LLM Bar Exam, LLC v. Barbri, Inc.

• Citation: 271 F.Supp.3d 547
• Decision Date: 25 September 2017
• Docket Number: 16 Civ. 3770 (KPF)
• Parties: LLM BAR EXAM, LLC, Plaintiff, v. 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, Defendants.
• Court: U.S. District Court — Southern District of New York

271 F.Supp.3d 547

LLM BAR EXAM, LLC, Plaintiff,

v.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, Defendants.

16 Civ. 3770 (KPF)

United States District Court, S.D. New York.

Signed September 25, 2017

Jessica Esmeralda Matic, Tosolini, Lamura, Rasile & Toniutti LLP, Rocco Lamura, Tosolini & Lamura LLP, New York, NY, for Plaintiff.

Christopher T. Holding, R. Todd Cronan, Goodwin Procter, LLP, Boston, MA, James A. Keyte, Luke Taeschler, Peter S. Julian, Skadden, Arps, Slate, Meagher & Flom LLP, Daniel Prugh Roeser, Goodwin Procter, LLP, New York, NY, Scott E. Gant, Boies, Schiller & Flexner LLP, Brian Timothy Burgess, Goodwin Procter, LLP, Washington, DC, Paul J Riehle, Sedgwick LLP, San Francisco, CA, for Defendants.

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 preparation industry.

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 laws.

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 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.

BACKGROUND³

A. Factual Background

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, 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.

1. The Parties

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).

2. 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...