus at a substantial cost,” leading Duke’s foreign
LL.M. students to suspect “that LBE did not want to pay Duke and/or LBE was
too cheap to pay for a room at Duke.” (Id. at ¶ 147). In contrast, Duke gave
“Barbri access to its campus and use of its classrooms free of charge.” (Id.).
LBE alleges that Barbri had “exclusive on-campus promoting privileges” at
In 2014, LBE asked Duke for permission to table on its campus. (FAC
¶ 148). Duke responded that it did not have enough space to accommodate
LBE. (Id.). LBE renewed its request in 2015, when it asked Oleg Kobelev,
Duke’s Assistant Dean of International Studies, for permission to table that
fall. (Id. at ¶ 149; Ex. 47). “Kobelev did not respond,” but Duke’s Associate
Dean of Admissions and Student Affairs William Hoye did, explaining that
Duke lacked the space to give LBE a table on its campus. (FAC ¶¶ 149-50;
Tosolini e-mailed Hoye on September 13, 2015, asking again if LBE could
market its classes at Duke. (Ex. 49). Tosolini wrote that LBE was “already the
number one course provider in many schools from the East to the West Coast,”
and that many Duke students had asked LBE to visit their campus. (Id.).
Hoye did not respond at first. (FAC ¶ 151). But after Tosolini e-mailed Hoye
again the following week (Ex. 50), Hoye wrote back, explaining that Duke was
“not in the position to approve additional bar preparation companies at th[at]
time” (Ex. 51). Tosolini asked Hoye to explain why Duke had banned LBE from
conducting promotional activities on campus (Ex. 52), but Hoye did not
respond (FAC ¶ 152).
LBE alleges that “[u]pon information and belief, [f]oreign LL.M. [s]tudents
at Duke are still requesting LBE to table” there.” (FAC ¶ 154). LBE remains
barred from marketing on Duke’s campus, while “Barbri has h[eld] multiple
events regarding its products and services at Duke.” (Id. at ¶¶ 153, 155, 156).
In fall 2015, LBE marketed its course at USC, and “enroll[ed] the largest
number of USC [f]oreign LL.M. [s]tudents in the history of LBE.” (FAC ¶ 159).
But in spite of this success, LBE claims that Barbri had many unfair
advantages over LBE. For one, it is alleged that USC Professor John
Heilman — who is “a long standing Barbri professor” — gave LL.M. students
“Barbri enrollment forms … during his regular for-credit classes.” (Id. at
¶ 160). And Barbri also marketed its course to LL.M. students “several weeks
prior to USC’s Fall Bar Week, which is the only opportunity that bar exam
preparation companies have access to USC.” (Id. at ¶ 161). By LBE’s account,
“Barbri presented its products and services to [f]oreign LL.M. [s]tudents during
one of [USC’s] first LL.M. classes during the [F]all 2015 [S]emester.” (Id.). The
result, LBE alleges, was that “many students” signed up for Barbri’s course
“without knowing of Barbri’s competitors and/or with the belief that Barbri is
the only company that offers bar examination preparation courses.” (Id.).
LBE further alleges that many USC foreign LL.M. students who had
registered — and put down a deposit — for Barbri’s course decided to switch to
LBE. (FAC ¶ 162). But these students learned that Barbri still planned “to
charge them the full amount of the bar preparation course.” (Id.). In October
2015, Tosolini e-mailed Kyle Jones, USC’s Dean of Students, about Barbri’s
early access to USC’s students and Barbri’s intention “to charge [students] the
full amount even if they d[id] not take part in [Barbri’s] main course.” (Id. at
¶ 163; Ex. 53). Jones did not respond. (FAC ¶ 163).
Sometime thereafter — “and without any reason and contrary to LBE’s
prior accommodations” — USC did not invite LBE to attend its “Spring Bar
Week” event in 2016. (FAC ¶ 164). 7 On February 12, 2016, Tosolini e-mailed
Anne Marlenga, USC’s Associate Dean for Graduate and International
Programs. (Ex. 54; see Ex. 55). Tosolini asked Marlenga “to confirm the dates”
for USC’s Spring Bar Week, because USC had not yet provided those dates to
LBE. (Ex. 54). Marlenga responded on February 16, apparently after speaking
The existence of Spring Bar Week at USC refutes LBE’s allegation that Fall Bar Week is
USC’s “only opportunity that bar exam preparation companies have access to USC.”
(FAC ¶ 161).
with Tosolini on the phone. (Ex. 55). Marlenga wrote that she was “look[ing]
forward to hearing from [Tosolini] about [LBE’s] participation” in Spring Bar
Week. (Id.). The First Amended Complaint confirms that Deborah Call, USC’s
Associate Dean for Graduate and International Programs, “invited LBE to
attend” the event, although it adds that “at that point, most of Spring Bar Week
[had] already started, which made it very difficult for LBE to attend on very
short notice and effectively market its products.” (FAC ¶ 166).
Marlenga ended her e-mail to Tosolini on a different note:
Lastly, for our current LLMs who have complained
about their [LBE] experience, and as you have said that
you would be willing to work with the LLM students who
have complained on a one-on-one basis, may I provide
your email address to each of them individually?
Thank you for your willingness to address our students’
LBE ultimately attended USC’s Spring Bar Week. (Ex. 56). At that event,
Call told an LBE representative that USC “ha[d] a number of LLM students who
[were] very dissatisfied with [LBE].” (Id.). Call added that she had encouraged
these students to speak with LBE’s representative “so that [the representative]
could notate their names and contact information.” (Id.). LBE’s representative
“seemed surprised.” (Id.). And as Call recounted to Tosolini in a February 22,
2016 e-mail, this representative met with some of USC’s students but “provided
no assurance that their problems would be addressed nor that their
registrations would be canceled.” (Id.).
Tosolini responded to Call, explaining that LBE’s “marketing people”
(including, the Court assumes, LBE’s representative at Spring Bar Week) “do
not get involved with cancellation[s] or refunds.” (Ex. 57). Tosolini added that
LBE “ha[d] over 500 enrolled students,” and that “only a small number of
students ha[d] issues.” (Id.). And Tosolini wrote that LBE’s “cancellation policy
is the same as those of [its] competitors.” (Id.).
Call’s February 23, 2016 reply to Tosolini’s e-mail told a different story.
Call wrote, in relevant part:
When we spoke last week about [LBE’s] tabling during
our Bar Week, and when I told you that we have many
students who feel that [LBE’s] business practices are
abhorrent, and that they have been misled by your reps,
you said “I understand that there are a very large
number of complaints by USC students[.]”
Further, you said, “I understand that students may be
confused” acknowledging that the information your
reps have provided our students lacks consistency with
your policies and practices.
Unfortunately, we are not able to work with [LBE] from
this point forward given our students’ deep level of
dissatisfaction with your company and your company’s
failure to address their serious concerns.
(Ex. 58). LBE ultimately agreed to refund four USC students on the condition
that they sign “an affidavit stating that the[y] … w[ould] not take a bar
examination within the next two years.” (FAC ¶ 169). Call told Tosolini that
the students should receive refunds without being “required to sign any
affidavit that prohibits [them] from taking the bar exam in the future.”
(Ex. 60). In a move that went “against the general practice in the bar
examination review industry as set forth by Barbri,” LBE consented, and
“waived the affidavit” requirement. (FAC ¶ 170). LBE is still not allowed to
rent classrooms or market its courses at USC. (Id. at ¶ 171).
The genesis of LBE’s marketing efforts at Emory is unclear. But it is
clear that Emory’s administration interceded when LBE refused to provide
refunds to certain Emory students.
In January 2016, Tosolini reached an agreement with Jessica Dworkin,
Emory’s Assistant Dean of Graduate programs, pursuant to which “students
‘who ha[d] not paid for [LBE’s] course w[ould] be released from their payment
obligations and students [who] ha[d] been charged w[ould] not receive a
refund.’” (FAC ¶ 175 (quoting Ex. 61)). Two months later, Robert B. Ahdieh, a
“Vice Dean and Professor at Emory … contacted [ ] Tosolini to demand that
LBE refund all Emory students immediately.” (Id. at ¶ 176). Ahdieh told
Tosolini that Dworkin did not have the authority to enter into an agreement
with LBE about these refunds. (Id.). And Ahdieh further “threatened to
communicate with other law schools and ‘bring an action against LBE.’” (Id.).
Ahdieh, LBE notes, “is … a distinguished faculty member at Barbri.” (Id.).
LBE’s dispute with Emory is set forth in a series of April 2016 e-mails
between Tosolini and Ahdieh. On April 1, 2016, Tosolini wrote to Ahdieh,
memorializing the terms of the agreement LBE had reached with Dworkin.
