Q1: Medical justif for



BLIND GRADING NUMBER____________________________

UNIVERSITY OF MIAMI

School of Law

Antitrust Professor Fajer

Final Examination May 7, 2008

INSTRUCTIONS

1. Read all instructions before beginning. Write your blind grading number in the space at the top of the page.

2. This is an open-book examination. You may consult any written material that you think will be helpful.

3. You will have three hours to complete your work on this exam. Bluebooks will not be distributed and laptop users may not begin using their laptops until the end of the first hour. During the first hour, you should read the exam materials and you may make notes on scrap paper or on the exam itself.

4. I will not grade material written on scrap paper or on the exam itself. I will grade only material written in the bluebooks or typed on your laptop during the final two hours of the exam.

5. There are two questions; you should answer both. Each question will be weighted equally, so allot your time accordingly. You may not have enough time to answer each question exhaustively; do the best you can.

6. If you are handwriting the exam, start each question in a separate bluebook. On the cover of each bluebook you use, write your anonymous grading number and the question number (e.g., "Question I" or "Question II continued"). Write only on one side of the page and write legibly. If your handwriting is large or difficult to read, write only on every other line. Illegible portions of the answer simply will not count.

7. If you are typing the exam, put the answer to each question on a separate question tab and type the question number at the beginning of each answer.

8. Please read the questions carefully. You will receive less credit if your answer disregards the instructions or some of the material presented in the question.

9. Your grade will be determined by both the breadth and depth of your analysis and, in part, by how well you write (conciseness, clarity, and organization). If you are feeling pressed for time, you may wish to put the end of your answer in outline form. While you will receive some credit for issues you clearly identify in this manner, you will receive less credit than if you fully analyze the issues.

10. If you think you need to make assumptions in order to answer a question, please identify the assumptions you make. (E.g., "Assuming Fajer can figure out how to play the CD today, ....")

11. Good Luck!

PROLOGUE: FACTS PERTAINING TO BOTH

QUESTION I & QUESTION II

Although you have never heard of it, Vetter is the ninth most populous state in the U.S. and is best known for its medical services.[1] Vetter requires that its attorneys attend ABA accredited law schools, seven of which are located in the state. Two of these are part of the state university system: the Ulysses S. Grant Law School at the University of Vetter (Grant) and Williams State University School of Law. The others (Browder University, Case Eastern Reserve, DeWeese University, Rouhani Law School and Shafrir University) are private. Historically, about 75% of lawyers in Vetter have come from these seven law schools.

Prior to 2000, the Vetter Bar Exam (VBE) consisted of the one-day multiple choice Multistate Bar Exam and one day of essays on Vetter state law. The average pass rate for first-time takers of the VBE from 1990-99 was 85%. In 2000, citing concerns about the quality of its lawyers, Vetter expanded the state law portion of the VBE to two days (in addition to the Multistate) and substantially increased its difficulty. From 2000-07, the average pass rate for first-time takers dropped to 72%.

QUESTION I

In May 2008, the state of Vetter, on behalf of its law students, sued BarBri in federal court claiming that BarBri had monopolized the market for bar review courses for the Vetter Bar Exam in violation of Sherman Act §2. After a trial, the District Court made the following findings of fact:

(1) The relevant market is bar review courses targeted for the Vetter Bar Exam (VBE). Bar review courses targeted just at the Multistate Bar Exam or for other states are inadequate substitutes for prospective lawyers who wish to practice in Vetter, particularly given the relatively difficult two days of the VBE dedicated to Vetter state law.

(2) BarBri is the leading purveyor of bar review courses in the United States. BarBri has a share of at least 80% in the markets for bar review courses in 43 states. It has a history of anti-competitive behavior including the market division declared per se unlawful in Palmer v. BRG.

QUESTION I continues on the next page.

QUESTION I continued:

(3) Between 1997 and 2001, BarBri sold 100% of the Bar Review courses targeted for the VBE. The only alternative available was private tutoring.

(4) Barriers to entry in the relevant market are significant. These include:

- Economies of scale in the production of materials and information, particularly those related to the Multistate Bar Exam.

- BarBri’s substantial name-recognition and proven track record.

- The industry practice of giving discounts to students who register for bar review courses and pay a non-refundable deposit in their first or second year of law school. This practice ties up a substantial portion of the market long before the relevant bar review course begins.

(5) Starting with the Summer 2000 administration, the VBE increased in difficulty and the bar pass rate dropped substantially. As a result, some prospective Vetter lawyers (particularly those who had failed the VBE one or more times) wanted alternatives to BarBri.

(6) Two new companies entered the market in time to give courses for the Summer 2002 VBE and remain market participants as of May 2008.

