The US Court of Appeals in Philadelphia will hear oral arguments June 22 in MIT's appeal of the US District Court ruling in the financial aid antitrust case.
Thane Scott of Palmer and Dodge, MIT's attorney, said MIT has requested in this unprecedented case that each side have double the normal time allocated for oral argument and questioning by the panel of three judges.
Mr. Scott reported the government said it would not object to the request that each side have 30 minutes, rather than 15 minutes, to discuss the case before a judicial panel of the Third Circuit Court, which covers cases in Pennsylvania, New Jersey, Delaware and the Virgin Islands. The Appeals Court, whose panel will be named shortly before the hearing, has not yet decided on the request for extra time.
The "statement of issues" before the Appeals Court is summarized by MIT in its brief as follows:
"Needy students are unable to attain a college education without significant amounts of financial assistance. Private colleges and universities have finite charitable resources with which to meet student financial need. For more than 30 years, groups of private colleges and universities have promoted educational access and opportunity by agreeing to limit the award of their scarce charitable resources to meeting the needs of students who otherwise would be unable to attend without financial aid. Do such agreements violate Section One of the Sherman Act?
"Do the agreements described above restrain 'trade or commerce' within the meaning of the Sherman Act, where the colleges engage in such intercollegiate cooperation to achieve social welfare and educational policy objectives, and obtain no financial benefit from their participation?
"Do the First Amendment rights of academic freedom and associational freedom protect colleges in their cooperative pursuit of educational policy and social welfare goals?"
The suit was announced May 22, 1991 by then Attorney General Richard Thornburgh against the eight Ivy League colleges and MIT, which participated in an annual meeting to determine the financial need of "overlap students" admitted to more than one of the colleges. The objective was to conserve scare financial resources so that more students would be able to attend who otherwise could not afford it. The Ivies signed a consent decree that day but MIT, convinced that it had not violated the antitrust laws, fought the case. The trial began June 25, 1992 and the decision was handed down September 2.
In its conclusion in the appellate brief, MIT asks the Appeals Court to reverse the District Court decision and states:
"In sum, Overlap is charity and charity is not commerce. As such, the Sherman Act simply has nothing to say about it.
"The proposition that the (Department of Justice Antitrust) Division seeks to test in this case is that wealthy consumers have a legal right to the financial benefits they might enjoy from promoting rivalry among charities even where the resulting financial enjoyment for the rich causes increased deprivation of the poor. Of course, the Sherman Act does not assign a higher value to the welfare of rich consumers than the welfare of poor consumers, or vice versa. The law speaks only in terms of the total welfare of all consumers.
"Here, the total welfare of all consumers is injured, not improved, by the decision... That decision improperly circumscribes the ability of charities cooperatively to advance social welfare objectives, and it improves the welfare of some consumers only by adversely affecting the welfare of others.
"The Division's unwise and unwarranted intervention obtains only a thin-and transparent-veneer of objectivity by claiming that it is merely intended to 'restore' market forces. There is no more a 'market' in charitably-subsidized higher education than there is 'market' in sheltering the homeless, rescuing t he abused, or feeding the hungry. Optimal allocation of charitable resources to meeting charitable needs occurs when charities, not enforcement agencies, determine social needs and allocate limited charitable resources. If through cooperation charities can more effectively relieve need, so much the better.
'In casting aside the objective standards of economic theory, the decision... turns the antitrust laws into a standardless device for implementing the subjective preference of the decision maker of the moment. Such misuse of the Sherman Act distorts and degrades it. 'A judge who feels compelled to a particular result regardless of the teaching of economic theory.' writes Judge Bork, 'deceives himself and abdicates his delegated responsibility.'"
A version of this article appeared in the May 19, 1993 issue of MIT Tech Talk (Volume 37, Number 33).