(Ex. 61). Tosolini added: “I received your voice message containing a clear
threat and defamatory statements. I would like to note that you have a real
conflict of interest since you are employed by Barbri, one of our direct
competitors.” (Id.). The First Amended Complaint does not specify the “threat
and defamatory statements” that Ahdieh allegedly made. Tosolini concluded by
writing: “Finally, I am copying my lawyer to this email as he is assessing the
actual and future damage that you are causing (and threatening to cause)
[LBE] by actively reaching out to other law schools.” (Id.).
Ahdieh responded to Tosolini that same day. (Ex. 62). He reiterated that
Dworkin “did not have authority to reach any ... agreement” regarding LBE’s
refunds. (Id.). And Ahdieh added that any agreement Dworkin had reached
“predated [Emory’s] receipt of documentation from multiple schools, and
multiple students, of your employee’s misrepresentation.” (Id.). The First
Amended Complaint does not identify the employee in question; nor does it
specify the misrepresentation she made. Ahdieh then advised Tosolini “to
proceed as you did at Georgetown,” or else LBE would “not be able to return to
Emory in the future.” (Id.). Ahdieh added that in the event Emory barred LBE
from its campus, the school would “need to share with those with whom we
have been in conversation why that decision was made, including in light of the
factual record of audio recordings, written messages, and the like that the
students have compiled.” (Id.).
LBE has chosen to rely on communications of this type as the principal
evidence of collusion among Defendants. Specifically, LBE alleges that
“Ahdieh’s mention of LBE’s conduct at Georgetown clearly shows that there is
some degree of communication and influence between law schools regarding
the various vendors and companies allowed to market and sell products on law
school campuses.” (FAC ¶ 177). In so doing, however, LBE focuses on those
portions of the e-mails referencing communications with other schools, while
studiously avoiding any discussion of the student and administrator
complaints discussed therein. In the e-mail in question, for instance, Ahdieh
concluded as follows:
[M]y apologies that this issue has reached this stage.
But I have to confess that, from my conversation with
my counterparts at other schools, I did not imagine
that — in the face of the obvious and acknowledged
provision of misinformation by your employee — you
would insist on requiring litigation in order for students
to receive relief.
(Ex. 62). Barbri, LBE alleges, “has identical Terms and Conditions as LBE,”
and it has engaged in “identical conduct.” (FAC ¶ 178). But Emory has “not
tak[en] any adverse actions against Barbri.” (Id.). And by LBE’s account,
“Ahdieh intentionally allowed Emory to breach its agreement with [ ] Tosolini in
clear favoritism for Barbri.” (Id.). As things stand, LBE is “foreclosed from
tabling, advertising, renting classrooms, and selling its product to” Emory’s
foreign LL.M. students. (Id. at ¶ 180).
LBE filed its initial Complaint on May 20, 2016. (Dkt. #1). On
September 6, 2016, Defendants filed three pre-motion letters that mirror the
briefs they filed in support of their omnibus motion to dismiss. (Dkt. #69-71).
The Court held a conference to discuss these letters on October 26, 2016, and
thereafter gave LBE the opportunity to amend its Complaint. (Dkt. #82).
LBE filed its First Amended Complaint on November 14, 2016. (Dkt.
#85). It asserts thirteen causes of action:
First Cause of Action: Conspiracy to restrain trade in
violation of 15 U.S.C. § 1 (against all Defendants).
Second Cause of Action: Monopolization in violation of
15 U.S.C. § 2 (against Barbri).
Third Cause of Action:
Attempted monopolization in
violation of 15 U.S.C. § 2 (against Barbri).
Fourth Cause of Action: Misrepresentation and fraud
Fifth Cause of Action:
Tortious interference with
Sixth Cause of Action:
Tortious interference with
contractual relations (against all Defendants).
Seventh Cause of Action: Violation of Section 349 of the
Eighth Cause of Action: Violation of Section 340(1) of
the New York General Business Law (against all
Ninth Cause of Action:
Racketeering in violation of
RICO, 18 U.S.C. § 1962(c) (against all Defendants).
Tenth Cause of Action:
Misappropriation of ideas
Eleventh Cause of Action:
slander/injurious falsehoods/defamation (against all
Thirteenth Cause of Action: Breach of contract/breach
of implied covenant of good faith and fair dealing
(against all Defendants).
Defendants filed their motion to dismiss the First Amended Complaint,
and their three supporting briefs, on December 16, 2016. (Dkt. #91-101). LBE
opposed that motion on February 1, 2017 (Dkt. #102), and briefing concluded
when Defendants filed three separate reply briefs on February 15, 2017 (Dkt.
The animating force behind this lawsuit is LBE’s belief that Defendants
have conspired to make Barbri the country’s leading — and only — bar review
company. But shorn of its internal contradictions and conclusory assertions,
the First Amended Complaint does not plausibly support that belief.
Instead, the First Amended Complaint depicts a commercial dispute
between two bar review providers: Barbri and LBE. And the First Amended
Complaint explains why LBE has lost ground in that dispute. Between 2010
and 2016, foreign LL.M. students from coast to coast complained about the
quality of LBE’s courses and the company’s business practices. When those
complaints reached the administrations of the New York Law Schools and the
Non-New York Law Schools, academic administrators intervened. LBE, in turn,
saw its tabling privileges vanish — not because of any collusion between Barbri
and the ten law schools named as defendants in this case, but because of the
independent (and, it appears, justified) actions of the New York Law Schools
and the Non-New York Law Schools.
In short, LBE has not alleged a single cognizable federal cause of action:
Its antitrust, civil RICO, and copyright claims all fail. And the Court declines
to exercise supplemental jurisdiction over LBE’s state-law causes of actions.
The Court thus grants Defendants’ motion to dismiss in its entirety. 8
As the Court noted supra, the Non-New York Defendants argue that the Court lacks
personal jurisdiction over them. (Dkt. #100). The Court agrees. The Court has
considered with care the Non-New York Law Schools’ personal jurisdiction arguments,
and agrees that there is no basis to assert general, specific, or statutory jurisdiction
But instead of dismissing the First Amended Complaint as to the Non-New York Law
Schools under Rule 12(b)(2), the Court will proceed directly to the Rule 12(b)(6)
arguments that all Defendants have made. “Although [courts] traditionally treat
personal jurisdiction as a threshold question to be addressed prior to consideration of
the merits of a claim, … that practice is prudential and does not reflect a restriction on
the power of the courts to address legal issues.” ONY, Inc. v. Cornerstone Therapeutics,
Inc., 720 F.3d 490, 498 n.6 (2d Cir. 2013). And “[i]n cases involving ‘multiple
defendants — over some of whom the court indisputably has personal jurisdiction — in
which all defendants collectively challenge the legal sufficiency of the plaintiff’s cause[s]
of action,’” courts can “proceed[ ] directly to the merits on a motion to dismiss.” Id.
(quoting Chevron Corp. v. Naranjo, 667 F.3d 232, 246 n.17 (2d Cir. 2012)); see Sullivan
v. Barclays PLC, No. 13 Civ. 2811 (PKC), 2017 WL 685570, at *11 (S.D.N.Y. Feb. 21,
2017) (adopting this approach where some defendants did not dispute personal
jurisdiction, which made it “necessary to rule on [ ] defendants’ Rule 12(b)(6) arguments
regardless of the [c]ourt’s personal jurisdiction over the remaining defendants”).
Such is the case here. The Court plainly has personal jurisdiction over, for example,
the New York Law Schools. Thus, even if the Court were to hold that it lacks personal
jurisdiction over the Non-New York Law Schools, it would have to consider their merits
arguments about the First Amended Complaint, which arguments are identical to those
Motions to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)
“To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim is facially plausible
‘when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.’”
Allco Fin. Ltd. v. Klee, 861 F.3d 82, 94-95 (2d Cir. 2017) (quoting Iqbal, 556
U.S. at 678). In determining whether a plaintiff has made this showing, “the
only facts to be considered are those alleged in the complaint, and the court
must accept them, drawing all reasonable inferences in the plaintiff’s favor.”
Doe v. Columbia Univ., 831 F.3d 46, 48 (2d Cir. 2016); see generally Goel v.
Bunge, Ltd., 820 F.3d 554, 559 (2d Cir. 2016) (noting that, in determining the
adequacy of a claim under Rule 12(b)(6), a court is generally limited to “facts
stated on the face of the complaint,” “documents appended to the complaint or
incorporated in the complaint by reference,” and “matters of which judicial
notice may be taken”).
“[T]he tenet that a court must accept as true all of the allegations
contained in a complaint is inapplicable to legal conclusions. Threadbare
recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Iqbal, 556 U.S. at 678. And once a court has
of the New York Law Schools. Instead of adopting that piecemeal approach, the Court
will dismiss the First Amended Complaint as to all Defendants under Rule 12(b)(6).
excised legal conclusions from a complaint, the remaining “well-pleaded facts”
must “permit the court to infer more than the mere possibility of misconduct.”
