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Hack, et al. v. The President and Fellows of Yale College, et al.
United States District Court for the District of Connecticut



No. 98-9136






On Appeal from the United States District Court for the District of Connecticut


2555 M Street, N.W.
Washington, D.C. 20037
(202) 293-6400

Attorneys for Plaintiffs-Appellants


This is an appeal from a final judgment entered on August 5, 1998, by District Judge Alfred V. Covello pursuant to his July 31, 1998 ruling (hereinafter "Op.") on the defendants-appellants' motion to dismiss. The District Court's opinion is reported at 16 F. Supp. 2d 183 (D. Conn. 1998).


The plaintiffs-appellants' Amended Complaint alleged violations of federal civil-rights laws, 42 U.S.C. § 1983; the Fair Housing Act, 42 U.S.C. § 3604; and the Sherman Act, 15 U.S.C. §§ 1, 2. The District Court had jurisdiction over these claims pursuant to 28 U.S.C. §§ 1331, 1337. The plaintiffs also presented state-law claims for breach of contract and unjust enrichment. The District Court had supplemental jurisdiction over these claims under 28 U.S.C. § 1367.

The District Court dismissed the entire Amended Complaint on the ground that it failed to state a claim. Fed. R. Civ. P. 12(b)(6). A timely notice of appeal was filed on August 13, 1998. This Court has jurisdiction. 28 U.S.C. § 1291.


  1. Whether Yale's history and current relationship with the State of Connecticut renders it a state actor or instrumentality for purposes of the constitutional protection against religious discrimination and other fundamental rights.
  2. Whether the plaintiffs' allegations that Yale's conduct is state action should have been dismissed before the plaintiffs were given any opportunity to discover and present facts relevant to those allegations.
  3. Whether the plaintiffs lacked standing to invoke the protections of the Fair Housing Act, 42 U.S.C. § 3604.
  4. Whether the Amended Complaint alleged a valid monopolization claim under the Sherman Act, 15 U.S.C. § 2.
  5. Whether the Amended Complaint alleged a valid "illegal tying" claim under the Sherman Act, 15 U.S.C. § 1.


1. Introduction

Elisha D. Hack, Jeremy A. Hershman, Batsheva Greer, and Lisa B. Friedman are students at Yale College, one of our Nation's oldest and most prestigious educational institutions. When they filed this lawsuit, they were freshmen and sophomores. The students are also devout Orthodox Jews who seek to enjoy the richness, diversity, challenges, and rewards of a Yale education while remaining faithful to their religious traditions and obligations. Amended Complaint ¶¶ 11-14, 58, 63-65 (Joint Appendix (hereinafter "JA") 13-14, 23, 25-26).

Yale has a rule that it purports to apply inflexibly: Yale requires all of its college freshmen and sophomores to reside in co-educational dormitories. The plaintiffs cannot reside in these dormitories, however, because to do so would conflict with their religious convictions and duties.

The plaintiffs contend -- and believe they could prove at trial -- that Yale's refusal either to exempt them from its purportedly across-the-board residence rule or to accommodate their religious beliefs within the dormitories is illegal because the rule is discriminatorily enforced against students who have religious objections to co-educational housing. Yale excuses everyone who is over 21 years of age from the residence rule, as well as anyone who is married -- whether or not the student lives off campus with his or her spouse. And, until very recently, any Yale student whose family lived in New Haven was also exempted.

Yale contends, and the District Court agreed, that Yale is free to discriminate against students with religious objections to co-educational housing because it is a "private" college. This argument, if sustained, would enable Yale to exclude all students of the Jewish faith from Yale College simply because they are Jewish, or to prohibit the practice of Catholicism or Islam on campus.

We acknowledge that the United States Constitution does not apply to religious discrimination by schools that are truly private. But the Constitution does forbid an institution like Yale -- a perpetual fixture of Connecticut's educational landscape that is enshrined in Connecticut's Constitution; a school with a long history of close relations and entanglement with, and financing by, the governments of the State of Connecticut, the City of New Haven, and the United States; and an institution that is governed by a board on which the Governor and Lieutenant Governor of Connecticut sit ex officio -- to engage in religious discrimination or to administer rules that deny to religious observers the same consideration given non-observers.

This is not, therefore, a case that challenges the housing policies of all private universities or that seeks to forge new constitutional principles affecting non-public entities. Rather, the plaintiffs' five civil-rights claims rest on the legal proposition that Yale -- uniquely and distinctively -- has sufficient marks of a governmental institution so that, for the specific purpose of protecting the students' constitutional rights, Yale must be treated as a state actor or instrumentality.

These students are not, as Yale has suggested, separatist or divisive. These four students seek an opportunity to live and learn with students from diverse backgrounds and traditions, and to contribute, through their example as devoutly religious and therefore "counter-cultural" students, to the educational experiences of others. That is why they applied to Yale, are still attending its classes, and participate in its extra-curricular activities. But this openness to diversity does not mean that they can or should surrender or compromise their own religious principles. The plaintiffs are challenging only Yale's intolerant, illiberal, and dismissive attitude toward their religious obligations, and its embracing of what Rabbi Marc Gellman recently called "the last acceptable prejudice in America . . . the prejudice against those who take their faith seriously." M. Gellman, "Civil Rights and the Sacred Truth," Civil Rights Journal 11, 14 (Fall 1997). The students do not acquiesce in current trends in popular culture and morality or in Yale's decision that these trends should override conscientious convictions based on religious beliefs and laws more than three thousand years old.

2. The Colonial Legislature Establishes Yale.

On October 9, 1701, during its first meeting in New Haven, Connecticut's colonial General Assembly approved "An Act for Liberty to Erect a Collegiate School." Brooks Mather Kelley, Yale: A History 6 (1974) (hereinafter "Yale History"). The founding Act described the new College as a place "wherein Youth may be instructed in the Arts and Sciences who through the blessing of Almighty God may be fitted for Publick employment both in Church and Civil State." Plaintiffs-Appellants' Addendum Exhibit (hereinafter "Ex.") 1. To promote and safeguard the school's public mission, the legislators who drafted and approved the Act took it upon themselves to name the trustees, prescribe their number, define their duties, and to direct that public funds be expended both initially and on an annual basis to support and encourage the newly created college. Id. This governmental wardship continued throughout the first century of Yale's existence, as the colonial and local public authorities supported the college and its civic mission directly and indirectly, financially and otherwise. Amended Complaint ¶¶ 18-35 (JA 14-17).

