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A trial in a California federal courtroom next year could mean thousands of Georgia lawyers will share with their counterparts around the country an estimated $300 million award for being charged inflated bar exam prep fees�less, of course, attorney fees and related expenses. The suit for a class of about 300,000 lawyers claims West Publishing, the corporate owner of BAR/BRI, the national bar review program, colluded with Kaplan Inc., one of the country’s largest prep companies for the Legal Scholastic Aptitude Test (LSAT), to scuttle a 1997 deal in which Kaplan would have entered the bar review business. In return, according to the complaint, BAR/BRI agreed to cease its own LSAT operations and pay Kaplan more than $500,000 a year, allowing each to control hefty chunks of their respective markets. The result, according the suit, was about $1,000 in higher fees for each participant in BAR/BRI classes�and an antitrust violation. Thomas Arthur, who teaches antitrust law at Emory University, knows a lot about the BAR/BRI course these days, given he just wrote a check for $2,295 for his son to take one. Even if the plaintiffs can prove the arrangement actually occurred as described in the complaint, said Arthur, the plaintiffs may have a hard time proving damages. “They’ll have to prove that Kaplan could indeed have entered the market and succeeded, and that may be difficult,” he said. The case, set for a February trial in the U.S. District Court for the Central District of California, stems from events in the mid-1990s, when BAR/BRI had a small LSAT prep business and was in hot competition with West’s newly formed bar review section, West Bar. In 1996, West was purchased by Thomson, which shortly thereafter agreed to sell West Bar to Kaplan, which then and now offered a wide range of training courses but none in the bar review field. But in August 1997, according to the suit, just as Kaplan was preparing to buy West Bar, “an executive of Kaplan communicated with an executive of BAR/BRI” that “if Kaplan stayed out of the bar review business, BAR/BRI would exit at least the LSAT market in which it competed, plus pay to Kaplan a sum in excess of $500,000 per year, on the pretext that it would be compensation for some service Kaplan would be providing for BAR/BRI, but which, in fact, was part of the continuing consideration to be provided to Kaplan, on the condition that it stay out of the full-service bar review course market so long as such payments are made.” BAR/BRI then absorbed West Bar’s assets and course materials, enabling it to become “the only company providing bar review courses preparing for virtually every state in the United States,” says the suit. The suit says, as a result of its virtual monopoly, BAR/BRI�which claims to provide more than 95 percent of the bar review courses in the country�has systematically raised prices and reduced the quality of its offerings. It accuses BAR/BRI and Kaplan of “per se illegal market division,” charging violations of the U.S. Sherman and Clayton antitrust acts. In 2001, Thomson/West bought BAR/BRI. In addition to five named plaintiffs, the class includes any law student or law school graduate who purchased the courses after August 1997. Attempts to reach attorneys for any of the involved parties were unsuccessful, but in court filings both West and Kaplan deny any illegal activities and rebuff claims that their actions “resulted in any supra-competitive pricing,” as alleged in the suit. Ryan Rodriguez et al. v West Publishing Corp., et al., No. CV-05-3222 R(MCx). If the case sounds familiar, there’s good reason: In 1990, BAR/BRI�which was then owned by Harcourt Brace Jovanovich, and a Georgia bar review company, BRG Georgia, were sued for antitrust violations. According to court files, a 1980 deal allowed BRG exclusive license to market BAR/BRI materials in Georgia, in return for which BAR/BRI received a guarantee that BRG would stay in Georgia and out of other markets and pay the Georgia company $100 per student and 40 percent of any fees over $350. “Immediately after the 1980 agreement, the price of BRG’s course increased from $150 to over $400,” says the record of Palmer v. BRG of Georgia, 498 U.S. 46, which accused the parties of Sherman Act violations. U.S District Judge Orinda Evans ruled for the defense, as did the 11th U.S Circuit Court of Appeals. But in 1990, the U.S. Supreme Court overturned the ruling. University of Georgia law professor James Ponsoldt, who served as plaintiffs’ counsel in the case, said he could not speak to the factual allegations of this case. But Ponsoldt, who has spoken to the plaintiffs’ attorneys in the current suit, said in the 1980s, “there was a continuing pattern by BAR/BRI to eliminate competition through buyouts or agreements for market allocation … This sounds like what they were up to in a number of cases in several states.” Ponsoldt, who served as Justice Department antirust lawyer in the Carter and Ford administrations, said if the facts laid out in Rodriguez are true, “it’s certainly illegal under existing law. Even though they aren’t fixing prices, they are paying a competitor not to compete in the market, and that’s been illegal for centuries,” he said. The key to winning this case, he said, is convincing a jury that the arrangement and payments were designed to keep competition out of specific markets. Alston & Bird partner Kevin Grady, who opposed Ponsoldt in that case�and who still complains, albeit good-naturedly, that the U.S. justices didn’t even bother to read his arguments before overturning his victory�agreed the suit claims facts that constitute per se illegal market allocation. But he echoed Emory’s Arthur in suggesting proving damages will be difficult. “One issue that’s going to be important is the extent of market power exerted [by the arrangement], and the ease of entry as to other companies that want to get into the business.” “It seems that this business is sort of a cottage industry�but a very lucrative one�and you have to wonder why more companies don’t get into it,” he added. Greg Land can be reached at [email protected]

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