IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

COLLEGENET, INC., a Delaware

Corporation, 

No. 3:14-cv-00771-HZ

Plaintiff,

OPINION & ORDER

v.

THE COMMON APPLICATION, INC., 

a Virginia corporation, 

Defendant.

Sarah J. Crooks

Scott D. Eads

PERKINS COIE, LLP

1120 NW Couch Street, Tenth Floor

Portland, OR 97209

David S. Steele 

Shylah R. Alfonso 

Catherine S. Simonsen 

Susan E. Foster

PERKINS COIE, LLP

1201 Third Avenue, Suite 4800

Seattle, WA 98101

Attorneys for Plaintiff

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Case 3:14-cv-00771-HZ Document 96 Filed 05/15/15 Page 1 of 20
Thomas M. Triplett

Richard K. Hansen

SCHWABE, WILLIAMSON, & WYATT, P.C.

1211 SW 5th Avenue, Suite 1900

Portland, OR 97204

Dominique Malata Perez

Frank M. Hinman

Jacqueline S. Delbasty

Sujal J. Shah

Susan J. Welch

MORGAN, LEWIS & BOCKIUS LLP

One Market, Spear Street Tower

San Francisco, CA 94105

Thane D. Scott

MORGAN, LEWIS & BOCKIUS LLP

One Federal Street

Boston, MA 02110

Attorneys for Defendant

HERNÁNDEZ, District Judge:

Plaintiff CollegeNET, Inc. brings this antitrust action against Defendant The Common 

Application, Inc., contending that Defendant violated the Sherman Act, 15 U.S.C. §§ 1, 2. 

Plaintiff alleges collusion among competitor colleges1 and conspiracy with their joint-venture 

entity, Defendant, to monopolize and restrain trade and foreclose rival providers in the 

admissions and online college application processing markets. Plaintiff brings the following 

claims in its First Amended Complaint2: (1) Horizontal Restraint of Trade in the Admissions 

Markets; (2) Horizontal Restraint of Trade in the Online College Application Processing Market; 

(3) Exclusive Dealing; (4) Tying; (5) Monopolization; (6) Attempted Monopolization; and (7) 

Conspiracy to Monopolize.

1 Plaintiff defines “college” for the purpose of this action as “a regionally accredited, not-for-profit 

educational institution in the United States that offers four-year (baccalaureate), full-time programs.” Am. 

Compl. ¶ 17. 

2 On November 3, 2014, the Court dismissed Plaintiff’s 103-page Complaint under Rule 8. Plaintiff 

submitted the present 55-page Amended Complaint [75] on November 24, 2014. 

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Defendant moves to dismiss Plaintiff’s Amended Complaint. Because Plaintiff fails to 

adequately allege antitrust injury, a required element for each of Plaintiff’s claims, the Court 

grants Defendant’s motion.

BACKGROUND

Plaintiff is a Portland, Oregon-based company that provides “web-based on-demand 

technologies to institutions of higher education and non-profits.” Am. Compl. ¶ 35. Plaintiff 

offers a “suite of web-based administrative services, including customized online application 

forms and processing services and contact management services.” Id. at ¶ 6.

Defendant is an association of 549 non-profit member colleges and universities. Id. at ¶ 7. 

According to Plaintiff, Defendant is not a single entity, but rather a “consortium of competitors.” 

Id. at ¶ 84. Defendant was formed in 1975 to assist students by simplifying the college 

admissions process by providing one “common” student application form (the “Common 

Application”) for students to submit basic background information in a standardized way as they 

applied to member colleges. Id. at ¶¶ 13, 38. Defendant provided a common, standardized 

(paper) application form for use at each of the member institutions. Id. at ¶ 38. Applicants could 

fill out this Common Application once, photocopy it, and submit it to any member institution. Id.

Membership was limited to “selective” colleges. Id. at ¶ 42.

Over time, Defendant has grown to be a “dominant online college application processing 

provider,” as colleges join the association in order to access Defendant’s “national pipeline of 

applicants” and use Defendant as their common application developer and processor. Id. at ¶¶ 14,

23, 48. Today, membership is open to almost any college. Id. at ¶ 83. As Defendant’s 

membership ranks grow, so do the number of student applicants using that service and, therefore, 

the number of applications members receive. Colleges compete to attract applicants not only to 

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secure “high-value students” but also because an increase in the number of applications increases 

the application fees a college generates and lowers its admission rate, thereby raising its 

selectivity rating and college ranking. Id. at ¶ 31. 