3. The State of Connecticut Continues the Partnership.

After Independence and the creation of the State of Connecticut, the General Assembly in 1791 appointed a committee to inquire into the progress and conditions of Yale. Yale History, at 103. The result of this committee's work was the 1792 Act of Union, which provided for continued substantial financial assistance from the State and prescribed that the Governor, the Lieutenant Governor, and six senior assistants in the Connecticut Council were to serve as ex officio members of the Yale Corporation. See Ex. 2. "The revision of the charter by the Act of Union of 1792 . . . recognized the importance of the state to the college and of the college to the state. It confirmed what had long been true but not officially recognized: that the state was a partner in this great enterprise. It was certainly . . . one of the most important events in the entire history of Yale." Yale History, at 103; see Amended Complaint ¶¶ 30-32 (JA 17).

4. Yale Is Enshrined in the Connecticut Constitution.

Connecticut's Constitution became effective on October 12, 1818. It confirmed -- and still confirms, in Article 8, § 3 -- the charter of Yale College. Amended Complaint ¶¶ 36-37 (JA 18); Ex. 4. Public financial and other support of, and government involvement with, Yale -- by state, local, and federal authorities -- continued throughout the Nineteenth Century, and they are important features of Yale's existence today. From collaboration in urban-revitalization projects to policing New Haven with its state-authorized police force, Yale continues to serve the people of Connecticut in a distinctly public fashion and, in turn, to receive millions of dollars in state and federal funding. See Amended Complaint ¶¶ 39-52 (JA 18-22). Yale and Connecticut remain "partners" to this day, and that partnership is confirmed in Connecticut's Constitution and laws and also in three centuries of cooperation.

5. Yale Creates Residential Colleges.

In 1925 -- over two hundred years after Yale's founding -- University President James Rowland Angell proposed the construction of "residential quadrangles of the Oxford-Cambridge type" at Yale. Yale History, at 373. Five years later, Edward S. Harkness -- flush with Standard Oil money -- promised nearly $16 million to re-make Yale according to the residential-college model. Id., at 374, 376. The first seven colleges opened in September 1933, resulting in the "greatest alteration in college life" of that time. Id., at 387-388. The network of residential colleges, and the role it plays in undergraduate education, has since become one of Yale's most distinguishing features.

Today, Yale's housing regulations generally require sophomores and freshmen to live on-campus, in one of the twelve residential colleges, all of which (Mr. Harkness would no doubt be surprised to learn) are completely and pervasively co-educational and none of which is regulated by parietal rules. Amended Complaint ¶¶ 53-54 (JA 22). Before the 1995-1996 academic year, this rule applied only to freshmen, and it did not apply to students whose families lived in New Haven. Ibid; Ex. 6. In recent years, however, for a variety of reasons, Yale students have increasingly sought out rental housing in nearby New Haven neighborhoods rather than in the residential colleges, prompting Yale's decision to expand the reach of the requirement as a way of keeping the dormitories full. Amended Complaint ¶¶ 54-55 (JA 22-23).

6. The Students Request an Exemption.

The plaintiffs are devout and observant Orthodox Jews. In contrast to the "ceremonial deism" that pervades much of contemporary American life, theirs is a demanding faith: "Orthodox Judaism regulates the details of daily life according to religious law and tradition. Among other things, Orthodox Judaism requires strict adherence to a code of sexual modesty. This code forbids, for example, touching members of the opposite sex other than one's immediate relatives or spouse. It also forbids living in a situation in which a person would have regular or repeated exposure to members of the opposite sex undressed or dressed immodestly." Amended Complaint ¶ 57 (JA 23). To the students, Jewish law is not merely advisory or precatory; it imposes binding obligations.

Given these obligations, the students simply cannot live in Yale's co-educational residential colleges as they are presently administered. See, e.g., Amended Complaint ¶ 72 (JA 28). The common areas of Yale's residential colleges, including the bathrooms, are easily accessible to members of both sexes. Amended Complaint ¶ 53 (JA 22). Yale has no "parietal rules" against room visits -- at any time of the day or night -- by members of the opposite sex or against sexual activity and immodesty in its dormitories. Ibid.

Each of the students, after he or she was admitted by Yale but before enrolling, requested an exemption from the mandatory housing policy. Amended Complaint ¶¶ 59, 63-65 (JA 23, 25-26). Each student informed Yale of his or her religious obligations as an Orthodox Jew and of the fact that, given the sexual activity and immodesty prevalent in Yale's co-educational dormitories, he or she could not, consistent with Orthodox Judaism, live in those dormitories. Amended Complaint ¶¶ 57, 59-60, 63-65 (JA 23-26). Given Yale's liberal tradition, its published assurances that it did not discriminate on the basis of religion (Amended Complaint ¶¶ 130-131; JA 44), and the fact that students in the past had been granted exemptions from the housing policy and permitted to live in housing other than the co-educational residence-hall dormitories for other reasons, the students had reason to believe, at the time they accepted Yale's offer of admission, that their religious beliefs would be respected.

7. Yale Refuses To Permit the Students To Live Off Campus.

The students' requests were denied by Yale, and they were directed to live in the co-educational residence halls. Op. at 4 (JA 90); Amended Complaint ¶¶ 61, 63-65 (JA 24-26). The students refused to disregard their religious obligations. Instead, they arranged for off-campus housing "that provides . . . an appropriate environment in which to practice [their] faith." Op. at 5 (internal quotation marks omitted)(JA 91); Amended Complaint ¶¶ 62-65 (JA 24-26). Under threat of expulsion, the students have paid for on-campus housing, and their dormitory rooms have remained vacant. Ibid.

For several months during the summer and fall of 1997, counsel for the students and various other third parties urged Yale to exempt the students from the on-campus requirement or to provide appropriate single-sex housing, either in the Residential Colleges or in other Yale-owned facilities. Amended Complaint ¶¶ 67-68 (JA 27-28). "[T]hese attempts [were] unsuccessful. [Yale] insisted that living in a Residential College is 'integral' to a Yale education, notwithstanding the relative newness of the housing requirement, the exemptions Yale grants to married students and students over the age of 21, and the requirement's inapplicability to College juniors and seniors." Amended Complaint ¶ 67 (JA 27).

8. The Students File Suit.

Faced with Yale's intransigence, the students filed this lawsuit in the United States District Court for the District of Connecticut on October 15, 1997. On December 2, 1997, the students filed an Amended Complaint, alleging violations of federal civil-rights and other statutes. The students contended that (1) Yale is liable under 42 U.S.C. § 1983 for violating the students' constitutional rights to religious freedom, freedom of association, privacy, due process, and equal protection (Amended Complaint ¶¶ 4, 69-96, 133-138; JA 11, 28-35, 45-46); (2) Yale has discriminated on the basis of religion in the provision of housing, in violation of the Fair Housing Act, 42 U.S.C. § 3604 (Amended Complaint ¶¶ 5, 97-99; JA 11-12, 36); and (3) Yale's housing policy constitutes illegal monopolization and is an unlawful "tying" arrangement under the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2 (Amended Complaint ¶¶ 7, 107-128; JA 12, 38-44)).

