The opinion of the court was delivered by: Austin, District Judge.
MEMORANDUM OPINION AND JUDGMENT ORDER
Plaintiffs have brought this five count class action, seeking
relief from defendants' alleged violations of the Sherman and
Clayton Antitrust Acts. Count I asserts that defendants possess
an illegal monopoly of the market consisting of those applicants
for the Illinois bar examination who take a bar review course.
Clayton Act § 7, 15 U.S.C. § 18 (1970). Counts II and III accuse
defendants of engaging in predatory practices and monopolistic
restraints of trade in order to prevent competitors, particularly
The Michigan Bar Review Center, from entering the relevant
market. Sherman Anti-Trust Act §§ 1 and 2, 15 U.S.C. § 1 and 2
(1970). Count IV alleges that defendants illegally tie the lease
of written course materials to the sale of their course by
offering to credit the rental charged for the lease against the
tuition charged for the course. Clayton Act § 3, 15 U.S.C. § 14
(1970). Finally, Count V asserts that the above acts were done in
furtherance of a combination and conspiracy to monopolize the
relevant bar review market. Sherman Anti-Trust Act §§ 1 and 2,
15 U.S.C. § 1 and 2 (1970). Defendants have moved to dismiss the
complaint for lack of subject matter jurisdiction on the grounds
that the acts complained of do not affect or occur in interstate
commerce. For the reasons stated below, this court grants
defendants' motion and dismisses the complaint.
After extensive discovery proceedings, it appears from the
parties' briefs and affidavits*fn1 that the basic,
jurisdictional facts of this case are undisputed. The individual
and corporate defendants are in the business of preparing
prospective attorneys for the bar examination in Illinois and
several other states. Nexus Corp. and Bar Review, Inc.
(hereinafter BRI) are incorporated under the laws of the State of
Illinois and maintain offices in Chicago, the principal location
from which defendants manage and supervise their multi-state
activities. BRI, a wholly owned subsidiary of Nexus Corp., merged
with a competitor in 1968 and since then it has offered the only
bar review course in Illinois. It is this monopoly that
plaintiffs seek to challenge.
Despite the fact that the complaint is directed at a monopoly
existing solely within the State of Illinois and that in a
companion case one of the judges of this court has already found
the requisite element of interstate commerce to be lacking,*fn2
plaintiffs nevertheless attempt to invoke federal jurisdiction
under either the "in commerce" or "affect commerce" theory*fn3 by
upon four interstate aspects of defendants' business. First,
plaintiffs note that defendants solicit customers for their
Illinois course in many states, that BRI and the non-Illinois bar
review courses exchange referrals and contacts, and that all of
defendants' employees are paid from Illinois. Further, some BRI
students take the course while living out of state and in
Washington, D.C. students may prepare for the multistate bar
examination while still in school and then complete the rest of
their course when they return to their home states. Second, parts
of the Illinois course are prepared by out of state faculty, some
of whom travel to Illinois to lecture. In addition, some of the
materials prepared for the Illinois course are modified for use
in other states. Third, the profits of the Illinois monopoly are
used to finance defendants' operations out of state.
Next, if the above three aspects of defendants' business are
not found to occur within the relevant stream of interstate
commerce, plaintiffs claim that these activities substantially
affect commerce because out of state competitors, like The
Michigan Bar Review Center, are prevented from expanding into
Illinois. The asserted effects on interstate commerce include a
restriction on the flow of course materials shipped into
Illinois, impairment of The Michigan Bar Review Center's ability
to hire the same professors as those employed by BRI, restraint
on the free choice of Illinois students in choosing a bar review
course, and a lessening of competition in other states.
Plaintiffs also allege that interstate travel is affected because
BRI activities affect the ability of BRI students to practice in
federal court and to gain reciprocal admission to practice law in
But, whether plaintiffs seek to characterize defendants'
activities as occurring in the stream of commerce or as affecting
a stream of commerce, their efforts in this case must fail
because, "The test of jurisdiction is not that the acts
complained of affect a business engaged in interstate commerce,
but that the conduct complained of affects the interstate
commerce of such business." Page v. Work, 290 F.2d 323 (9th Cir.
1961), cert. denied, 368 U.S. 875, 82 S.Ct. 121, 7 L.Ed.2d 76.
Thus, in Page the court held that the publication of legal
notices and advertising in Los Angeles County neither occurred in
the course of interstate commerce nor affected interstate
commerce in newsprint, ink, and advertising. Accord, Yellow Cab
Co. of Nevada v. Cab. Emp., Auto., & W. Local #881, 457 F.2d 1032
(9th Cir. 1972); Sun Valley Disposal Co. v. Silver State Disposal
Co., 420 F.2d 341 (9th Cir. 1969); Lieberthal v. North Country
Lanes, Inc., 332 F.2d 269 (2d Cir. 1964); Cherney Disposal Co. v.