Defendant has a three-tiered membership structure. Id. at ¶ 74. All members must (1) use 

Defendant’s Common Application for all form and payment processing—including Institutional 

Supplements—for Common Applicants; (2) accept all Common Applicant evaluation forms 

(including final transcripts) online, for schools that choose to send them online; and (3) accept 

the Common Application fee waiver. Id. at ¶ 75. In addition, “Exclusive I” members must also 

use the Common Application as their only admission application for full-time, undergraduate, 

degree-seeking applicants, and “Exclusive II” members must further (1) establish uniform fees 

for all applicants; (2) use the Common Application as their only transfer application; and (3) use 

Slideroom.com for their Arts Supplement (if they offer one). Id. at ¶¶ 76, 77. According to 

Plaintiff, the “penalties”3 for choosing to be a Non-Exclusive versus Exclusive II member are 

“extreme.” Id. at ¶ 78.

Plaintiff alleges that Defendant’s agreements with its members have reduced “Net 

Output,” which Plaintiff defines as the net value derived from Online College Application 

Processing services by both Colleges and applicants:

Net Output increases as the quality, functionality, features, ease of use, and level of 

innovativeness of Online College Application Processing services improve. Net Output 

also increases as those services better enable Colleges to discover and matriculate 

students who are good matches for their College, applicants to discover and matriculate at 

Colleges that are good matches for them, and Colleges to predict yield (how many 

accepted applicants will matriculate). Net Output decreases as the amount of resources 

(e.g. money and time) expended by Colleges and applicants in connection with using 

Online College Application Processing services in the college admissions process 

increases.

3 There is a $2 difference per application between Exclusive and Non-Exclusive members. Am. Compl. ¶ 

78. Plaintiff characterizes this as a “penalty” on Non-Exclusive members. Id. Defendant characterizes it 

as a “modest, two-tiered incentive discount” for Exclusive members. Def.’s Mot. 24.

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Id. at ¶ 21. Plaintiff alleges that Defendant has reduced Net Output by imposing the following 

membership restrictions and restraints (thereinafter, “Challenged Restraints”): tying and 

bundling/forced purchase requirements, exclusivity restrictions, an “equal treatment” 

requirement, and uniformity requirements. Id. at ¶ 15. According to Plaintiff, Defendant’s 

Challenged Restraints have led to a significant growth in Defendant’s membership and revenue, 

yet none of them are necessary to achieve any legitimate or procompetitive goal. Id. at ¶ 16.

Plaintiff hosted Common Application Institutional Supplements4 and supported Common 

Application member colleges in a variety of ways prior to Defendant’s adoption and enforcement 

of the “Challenged Restraints.” Id. Plaintiff alleges that it has been injured because it has been 

prevented or significantly limited in its ability to offer customized application processing 

services to colleges and applicants. Id. at ¶ 160. Plaintiff alleges that it has lost over 200 college 

customers to Defendant in the last 10-15 years due to Defendant’s “anticompetitive and 

exclusionary conduct.” Id. at ¶ 37. 

As to the tying and bundling/forced purchase requirements, Plaintiff alleges that 

Defendant has tied access to the applicant pipeline generated by its Standard College Application 

Data service to members’ use of Common Application’s Online College Application Processing 

services. Id. at ¶ 153. Plaintiff contends that Defendant’s tying arrangement harms competition in 

the relevant markets by limiting college choice, limiting the scope of services and price 

competition available to student applicants, and foreclosing rival providers from capturing 

colleges’ and applicants’ business. Id. at ¶ 153.

Plaintiff alleges that Defendant’s exclusivity provisions have further disadvantaged and 

foreclosed rival providers by making it prohibitively expensive for members to use and offer to 

4 “Institutional Supplements” are member-specific supplements which many members require in addition 

to the Common Application. Am. Compl. ¶ 15.

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applicants those rivals’ services. Id. at ¶ 154. The exclusivity provisions charge a lower perapplication fee for members who agree to use the Common Application exclusively. Id. at ¶ 47.