9. The District Court Decides.

Yale filed a motion to dismiss the students' Amended Complaint on December 15, 1997 (JA 49-52). The students opposed the motion, and requested oral argument. Meanwhile, Yale refused the students' request for voluntary discovery and, on January 15, 1998, moved to prevent the students from conducting any discovery pending resolution of the motion to dismiss (JA 53-62). No discovery was conducted pending the District Court's decision on that motion. Almost six months after it was filed, the District Court denied Yale's motion to stay discovery (JA 86). The parties then negotiated and submitted the required discovery plan pursuant to Fed. R. Civ. P. 26(f), which was approved on July 23, 1998. Just eight days later, the District Court, without hearing oral argument, dismissed the students' Amended Complaint in its entirety (JA 87-120, 121).


Four students at Yale College claim that, in administering its dormitory-residence rules, Yale has discriminatorily refused to give their religious obligations the same deference it gives to secular considerations raised by other students. If Yale were subject to the constraints of the United States Constitution, the students' civil-rights claims could not have been dismissed. The District Court would have had to evaluate the claims on their merits and weighed the impact of the discriminatory treatment against any justifications offered by Yale for treating the plaintiffs' religious convictions differently than other claims for exemption from the co-educational housing requirement. The legal precedent is clear: the only reported decision that has considered a claim like these plaintiffs' has held that the policy followed here by Yale is unlawful when implemented by a government-operated university. Rader v. Johnston, 924 F. Supp. 1540 (D. Neb. 1996).

The District Court, however, never evaluated the students' constitutional claims because it determined, without the aid of information that would have emerged in discovery, that "Yale is not a state actor" and "Yale's housing policy decisions may not be treated as state action." Op. at 18 (JA 104). This precipitous determination regarding Yale's "private" status frees Yale from any and all constitutional limitations. It means that Yale could, as a "private" entity, engage in flagrant and open religious discrimination in admissions, dormitory assignment, and all phases of University administration.

But, in fact, Yale "has never been wholly a private institution." Yale History, at 11. The leading history of Yale describes the State of Connecticut as "a partner in this great enterprise." Id., at 103. Yale is, we submit, a unique institution that merges governmental and private control and functions. It therefore cannot totally escape the requirements of the United States Constitution simply by professing to be "private." Its origins, history, development, and current privileged status within the State of Connecticut and the City of New Haven subject Yale to fundamental obligations imposed by the Constitution.

The District Court erroneously believed that the Supreme Court has mandated a single "test" by which Yale's claim to a legal right to discriminate on the basis of religion may be evaluated, and it simply asserted -- without the benefit of any discovery -- that the students' claims failed to satisfy that "test." This conclusion was an erroneous decision on an important question of constitutional law.

The District Court's conclusion was also based on an error of federal civil procedure. By dismissing the students' complaint before permitting them to obtain any discovery on factual issues relating to their civil-rights claims, the District Court violated established principles governing cases of this kind. Dismissal of a Section 1983 action under Federal Rule Civ. Proc. 12(b)(6) is not permissible if the plaintiff is seeking to discover facts that support a claim that the defendant is, for civil-rights purposes, a state actor or instrumentality. See Weise v. Syracuse Univ., 522 F.2d 397, 407 (2d Cir. 1975).

We turn next to the students' statutory claims. Contrary to the conclusion of the District Court, the plaintiffs have Article III "standing" to assert a claim under the Fair Housing Act, 42 U.S.C. § 3604, because they have been forced to pay for housing that they cannot, as Orthodox Jews, occupy while other students, who have non-religious grounds for modifying Yale's dormitory rules, have been accommodated by Yale. In addition, Yale's mandatory co-educational housing policy has the clear effect of excluding the students from housing on the basis of their religion. These are prima facie violations of the Fair Housing Act.

Finally, the students' Amended Complaint alleges valid "monopolization" and "tying" claims under the federal antitrust laws. Yale's compulsory dormitory-residence requirements violate the long-standing prohibitions against monopolization and unreasonable restraints of trade. Yale is seeking to monopolize the market for student housing in New Haven. By requiring all freshmen and sophomores to live in the dormitories, Yale eliminates its competitors in that market. And by requiring all who want a unique Yale education to pay for housing in its dormitories, Yale is using its market power to force students to purchase an unwanted "tied" product.


To determine whether an educational institution is subject to the constitutional limitations imposed on government, a court must consider both (1) the characteristics of the particular educational institution and (2) the nature of the constitutional claim being asserted. A small college or other private school that is funded and supported entirely by private contributions, and that receives no governmental financing or state endorsement of any kind, is obviously different for constitutional purposes from a nominally "private" school that is, in fact, created, supported, and promoted by state law and that is controlled by a group including government agencies and/or government officers.

By the same token, not all "state action" claims are the same. An employee who claims, for example, that a university has disciplined him without the full panoply of required procedural safeguards is making a significantly different claim than a student who has been expelled from, or denied admission to, a school on account of his race or religion. A college that is not a "state actor" for purposes of detailed hiring and discharge procedures may be a "state actor" for purposes of vindicating the more fundamental right to be free from racial or religious discrimination.

This Court has observed that the state-action inquiry varies with the nature of the constitutional right asserted. Weise, 522 F.2d at 406; Wahba v. New York Univ., 492 F.2d 96, 100 (2d Cir. 1974) ("We do not find decisions dealing with one form of state involvement and a particular provision of the Bill of Rights at all determinative in passing upon claims concerning different forms of government involvement and other constitutional guarantees."). Judge Friendly once noted that courts are more likely to find state action when conduct that is particularly offensive to constitutional norms -- such as discrimination on the basis of race, religion, or sex -- is alleged. Grafton v. Brooklyn Law School, 478 F.2d 1137, 1142 (2d Cir. 1973); see Weise, 522 F.2d at 405-407; Coleman v. Wagner College, 429 F.2d 1120, 1127 (2d Cir. 1970) (Friendly, J., concurring); Jackson v. Statler Foundation, 496 F.2d 623, 635 (2d Cir. 1974).

This case concerns an educational institution that many describe as "private" because it is not directly administered by a governmental agency, as are the hundreds of public state and local educational institutions in this country. But the students have alleged and believe they could prove that Yale is not truly a "private" institution. Its unmatched reputation and prestige are in large part due to nearly three hundred years of extraordinary government endorsements, financial support, and other assistance from the State of Connecticut and to the fact that Yale's charter and mission continue to bear the official imprimatur of Connecticut and of the City of New Haven.

Not only does this case involve a unique institution, but the constitutional liberty at issue here is perhaps the most fundamental right guaranteed by the Bill of Rights -- the liberty to practice one's faith. Yale is not being asked to acknowledge some arcane procedural right that emerged from obscure litigation. It is being asked to respect what every modern society is expected to respect -- the call of conscience and religious conviction.

