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Kaplan LSAT Antitrust Lawsuit Dismissed
By JONATHAN PERLOW
March 15, 2010
(CN) - A federal judge in Manhattan dismissed as time-barred an antitrust lawsuit accusing Kaplan Inc. of cutting a secret deal with a competitor that allowed it to dominate the Law School Aptitude Test preparation market. Kaplan settled a similar class action in California in 2007 when it agreed to pay $49 million and terminate its "co-marketing relationship" with bar exam prep giant, BAR/BRI, which was not named in the current suit.
The two test prep companies were accused of secretly agreeing in 1997 to a "per se illegal market division in which BAR agreed to withdraw certain exam preparation courses, including LSAT courses, from the market in which Kaplan was the dominate competitor. Kaplan, in turn, agreed not to enter the full service bar review business," the complaint states.
The plaintiff, Corey Kearse, took a Kaplan LSAT course in 2003 and claimed he paid an inflated price due to the alleged market allocation agreement.
Kaplan is three times the size of its closest competitor, The Princeton Review, which offers LSAT prep courses, Kearse said. And BAR/BRI represented that it prepares more than 95 percent of all students who take the bar exam each year, according to the plaintiff.
But U.S. District Judge Lewis Kaplan said Kearse missed the window to make his antitrust claims, pointing out that the near-identical case in California garnered enough attention to provide him with sufficient warning.
"Common sense suggests that the complaint in that action was not born, fully grown and fully armed, from the brow of Zeus in an instant on that day," Judge Kaplan wrote. "Here, plaintiff was allegedly injured on August 12, 2003, the date of his Kaplan LSAT purchase for which he claims to have paid an inflated price.
"He therefore had four years from that date to bring suit. His April 29, 2009 filing was one year and eight months too late."
Kearse attempted to avoid the statute of limitations restriction by alleging fraudulent concealment, which, "if sufficiently alleged, might toll the running of the four year period," the judge wrote.
But he said the plaintiff's fraudulent concealment claims did not pass muster, calling those charges in the complaint "entirely conclusory."
Judge Kaplan left the window open, however, for Kearse to rework his complaint.
"As I cannot exclude the possibility that plaintiff could sufficiently allege fraudulent concealment, the dismissal is without prejudice," he concluded.
The judge gave Kearse until March 25 to amend the fraudulent concealment claims in his lawsuit.