Defendant’s “equal treatment” requirement requires members to encourage the use of the 

Common Application by ensuring that the fee for Common Applicants is no more than for other 

accepted applications, providing an equally prominent link to the Common Application Online 

whenever the college posts a link to another online application, and offering any special benefits 

to students regardless of what kind of application they choose.5 Id. at ¶ 46. Plaintiff alleges that 

Defendant’s “equal treatment” requirement is “tantamount to an agreement among members to 

suppress demand for Online College Application Processing services” and also operates as a 

group boycott agreement among members, pursuant to which they agree not to promote rival 

providers’ applications. Id. at ¶ 152.

Finally, Plaintiff alleges that Defendant’s uniformity requirements have forced colleges 

to limit the content and standardize the look and feel of their applications and to limit applicants’ 

ability to upload documents, customize their applications to different colleges, and otherwise 

showcase themselves. Id. at ¶ 155. This has resulted in reduced competition, depressed Net 

Output, and has foreclosed competitors. Id. 

Plaintiff identifies four relevant markets in which to analyze its claims: (1) Online 

College Application Processing Market; (2) College Market for Standard College Application 

Data Services; (3) Student Application Market; and (4) College Admissions Market (markets (3) 

and (4) collectively, the “Admissions Markets”). Id. at ¶ 90. Alternatively, Plaintiff argues that 

5 While Plaintiff’s Amended Complaint says that members are required to “not explicitly offer special 

benefits,” Am. Compl. ¶ 46 (emphasis added), this must have been a typographical error on Plaintiff’s 

part because Defendant’s 2013 Membership Profile Form for Non-Exclusive members states that 

members are required “to explicitly offer special benefits.” Def.’s Request for Judicial Notice, Ex. 2 at 4, 

[82].

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the Admissions Markets may be limited to “Elite Colleges,”—top ranked colleges. Id. at ¶¶ 132, 

141. 

The Online College Application Processing Market is the market for online application 

and evaluation forms and processing services offered to colleges and applicants. Id. ¶ 20. Online 

College Application Processing providers develop a college’s online application and evaluation 

forms, host those forms online, process applicants’ form submissions, process applicants’ 

transcripts, and/or process applicants’ application fee payments. Id. Plaintiff estimates that 

Defendant’s share of this market is “at least 60%.” Id. at ¶ 115. Plaintiff further estimates that 

Defendant’s share of each of this market’s submarkets—those for (1) online application forms 

and processing, (2) online evaluation forms and processing, (3) transcript processing, and (4) 

payment processing—is at least 60%, “except perhaps in transcript processing market.” Id. at ¶¶

20, 115. Therefore, according to Plaintiff, Defendant has market and monopoly power in these 

submarkets. Id. at ¶ 116.

The Standard College Application Data Service market is the market for a generic, textbased data entry form for applicants to input their background information as required by more 

than one college. Id. at ¶ 118. The market includes full application form development and 

processing. Id. According to Plaintiff, Defendant’s share of this market is in excess of 90%. Id. at 

¶ 122.

The Student Application market encompasses the market for student applications to fulltime, four-year degree programs at colleges. Id. at ¶ 32. This market does not include the market 

for student applications to non-U.S. colleges, graduate student programs, two-year and/or parttime degree programs, unaccredited institutions, or for-profit institutions. Id. at ¶ 127. According 

to Plaintiff, Defendant has market power because its members will process at least 40-45% of 

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college applications in the 2014-2015 year. Id. at ¶ 129. Alternatively, Plaintiff states that the 

Student Application Market may be limited to the Elite Student Application Market—the market 

for student applicants for admission to Elite Colleges. Id. at ¶ 132. Plaintiff alleges that 

Defendant will process approximately 70% of Elite Colleges’ freshman admissions applications 

in the 2014-2015 year. Id. at ¶ 141. 

The College Admissions market is the market for students to enroll in full-time, four-year 

degree programs at colleges. Id. at ¶ 138. As with the Student Application market, Plaintiff 

excludes from the College Admissions market the market for student applications to non-U.S. 

colleges, graduate student programs, two-year and/or part-time degree programs, unaccredited 

institutions, or for-profit institutions. Id. at ¶ 139. Additionally, Plaintiff alleges Defendant’s 

market share and market power are the same as in the Student Application Market, and that the 

market can similarly be limited to Elite Colleges. Id. at ¶¶ 140-41.

STANDARDS

I. Motion to Dismiss

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency 

of the claims. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). "All allegations of material 

fact are taken as true and construed in the light most favorable to the nonmoving party." Am. 