A. The Undisputed Historical Facts Establish That Yale Is an Agency or Instrumentality of the State of Connecticut for Purposes of Racial or Religious Discrimination.

In Lebron v. National Railroad Passenger Corp., 513 U.S. 374 (1995), eight Supreme Court Justices held that Amtrak -- a corporation created to operate railroads on a for-profit basis -- "is an agency or instrumentality of the United States for the purpose of individual rights guaranteed against the Government by the Constitution." 513 U.S. at 394. In so holding, the Lebron Court overrode an explicit statutory provision declaring Amtrak a private entity, not a government agency: "The Corporation will not be an agency or establishment of the United States Government." The Court held, in light of "the long history of corporations created and participated in by the United States for the achievement of governmental objectives" (513 U.S. at 386), that Amtrak must be classified as a government agency "for purposes of determining the constitutional rights of citizens affected by its actions." 513 U.S. at 392.

Yale is, for the specific and limited purpose of vindicating constitutional rights, as much an instrumentality of Connecticut as Amtrak is an instrumentality of the United States. The Court's rationale in Lebron leads, by parallel reasoning, to the conclusion that Yale is also subject to the limitations imposed on government with respect to "the constitutional rights of citizens affected by its actions." 513 U.S. at 392.

(1) Yale was created by Connecticut statute.

The Lebron Court placed great emphasis on the fact that Amtrak was created by a federal statute. It reviewed at length the history of corporations "created and participated in by the United States." 513 U.S. at 386. Just as the corporations surveyed by the Supreme Court were "created" by federal statutes, Yale was "created" by a 1701 enactment of the General Assembly of Connecticut. Amended Complaint ¶¶ 18, 19 (JA 14-15); Ex. 1. Over the next 20 years, additional laws were enacted to assist the government-created institution financially and in other ways. Amended Complaint ¶¶ 20-24 (JA 15-16); Ex. 7. Laws enacted by the Connecticut General Assembly in 1723 and 1745 (Amended Complaint ¶¶ 25, 26; JA 16, Ex. 8-9) reaffirmed the initial creation of Yale by statute, further refined Yale's "powers and privileges," and specified how it was to be governed. Additional financial assistance from the public treasury was provided by laws enacted in 1747, 1749, and 1770. Amended Complaint ¶¶ 27-29 (JA 16-17); Ex. 10.

The statutory creation, charter, and public mission of Yale were re-confirmed after the American Revolution in the 1792 Act of Union, which specified that the College was to be run by the governor, lieutenant-governor, and six senior assistants in the Connecticut Council, all of whom were to serve ex officio. Amended Complaint ¶¶ 30-32 (JA 17); Ex. 2. This requirement was modified in 1819 to provide that six senior senators were to join the governor and lieutenant-governor on Yale's board. Amended Complaint ¶ 39 (JA 18); Ex. 11.

The history of legislative involvement and "participation" in the creation of Yale is far more extensive and long-standing than the history on which the Court relied in Lebron. It establishes beyond any doubt that Yale was and is the creature of the Connecticut government. As Professor Kelley said in his monumental history of Yale: "The revision of the charter by the Act of Union of 1792 . . . recognized the importance of the state to the college and of the college to the state. It confirmed what had long been true but not officially recognized -- that the state was a partner in this great enterprise." Yale History, at 103.

(2) Yale's charter has been enshrined in the Connecticut Constitution.

Yale was not only created by Connecticut law -- as the many government corporations discussed in Lebron were created by federal law -- it has also been elevated to a constitutional status that places it beyond legislative repeal. The Connecticut Constitution, adopted in 1818, declares:

The charter of Yale College, as modified by agreement with the corporation thereof, in pursuance of an act of the general assembly, passed in May, 1792, is hereby confirmed.

Conn. Const. Art. VIII, § 3; Ex. 4. Thus, even if the Connecticut Legislature wished to repeal Yale's charter, it is constitutionally unable to do so. Unlike truly private institutions in the State of Connecticut, Yale is constitutionally identified as a permanent fixture in and permanent resource for the State.

This level of government endorsement far exceeds that of the governmental instrumentalities that were described in Lebron. 513 U.S. at 386-394. There would surely have been no doubt of Amtrak's governmental status, regardless of the intricate details of its management structure, if it had not only been created by federal law but were also named and eternalized in the United States Constitution. Indeed, we know of no entity named in the United States Constitution that is not, ipso facto, an agency or instrumentality of government.

(3) Yale was created to further public, governmental objectives.

Laws adopted by both the Connecticut colonial and state legislatures often expressed the public purpose behind the creation and continued support of Yale. Yale was created to provide a valuable public service that was thought to be essential to the future of Connecticut. Yale's public function has been affirmed and perpetuated not only by its explicit designation in the Connecticut Constitution but also by the great degree of financial and other assistance provided to Yale by the New Haven, Connecticut, and United States governments. Amended Complaint ¶¶ 45-49 (JA 19-20).

The Supreme Court in Lebron viewed Amtrak as designed to serve governmental objectives even though Congress explicitly disavowed government status for Amtrak and clearly contemplated that Amtrak would produce a profit for private shareholders. 513 U.S. at 385-386. Although the operation of railroads had always been a function that was and still is carried out by private entities, Congress' action in 1970 was viewed by the Court as transforming that traditionally private task into a governmental function. The existence of truly private colleges in Connecticut does not, by the same token, diminish Yale's status as a creature of Connecticut government, established for governmental purposes.

(4) Connecticut's Governor and Lieutenant Governor are ex officio members of Yale's governing board.

The participation of government officials in the governance and administration of the entity alleged to be a public instrumentality was another important consideration in Lebron. The Court noted, for instance, that five of the 25 directors of the second Bank of the United States were appointed by the President. 513 U.S. at 386-87. Similarly, the Union Pacific Railroad was "chartered in 1862 with the specification that two of its directors would be appointed by the President of the United States." 513 U.S. at 387.

None of the enabling legislation for the governmental corporations enumerated in Lebron specified that the President and Vice-President were themselves to be ex officio board members. Such a statutory designation might well have been sufficient, in and of itself, to render a federally created corporation a government instrumentality, regardless of how many directors came from the private sector. After all, when the Chief Executive and the second highest-ranking official of government are named ex officio to a board, it stands to reason that their participation carries more weight than that of a number, or even a majority, of the Chief Executive's designees. An opinion expressed by the Chief Executive at a board meeting has far more influence than the views of any or all of the anonymous bureaucrats he or she selects. And the public naturally views a policy decision made by a board that includes a President or Governor as more "official" than a similar decision made by a group of private individuals -- even if all these individuals have been designated by the President or Governor.