Id. at 679. Put another way: “While Twombly does not require heightened fact
pleading of specifics, it does require enough facts to ‘nudge [a plaintiff’s] claims
across the line from conceivable to plausible.’” In re Elevator Antitrust Litig.,
502 F.3d 47, 50 (2d Cir. 2007) (quoting Twombly, 550 U.S. at 570).
The Court Grants Defendants’ Rule 12(b)(6) Motion to Dismiss
Five of the First Amended Complaint’s thirteen causes of action — the
First (15 U.S.C. § 1), Second (15 U.S.C. § 2), Third (also 15 U.S.C. § 2), Ninth
(18 U.S.C. § 1962), and Eleventh (17 U.S.C. § 101) Causes of Action — arise
under federal law. The Court will address these five claims first, analyzing why
all five are meritless. The Court will then explain why it is declining to exercise
supplemental jurisdiction over the First Amended Complaint’s eight state-law
causes of action. And finally, the Court will address why it is dismissing LBE’s
First, Second, Third, and Ninth Causes of Action with prejudice, and the First
Amended Complaint’s remaining claims without prejudice.
The First Amended Complaint Fails to State a Claim for Relief
Under Any Federal Statute
LBE Does Not Plausibly Allege That Defendants
Conspired to Restrain Trade in Violation of 15 U.S.C. § 1
Section 1 of the Sherman Act, 15 U.S.C. § 1, provides that “[e]very
contract, combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States, or with foreign
nations, is declared to be illegal.” 15 U.S.C. § 1. “Since all contracts
necessarily restrain trade to some extent, this provision cannot be read
literally: [O]nly ‘unreasonable’ restraints of trade are unlawful.” In re
Aluminum Warehousing Antitrust Litig., 95 F. Supp. 3d 419, 438 (S.D.N.Y.
2015) (quoting Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723
(1988)). And “[t]o run afoul of § 1, the unreasonable restraint must result from
an agreement between two or more entities.” Id.
Accordingly, to state a Section 1 claim, a plaintiff must make two
showings: “[i] a combination or some form of concerted action between at least
two legally distinct economic entities that [ii] unreasonably restrains trade.”
United States v. Am. Express Co., 838 F.3d 179, 193 (2d Cir. 2016) (internal
quotation mark and citation omitted). The Court considers each of these
elements in turn.
Element One — A Combination or Some Form of Concerted Action: “The
crucial question in a Section 1 case is … whether the challenged conduct stems
from independent decision or from an agreement, tacit or express.” Mayor &
City Council of Baltimore, Md. v. Citigroup, Inc., 709 F.3d 129, 135 (2d Cir.
2013) (internal quotation marks omitted) (quoting Starr v. Sony BMG Music
Entm’t, 592 F.3d 314, 321 (2d Cir. 2010)). “Agreements that fall within the
scope of Section 1 are characterized as either ‘horizontal’ or ‘vertical.’” In re
Zinc Antitrust Litig., 155 F. Supp. 3d 337, 376 (S.D.N.Y. 2016). “A horizontal
agreement is an ‘agreement between competitors at the same level of the
market structure,’ while a vertical agreement is a ‘combination[ ] of persons at
different levels of the market structure.’” Id. (quoting United States v. Topco
Assocs., Inc., 405 U.S. 596, 608 (1972)). Further, “courts have long recognized
the existence of ‘hub-and-spoke’ conspiracies in which an entity at one level of
the market structure, the ‘hub,’ coordinates an agreement among competitors
at a different level, the ‘spokes.’ United States v. Apple, Inc., 791 F.3d 290, 314
(2d Cir. 2015) (citation omitted). “These arrangements consist of both vertical
agreements between the hub and each spoke and a horizontal agreement
among the spokes to adhere to the [hub’s] terms, often because the spokes
would not have gone along with [the vertical agreements] except on the
understanding that the other [spokes] were agreeing to the same thing.” Id.
(internal quotation marks and citation omitted).
No matter the type of agreement alleged, “[a] plaintiff’s job at the pleading
stage, in order to overcome a motion to dismiss, is to allege enough facts to
support the inference that a conspiracy actually existed.” Citigroup, 709 F.3d
at 136; accord Twombly, 550 U.S. at 556 (“[S]tating [a Section 1] claim requires
a complaint with enough factual matter (taken as true) to suggest that an
agreement was made.”). This bar is not high: “To survive dismissal, ‘the
plaintiff need not show that its allegations suggesting an agreement are more
likely than not true or that they rule out the possibility of independent action,
as would be required at later litigation stages such as a defense motion for
summary judgment, or a trial.’” Gelboim v. Bank of Am. Corp., 823 F.3d 759,
782 (2d Cir. 2016) (quoting Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d
162, 184 (2d Cir. 2012)), cert. denied, 137 S. Ct. 814 (2017). “Instead, a well46
pleaded complaint may proceed even if … actual proof of those facts is
improbable, and … a recovery is very remote and unlikely as long as the
complaint presents a plausible interpretation of wrongdoing.” In re London
Silver Fixing, Ltd., Antitrust Litig., 213 F. Supp. 3d 530, 558 (S.D.N.Y. 2016)
(emphasis in original) (internal quotation marks and citations omitted).
“As the Second Circuit has recognized, there are two ways, at the
pleading stage, for a plaintiff ‘to allege enough facts to support the inference
that a conspiracy actually existed’ so as to overcome a motion to dismiss.” In
re Interest Rate Swaps Antitrust Litig., — F. Supp. 3d —, No. 16 MDL 2704
(PAE), 2017 WL 3209233, at *17 (S.D.N.Y. July 28, 2017) (quoting Citigroup,
709 F.3d at 136). “First, a plaintiff may, of course, assert direct evidence that
the defendants entered into an agreement in violation of the antitrust laws.”
Citigroup, 709 F.3d at 136. “Such evidence would consist, for example, of a
recorded phone call in which two competitors agreed to fix prices at a certain
level.” Id. “Direct evidence, however, is not required.” Interest Rate Swaps,
2017 WL 3209233, at *18. And a “[c]ourt cannot take [a plaintiff’s] failure to
present direct evidence as a sign that no conspiracy existed.” London Silver
Fixing, 213 F. Supp. 3d at 558.
Thus, “as an alternative to direct evidence, to prove a [Section 1]
conspiracy a plaintiff may rely on indirect or circumstantial evidence, that is,
‘inferences that may fairly be drawn from the behavior of the alleged
conspirators.’” Interest Rate Swaps, 2017 WL 3209233, at *18 (quoting
Anderson News, 680 F.3d at 183). But “‘alleging parallel conduct alone is
insufficient, even at the pleading stage,’ to survive a motion to dismiss.” Id.
(quoting Citigroup, 709 F.3d at 136). “Rather, to plausibly allege a § 1
violation, the parallel conduct must be ‘placed in a context that raises a
suggestion of a preceding agreement, not merely parallel conduct that could
just as well be independent action.’” Id. (quoting Twombly, 550 U.S. at 557).
“Examples of a parallel conduct allegation that would suffice under this
standard include ‘parallel behavior that would probably not result from chance,
coincidence, independent responses to common stimuli, or mere
interdependence unaided by an advance understanding among the parties.’”
Starr, 592 F.3d at 322 (quoting Twombly, 550 U.S. at 556 n.4). “A plaintiff may
also state a Section 1 claim if he alleges behavior ‘that would plausibly
contravene each defendant’s self-interest in the absence of similar behavior by
rivals.’” In re Elec. Books Antitrust Litig., 859 F. Supp. 2d 671, 682 (S.D.N.Y.
2012) (quoting Starr, 592 F.3d at 327).
“Post-Twombly courts have analyzed § 1 claims based on parallel
conduct by horizontal competitors by inquiring whether ‘plus factors’ and/or
other circumstantial evidence are present that, along with the parallel conduct,
make it plausible to infer an agreement among competitors.” Interest Rate
Swaps, 2017 WL 3209233, at *19. “These plus factors include: [i] ‘a common
motive to conspire’; [ii] ‘evidence that shows that the parallel acts were against
the apparent individual economic self-interest of the alleged conspirators’; and
[iii] ‘evidence of a high level of interfirm communications.’” Gelboim, 823 F.3d
at 781 (internal quotation marks omitted) (quoting Citigroup, 709 F.3d at 136).
“[T]his list” of plus factors “is ‘neither exhaustive nor exclusive, but rather
illustrative of the type of circumstances which, when combined with parallel
behavior, might permit a jury to infer the existence of an agreement.’” In re
Propranolol Antitrust Litig., — F. Supp. 3d —, No. 16 Civ. 9901 (JSR), 2017 WL
1287515, at *4 (S.D.N.Y. Apr. 6, 2017) (quoting Gelboim, 823 F.3d at 781).
