Low Cost Law School Alleges Scheme To Kill Off Competition For Law Students In Southern California

A Southern California law school is alleging that its low-cost formula for evening law school students is being jeopardized by the anticompetitive acts of its main competitor.

The Southern California Institute of Law (“SCIL”) has filed a complaint in the U.S. District Court for the Central District of California against TCS Education System, David Figuli, and Global Equities, LTD, alleging that the defendants’ have harmed competition and will increase the cost of tuition for evening law schools in the California tri-county region of San Luis Obispo, Santa Barbara and Ventura Counties.   

SCIL is a small evening law school serving the tri-county region.  The other evening law school in the area is the Santa Barbara & Ventura Colleges of Law (“COL”).  Tuition at SCIL is $350 per unit.  The unusually low price is primarily attributable to the faculty’s commitment to receive a “modest compensation.”

SCIL’s complaint in Southern California Institute of Law v. TCS Education System alleges that agents of TCS (a private, not-for-profit corporation that joins with schools to provide business and financial support) approached SCIL regarding a potential acquisition by TCS.  SCIL claims that TCS inexplicably ended negotiations with SCIL and “made a calculated decision” to use SCIL’s confidential information in negotiations with SCIL’s primary competitor, COL.  TCS and COL announced an affiliation agreement effective October 1, 2010.  The complaint alleges that the affiliated entities will use SCIL’s confidential information to “kill off competition in the region, destroy the plaintiff’s business and increase the cost of tuition.” 

SCIL brings claims grounded in contract law, misappropriation of trade secrets, and antitrust law under the Sherman Act and California’s Cartwright Act.  SCIL primarily seeks injunctive relief to cease the affiliation and protect SCIL’s existence in the market as a low-cost provider of legal education.  The complaint also asks for relief in the form of disgorgement of unfair profits and compensatory and punitive damages.  No answer has been filed yet.

SCIL recently received accreditation by the Committee of Bar Examiners for the State of California, allowing its students to sit for Bar Examination upon graduation.  However, since SCIL is not accredited by the American Bar Association or the Western Association of Schools and Colleges, its students cannot receive federal financial aid.