Moreover, the Supreme Court noted in Lebron that the Amtrak board members appointed by the President are not removable by the President or impeachable by Congress once they take office. 513 U.S. at 398. This restriction reduces drastically their accountability to the Executive Branch and the likelihood that their policy decisions could be controlled by government officials. The Lebron Court also noted that most of the President's nominees to Amtrak's nine-member board must be selected from the private sector, from lists of candidates recommended by private railway interests. 513 U.S. at 385-86. This limitation even further reduces the influence of elected government officials on Amtrak policy.

In contrast, the Governor and Lieutenant-Governor of Connecticut, wearing their government hats, are required by state law to serve as members (not merely to approve private citizens' board-member selections) of Yale's governing board. This official designation to the Yale board of the State's highest-ranking officials gives the Connecticut government an influential role in Yale's policy decisions. The Tenth Circuit put the matter well in Gilmore v. Salt Lake City Community Action Program, 710 F.2d 632, 637-638 n. 12 (10th Cir. 1983):

When public officials serve on a governing board of an institution, there is always some risk that the officials may advance government objectives through the institution. When the officials serve on the board to offer service and assistance qua governmental officials, when their presence on the board is a requirement for federal funding, and when the decisions of the board often involve issues of public interest, there exists a substantial risk that governmental objectives can influence institutional action. Accordingly, the institution becomes a state actor even if, as here, the public officials maintain only a minority representation on the governing board. The potential for government influence cannot be directly calibrated to the number of officials on the board; the officials, by virtue of the requirement of their position, can exercise influence far in excess of their proportional representation.

All in all, the designation of the two highest state-government officials as Yale board members is, we submit, at least as effective and meaningful an involvement of government in the policy of Yale as is the Presidential power to appoint -- but never thereafter to control -- a majority of Amtrak's board from specific lists of recommended private-sector nominees.

This is particularly true when the practice that is being challenged is so significant as racial or religious discrimination. A board that includes a Governor and Lieutenant-Governor -- like a board that includes a President and Vice-President -- cannot shield racial or religious discrimination behind the façade of "private action." See, e.g., Shelley v. Kraemer, 334 U.S. 1, 20 (1947); Ex part Virginia, 100 U.S. (10 Otto) 339 (1879).

(5) Yale must report its budget to the Connecticut Legislature.

Finally, the Supreme Court noted in its Lebron opinion that Amtrak is required to submit regular reports to the President and to Congress. 513 U.S. at 386. This was another factor that the Court found to be relevant in determining that Amtrak is a federal instrumentality. Similarly, Yale must submit its budget and financial report to the Connecticut Legislature. Amended Complaint ¶ 35 (JA 17); Ex. 3. This requirement demonstrates that, unlike truly private institutions, Yale is an educational institution that operates in partnership with the Connecticut General Assembly and state government and that therefore must respect the constitutional rights of those who are affected by its actions.

B. The Fact That Less Than a Majority of Yale's Board Consists of Connecticut Officials or Government Appointees Does Not Permit Yale To Violate the Constitution.

The District Court relied on only one distinction between this case and Lebron to justify its conclusion that Yale, unlike Amtrak, may engage in what -- as the Rader case demonstrates, supra -- would otherwise be unconstitutional religious discrimination. It held that Lebron applies only if government retains "the authority to appoint a majority of directors." Op. at 10 (JA 96) (emphasis in original).

The District Court read Lebron as if it articulated a "three-pronged analytical test" (Op. at 8; JA 94), the third prong of which is the power of government -- be it federal or state -- to "control" a majority of the board of directors through executive appointment. The Lebron Court did not, however, suggest that the considerations enumerated in its opinion formed the "prongs" of a "test." In this "era rich in three-part tests" (Steel Company v. Citizens for a Better Environment, 118 S.Ct. 1003, 1017 n. 5(1998)), the Supreme Court does not keep it a secret when it promulgates yet another such test.


The undisputed historical facts establish, we believe, that Yale is an instrumentality of the State of Connecticut for the specific purpose of vindicating constitutional guarantees. The Federal Rules, however, did not require the plaintiffs to convince the District Court of this fact in order to defeat Yale's motion to dismiss.

The District Court lost sight of the basic rule that "[t]he issue [on a motion to dismiss] is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). A plaintiff need only state his claims and the basis for them with sufficient specificity to provide the defendants with fair notice. See, e.g., Cohen v. Litt, 906 F. Supp. 957, 961 (S.D.N.Y. 1995) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

There are, in this case, two alternative related legal theories under which Yale's residence policy may be found, for civil-rights purposes, to be government action. The first -- that Yale is an instrumentality of the State of Connecticut -- may be supported with additional facts that could emerge during discovery. These include, but are not limited to, the degree to which the State is currently involved in policy-making decisions of the Yale board, the historical role of the board's ex officio board members in such decisions, the extent to which Yale is financially supported by state and federal funds, the amount of oversight the Connecticut legislature exercises over Yale's budgetary and other decisions.

In addition, even if Yale is not an "instrumentality" of Connecticut government within the meaning of Lebron, its discriminatory residence policies may nonetheless constitute state action. The Supreme Court has emphasized that the formulation of "infallible test[s]" in this difficult area is an "impossible task" (Reitman v. Mulkey, 387 U.S. 369, 378 (1967)) and, not surprisingly, "has not developed a unitary test" for state action. Instead, the "facts of each case determine the test." Imperiale v. Hahnemann Univ., 776 F. Supp. 189, 195 (E.D. Pa. 1991); Yeo v. Town of Lexington, 131 F.3d 241, 249 (1st Cir. 1997) ("The modern state action decisions of the Supreme Court do not rely on a single analytical model."), cert. denied, 118 S.Ct. 2060 (1998).

There is no single "test," but the question ultimately to be resolved in Section 1983 cases is whether "the alleged infringement of federal rights [is] fairly attributable to the State?" Barrios-Velazquez v. AEELA, 84 F.3d 487, 491 (1st Cir. 1996) (quoting Rendell-Baker v. Kohn, 457 U.S. 830, 838 (1982)); Humpherys v. Nager, 962 F. Supp. 347, 351 (E.D.N.Y. 1997). This inquiry requires a complicated, fact-specific, and context-sensitive inquiry because it is "[o]nly by sifting facts and weighing circumstances [that] the nonobvious involvement of the State in private conduct be attributed its true significance." Burton v. Wilmington Parking Authority, 365 U.S. 715, 722, 726 (1961); Grijalva v. Shalala, 152 F.3d 1115, 1119-1120 (9th Cir. 1998) ("A detailed inquiry into the facts of the particular case may be necessary to determine whether there is state or federal action."); Logan v. Bennington College Corp., 72 F.3d 1017, 1027-28 (2d Cir. 1995). Because the students' Section 1983 claims are inherently factbound and context-sensitive, their claims should not have been dismissed before they had the opportunity to discover and introduce supporting evidence.