“[T]he presence of plus factors certainly does not compel or ‘necessarily
lead to an inference of conspiracy.’” Anderson News, L.L.C. v. Am. Media, Inc.,
123 F. Supp. 3d 478, 499 (S.D.N.Y. 2015) (quoting Apex Oil Co. v. DiMauro, 822
F.2d 246, 254 (2d Cir. 1987)). And sometimes, a plaintiff’s allegations of
parallel conduct, combined with plus factors, will not support a Section 1
claim. “An inference of conspiracy will not arise when the conspirators’ parallel
conduct ‘made perfect business sense,’ … ‘there are obvious alternative
explanations for the facts alleged,’ … or the alleged facts ‘suggest competition
at least as plausibly as [they] suggest anticompetitive conspiracy[.]’” Interest
Rate Swaps, 2017 WL 3209233, at *18 (quoting Citigroup, 709 F.3d at 138; In
re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 322-23 (3d Cir. 2010); Elevator
Antitrust Litig., 502 F.3d at 51). Nonetheless, “the requirement of ‘plausible
grounds to infer an agreement does not impose a probability requirement at the
pleading stage; it simply calls for enough facts to raise a reasonable expectation
that discovery will reveal evidence of illegal agreement[.]’” Id. (internal
quotation marks omitted) (emphases in original) (quoting Anderson News, 680
F.3d at 184).
Element Two — An Unreasonable Restraint of Trade: “Section 1 does not
disallow any and all agreements; it disallows only those ‘in restraint of trade or
commerce among the several States.’” Elec. Books, 859 F. Supp. 3d at 682
(quoting 15 U.S.C. § 1). Moreover, Section 1 “outlaws only unreasonable
restraints.” Id. (emphasis in original) (quoting Leegin Creative Leather Prods.,
Inc. v. PSKS, Inc., 551 U.S. 877, 885 (2007)).
“To determine whether a practice unreasonably restrains trade in
violation of the Sherman Act, courts apply one of two rules designed to provide
guidance in forming judgments about the competitive significance of challenged
restraints.” Am. Express Co., 838 F.3d at 193. “A plaintiff alleging a § 1
violation may allege either [i] a per se unlawful agreement or [ii] one that is
illegal under the ‘rule of reason.’” Interest Rate Swaps, 2017 WL 3209233, at
*22. “Per se liability is limited to ‘agreements whose nature and necessary
effect are so plainly anticompetitive that no elaborate study of the industry is
needed to establish their illegality[.]’” Id. (quoting Nat’l Soc’y of Prof’l Eng’rs v.
United States, 435 U.S. 679, 692 (1978)). But “[m]ost antitrust claims are
evaluated under the rule of reason,” which “requires a court to weigh all of the
circumstances surrounding the challenged conduct to determine whether the
alleged restraint is unreasonable, taking into account the nature of the specific
business, the industry, the restraint’s history, and whether the defendant has
market power.” In re Aluminum Warehousing Antitrust Litig., No. 13 MDL 2481
(KBF), 2014 WL 4277510, at *25 (S.D.N.Y. Aug. 29, 2014).
To review, a cognizable Section 1 claim has two elements: “[i] a
combination or some form of concerted action between at least two legally
distinct economic entities that [ii] unreasonably restrains trade.” Am. Express
Co., 838 F.3d at 193 (internal quotation marks and citation omitted). LBE has
established neither element. Nothing in the First Amended Complaint suggests
that Defendants entered into a conspiracy. And the First Amended Complaint
does not allege plausibly that any of the Defendants sought to unreasonably
restrain trade. LBE’s Section 1 claim fails.
LBE Has Not Plausibly Alleged That Defendants Entered Into Any Form
of Agreement: LBE brings its Section 1 claim against all Defendants in this
action. (FAC ¶¶ 193-201). But the First Amended Complaint does not present
direct evidence to support LBE’s claim that Barbri, the New York Law Schools,
and the Non-New York Law Schools entered into an agreement (let alone an
agreement to restrain trade). Nor does the First Amended Complaint plead
indirect evidence to support the existence of an agreement between these
entities. On this first element, LBE’s Section 1 claim fails.
To begin, the First Amended Complaint presents no “direct evidence that
[Defendants] entered into an agreement in violation of the antitrust laws.”
Citigroup, 709 F.3d at 136. LBE does not argue otherwise in its opposition
brief. Instead, LBE attempts to rely on indirect evidence of Defendants’
conspiracy, claiming that in the First Amended Complaint, Defendants’
“conspiracy agreement” is “evidenced by parallel conduct and contributing
‘plus factors.’” (LBE Opp. 14).
The Court disagrees. The First Amended Complaint provides no indirect
evidence to support LBE’s claim that Defendants entered into an agreement
within the meaning of Section 1. LBE argues that the New York Law Schools
and the Non-New York Law Schools engaged in parallel conduct when they
“forb[ade] [LBE] from any on-campus tabling, marketing[,] and promotion
privileges”; LBE deems these decisions “almost simultaneous.” (LBE Opp. 15).
But calling this conduct “parallel” is a stretch: The First Amended Complaint
makes plain that these schools banned LBE from marketing on their campuses
at different times over the span of several years. Columbia, for example, first
“disallow[ed] LBE from” its campus in “September of 2010” (FAC ¶ 69);
Fordham did the same, but not until February 2016 (id. at ¶ 102). Parallel
conduct is insufficient, on its own, to state a plausible Section 1 claim. See
Interest Rate Swaps, 2017 WL 3209233, at *18 (quoting Citigroup, 709 F.3d at
136). Here, LBE has not established even this basic building block of an
LBE’s attempt to establish “plus factors” is similarly unavailing. LBE
argues that the First Amended Complaint pleads three such factors:
“(i) common motive to conspire; (ii) actions contrary to each defendant’s selfinterest; and (iii) regular communication between defendants.” (LBE Opp. 17).
Initially, the Court notes that in its brief, LBE largely supports these plus
factors with allegations that do not appear in the First Amended Complaint.
(See id. at 18 (arguing that Barbri gives “prepaid credit cards/gift cards to
numerous departments at the Defendant Law Schools”); id. at 19 (claiming that
Polo urged NYU, Cardozo, and Harvard to ban LBE from their campuses); id.
(ruminating that the New York Law Schools and the Non-New York Law
Schools “had the regular opportunity to discuss the on-going nature of their
scheme” because “academic scholars customarily speak over the phone, via
email, and meet at seminars”). The Court will not consider these new
allegations here, as “[i]t is axiomatic that [a] [c]omplaint cannot be amended by
the briefs in opposition to a motion to dismiss.” Komlossy v. Faruqi & Faruqi,
LLP, No. 15 Civ. 9316 (KPF), 2017 WL 722033, at *6 (S.D.N.Y. Feb. 23, 2017)
(quoting Jordan v. Chase Manhattan Bank, 91 F. Supp. 3d 491, 500 (S.D.N.Y.
But the biggest flaw in LBE’s account of these “plus factors” — and, more
broadly, in LBE’s Section 1 claim — is that “there are obvious alternative
explanations for the” New York Law Schools’ and Non-New York Law Schools’
conduct. Interest Rate Swaps, 2017 WL 3209233, at *18 (internal quotation
mark and citation omitted). LBE posits that these law schools “provide
preferential treatment to Barbri over its competitors to ensure” that the schools
continue receiving “donations and sizable employment agreements” from
Barbri. (LBE Opp. 18). The First Amended Complaint gives no sense of these
donations’ size. Nor does it attempt to explain why the administrators of the
New York Law Schools and the Non-New York Law Schools would be invested
in ensuring that professors at these schools can continue teaching Barbri
courses on the side.
Even more importantly, the First Amended Complaint does not provide
any support for LBE’s claim that the New York Law Schools and the Non-New
York Law Schools favor Barbri over Barbri’s competitors. Instead, the First
Amended Complaint establishes only that these law schools prefer Barbri over
one of its competitors: LBE. And the First Amended Complaint — and moreso,
its exhibits — makes plain why this is so: Administrators at these schools
were concerned about the quality of LBE’s bar review course and the
company’s business practices.
Consider the concerns that administrators at law schools across the
country conveyed to LBE. There were complaints about the quality of LBE’s
course materials. (Ex. 36, 39). There were concerns about LBE’s refusal to
provide refunds to students. (Ex. 42-46). There were complaints about LBE’s
business tactics, including its decision to pursue litigation against students.
(Ex. 39, 58). And there were complaints that LBE’s marketing representatives
made misrepresentations to law students who were considering signing up for
LBE’s courses. (Ex. 58, 62).