Family Ass'n, Inc. v. City & Cnty. of S.F., 277 F.3d 1114, 1120 (9th Cir. 2002). However, the 

court need not accept conclusory allegations as truthful. See Warren v. Fox Family Worldwide, 

Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) ("[W]e are not required to accept as true conclusory 

allegations which are contradicted by documents referred to in the complaint, and we do not 

necessarily assume the truth of legal conclusions merely because they are cast in the form of 

factual allegations") (internal quotation marks, citation, and alterations omitted). Rather, to state 

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a plausible claim for relief, the complaint “must contain sufficient allegations of underlying 

facts” to support its legal conclusions. Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). 

A motion to dismiss under Rule 12(b)(6) will be granted if a plaintiff alleges the 

"grounds" of his "entitlement to relief" with nothing "more than labels and conclusions, and a 

formulaic recitation of the elements of a cause of action[.]" Bell Atl. Corp. v. Twombly, 550 U.S. 

544, 555 (2007). "Factual allegations must be enough to raise a right to relief above the 

speculative level on the assumption that all the allegations in the complaint are true (even if 

doubtful in fact)[.]" Id. (citations and footnote omitted).

To survive a motion to dismiss, a complaint "must contain sufficient factual matter, 

accepted as true, to state a claim to relief that is plausible on its face[,]" meaning "when the 

plaintiff pleads factual content that allows the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 

(internal quotation marks omitted). Additionally, "only a complaint that states a plausible claim 

for relief survives a motion to dismiss." Id. at 679. A complaint must contain "well-pleaded 

facts" which "permit the court to infer more than the mere possibility of misconduct[.]" Id. at 

679.

II. Antitrust Analysis

Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form of trust 

or otherwise, or conspiracy, in restraint of trade or commerce among the several States.” 15 

U.S.C. § 1. “Congress designed the Sherman Act as a consumer welfare prescription.” Reiter v. 

Sonotone Corp., 442 U.S. 330, 343 (1979) (internal quotation marks omitted). “Consumer 

welfare is maximized when economic resources are allocated to their best use” and when 

“consumers are assured competitive price and quality.” Rebel Oil Co. v. Atl. Richfield Co., 51 

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F.3d 1421, 1433 (9th Cir. 1995). “A restraint that has the effect of reducing the importance of 

consumer preference in setting price and output is not consistent with this fundamental goal of 

antitrust law.” Nat'l Collegiate Athletic Ass'n v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 

107, 104 (1984). Congress sought to ensure that competitors not cut deals aimed at stifling 

competition and at permitting higher prices to be charged to consumers than would be expected 

in a competitive environment, or permitting lower prices to be paid to those from whom 

competitors bought materials than a fair market rate. California ex rel. Harris v. Safeway, Inc., 

651 F.3d 1118, 1132-34 (9th Cir. 2011). 

Agreements of competitors, whether express or implicit, whether by formal agreement or 

otherwise, in restraint of trade are outlawed. However, the Supreme Court has repeatedly 

recognized that by the language of the Sherman Act, “‘Congress intended to outlaw only 

unreasonable restraints.’” Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006) (quoting State Oil Co. v. 

Khan, 522 U.S. 3, 10 (1997)). “[M]ost antitrust claims are analyzed under a ‘rule of reason,’ 

according to which the finder of fact must decide whether the questioned practice imposes an 

unreasonable restraint on competition, taking into account a variety of factors[.]” State Oil, 522 

U.S. at 10. The rule of reason is the presumptive or default standard, and it requires the antitrust 

plaintiff to “demonstrate that a particular contract or combination is in fact unreasonable and 

anticompetitive.” Dagher, 547 U.S. at 5. “The rule of reason weighs legitimate justifications for a 

restraint against any anticompetitive effects.” Paladin Associates, Inc. v. Montana Power Co., 

328 F.3d 1145, 1156 (9th Cir. 2003). The court reviews all the facts, including the precise harms 

alleged to the competitive markets, and the legitimate justification provided for the challenged 

practice, and determines whether the anticompetitive aspects of the challenged practice outweigh 

its procompetitive effects. Id.

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In order to state a Section 1 claim under the rule of reason, plaintiffs must plead facts 

which, if true, will prove “(1) a contract, combination or conspiracy among two or more persons 

or distinct business entities; (2) by which the persons or entities intended to harm or restrain 

trade or commerce among the several States, or with foreign nations; (3) which actually injures 

competition;” and (4) that they were harmed by the defendant's anti-competitive contract, 

combination, or conspiracy, and that this harm flowed from an “anti-competitive aspect of the 

practice under scrutiny.” Brantley v. NBC Universal, Inc., 675 F.3d 1192, 1197 (9th Cir. 2012) 

(citations omitted); see also Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990).

