US Appeals Court Asked to Block Class Action in Elite University Fin Aid Case

Cornell University, the University of Pennsylvania and three other elite US universities have asked a federal appeals court to overturn a ruling that allowed a class action lawsuit over financial aid practices to proceed, in a case that could expose them to more than $2bn in damages.

The case, filed in 2022 in Chicago federal court, accuses 17 leading institutions of suppressing competition in the provision of financial aid and favouring wealthier students in their admissions processes.

In June, a federal judge certified a class comprising more than 220,000 students who attended the universities over a 20-year period. The schools argue that any resulting damages could exceed $2bn, driven by US antitrust law provisions that allow for treble damages.

Lawyers for the universities, including Seth Waxman of WilmerHale representing the University of Pennsylvania, have asked the 7th US Circuit Court of Appeals in Chicago to permit an appeal against District Judge Matthew Kennelly’s certification order and to overturn it.

The institutions contend that the case involves too many individualised issues across thousands of students to be handled as a single class action. They also argue that the court relied on an expert for the plaintiffs who “calculated an artificial average overcharge using an invented price metric”.

In their appeal, the universities further argue that class certification was improper after Judge Kennelly questioned statements made by one of the plaintiffs’ law firms regarding its fee arrangements. The judge later disqualified the firm and appointed new lead counsel from MoloLamken.

Steven Molo, lead attorney for the student plaintiffs, said in a statement that Judge Kennelly had “carefully considered whether to certify the class” and that there was “no basis” for the appeals court to overturn the decision.

Twelve universities — including Brown University, Yale University and Columbia University — have already reached settlements with the plaintiffs worth nearly $320m. The remaining defendants include Cornell University, the University of Pennsylvania, Georgetown University, the University of Notre Dame and the Massachusetts Institute of Technology. All defendants, including those that have settled, deny any wrongdoing.

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