In light of these complaints, it is unsurprising that — at different times
over the span of several years — many of the New York Law Schools and the
Non-New York Law Schools barred LBE from marketing its courses on their
campuses. Their reactions were “independent responses to common stimuli,”
Starr, 592 F.3d at 322 (quoting Twombly, 550 U.S. at 556 n.4), not a
coordinated effort to stifle competition. And this alternative explanation for
these law schools’ conduct defeats any “inference of conspiracy” that LBE
attempts to raise. Interest Rate Swaps, 2017 WL 3209233, at *18. Even
viewed in the light most favorable to LBE, the First Amended Complaint’s
allegations fall far short of establishing that Defendants entered into a
LBE Has Not Plausibly Alleged That Defendants Unreasonably Restrained
Trade: LBE’s failure to plead an agreement between and among Defendants is
fatal to its Section 1 claim. In turn, the Court need not consider whether LBE
has established the second element of this claim: that Defendants
unreasonably restrained trade. See Anderson News, 123 F. Supp. 3d at 496
(“Only after an agreement is established will a court consider whether the
agreement constituted an unreasonable restraint of trade.” (quoting AD/SAT v.
Associated Press, 181 F.3d 216, 232 (2d Cir. 1999))). Nonetheless, the Court
will explain why LBE has also not made this showing, because this pleading
deficiency highlights a fundamental flaw in all of LBE’s antitrust claims.
Section 1 forbids unreasonable restraints on trade. And that restriction
furthers the overarching goal of the Sherman Act: “to protect[ ] competition as a
whole in [a given] relevant market.” Am. Express Co., 838 F.3d at 193 (internal
quotation mark omitted) (quoting Top Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d
90, 96 (2d Cir. 1998)). But the Sherman Act does not “aim[ ] to
protect … individual competitors within that market.” Id. (internal quotation
marks omitted) (quoting Top Mkts, 142 F.3d at 96). Put another way:
“Disputes between business competitors … are not the proper subjects of
antitrust actions.” Id.
The First Amended Complaint alleges clearly that LBE and Barbri are in
a dispute. But it gives no indication that Defendants have done anything to
harm “competition as a whole” within the LLM Market. Part of this is because
the LLM Market is not a cognizable market under the Sherman Act, an issue
the Court will explain in the next section of this Opinion. But another reason
why LBE has failed to allege injury to competition is the fact that the First
Amended Complaint provides no information about other companies that
compete with Barbri and LBE.
Plainly, LBE is aware that such competitors exist. (See FAC ¶ 27
(alleging that “LBE has enjoyed significantly high bar passage rates compared
to those of its competitors”); id. at ¶ 42 (“[T]here are a very limited number of
bar preparation providers in the JD Market and even [fewer] in the LLM
Market.”); Ex. 11 (Tosolini writing about “competitors” offering discounts to
students)). And the First Amended Complaint’s exhibits mention two such
competitors by name: Kaplan (Ex. 20-21, 37) and Pieper (Ex. 38). But the
First Amended Complaint does not contain a single allegation about these
competitors, let alone how competition among them has suffered because of
Again, the First Amended Complaint does not plausibly allege that
Defendants entered into a conspiracy of any stripe. But even if the Court were
to accept LBE’s allegation that Defendants entered into a conspiracy, that
conspiracy’s object — favoring Barbri over LBE — would not be cognizable
under the Sherman Act. The First Amended Complaint, at bottom, depicts a
business dispute between two competing bar review companies. It does not
state a claim under Section 1 of the Sherman Act.
LBE Does Not Plausibly Allege That Barbri Monopolized
the LLM Market in Violation of 15 U.S.C. § 2
Section 2 of the Sherman Act forbids monopolization. 15 U.S.C. § 2. “To
state a[ ] claim under Section 2, a plaintiff must allege plausible facts that”
establish two elements. Zinc Antitrust Litig., 155 F. Supp. 3d at 377. First, a
plaintiff must establish “that a defendant possesses market power (sometimes
referred to as ‘monopoly power’) in a relevant market, and willfully acquired or
maintained such power as ‘distinguished from growth or development as a
consequence of a superior product, business acumen, or historic accident.’” Id.
(quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966)). And
second, a plaintiff must plausibly allege that the defendant engaged in
“anticompetitive conduct.” New York ex rel. Schneiderman v. Actavis PLC, 787
F.3d 638, 651 (2d Cir. 2015). The Court considers both elements in turn.
Element One — Market Power: Under Section 2, “[a] claim of monopoly
power may be alleged by pleading [i] power to control prices or exclude
competition, or [ii] possession of a predominant share of the relevant market.”
Merced Irrigation Dist. v. Barclays Bank PLC, 165 F. Supp. 3d 122, 140
(S.D.N.Y.), reconsideration denied, 178 F. Supp. 3d 181 (S.D.N.Y. 2016).
Because the First Amended Complaint bases its Section 2 claim on Barbri’s
alleged market share (see FAC ¶¶ 205, 207), the Court will focus on this second
method of establishing market power. “To allege [market] power by this means,
a plaintiff must satisfactorily allege both [i] a plausible definition of a relevant
market and [ii] excess market share in that market.” Shak v. JPMorgan Chase
& Co., 156 F. Supp. 3d 462, 482 (S.D.N.Y. 2016).
The Court begins by considering the metes and bounds of a relevant
market. For purposes of Section 2, “the relevant market is the ‘area of effective
competition’ within which the defendant operates.” Concord Assocs., L.P. v.
Entm’t Properties Tr., 817 F.3d 46, 52 (2d Cir. 2016) (quoting AD/SAT, 181 F.3d
at 227). Such “a market has two components: [i] a product market and [ii] a
geographic market.” Id.
“A relevant product market consists of ‘products that have reasonable
interchangeability for the purposes for which they are produced — price, use
and qualities considered.’” Zinc Antitrust Litig., 155 F. Supp. 3d at 378 (quoting
United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 404 (1956)).
“Products are considered reasonably interchangeable if consumers treat them
as acceptable substitutes.” Id. Thus, for purposes of Section 2, “[t]he relevant
market must be defined ‘as all products reasonably interchangeable by
consumers for the same purposes,’ because the ability of consumers to switch
to a substitute restrains a firm’s ability to raise prices above the competitive
level.’” Shak, 156 F. Supp. 3d at 482 (quoting City of N.Y. v. Grp. Health Inc.,
649 F.3d 151, 155 (2d Cir. 2011)). And “[w]here the plaintiff fails to define its
proposed relevant market with reference to the rule of reasonable
interchangeability and cross-elasticity of demand, or alleges a proposed
relevant market that clearly does not encompass all interchangeable substitute
products even when all factual inferences are granted in [the] plaintiff’s favor,
the relevant market is legally insufficient and a motion to dismiss may be
granted.” Id. at 482-83 (quoting Chapman v. N.Y. State Div. for Youth, 546 F.3d
230, 238 (2d Cir. 2008)).
A “geographic market encompasses the geographic area in which
purchasers of the product can practicably turn for alternative sources of the
product.” Zinc Antitrust Litig, 155 F. Supp. 3d at 378. “Factors relevant to [the]
geographic scope of a market ‘may include barriers to transactions between
buyers and sellers of different locations, such as transportation costs to a
particular location, as well as the relative preferences of consumers with
respect to travel and price.’” Id. (quoting Heerwagen v. Clear Channel
Commc’ns, 435 F.3d 219, 228 (2d Cir. 2006), overruled on other grounds as
recognized by Concord Assocs., 817 F.3d at 53).
As for excess market share, “one firm’s large percentage share of a
defined relevant market” can suffice to establish this element of a Section 2
claim. Aluminum Warehousing, 95 F. Supp. 3d at 454. “For instance, ‘a
market share of over 70 percent is usually strong evidence of monopoly
power.’” Id. (quoting Top Mkts., 142 F.3d at 99).
“Although market definition is a deeply fact-intensive inquiry not
ordinarily subject to dismissal at the pleadings stage, … there is no absolute
rule against dismissal where the plaintiff has failed to articulate a plausible
explanation as to why a market should be limited in a particular way[.]”
Concord Assocs., 817 F.3d at 53 (internal quotation marks and citations
omitted). In turn, a district court adjudicating a motion to dismiss a Section 2
claim should “assess whether the … complaint asserts sufficient facts to allege
plausibly the existence of both a product and geographic market.” Id. “Cases
are subject to dismissal when [a] plaintiff fails to allege a plausible explanation
as to why a market should be limited in a particular way.” Zinc Antitrust Litig.,
155 F. Supp. 3d at 378.
Element Two — Anticompetitive Conduct: “The Second Circuit has
defined anticompetitive conduct as ‘conduct without a legitimate business
purpose that make[s] sense only because it eliminates competition.’” Merced,
165 F. Supp. 3d at 142 (quoting In re Adderall XR Antitrust Litig., 754 F.3d 128,
133 (2d Cir. 2014)).
LBE’s Section 2 monopolization claim fails because the First Amended
Complaint does not plausibly allege that Barbri has market power. What LBE
believes to be the relevant market — the LLM Market — is not cognizable under
Section 2. And in any event, the First Amended Complaint gives no indication
that Barbri holds an excess share of the LLM Market.
The First Amended Complaint defines the LLM Market as follows. The
LLM Market comprises “the U.S. market for bar examination review courses for
[f]oreign LL.M. [s]tudents.” (FAC ¶ 29). LBE alleges that “the relevant
geographic market” for the LLM Market “is the United States.” (Id. at ¶ 38). By
LBE’s account, the LLM Market is distinct from the JD Market (“the U.S.
market for bar examination review courses for J.D. graduates”). (Id. at ¶ 27).