This fourth element is generally referred to as “antitrust injury” or “antitrust standing.” Id.

Section 2 of the Sherman Act provides: “Every person who shall monopolize, or attempt 

to monopolize, or combine or conspire with any other persons, to monopolize any part of the 

trade or commerce ... shall be deemed guilty of a felony....” 15 U.S.C. § 2. “In order to state a 

claim for monopolization under Section 2 of the Sherman Act, a plaintiff must prove: (1) 

possession of monopoly power in the relevant market; (2) willful acquisition or maintenance of 

that power; and (3) causal antitrust injury.” SmileCare Dental Grp. v. Delta Dental Plan of 

California, Inc., 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). The following elements are 

required to establish an attempt to monopolize claim: “(1) specific intent to control prices or 

destroy competition; (2) predatory or anticompetitive conduct to accomplish the monopolization; 

(3) dangerous probability of success; and (4) causal antitrust injury.” Id. To prove a conspiracy

to monopolize in violation of Section 2, a plaintiff must show four elements: (1) the existence of 

a combination or conspiracy to monopolize; (2) an overt act in furtherance of the conspiracy; (3) 

the specific intent to monopolize; and (4) causal antitrust injury. Paladin, 328 F.3d at 1158. 

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While the rule of reason is the default standard to analyze allegedly anticompetitive 

conduct, “[s]ome types of restraints . . . have such predictable and pernicious anticompetitive 

effect, and such limited potential for procompetitive benefit, that they are deemed unlawful per 

se.” State Oil, 522 U.S. at 10. Such restraints “‘are conclusively presumed to be unreasonable 

and therefore illegal without elaborate inquiry as to the precise harm they have caused or the 

business excuse for their use.’” Nw. Wholesale Stationers, 472 U.S. at 289 (quoting N. Pac. Ry. 

Co. v. United States, 356 U.S. 1, 5 (1958)). Per se treatment is proper only “[o]nce experience 

with a particular kind of restraint enables the [c]ourt to predict with confidence that the rule of 

reason will condemn it.” Arizona v. Maricopa Cnty. Med. Soc'y, 457 U.S. 332, 344 (1982). “[A] 

‘departure from the rule-of-reason standard must be based upon demonstrable economic effect 

rather than ... upon formalistic line drawing.’” Leegin Creative Leather Prods., Inc. v. PSKS, 

Inc., 551 U.S. 877 (2007) (second alteration in original) (quoting Cont'l T.V., Inc. v. GTE 

Sylvania Inc., 433 U.S. 36, 58–59 (1977)). To justify per se condemnation, a challenged practice 

must have “manifestly anticompetitive” effects and lack “any redeeming virtue.” Id. at 886

(internal quotation marks omitted). The Supreme Court has “‘expressed reluctance to adopt per 

se rules where the economic impact of certain practices is not immediately obvious.’” Dagher,

547 U.S. at 5 (quotation marks and ellipses omitted) (quoting State Oil, 522 U.S. at 10).

In sum, per se and rule-of-reason analyses are two methods of determining whether a 

restraint is “unreasonable”; in other words, whether its anticompetitive effects outweigh its 

procompetitive effects. Atl. Richfield Co., 495 U.S. at 341-42 n.12 (1990) (“Both per se rules 

and the Rule of Reason are employed ‘to form a judgment about the competitive significance of 

the restraint.’ [W]hether the ultimate finding is the product of a presumption or actual market 

analysis, the essential inquiry remains the same-whether or not the challenged restraint enhances 

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competition.”) (internal quotations and citations omitted). While the per se rule determines 

whether or not the Sherman Act was violated, antitrust injury must be shown even for per se

claims. Id. at 341 (“The antitrust injury requirement ensures that a plaintiff can recover only if 

the loss stems from a competition-reducing aspect or effect of the defendant's behavior. The need 

for this showing is at least as great under the per se rule as under the rule of reason.”) (emphasis 

in original). 

DISCUSSION

I. Incorporation by Reference

The doctrine of incorporation by reference allows “a district court to consider documents 

whose contents are alleged in a complaint and whose authenticity no party questions, but which 

are not physically attached to the plaintiff's pleading.” In re Silicon Graphics, Inc. Sec. Litig. 