- Connolly Crash Courses (CCC) advertises itself as a discount course and charges about 15% less than BarBri. CCC’s bar pass rate has consistently been about the same as BarBri’s.

- Legal Jewel Limited (LJL) charges prices similar to BarBri’s and has regularly achieved bar pass rates 10-15% better than BarBri’s.

(7) Initially, both CCC and LJL marketed their courses primarily to people who had already failed the VBE at least once. As they demonstrated strong VBE pass rates, they increasingly were able to attract first-time takers as well. For the Summer 2005 VBE, BarBri’s share of the market had dropped to 74%, with CCC and LJL reaching about 13% each.

(8) In Fall 2005, BarBri initiated a new pricing policy for its VBE courses. It substantially raised the price of its courses for those purchasing less than six months before the course began, but left the prices the same for earlier purchases. It thus was able to advertise that it had greatly increased the discount available for early purchase. BarBri also increased by 20% the size of the deposit it required for early purchase, making it more expensive for students to subsequently switch to a different course.

(9) CCC and LJL immediately faced increased difficulty marketing their courses to first-time takers of the VBE. Their market shares have since declined steadily.

QUESTION I continues on the next page.

QUESTION I continued:

(10) The course for the Summer 2008 VBE was the first one for which BarBri’s new pricing scheme had been in effect from the time most of the first-time takers were first year students. As of May 1, 2008, BarBri had sold 87% of the courses for the Summer 2008 VBE, with CCC selling 5% and LJL 8%. The change in market share between 2005 and 2008 is substantially attributable to more first-time takers choosing BarBri in response to its new pricing scheme.

(11) With its large market share and the substantial barriers to entry, BarBri has had monopoly power in the relevant market continuously since 1997.

Based on these findings, the District Court held that BarBri had violated §2, arguing that the increased discounts and deposits were exclusionary and increased the barriers to entry and expansion in the market. The court, relying on United Shoe Machinery, issued an injunction prohibiting BarBri from using non-refundable deposits for advance purchase of bar review courses for the VBE. The court said this remedy was appropriate “in light of the extent and longevity of the monopoly power and the history of anti-competitive behavior.”

The Court of Appeals reversed. The majority argued that United Shoe Machinery had been effectively overruled by Trinko and that even a monopoly is entitled to use business practices that help it to compete effectively. The dissent agreed that enjoining the non-refundable deposits was inappropriate, but would have allowed relief for harm stemming from the 2005 pricing changes that bolstered BarBri’s monopoly position.

The U.S. Supreme Court granted certiorari to address the scope of the conduct requirement of a Sherman Act §2 monopolization claim and, more specifically, to decide when, if ever, a monopolist should be forbidden from engaging in non-predatory business practices that might have the effect of strengthening its market position.

Compose drafts of the analysis sections of an opinion and of a shorter dissent for the Court deciding this question in the context of the facts of this case. Assume the state has standing to bring the lawsuit. Assume the District Court’s findings of fact are supported by the record and that the facts in the Prologue are correct. You may employ your own understanding of how the relevant market works to the extent that it is not inconsistent with the findings of fact or the facts in the Prologue.

QUESTION II

Based on the following scenario, discuss whether any aspect of the “2005 Agreement” described below might violate Sherman Act §1. You may employ your own understanding of how law schools operate to the extent that it is not inconsistent with the facts provided. As part of your answer, identify and explain the possible significance of any plausible facts not provided (and not inconsistent with facts you have) that could be important to the legal analysis. You probably will find it helpful to detach the chart at the end of the exam and consult it as you read the scenario.

Because of its large student body, Case Eastern Reserve offers many specialized elective courses unavailable at most law schools. In the early 1990s, to allow students at other law schools to take advantage of these courses, Case Eastern pioneered the use of the “Remote Access Course” (RAC). It installed special video-conferencing equipment in two classrooms, which it then used to hold classes that it broadcast to other law schools. Depending on the sophistication of the equipment at the receiving law schools, the students at those schools could either actively participate in the RAC via video conferencing or simply watch it on a video monitor.

Case Eastern rapidly marketed its RACs to many law schools. It used a standard contract which included a fee paid by the receiving school for each enrolled student to cover Case Eastern’s costs of instruction and technical services. Other law schools (including Shafrir) began marketing RACs, generally adopting some version of Case Eastern’s standard contract.