And because “significantly” fewer LL.M. students “sit for a bar examination,”
“[t]he LLM Market is far more limited than the JD Market.” (Id. at ¶ 31).
This is an inadequate market definition. LBE’s claimed distinction
between the LLM Market and the JD Market “is an ipse dixit.” Shak, 156 F.
Supp. 3d at 483. This is in large part because LBE has not defined the LLM
Market “with reference to the rule of reasonable interchangeability and crosselasticity of demand,” a deficiency that alone merits dismissal of LBE’s Section
2 claim. Chapman, 546 F.3d at 238 (citation omitted).
Although LBE alleges that the LLM Market is distinct from the JD
Market, it acknowledges that LL.M. and J.D. graduates take the same bar
exam — these students “are in direct competition.” (FAC ¶ 34). LBE also
claims that in 2009, it became “the first company to offer” a bar review course
catered specifically to foreign LL.M. graduates. (Id. at ¶ 37). Indeed, by LBE’s
account, before 2012, “Barbri only sold one type of bar review course to both
the JD Market and the LLM Market.” (Id. at ¶ 46; see id. at ¶ 45).
How, then, did foreign LL.M. graduates study for the bar before LBE was
founded in 2009? The most logical reading of the First Amended Complaint is
that they took the same bar review classes as their J.D.-holding peers. But the
First Amended Complaint does not address this obvious overlap between the
LLM Market and the JD Market. And as a result, the First Amended Complaint
does not explain why the JD Market does not offer “reasonably
interchangeable” substitutes for the courses available in the LLM Market.
Shak, 156 F. Supp. 3d at 482 (quoting Grp. Health, 649 F.3d at 155). LBE’s
failure to address these alternative products renders its definition of the LLM
Market implausible. See Bayer Schering Pharma AG v. Sandoz, Inc., 813 F.
Supp. 2d 569, 577-78 (S.D.N.Y. 2011).
And even if LBE had plausibly defined the LLM Market, the First
Amended Complaint does not allege that Barbri holds an excess share of it.
The First Amended Complaint “assume[s]” that Barbri has an “over 80%”
share” of “the bar review marketplace.” (FAC ¶ 43; see also id. at ¶ 205 (“Upon
information and belief, Barbri maintains an 80%-90% share of the LLM Market
and the JD Market.”)). This is confusing, given LBE’s insistence that the JD
Market and LLM Market are distinct, and that only the latter is relevant to
LBE’s Section 2 claim. (Id. at ¶¶ 29-30). In any event, the First Amended
Complaint provides no indication of Barbri’s share of the LLM Market.
Moreover, some of the First Amended Complaint’s allegations undercut
an inference that Barbri has an excess share of the LLM Market. “It is inherent
in the concept of a claim brought under Section 2 that the monopolist has the
power over price and competition in the market it purportedly monopolizes.”
Zinc Antitrust Litig., 155 F. Supp. 3d at 379. Throughout the First Amended
Complaint, LBE alleges that Barbri charges “supracompetitive prices” for its
“bar review courses.” (FAC ¶¶ 44, 198). But the First Amended Complaint also
alleges that Barbri offered discounts to students at many law schools. (Id. at
¶¶ 56, 99, 161). The question, then, is why Barbri — an alleged
monopolist — would discount its courses in order to compete in the LLM
Market. LBE supplies no answer, weakening its claim that Barbri holds an
excess share of the LLM Market.
In sum, LBE has not plausibly alleged that Barbri possesses market
power in the LLM Market. Its Section 2 monopolization claim thus fails.
LBE Does Not Plausibly Allege That Barbri Attempted
Monopolization in Violation of 15 U.S.C. § 2
“Section Two of the Sherman Act … [also] forbids attempted
monopolization.” A.V.E.L.A., Inc. v. Estate of Marilyn Monroe, LLC, 241 F. Supp.
3d 461, 481 (S.D.N.Y. 2017). “To make out a Section Two claim, a plaintiff
must prove three things: ‘[i] that the defendant has engaged in predatory or
anticompetitive conduct with [ii] a specific intent to monopolize and [iii] a
dangerous probability of achieving monopoly power.’” Id. (quoting Sandoz, 813
F. Supp. 2d at 578). And “[i]n order to determine whether there is a dangerous
probability of monopolization, courts have found it necessary to consider the
relevant market and the defendant’s ability to lessen or destroy competition in
that market.” Sandoz, 813 F. Supp. 2d at 578 (quoting Spectrum Sports, Inc. v.
McQuillan, 506 U.S. 447, 456 (1993)).
LBE’s “attempted monopolization claim mirrors [its] actual
monopolization claim,” Zinc Antitrust Litig., 155 F. Supp. 3d at 382, and both
fail for similar reasons. To begin, LBE has not established a cognizable
market. “‘A valid claim for … attempted monopolization must define the
relevant product market’ in which trade was monopolized.” Boneta v. Rolex
Watch USA, Inc., 232 F. Supp. 3d 354, 360 (S.D.N.Y. 2017) (quoting Shaw v.
Rolex Watch, U.S.A., Inc., 673 F. Supp. 674, 678 (S.D.N.Y. 1987)). But as the
Court just explained, the LLM Market, as defined in the First Amended
Complaint, is not cognizable under Section 2.
LBE’s failure to define a valid market prevents it from demonstrating that
Barbri has a dangerous probability of achieving a monopoly. True, an
attempted monopolization claim requires “[a] lesser degree of market
power … than that necessary to establish a completed monopolization claim.”
Bayer Schering, 813 F. Supp. 2d at 580 (quoting Tops Mkts., 142 F.3d at 100).
But a court cannot determine whether a defendant holds any degree of market
power before “determin[ing] what market that defendant has attempted to
monopolize.” A.V.E.L.A., 241 F. Supp. 3d at 481; see Concord Assocs., 817
F.3d at 53 (“[W]ithout a definition of [a relevant] market there is no way to
measure the defendant’s ability to lessen or destroy competition.” (quoting
Xerox Corp. v. Media Scis. Int’l, Inc., 511 F. Supp. 2d 372, 383 (S.D.N.Y. 2007))).
Here again, LBE cannot state a claim under Section 2 without defining a
plausible market. Its attempted monopolization claim, like its completed
monopolization claim, fails accordingly.
LBE Does Not Plausibly Allege That Defendants Have
Committed a Civil RICO Violation
18 U.S.C. § 1964(c) provides a civil remedy to “[a]ny person injured in his
business or property by” a RICO violation. “To sustain a private cause of
action under RICO, a plaintiff must allege: ‘[i] the defendant’s violation of 18
U.S.C. § 1962, [ii] an injury to the plaintiff’s business or property, and
[iii] causation of the injury by the defendant’s violation.” Campeggi v. Arche
Inc., No. 15 Civ. 1097 (PGG), 2016 WL 4939539, at *12 (S.D.N.Y. Sept. 14,
2016) (quoting Lerner v. Fleet Bank, N.A., 459 F.3d 273, 283 (2d Cir. 2006)).
“Turning to the first requirement, to establish a defendant’s violation of 18
U.S.C. § 1962, a plaintiff must allege ‘the existence of seven constituent
elements: [i] that the defendant [ii] through the commission of two or more acts
[iii] constituting a pattern [iv] of racketeering activity [v] directly or indirectly
invests in, or maintains an interest in, or participates in [vi] an enterprise
[vii] the activities of which affect interstate or foreign commerce.’” TardibuonoQuigley v. HSBC Mortg. Corp. (USA), No. 15 Civ. 6940 (KMK), 2017 WL
1216925, at *5 (S.D.N.Y. Mar. 30, 2017) (internal quotation marks omitted)
(quoting Moss v. Morgan Stanley Inc., 719 F.2d 5, 17 (2d Cir. 1983)). Below,
the Court considers two (really, three) of these elements in greater detail: what
constitutes (i) a “pattern of racketeering activity” and (ii) a RICO “enterprise.”
Pattern of Racketeering Activity: “‘[R]acketeering activity,’ as defined in
RICO, may consist of any of a number of criminal offenses, … including mail
fraud in violation of 18 U.S.C. § 1341, and wire fraud in violation of 18 U.S.C.
§ 1343.” Crawford v. Franklin Credit Mgmt. Corp., 758 F.3d 473, 487 (2d Cir.
2014) (citing 18 U.S.C. § 1961(1)). “A ‘pattern of racketeering activity’ consists
of, inter alia, ‘at least two acts of racketeering activity[.]’” Id. (quoting 18 U.S.C.