(SGI), 183 F.3d 970, 986 (9th Cir. 1999) (internal quotation omitted). Because these documents 

have essentially been adopted as part of the complaint, the Court may consider them without 

converting the motion to dismiss into a motion for summary judgment. United States v. Richie,

342 F.3d 903, 908 (9th Cir. 2003) (“Even if a document is not attached to a complaint, it may be 

incorporated by reference into a complaint if the plaintiff refers extensively to the document or 

the document forms the basis of the plaintiff's claim.”). 

Defendant asks the Court to incorporate by reference: (1) a letter to Defendant’s board 

members and (2) a copy of Defendant’s 2013 Membership Profile Form for Non-Exclusive 

Members. Plaintiff does not oppose Defendant’s request. Because both documents are referred to 

in the Amended Complaint and form part of the basis of Plaintiff’s claims, the Court incorporates 

them by reference.

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II. Antitrust Injury

Antitrust injury “is an element of all antitrust suits.” Rebel Oil, 51 F.3d at 1433.

Accordingly, the lack of antitrust injury serves as an independent basis for dismissal. 

LiveUniverse, Inc. v. MySpace, Inc., 304 F. App'x 554, 557 (9th Cir. 2008). The Court grants 

Defendant’s motion to dismiss in its entirety because Plaintiff fails to adequately plead an 

antitrust injury.

6

To assert a claim under § 1 and § 2 of the Sherman Act, a plaintiff must have suffered an 

“antitrust injury,” meaning an injury “of the type the antitrust laws were intended to prevent and 

that flows from that which makes the defendant’s acts unlawful.” Brunswick Corp v. Pueblo 

Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). Plaintiff “must prove that [its] loss flows from an 

anticompetitive aspect or effect of the defendant's behavior, since it is inimical to the antitrust 

laws to award damages for losses stemming from acts that do not hurt competition.” Rebel Oil 

Co., 51 F.3d at 1433 (9th Cir. 1995) (citing Atlantic Richfield Co., 495 U.S. at 334); see also, 

Metro Indus., Inc. v. Sammi Corp., 82 F.3d 839, 847 (9th Cir. 1996) (“a plaintiff must allege 

‘antitrust injury,’ that is, that the agreement at issue actually caused injury to competition within 

a market, beyond its impact on the plaintiff.”).

Because Congress designed the Sherman Act to protect consumers or purchasers of goods 

in a market, Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979), the focus of the antitrust injury 

analysis is the direct result of anticompetitive conduct on consumers. Brunswick Corp. v. Riegel 

Textile Corp., 752 F.2d 261, 266 (7th Cir. 1984). Hence the often repeated phrase—antitrust 

laws were enacted for “the protection of competition, not competitors.” Brown Shoe Co. v. 

United States, 370 U.S. 294, 320 (1962); see also Gorlick Distribution Centers, LLC v. Car 

6 Because the lack of antitrust injury disposes of the entire case, the Court declines to reach the parties’ 

additional arguments regarding the merits of specific claims.

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Sound Exhaust Sys., Inc., 723 F.3d 1019, 1024-25 (9th Cir. 2013). A plaintiff must demonstrate 

injury to competition in the market as a whole, not merely injury to itself as a competitor. 

Gorlick, 723 F.3d at 1024-25; see also Brantley, 675 F.3d at 1200. 

As discussed in the Background section of this Opinion & Order, Plaintiff alleges that 

Defendant engages in unlawful conduct in the form of four Challenged Restraints. Plaintiff 

alleges that it has lost over 200 college customers to Defendant in the last 10-15 years. Id. at ¶ 

37. According to Plaintiff, these losses “were directly caused by [Defendant’s] anticompetitive 

and exclusionary conduct.” Id. Plaintiff contends that Defendant has foreclosed a substantial 

amount of competition, is likely to further foreclose a substantial amount of competition, and has 

excluded Plaintiff from competing in the Online College Application Processing Market and 

submarkets. Id. at ¶¶ 180-81. Plaintiff claims that Defendant has artificially suppressed 

Plaintiff’s output and profits and foreclosed possible customers from retaining Plaintiff. Id. at ¶ 

176. Furthermore, Plaintiff claims that is has been injured by being foreclosed from competing 

with Defendant to provide Online College Application Processing services and from earning the

profits it would have earned but for Defendant’s unlawful conduct. Id at ¶¶ 186, 198, 205, 211, 

218.