For RACs to operate effectively, the receiving school must be willing to give credit for classes taught by the faculty of the broadcasting school.[2] Potential receiving schools were happy to give credit for courses from a very prestigious school like Case Eastern, but sometimes balked at courses from law schools perceived as “inferior.” For example, Shafrir offered several courses on Vetter state law as RACs, which were purchased in the late 1990s by Grant, Rouhani, Williams State, and two law schools outside Vetter. Both Browder and DeWeese generally refused to give their students credit for these courses. After extensive negotiation, both did agree to give credit for Shafrir’s course in Vetter Criminal Law, but only because it was taught by Prof. Karen Kenny, who had drafted most of Vetter’s Criminal Code.

QUESTION II continues on the next page.

QUESTION II continued:

Before Vetter toughened the VBE in 2000, Browder and DeWeese, which marketed themselves as “national” law schools, offered almost no courses in Vetter state law. The rest of the Vetter law schools each taught some Vetter state law courses, but Shafrir was the only one that regularly offered courses in all of the Vetter state law subjects tested on the VBE.

Starting in Fall 2000, law students intending to practice in Vetter became aware of the increased difficulty of the VBE and new lower passage rate. Accordingly, between 2000 and 2005, the demand for courses in Vetter state law increased sharply, even at the state’s most prestigious schools. Enrollment in Shafrir’s state law RACs ballooned and DeWeese (but not Browder) agreed to give credit for several more of these courses.

During 2005, Browder and DeWeese each renovated a classroom to make the broadcast of RACs possible. Representatives of the two schools set up meetings with Case Eastern administrators to learn more about RACs. Because of these meetings, the three law schools realized they had common concerns about RACs and the teaching of Vetter state law courses. After further discussions, Browder, Case Eastern and DeWeese (BC&D) entered into the “2005 Agreement,” which included the following provisions:

1) BC&D would no longer give credit for Vetter state law RACs from any other law schools. BC&D would not give credit for other RACs from other law schools if the same RAC was available from one of its two partners.

2) Each year, BC&D would each teach one third of the necessary Vetter state law courses as RACs. Enrollment in these RACs would be free for students of BC&D.

3) Students from other law schools also could enroll in the BC&D Vetter state law RACs at Case Eastern’s usual fee, with the proceeds to be divided equally among BC&D.

4) Representatives of BC&D would meet each year to decide which school would teach which Vetter state law course. At the same meeting, the representatives would discuss each school’s other potential RAC offerings to try to avoid overlap.

QUESTION II continues on the next page.

QUESTION II continued:

At a press conference announcing the 2005 Agreement, the Dean of DeWeese declared that it “allowed the leading law schools in Vetter to take advantage of new technology to share the strengths of our respective faculties and to ensure that our students who wish to practice in Vetter are properly trained while still maintaining the highest educational standards.” After the press conference, Shafrir asked to participate in the agreement, but BC&D denied the request.

The 2005 Agreement remained in operation for the 2006-07 and 2007-08 academic years, during which the following events have occurred:

- DeWeese and Browder students petitioned their schools to continue giving credit for Shafrir’s Vetter Criminal Law class taught by Prof. Kenny. Both schools refused to do so.[3]

- Shafrir’s Admissions and Recruiting Office removed language from its promotional materials stating that some of Shafrir’s courses were simultaneously taken by “students from the best law schools in Vetter.”

- During 2006-07, the law schools that had given credit for Shafrir’s state law RACs in 2005-06 replaced most of them with RACs from BC&D.

- For 2007-08, Shafrir substantially lowered the per student fees for its state law RACs. As a result, Williams State offered credit only for Shafrir RACs and not for BC&D’s and most of Shafrir’s other prior customers gave credit for several more Shafrir RACs than they had in 2006-07.

Chart for QUESTION II on the next page.

INFORMATION REGARDING VETTER LAW SCHOOLS (as of May 1, 2008)

|Law School |Public or |U.S. News Ranking |Average Graduating J.D.|% of J.D.s from Vetter Law |Average % of J.D.s Taking |

| |Private |(5-Year Range) |Class |Schools |VBE |

|Browder U. |Pvt. |15-22 |180 |10% |40% |

|Case Eastern |Pvt. |19-24 |450 |25% |35% |

|DeWeese U. |Pvt. |37-52 |270 |15% |45% |

|Grant L.S. |Pub. |40-46 |360 |20% |60% |

|Rouhani L.S. |Pvt. |78-86 |90 |5% |85% |

|Shafrir U. |Pvt. |Over 100 |270 |15% |90% |

|Williams State |Pub. |Over 100 |180 |10% |95% |

-----------------------

[1] Surely you have heard of Vetteran Hospitals.

[2] Even if they are very interested in the subject matter, very few law school students have the time or the discipline to attend a course regularly without receiving credit.

[3] Leading one frustrated DeWeese student to exclaim, “OMG, they’ve killed Kenny!”

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download