§ 1961(5)). “To survive a motion to dismiss, this pattern must be adequately
alleged in the complaint.” BWP Media USA Inc. v. Hollywood Fan Sites, LLC, 69
F. Supp. 3d 342, 361 (S.D.N.Y. 2014) (quoting Spool v. World Child Int’l
Adoption Agency, 520 F.3d 178, 183 (2d Cir. 2008)).
Further, “a civil RICO plaintiff also ‘must show that the racketeering
predicates are related, and that they amount to or pose a threat of continued
criminal activity.’” Crawford, 758 F.3d at 487 (quoting H.J. Inc. v. Nw. Bell Tel.
Co., 492 U.S. 229, 239 (1989)). “The requisite continuity may be found in
‘either an open-ended pattern of racketeering activity (i.e., past criminal
conduct coupled with a threat of future criminal conduct) or a closed-ended
pattern of racketeering activity (i.e., past criminal conduct extending over a
substantial period of time).’” Id. (internal quotation marks omitted) (quoting
GICC Capital Corp. v. Tech. Fin. Grp., Inc., 67 F.3d 463, 466 (2d Cir. 1995)).
RICO Enterprise: 18 U.S.C. § 1961(4) defines “enterprise,” for purposes
of RICO, as “any individual, partnership, corporation, association, or other
legal entity, and any union or group of individuals associated in fact although
not a legal entity.” “The existence of an enterprise at all times remains a
separate element which must be proved by” a civil RICO plaintiff. New York v.
United Parcel Serv., Inc., No. 15 Civ. 1136 (KBF), 2016 WL 4203547, at *3
(S.D.N.Y. Aug. 9, 2016) (internal quotation mark omitted) (quoting United
States v. Turkette, 452 U.S. 576, 583 (1981)); see also id. (“[T]he enterprise
‘must be separate from the pattern of racketeering activity and distinct from
the person conducting the affairs of the enterprise.’” (quoting First Capital
Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 173 (2d Cir. 2004)).
Section 1961(4) includes in the definition of an enterprise “any … group
of individuals associated in fact.” Boyle v. United States, 556 U.S. 938, 944
(2009) (quoting 18 U.S.C. § 1961(4)). “An ‘association-in-fact’ for RICO
purposes ‘is proved by evidence of an ongoing organization, formal or informal,
and by evidence that the various associates function as a continuing unit.’”
Tardibuono-Quigley, 2017 WL 1216925, at *6 (quoting City of N.Y. v. Chavez,
944 F. Supp. 2d 260, 269 (S.D.N.Y. 2013)). And “‘[i]t is apparent’ from RICO’s
text ‘that an association-in-fact enterprise must have at least three structural
features: [i] a purpose, [ii] relationships among those associated with the
enterprise, and [iii] longevity sufficient to permit these associates to pursue the
enterprise’s purpose.” Id. (quoting Boyle, 556 U.S. at 946). Further, a civil
RICO “complaint must set out facts tending to show that each individual
defendant ‘participated in the operation or management of the enterprise
itself.’” Elsevier Inc. v. W.H.P.R., Inc., 692 F. Supp. 2d 297, 307 (S.D.N.Y. 2010)
(quoting Reves v. Ernst & Young, 507 U.S. 170, 183 (1993)); see id. at 307-08
(“For purposes of civil RICO, it is not enough to allege that a defendant
provided services that were helpful to an enterprise, without alleging facts that,
if proved, would demonstrate some degree of control over the enterprise.”).
“In determining whether [a plaintiff has] alleged the existence of an
association-in-fact RICO enterprise, courts analyze the ‘hierarchy, organization,
and activities of the alleged association to determine whether its members
functioned as a unit.’” BWP Media, 69 F. Supp. 2d at 360 (quoting Cont’l
Petroleum Corp. v. Corp. Funding Partners, LLC, No. 11 Civ. 7801 (PAE), 2012
WL 1231775, at *5 (S.D.N.Y. Apr. 12, 2012)); cf. Kriss v. Bayrock Grp. LLC,
No. 10 Civ. 3959 (LGS), 2016 WL 7046816, at *16 (S.D.N.Y. Dec. 2, 2016) (“An
association-in-fact enterprise ‘need not have a hierarchical structure, a chain
of command, or other business-like attributes,’ but it ‘must have an
ascertainable structure beyond that inherent in the pattern of racketeering
activity in which it engages.’” (quoting United States v. Applins, 637 F.3d 59, 73
(2d Cir. 2011)), appeal dismissed (Feb. 6, 2017), on reconsideration in part,
2017 WL 1901966 (S.D.N.Y. May 8, 2017). At base, “an association-in-fact
enterprise is ‘a group of persons associated together for a common purpose of
engaging in a course of conduct.’” Tardibuono-Quigley, 2017 WL 1216925, at
*6 (quoting Boyle, 556 U.S. at 946).
The First Amended Complaint does not state a cognizable civil RICO
claim. LBE alleges that “[b]etween the summer of 2009 through April 2016,”
Barbri, the New York Law Schools, and the Non-New York Law Schools “formed
an association-in-fact for the purpose of defrauding LBE.” (FAC ¶ 284). That
enterprise’s “common purpose,” LBE claims, “was to use artifice, deceit,
misinformation, and dishonest means to wrest away from LBE its customers in
the LLM Market.” (Id. at ¶ 286). And Defendants allegedly accomplished this
purpose by committing various predicate acts of mail and wire fraud. (Id. at
¶ 287). 9
These allegations raise more questions than they answer. To start:
What fraudulent communications did Defendants transmit via mail and wire in
furtherance of their “enterprise-in fact”? Who made the statements? And
when were the statements made? “[W]here ... the predicate acts on which a
RICO claim is based sound in fraud, those acts must be pleaded in conformity
with Rule 9(b)’s heightened pleading standard.” BWP Media, 69 F. Supp. 3d at
362 (quoting Cont’l Petroleum, 2012 WL 1231775, at *4). “In order to comply
with Rule 9(b), a complaint alleging fraud ‘must: [i] specify the statements that
the plaintiff contends were fraudulent, [ii] identify the speaker, [iii] state where
and when the statements were made, and [iv] explain why the statements were
fraudulent.’” Id. (quoting Lerner, 459 F.3d at 290). “And ‘[w]hen … a complaint
contains allegations of fraud against multiple defendants, the plaintiff must
plead facts that describe each defendant’s involvement in the fraud.’” Id.
(quoting Watkins v. Smith, No. 12 Civ. 4635 (DLC), 2013 WL 655085, at *9
(S.D.N.Y. Feb. 22, 2013)). The First Amended Complaint fails on all of these
In its opposition brief, LBE alleges that Defendants’ pattern of racketeering activity
included “commercial bribery” in violation of New York Law. (LBE Opp. 33-34). Like
many of the claims LBE makes in its brief, this allegation does not appear in the First
Amended Complaint. The Court will thus not consider it here. (See supra note 4).
“Given the routine use of mail and wire communications in business
operations, … ‘RICO claims premised on mail or wire fraud must be
particularly scrutinized because of the relative ease with which a plaintiff may
mold a RICO pattern from allegations that, upon closer scrutiny, do not
support it.’” Crawford, 758 F.3d at 489 (quoting Efron v. Embassy Suites
(Puerto Rico), Inc., 223 F.3d 12, 20 (1st Cir. 2000)). Just so here. LBE’s
allegations of fraud do not satisfy Rule 12(b)(6), much less Rule 9(b). The First
Amended Complaint thus fails to allege plausibly that Defendants engaged in a
pattern of racketeering activity.
LBE’s allegations that Defendants formed an enterprise-in-fact are
equally unavailing. The First Amended Complaint gives no indication that
Defendants “functioned as a unit.” BWP Media, 69 F. Supp. 2d at 360 (internal
quotation mark and citation omitted). Instead, LBE rests on its conclusory
assertion that Barbri and the law school defendants “formed an association-in
fact” that constituted “an ‘enterprise’” under 18 U.S.C. § 1961(4). (FAC ¶ 284).
But even if LBE had established the existence of an association-in-fact
enterprise, the First Amended Complaint does not allege “that each individual
defendant participated in the operation or management of the enterprise itself.”
Elsevier, 692 F. Supp. 2d at 307 (internal quotation marks and citation
omitted). Accordingly, LBE also falls short of plausibly alleging the existence of
a RICO enterprise-in-fact.
For these reasons, LBE has not stated a cognizable civil RICO claim.
LBE Does Not Allege Plausibly That Barbri Committed
“To withstand a motion to dismiss, a complaint based on copyright
infringement must allege: [i] which original works are the subject of the
copyright claim; [ii] that the plaintiff owns the copyrights in those works;
[iii] that the copyrights have been registered in accordance with [the Copyright
Act]; and [iv] ‘by what acts during what time’ the defendant infringed the
copyright.” Gym Door Repairs, Inc. v. Young Equip. Sales, Inc., 206 F. Supp. 3d
869, 893 (S.D.N.Y. 2016) (quoting Carell v. Shubert Org., Inc., 104 F. Supp. 2d
236, 250 (S.D.N.Y. 2000)), reconsideration denied, No. 15 Civ. 4244 (JGK),
2016 WL 6652733 (S.D.N.Y. Nov. 10, 2016). “The third prong, demonstrating a
valid copyright registration, captures the statutory requirement of Section
411(a) of the Copyright Act, which provides in relevant part that ‘no civil action
for infringement of the copyright in any United States work shall be instituted
until preregistration or registration of the copyright claim has been made in
accordance with this title.’” Gattoni v. Tibi, LLC, — F. Supp. 3d —, No. 16 Civ.