Plaintiff tries to translate its individual harm into harm to competition by alleging that 

Defendant’s Challenged Restraints injure both colleges and applicants. However, the Amended 

Complaint lacks sufficient factual allegations of harm to either group of consumers.

Defendant’s Challenged Restraints have led to an increase in applicants applying to 

colleges. See Am. Compl. ¶ 50 (“For example, between 2010 and 2011, the percentage of 

students applying to at least three Colleges rose from 77% to 79% (more than 10% more than in 

2000) and the percentage of students applying to at least seven colleges rose from 25% to 29% 

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(both of which are more than double the percentage of such students a decade earlier.”). 

Nevertheless, Plaintiff contends that this increase in output of applications harms applicants and 

colleges when quality, and not just quantity, is accounted for.

Plaintiff uses the concept of “Net Output” as a framework for understanding the injury to 

consumers. Plaintiff contends that antitrust laws allow for “output” to encompass factors beyond 

quantity, such as quality, efficiency, and innovation. Taking those factors into account, Plaintiff 

contends that “Net Output” from Online College Application Processing services accounts for 

the costs of submitting, processing, and reviewing applications. Am. Compl. ¶ 32. While 

colleges are receiving more and more applications, the online application processing services are 

allegedly of an inferior quality because there is a lack of competition, resulting in a more 

expensive and time-consuming process for applicants and colleges. Id. ¶¶ 68-72, 137, 149-56, 

159, 166-67. Plaintiff argues that Defendant’s Challenged Restraints have decreased “Net 

Output,” as seen by the anticompetitive effects of the Challenged Restraints—specifically, worse 

college matching, reduced choice, lower-quality, less innovative college application processing 

services, and higher effective prices to students. According to Plaintiff, “customization and 

information exchange in the college application process result in greater-quality matches with 

less application churn.” Pl.’s Opp. 16. Colleges and applicants would save time and money by 

submitting and processing less meaningless applications, which would improve services and 

result in better matches. Id. 

Plaintiff’s concept of Net Output fails, however, because it is based on the assumption 

that colleges and applicants do not want to participate in an increased “application churn.” 

Plaintiff’s position rests upon the conclusion that colleges and applicants are harmed by a system 

that increases the number of applications to colleges, regardless of an applicant’s likelihood of 

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acceptance to any particular college. However, Plaintiff’s opinion about what is best for 

applicants and colleges cannot suffice to establish antitrust injury. The Court finds it equally 

probable that the “application churn” is precisely what colleges and applicants desire—a system 

that facilitates increased applications in an efficient way. Even Plaintiff concedes that colleges

want an increase in applications because they “secure a boost in members’ applications, 

application fees, and rankings.” Am. Compl. ¶157(c). “This in turn allows the College to attract 

even more (and higher-value) applicants, greater alumni donations, and better professors, 

increases the College’s creditworthiness, and lowers its borrowing costs.” Id. ¶ 31.

Contrary to Plaintiff’s assertions, the product at issue here is unlike dating websites that 

advertise to help people find their one match or services in the real estate market that help a 

buyer find one house. The product here aims to do precisely what Plaintiff alleges is occurring—

increasing the ease and efficiency by which applicants can apply to many colleges and by which 

colleges can receive many applications. 

Furthermore, Plaintiff alleges that Defendant’s Challenged Restraints have suppressed 

prices for online college applications processing services “below competitive levels.” Am. 

Compl. ¶ 172. According to Plaintiff, the Challenged Restraints “enable members to spend 

below-competitive levels on Online College Application Processing services without losing 

applicants” and Defendant’s “equal treatment” requirement has “lower[ed] prevailing prices for” 

Online College Application Processing services. Id. at ¶¶ 157(a), 151. Notably, Plaintiff does not 

allege that Defendant has set prices below-cost. An allegation of prices merely “below 

competitive levels,” (as opposed to predatory pricing), does not form the basis of an antitrust 

claim. See Atl. Richfield, 495 U.S. at 340 (“Low prices benefit consumers regardless of how 

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those prices are set, and so long as they are above predatory levels, they do not threaten 

competition. Hence, they cannot give rise to antitrust injury.”).

Plaintiff does not offer, and this Court does not find, support for the proposition that an 

injury solely based on less innovation and choice is sufficient to state a claim for antitrust injury. 