Judge Higginbotham provided a helpful illustration of the factbound and context-sensitive analysis that is required for state-action claims against seemingly private educational institutions in Isaacs v. Board of Trustees of Temple Univ., 385 F. Supp. 473 (E.D.Pa. 1974). In that case, two former faculty members sued the University under Section 1983 and the University responded, as Yale has done here, by insisting that it was a "purely private" institution. 385 F. Supp. at 474. After a detailed analysis of prior case-law, Judge Higginbotham concluded that "[o]n the basis of my reading of the extensive record in this case, I have concluded that the Commonwealth of Pennsylvania has so significantly involved itself in the affairs of Temple University that the latter's activities satisfy the requirements of 'state action' and action 'under color of' state law as set forth in Burton v. Wilmington Parking Authority, . . . , and its progeny." 385 F. Supp. at 495.

Courts have agreed that it is inappropriate to dismiss a Section 1983 claim against an ostensibly private school or university simply because the particular allegations in the complaint are not by themselves sufficient conclusively to establish state action. In Weise, supra, for example, this Court held that the District Court had erred in dismissing a former instructor's Section 1983 complaint against a private university. The Court emphasized that the plaintiffs' allegations concerning the relationship between the university and the state presented complicated questions that could not be properly resolved without a hearing and the presentation of evidence. 522 F.2d at 407. The Court of Appeals for the Third Circuit recently applied this same basic principle in Lake v. Arnold, 112 F.3d 682 (3d Cir. 1997). After quoting Scheuer v. Rhodes, supra, the Third Circuit observed that "state action" determinations should not be made on a motion to dismiss or on the basis of an "undeveloped record." 112 F.3d at 689. The court added, "[a]nalysis of the law must attend development of the facts." Ibid.

In this case, the students have been given no opportunity to discover and develop facts that are exclusively within Yale's control. Whether or not Yale is a "state actor" could depend on the degree to which it is currently assisted, encouraged, and influenced by agencies and officials of Connecticut state government and by agencies of the City of New Haven. Moreover, the degree to which Yale's dormitory residence rules are intertwined with government policies or with government funding may affect the finding whether it is "state action."

It is well established that the presumptions against dismissal of a complaint under Rule 12(b)(6) "run particularly strongly in favor of a non-movant alleging a violating of her civil rights." Cohen v. Litt, 906 F. Supp. at 962 (citing Dwyer v. Regan, 777 F.2d 825, 829 (2d Cir. 1985)). Given the serious nature of their religious-discrimination claims, the students must be given an opportunity to develop probative facts by the discovery process and to present them to the District Court.


The students alleged that Yale's mandatory co-educational residence rules violate the Fair Housing Act. The District Court, however, asserted that the students lacked Article III "standing to bring their fair-housing claims" because "[t]he plaintiffs were not denied housing or discriminated against by the terms or conditions of Yale's housing policy." Op. at 21 (JA 107). This holding confused the question of "standing" with the merits of the plaintiffs' claims, which the District Court prematurely decided.

A. The Amended Complaint Alleges Violations of the Fair Housing Act.

The Fair Housing Act provides that "it shall be unlawful to refuse to sell or rent . . . or otherwise make unavailable or deny, a dwelling to any person because of . . . religion." 42 U.S.C. § 3604(a). The Act also prohibits discrimination "in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of . . . religion." 42 U.S.C. § 3604(b). The students have alleged that by refusing to honor their religion-based requests for single-sex housing Yale has in effect refused to make a dwelling available and has discriminated against the plaintiffs "because of . . . religion," thereby violating these two sections of the Fair Housing Act. Amended Complaint ¶ 99 (JA 36).

Section 3604(a) "reaches every practice which has the effect of making housing more difficult to obtain on prohibited grounds." United States v. City of Parma, Ohio, 494 F. Supp. 1049, 1053 (N.D. Ohio 1980) (emphasis added). This Court observed, in LeBlanc-Sternberg v. Fletcher, 67 F.3d 412, 424 (2d Cir. 1995), that "[t]he phrase, 'otherwise make unavailable' has been interpreted to reach a wide variety of discriminatory housing practices." In that case, plaintiffs sued the Village of Airmont under the Fair Housing Act, alleging that the Village "discriminated against Orthodox Jews on the basis of their religion through the adoption of zoning policies limiting the use of Orthodox rabbis' homes for prayer services." 67 F.3d at 416. There was, as in this case, no allegation in LeBlanc that Jews were not permitted to buy property or to live in Airmont. However, it was established that it was "important for Orthodox Jews to be able to gather for worship in congregations large enough to ensure the presence of a minyan, and close enough to the congregants' homes to allow them to walk to services." 67 F.3d at 417. The Village of Airmont's zoning regulations made it more difficult for Orthodox Jews to comply with their obligations and therefore had the effect of excluding Orthodox Jews from the community. 67 F.3d at 418. This Court held that the District Court in LeBlanc erred in setting aside the jury's verdict against the Village, because "the evidence was sufficient to establish that Airmont violated the private plaintiffs' rights under the Fair Housing Act." 67 F.3d at 424.

Yale's insistence that it will only provide housing that it knows the students cannot occupy, and its refusal to make available to the students housing that the students can occupy (despite the fact that such housing exists and that Yale does provide it to other students), has, like the zoning regulations enacted by the Village of Airmont, "made unavailable" and constructively denied housing to the students because of religion. If, for example, a dormitory rule made it impermissible for all students to wear a yarmulke in a dormitory room, or prohibited all students from keeping a prayer shawl ("tallit"), phylacteries ("tefillin"), or a prayerbook ("siddur") in his (or her) room, such regulations would, in practical effect, exclude Orthodox Jews from the dormitories. The current rules (or, more precisely, the current absence of any traditional, reasonable parietal rules) have the same effect on the plaintiffs. This discrimination is actionable under Section 3604(a).

Section 3604(b) makes it "unlawful to discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, . . . because of religion." Providing only co-educational housing facilities, which were and are known to be unacceptable to these students because of their religious beliefs and obligations, is a "term" or "condition" of the rental of a dwelling, and is an aspect of the "provision of services or facilities in connection [with a dwelling]," under the Act. Therefore, Yale's policy of granting ad hoc and other exemptions and accommodations for secular reasons, but not for religious reasons, is also actionable under Section 3604(b).

The United States Supreme Court has made clear that it is discrimination to treat religion-based requests for exemptions differently than other requests: "[W]here the State has in place a system of individual exemptions, it may not refuse to extend that system to cases of 'religious hardship' without compelling reason." Employment Div. v. Smith, 494 U.S. 872, 884 (1990) (citing Bowen v. Roy, 476 U.S. 693, 708 (1986)); see also Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520, 536-38, 542-546 (1993); Rader, 924 F. Supp. at 1552 n. 23 ("[W]hen government grants exemptions to a general rule on an individualized basis and refuses to extend an exemption to a religious observer, strict scrutiny applies.").