7527 (RWS), 2017 WL 2313882, at *2 (S.D.N.Y. May 25, 2017) (quoting 17
U.S.C. § 411(a)).
“The Second Circuit has not addressed” “whether a work qualifies as
registered under the [Copyright Act] when an application for copyright is
pending.” Gattoni, 2017 WL 2313882, at *3. But nearly every court in the
Southern District has answered this question “no.” See Zuma Press, Inc. v.
Getty Images (US), Inc., No. 16 Civ. 6110 (AKH), 2017 WL 2829517, at *4
(S.D.N.Y. June 29, 2017) (collecting cases). The Second Circuit has explained
“that a plaintiff plainly fails to satisfy the precondition requirements of [S]ection
411(a) by neglecting to apply for registration of the relevant work prior to filing
suit for copyright infringement.” Sullivan v. Duncan, No. 13 Civ. 1640 (SAS),
2015 WL 4393316, at *4 (S.D.N.Y. July 17, 2015) (citing Psihoyos v. John Wiley
& Sons, Inc., 748 F.3d 120, 125-26 (2d Cir. 2014)).
LBE’s final federal claim fails for a simple reason: The First Amended
Complaint does not allege that LBE holds, or has even applied for, a copyright.
LBE tries to escape this conclusion by arguing that “[r]egistration is not a
prerequisite to copyright protection under the Copyright Act.” (LBE Opp. 38).
This argument is inapposite: Registration is plainly a prerequisite for “suing for
copyright infringement” under the Copyright Act. PaySys Int’l, Inc. v. Atos Se,
226 F. Supp. 3d 206, 214-15 (S.D.N.Y. 2016) (emphasis added) (internal
quotation mark omitted) (quoting Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154,
157 (2010)). And because LBE did “not even file[ ] [an] application[ ] for
registration … prior to instituting” this lawsuit, it cannot bring an infringement
claim under the Copyright Act. Psihoyos, 748 F.3d at 125. Accordingly, the
Court must dismiss LBE’s copyright infringement claim against Barbri.
The Court Declines to Exercise Supplemental Jurisdiction over
Plaintiff’s State-Law Causes of Action
So far, the Court has dismissed LBE’s five federal claims. LBE’s eight
remaining claims (its Fourth, Fifth, Sixth, Seventh, Eighth, Tenth, Twelfth, and
Thirteenth Causes of Action) all arise under state law. And for the reasons that
follow, the Court will decline to exercise supplemental jurisdiction over them.
28 U.S.C. § 1367(c)(3) grants a district court discretion to “decline to
exercise supplemental jurisdiction over” pendent state-law claims “if … the
district court has dismissed all claims over which it has original jurisdiction.”
“Once a district court’s discretion is triggered under § 1367(c)(3), it balances
the traditional ‘values of [i] judicial economy, [ii] convenience, [iii] fairness, and
[iv] comity,’ … in deciding whether to exercise jurisdiction.” Kolari v. N.Y.Presbyterian Hosp., 455 F.3d 118, 122 (2d Cir. 2006) (quoting Carnegie-Mellon
Univ. v. Cohill, 484 U.S. 343, 350 (1988)); accord United Mine Workers of Am. v.
Gibbs, 383 U.S. 715, 726-27 (1966); cf. Benjamin v. N.Y.C. Dep’t of Health, 144
F. App’x 140, 142 (2d Cir. 2005) (summary order) (“In assessing whether
§ 1367(c)(3) discretion has been appropriately exercised, this Court looks
mainly to whether a District Court reached unsettled issues of state law and to
whether disposition was supported by significant considerations of judicial
economy.” (emphasis added)). Those factors generally militate in favor of
dismissing state-law claims: “[I]n the usual case in which all federal-law
claims are eliminated before trial, the balance of factors to be considered under
the pendent jurisdiction doctrine … will point toward declining to exercise
jurisdiction over the remaining state-law claims.” Cohill, 484 U.S. at 350 n.7;
see also Motorola Credit Corp. v. Uzan, 388 F.3d 39, 56 (2d Cir. 2004) (“[O]ur
Court has held, as a general proposition, that ‘if [all] federal claims are
dismissed before trial ..., the state claims should be dismissed as well.’”
(emphasis in original) (quoting Castellano v. Bd. of Trustees, 937 F.2d 752, 758
(2d Cir. 1991)).
All four Gibbs factors counsel in favor of declining supplemental
jurisdiction over LBE’s state-law claims. First, judicial economy tilts in favor of
declining supplemental jurisdiction, because this case has not yet moved past
the pleadings stage. See Chenensky v. N.Y. Life Ins. Co., 942 F. Supp. 2d 388,
392 (S.D.N.Y. 2013). Second, the Court finds nothing inconvenient about
having the parties litigate LBE’s state claims in state court. Third, the Court
does not believe that declining supplemental jurisdiction will prejudice the
parties. And finally, comity counsels in favor of having LBE pursue its statelaw claims in state court, where those claims “will be afforded a ‘surer-footed
reading of applicable law.’” Kolari, 455 F.3d at 123-24 (quoting Gibbs, 383 U.S.
In sum, “this is the ‘usual case’” in which a federal court should decline
supplemental jurisdiction over state claims. Kolari, 455 F.3d at 123. The
Court will therefore dismiss LBE’s Fourth, Fifth, Sixth, Seventh, Eighth, Tenth,
Twelfth, and Thirteenth Causes of Action without prejudice to LBE’s ability to
refile them in state court.
The Court Dismisses Plaintiff’s First, Second, Third, and Ninth
Causes of Action With Prejudice, and Its Remaining Causes of
Action Without Prejudice
For clarity’s sake, the Court will conclude by explaining which claims it
is dismissing with, and without, prejudice:
LBE’s First, Second, Third, and Ninth Causes of Action: The Court held
supra that none of these federal causes of action states a claim for relief. LBE
has not requested an opportunity to replead them (or any other of its claims,
for that matter). Accordingly, the Court dismisses these four claims with
prejudice. See Gallop v. Cheney, 642 F.3d 364, 369-70 (2d Cir. 2011).
LBE’s Fourth, Fifth, Sixth, Seventh, Eighth, Tenth, Eleventh, Twelfth,
and Thirteenth Causes of Action: The claims that remain are LBE’s state-law
causes of action and its copyright claim. The Court dismisses these claims
This outcome is straightforward for all of LBE’s state-law claims: The
Court has declined supplemental jurisdiction over these claims to allow LBE to
refile them in state court. But the Court’s reason for denying without prejudice
LBE’s copyright claim (which arises under federal law) requires more
explanation. The Court dismissed this claim because LBE does not hold (and
indeed, has not even applied for) a copyright. (See supra at 71-72). The
Copyright Act commands that result: 17 U.S.C. § 411(a) states that “no civil
action for infringement of the copyright in any United States work shall be
instituted until preregistration or registration of the copyright claim has been
made.” And “[c]ourts within this Circuit have consistently held that failing to
meet a statutory precondition to suit precludes adjudication on the merits and
warrants dismissal without prejudice.” Senisi v. John Wiley & Sons, Inc.,
No. 13 Civ. 3314 (LTS), 2016 WL 1045560, at *3 (S.D.N.Y. Mar. 15, 2016); see
Duncan, 2015 WL 4393316, at *7 (dismissing plaintiff’s copyright claim without
prejudice where plaintiff’s copyright application was pending); cf. Palmer/Kane
LLC v. Rosen Book Works LLC, 204 F. Supp. 3d 565, 574 (S.D.N.Y. 2016)
(dismissing without prejudice infringement claims based on unregistered
works, because issue of dismissal with prejudice vel non “ha[d] not been
adequately briefed”). The Court will follow suit here, and dismiss Plaintiff’s
copyright claim without prejudice.
For the reasons set forth above, Defendants’ motion to dismiss LBE’s
First Amended Complaint is GRANTED. LBE’s First, Second, Third, and Ninth
Causes of Action are DISMISSED WITH PREJUDICE. LBE’s Fourth, Fifth,
Sixth, Seventh, Eighth, Tenth, Eleventh, Twelfth, and Thirteenth Causes of
Action are DISMISSED WITHOUT PREJUDICE.
The Clerk of Court is directed to terminate all pending motions, adjourn
all remaining dates, and close this case.
September 25, 2017
New York, New York
KATHERINE POLK FAILLA
United States District Judge
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