271 F. Supp. 3d 547
S.D.N.Y.2017Background
- Plaintiff LLM Bar Exam, LLC (LBE) offered bar-review courses tailored to foreign LL.M. students beginning in 2009 and alleges initial commercial success before losing business.
- Defendant Barbri, Inc. is a longtime, large bar-review provider; LBE accuses Barbri of copying LBE’s course, disparaging LBE to students/schools, and using financial relationships with law schools to foreclose LBE from campus marketing.
- LBE framed a discrete "LLM Market" (bar prep for foreign LL.M. students) and sued Barbri plus ten law schools (New York and non‑New York) asserting federal claims (Sherman Act §§1–2, RICO, Copyright) and multiple state-law tort and business claims in a 78‑page First Amended Complaint.
- The FCA alleges: (1) Barbri developed an allegedly identical LLM‑focused course after meeting LBE, (2) Barbri and various law school administrators circulated disparaging statements and conditioned campus access in ways that excluded LBE, and (3) law schools coordinated (hub‑and‑spoke) with Barbri to monopolize the LLM Market.
- Defendants moved to dismiss under Rule 12(b)(6) (and some non‑NY schools challenged personal jurisdiction). The Court assessed plausibility, plus‑factors, market definition, RICO predicates, and copyright registration prerequisites.
- Decision: the Court dismissed all federal claims (Sherman Act §§1–2, attempted monopolization, RICO, copyright) — several with prejudice — and declined supplemental jurisdiction over state claims, dismissing those without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Defendants conspired in restraint of trade under §1 | LBE: schools and Barbri formed a hub‑and‑spoke conspiracy to exclude LBE from campus access and foreclose the LLM Market | Defendants: actions were independent, based on legitimate student/administrative complaints; no agreement alleged | Court: §1 claim dismissed — no plausible agreement or plus‑factors; parallel bans explained by independent responses to complaints |
| Whether Barbri monopolized the LLM Market under §2 | LBE: Barbri holds dominant share (alleged 80%+) of a distinct LLM Market and used Law School Agreements to maintain monopoly | Barbri: market definition implausible; discounts and other competitors undermine monopoly claim | Court: §2 claim dismissed — LLM Market not plausibly defined; market‑power allegation unsupported |
| Whether Barbri attempted monopolization under §2 | LBE: Barbri’s conduct (copying, disparagement, school deals) shows intent and dangerous probability to monopolize | Defendants: no cognizable market; procompetitive explanations for conduct | Court: attempted monopolization dismissed for same market‑definition and power deficiencies |
| Whether Defendants engaged in a RICO pattern (fraud) via an association‑in‑fact enterprise | LBE: bootsrapped RICO from alleged mail/wire fraud communications and an association of Barbri + schools to injure LBE | Defendants: predicates not pleaded with Rule 9(b) particularity; no enterprise structure or continuity shown | Court: RICO claim dismissed — predicates inadequately pled, Rule 9(b) not satisfied, and no plausible association‑in‑fact alleged |
| Whether Barbri infringed LBE copyrights | LBE: Barbri’s 2013 course is identical to LBE’s materials and infringes LBE’s copyrights | Barbri: (and court) note plaintiff has not alleged registration or even application for copyright | Court: copyright claim dismissed without prejudice — §411(a) precondition (registration) not satisfied |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaint must plead factual matter sufficient to state a plausible claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (§1 conspiracy requires factual allegations raising a plausible inference of agreement)
- Gelboim v. Bank of Am. Corp., 823 F.3d 759 (2d Cir. 2016) (pleading standards for conspiracy and use of circumstantial plus‑factors)
- Boyle v. United States, 556 U.S. 938 (2009) (association‑in‑fact enterprise requires purpose, relationships, and sufficient longevity)
- H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (1989) (pattern of racketeering requires related predicates and continuity)
- Psihoyos v. John Wiley & Sons, Inc., 748 F.3d 120 (2d Cir. 2014) (registration requirement for copyright litigation as a precondition to suit)
- Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010) (limitations on copyright remedies absent registration procedural compliance)
- Allco Fin. Ltd. v. Klee, 861 F.3d 82 (2d Cir. 2017) (standards for assessing plausibility on a Rule 12(b)(6) motion)