Yale will likely insist that its on-campus housing requirement is both neutral and generally applicable and that it has not discriminated against the students either on paper or in practice. But this is certainly a disputed question of fact that should not have been resolved by the District Court on a motion to dismiss. See, e.g., Sassower v. Field, 752 F. Supp. 1182, 1189 (S.D.N.Y. 1990) (plaintiffs created triable issue of fact in Fair Housing Act case where they claimed that defendants failed to comply with their own internal guidelines in denying purchase application); Rader, 924 F. Supp. at 1543 & n.2, 1546-47 (court held a bench trial and made detailed findings regarding University's practice of granting non-religion-based exemptions to parietal rule).

In sum, the students' allegations are sufficient to state a claim for relief under the Fair Housing Act, especially given that the United States Supreme Court has called for a "generous construction" of the Act in light of its important purposes. Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 211-212 (1972).

B. The District Court's "Standing" Rationale Is Erroneous.

The District Court dismissed the plaintiffs' Fair Housing claim because, it said, the plaintiffs lacked "standing" to sue. The Court asserted that the Amended Complaint had "set forth no factual allegations that satisfy the injury-in-fact element" (Op. at 21; JA 107) because, in the District Court's opinion, the dormitory rooms remain open for the students to occupy. Op. at 5 (JA 91). This conclusion plainly misapprehends the plaintiffs' claims. The plaintiffs are not arguing that they have been barred from occupying the rooms assigned to them. But they do contend that, by reason of Yale's dormitory policies, the rooms are effectively unavailable to them. Yale's dormitory policies have the effect of excluding these devoutly observant Orthodox Jews because of their religion. The law is clear that a plaintiff can establish illegal discrimination under the Fair Housing Act by proving either disparate treatment or disparate impact. See, e.g., United States v. Incorporated Village of Island Park, 888 F. Supp. 419, 445 (E.D.N.Y. 1995); Huntington Branch NAACP v. Town of Huntington, 844 F.2d 926, 934 (2d Cir. 1988), aff'd, 488 U.S. 15 (1988).

The District Court ruled erroneously that the plaintiffs lacked standing because their claims lacked merit. A party's standing to bring a claim in federal court does not depend on the merits of his claims. The question under Article III is not whether a plaintiff can prevail, but whether that plaintiff has the "requisite . . . interest that is, or is threatened to be, injured by the [challenged] conduct." Doremus v. Board of Education, 342 U.S. 429, 435 (1952).

The Fair Housing Act reflects "a congressional intention to define standing as broadly as is permitted by Article III of the Constitution." Trafficante, 409 U.S. at 209; Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 109 (1979); Havens Realty Corp. v. Coleman, 455 U.S. 363, 380 (1982); LeBlanc-Sternberg, 67 F.3d at 424-425; Comer v. Cisneros, 37 F.3d 775, 788-789 (2d Cir. 1994). As the Trafficante Court noted, the Act's language is "broad and inclusive" (409 U.S. at 209), it promotes a "policy that Congress considered to be of the highest priority" (409 U.S. at 211), and Congress' aims can only be achieved by a "generous construction" of the statute (409 U.S. at 212). Therefore, "the sole requirement for standing to sue under [the Fair Housing Act] is the Article III minima of injury in fact." Havens, 455 U.S. at 372. Any "aggrieved person" may commence a civil action in an appropriate court under the Fair Housing Act. 42 U.S.C. § 3613(a)(1)(A). An "aggrieved person" is defined broadly in Section 3602(i)(1) as anyone who "claims to have been injured by a discriminatory housing practice."

The students have suffered concrete economic injury as a result of Yale's Fair Housing Act violations. They have been forced to pay for on-campus housing that they have not used, cannot use, never will use, and that Yale knows is useless to them. Amended Complaint ¶¶ 62-65, 101-104 (JA 24-26, 36-37). This kind of tangible and concrete financial harm -- in addition to less tangible but no-less-real harm they have suffered by being denied the chance to participate fully in undergraduate life -- is routinely found sufficient to confer standing in Fair Housing Act cases. See, e.g., Simovits v. Chanticleer Condominium Assoc., 933 F. Supp. 1394, 1400 (N.D. Ill. 1996) (financial strain from additional mortgage payments and lost opportunities to sell condominium created standing under Act).


The students alleged two federal antitrust claims that were precipitously and erroneously dismissed by the District Court. The first claim was that Yale's requirement that freshmen and sophomores reside in the dormitories was an attempt by Yale to monopolize the New Haven student-housing market. Amended Complaint ¶¶ 109, 110, 112 (JA 38-39). The second antitrust claim was that the requirement was an illegal "tying arrangement" because the provision of a Yale education was made conditional on the purchase by the students of "unrelated housing services." Amended Complaint ¶ 121 (JA 42).

A. The Students' Monopolization Claim Defined a Relevant Market Within Which Yale Has Monopoly Power.

The District Court faulted the plaintiffs' complaint for failing to meet their "burden of defining the relevant market." Op. at 29 (JA 115) (quoting Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997), cert. denied, 118 S.Ct. 1385 (1998)) (internal quotations omitted). Relying on Rohlfing v. Manor Care, Inc., 172 F.R.D. 330 (N.D. Ill. 1997), the District Court erroneously concluded that the students' "allegation that the relevant market is housing for Yale students fails to include all interchangeable substitutes." Op. at 32 (JA 118).

The plaintiffs recognized, however, that a monopolization claim must define a relevant market "with reference to the rule of reasonable interchangeability and cross elasticity of demand." Queen City, 124 F.3d at 436; Pepsico, Inc. v. The Coca-Cola Co., Inc., 1998 WL 547088, *5 (S.D.N.Y. Aug. 27, 1998). And their proposed market -- student housing in New Haven -- did "encompass all interchangeable substitute products." Queen City, 124 F.3d at 436; see also Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 482 (1992); Brown Shoe Co., 370 U.S. 294, 325 (1962).

The "relevant market" alleged in this case includes interchangeable substitute products. It is a fact of life that not all dwelling space in New Haven is interchangeable with "student housing." If prices drop for 19th Century farmhouses in Milford, New Haven students will not flock from town to country. See Amended Complaint ¶ 113 (JA 39-40) ("There is no cross-elasticity of demand between housing for Yale students and any other housing in the area."). Similarly, were the rent for traditional student housing -- on campus and off -- to drop precipitously, there would be no rush for dingy academic digs by the Connecticut gentry. "Student housing" -- the relevant market identified by the plaintiffs -- does include interchangeable products, such as apartments, group houses, and dormitories, -- and it does not exclude any reasonably substitutable commodity.