Certainly, decreased innovation and choice can be relevant to a court’s finding of antitrust injury. 

However, an allegation of diminished quality alone is not sufficient to establish injury in any of 

the cases cited by Plaintiff. See, e.g., Rebel Oil, 51 F.3d at 1433 (an act is deemed 

anticompetitive under the Sherman Act only when it harms both allocative efficiency and raises 

the prices of goods above competitive levels or diminishes their quality) (emphasis added). The 

Court declines to make new law here and open the door for antitrust claims to be brought by any 

plaintiff who claims to have a higher quality product that consumers should be choosing.

Both parties cite Sewell Plastics, Inc. v. Coca-Cola Co., 720 F. Supp. 1196 (W.D.N.C. 

1989) aff'd and remanded, 912 F.2d 463 (4th Cir. 1990), in support of their arguments. In Sewell, 

a plastic bottle manufacturer (Sewell) brought an action against soft drink bottlers and 

Southeastern Container, a plastic bottle manufacturing cooperative formed by the defendant 

bottlers, alleging violations of federal antitrust law (among other allegations). Id. Prior to the 

defendant bottlers forming their manufacturing cooperative, they had purchased over 90% of 

their bottles from Sewell. Id. at 1199. After forming their own bottling manufacturing facility, 

defendant bottlers bought only about 17% of their bottle requirements from Sewell. Id. The court 

found that the “economic consequences in the relevant market of the bottle-making defendants 

were dramatic.” Id. Prices for plastic bottles dropped, production of plastic bottles increased, 

production processes became more efficient, the number of competitors in the market remained 

the same but market concentration decreased, and—most importantly—“although some 

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competitors may be making less profit, there has been no adverse effect on competition.” Id.

(emphasis in original). Because antitrust laws were enacted to protect competition, not 

competitors, the court granted the defendants summary judgment because the plaintiff could not 

establish an antitrust injury. Id.

Plaintiff argues that Sewell is distinguishable because the court found that there were no 

anticompetitive effects—price to consumers had decreased, consumer choice had increased, and 

innovation had increased. Id. at 1196, 1211, 1213, 1218-1219, 1222. Because Plaintiff alleges 

anticompetitive effects here, Plaintiff argues that its Complaint survives the motion to dismiss. 

However, in evaluating a motion to dismiss, the court looks not just at Plaintiff’s allegations, but 

at the factual support underlying those allegations. As discussed above, Plaintiff fails to allege 

any facts to support a claim that Defendant’s Challenged Restraints have had an anticompetitive 

effect that has injured consumers. As the Supreme Court has emphasized, an insistence on 

specificity of facts is warranted before permitting a case to proceed into costly and protracted 

discovery in an antitrust case because of the potential great expense of discovery. Bell Atl. Corp. 

v. Twombly, 550 U.S. 544, 558 (2007); see also Somers v. Apple, Inc., 729 F.3d 953, 966 (9th 

Cir. 2013). Because the Court fails to find facts to support an allegation of antitrust injury, 

Plaintiff’s Amended Complaint is dismissed.

III. Leave to Amend

If the court dismisses a complaint, it must decide whether to grant leave to amend. See 28 

U.S.C. § 1653. The Ninth Circuit has repeatedly held that dismissal without leave to amend is 

improper, even if no request to amend the pleading was made, unless it is clear that the defective 

pleading cannot possibly be cured by the allegation of additional facts. Snell v. Cleveland, Inc.,

316 F.3d 822, 828 n. 6 (9th Cir. 2002) (citing Lee v. City of Los Angeles, 250 F.3d 668, 692 (9th 

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Cir. 2001)); Lopez v. Smith, 203 F.3d 1122, 1130–31 (9th Cir. 2000). Accordingly, the Court 

grants Plaintiff leave to amend.

CONCLUSION

Defendant’s Motion to Dismiss [80] and Amended Request Seeking Judicial 

Consideration of Documents Incorporated by Reference [82] are GRANTED. Plaintiff is granted 

leave to amend the First Amended Complaint to allege facts sufficient to demonstrate an antitrust 

injury. If Plaintiff chooses to amend its complaint, it must do so within 14 days of the date 

below. 

IT IS SO ORDERED.

Dated this day of ___________________, 2015.

 

MARCO A. HERNÁNDEZ

United States District Judge

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