Because of Yale's monopolistic policy, many consumers are prevented from responding to price changes within the relevant market. An unmarried Yale sophomore is not permitted to "substitute" a third-floor apartment on Orange Street in New Haven for a dormitory room, even if the former is available at a much better price. Despite the fact that these two goods are interchangeable and are part of the same "relevant market," consumers' rational behavior is thwarted. See Amended Complaint ¶ 111 (JA 39) ("By requiring freshmen and sophomores to live on campus, Yale has reduced the supply of housing available to those Yale students and eliminated competition from other potential landlords in the New Haven area."). This is precisely the vice of monopoly that the Sherman Act was intended to remedy. See Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton College, 128 F.3d 59, 67 (2d Cir. 1997).

This Court's recent decision in Hamilton Chapter highlights two important errors in the District Court's opinion in this case. First, the District Court erred by requiring the students to prove their case, without any discovery, in order to withstand a motion to dismiss under Fed. R. Civ. P. 12(b)(6). It is well established that "market definition is most often a factual inquiry." Pepsico, Inc., 1998 WL 547088, *6, *11; International Audiotext Network, Inc. v. American Tel. & Tel. Co., 893 F. Supp. 1207, 1214 (S.D.N.Y. 1994), aff'd, 62 F.3d 69 (2d Cir. 1995). For this reason, a "generous approach to pleading applies in the antitrust context." Hamilton, 128 F.3d at 63.

The issue is not whether a plaintiff will or might ultimately prevail on her claim, but whether she is entitled to offer evidence in support of the allegations in the complaint. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test. A dismissal is warranted under Rule 12(b)(6) only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. 128 F.3d at 62-63 (citations and internal quotations omitted).

Second, the District Court asserted that "the amended complaint's allegation that the relevant market is housing for Yale students fails to include all interchangeable substitutes. The plaintiffs could have opted to attend a different college or university if they were not satisfied with Yale's housing policy." Op. at 32 (JA 118). This conclusion is similar to the argument advanced by the defendant in Hamilton, 128 F.3d at 62 (defendants argued that "the relevant product market was not the market for room and board for Hamilton students, as alleged in the complaint, but the market for highly selective liberal arts colleges in which Hamilton competes for students with more than 100 colleges"). In Hamilton, however, several fraternities had alleged that Hamilton College's residential policy, which requires all of its students to live in college housing and participate in a college meal plan, "unlawfully monopolizes the market for residential services in Clinton, New York." 128 F.3d at 61. Neither the District Court in Hamilton nor this Court suggested that the relevant-market definition in Hamilton was defective. By the same token, the students' definition of the relevant market as the market for student housing in New Haven was sufficient to withstand Yale's motion to dismiss.

B. The Students' "Tying Arrangement" Claim Alleged That the Tying Product Is Unique.

The District Court dismissed the students' "tying" claim on the ground that the Amended Complaint failed to allege "that Yale is unique beyond the colloquial meaning of the word." Op. at 27 (JA 113). The District Court arrived at this result on the basis of its understanding of the First Circuit's decision in Lee v. Life Ins. Co. of North America, 23 F.3d 14 (1st Cir. 1994). Op. at 25-26 (JA 111-112). The court in Lee rejected a Sherman Act challenge to the University of Rhode Island's policy of tying its degree program to the purchase of health services from the University's on-campus clinic. 23 F.3d at 15. In one paragraph of its opinion, the First Circuit observed that the plaintiffs could not colorably claim "market power" because (23 F.3d at 17):

Although URI obviously is "unique" in the colloquial sense, appellants cannot claim that other institutions of higher education do not or cannot provide "functionally similar" educational offerings to potential URI applicants.

The Amended Complaint in this case did, however, allege "market power":

Yale has sufficient economic power in the educational market to compel acceptance of the tied product, that is, to coerce students to purchase housing that they would not otherwise buy.

Amended Complaint ¶ 124 (JA 42-43). This is because, the plaintiffs' contended:

[Yale's] economic power is based on the fact that a Yale degree has unique attributes that make it without substitute or equal. It is of incomparable value to potential employers and graduate schools. Only a Yale degree allows access to certain important advantages, such as the worldwide network of Yale alumni.

Amended Complaint ¶ 124 (JA 42-43). Thus, emphasizing Yale's unmatched traditions, the students have alleged that there are no universities functionally equivalent to Yale College and that a Yale degree has advantages that no other universities in the educational market can provide.

"Uniqueness" -- and therefore market power -- may be based on factors that prevent others from offering the same product -- or "barriers to entry." See Fortner Enterprises, Inc. v. U.S. Steel Corp., 394 U.S. 495, 505 n. 2 (1969) (Fortner I). One obvious and important barrier is the time it takes to develop a reputation. It has taken centuries for Yale to establish itself as one of the world's elite institutions, to build an enviable endowment, and to solidify its claim on the brightest young students. A would-be competitor could not possibly hope to build a comparable institution anytime soon. This fact confers upon Yale an "advantage not shared by [its] competitors in the market for the tying product." U.S. Steel Corp. v. Fortner Enterprises, 429 U.S. 610, 620 (1977) ("Fortner II").

Moreover, Lee cannot justify the District Court's dismissal of the students' claim because the plaintiffs in Lee were permitted at least "minimal discovery." 23 F.3d at 15. In this case, because of the District Court's delay in ruling on Yale's motion to stay discovery, the students have been permitted no discovery whatever. The District Court apparently believed that the students would be unable to prove that Yale in fact exercises "sufficient economic power in the tying product market to coerce purchaser acceptance of the tied product." This was not the students' burden. A Sherman Act plaintiff need only give a "short plain statement of a claim for relief which gives notice to the opposing party." George C. Frey Ready-Mix Concrete, Inc., v. Pine Hill Concrete Mix Corp., 554 F.2d 551, 554 (2d. Cir. 1977) (reversing grant of motion to dismiss where plaintiff alleged simple elements of monopolization). "The discovery process is designed to provide whatever additional sharpening of the issues may be necessary." Id.

A plaintiff making a tying-arrangement claim need not prove full-blown monopoly power; he must only allege that the tying product is unique. Fortner II, 429 U.S. at 620-21. Whether a tying product is sufficiently "unique" to satisfy the market-power element of a tying claim is a question of fact and one which should not be resolved before trial, let alone before discovery has commenced. See, e.g., Fortner I, 394 U.S. at 506; Hill v. A-T-O, Inc., 535 F.2d 1349, 1354 (2d. Cir. 1976). Because the students have alleged that a Yale education is unique (Amended Complaint ¶ 124; JA 42-43), they have sufficiently stated their tying claim.


The District Court erred in dismissing the students' Amended Complaint and, for all the foregoing reasons, the judgment of the District Court should be reversed and this case remanded for discovery and trial.

DATED: November 9, 1998
2555 M Street, N.W.
Washington, D.C. 20037
(202) 293-6400

Attorneys for Plaintiffs-Appellants

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