Chicago & Suburban Refuse Disposal, 5 Trade Reg.Rptr. ¶ 73,958
(N.D.Ill. 1972); Bailey's Bakery, Ltd. v. Continental Baking Co.,
235 F. Supp. 705 (D.Hawaii 1964), aff'd per curiam, 401 F.2d 182
(9th Cir. 1968), cert. denied, 393 U.S. 1086, 89 S.Ct. 874, 21
L.Ed.2d 779 (1969).
In the instant case, the allegedly illegal conduct occurs in a
market consisting of those applicants for the Illinois bar
examination who take a bar review course. Complaint ¶ 12. It is
undisputed that the BRI course is given only in the State of
Illinois, that the vast majority of students who take it have
Illinois residences,*fn4 that they are preparing for the
Illinois bar examination administered by the Illinois Board of
Law Examiners, and that upon passing the examination a person is
entitled to receive a license to practice law only in the State
of Illinois. Reliance upon the flow in commerce of such
incidental activities as advertising, solicitation, preparation
of course materials, and the travel of non-Illinois lecturers
will not alter the intrastate character of the course itself.
Hence, the acts complained of occur in a market that is located
wholly within the State of Illinois and is neither in the flow of
interstate commerce or at either end of that flow.
However, plaintiffs have alternatively asserted that even if
this conduct occurs in a market that is wholly intrastate,
federal jurisdiction may be predicated upon a showing that the
conduct substantially affects interstate commerce. Burke v. Ford,
389 U.S. 320, 88 S.Ct. 443, 19 L.Ed.2d 554 (1967). This theory,
too, must fail because the asserted effects on interstate
commerce here are merely incidental to defendants' local
activities. Sun Valley Disposal Co. v. Silver State Disposal Co.,
supra; Cherney Disposal Co. v. Chicago & Suburban Refuse
Disposal, supra. Thus, alleging that defendants offer bar review
courses in several states is irrelevant to a complaint asserting
injury to customers in the Illinois market. That there may be
nationwide competition for students and lecturers, whose travel
across state lines may be influenced by local conditions, is
incidental to defendants' business and irrelevant to this court's
jurisdiction. Moreover, the suggestion that the interstate
movement of students confers anti-trust jurisdiction over purely
local conduct was firmly rejected in Marston v. Ann Arbor
Property Managers Ass'n, 302 F. Supp. 1276 (E.D.Mich. 1969), aff'd
per curiam, 422 F.2d 836 (6th Cir. 1970), cert. denied,
399 U.S. 929, 90 S.Ct. 2244, 26 L.Ed.2d 796. In addition, whatever effect
the BRI monopoly may have upon a student's decision to practice
law in Illinois is deemed too remote for federal jurisdictional
purposes and is purely speculative upon the facts presented to
this court. Furthermore, the fact that an intrastate business has
customers who come from another state before receiving local
services does not in itself show any effect on interstate
commerce. Elizabeth Hospital, Inc. v. Richardson, 269 F.2d 167
(8th Cir. 1958), cert. denied, 361 U.S. 884, 80 S.Ct. 155, 4
L.Ed.2d 120 (1959); Spears Free Clinic and Hospital for Poor
Children v. Cleere, 197 F.2d 125 (10th Cir. 1952); Hotel
Phillips, Inc. v. Journeymen Barbers, 195 F. Supp. 664 (W.D.Mo.
1961), aff'd per curiam, 301 F.2d 443 (8th Cir. 1962).
Next, the complaint alleges that BRI solicits applications from
out of state students. However, interstate solicitation does not
necessarily constitute interstate commerce and in any event the
solicitation activity here is merely incidental to the conduct of
the course itself, which is the conduct complained of. Cotillion
Club, Inc. v. Detroit Real Estate Board, 303 F. Supp. 850
(E.D.Mich. 1964). Allegations of minor or insignificant effects
on interstate commerce will simply not support this court's
jurisdiction. Lieberthal v. North Country Lanes, Inc., supra; Sun
Valley Disposal Co. v. Silver State Disposal Co., supra; Page v.
Work, supra. Finally, plaintiffs' reliance upon cases involving
federal jurisdiction over state bar examination statutes*fn5 is
misplaced because those suits were brought to vindicate alleged
violations of civil rights under 42 U.S.C. § 1983 (1970),
jurisdiction for which does not involve interstate commerce.
In conclusion, similar issues were before Judge Bauer when he
wrote the 1972 opinion in Michigan Bar Review Center, Inc. v.
Nexus Corp., supra, a case that was brought by the employer of
one of the plaintiffs herein. After the passage of nearly a year
and the expenditure of much effort on discovery, plaintiffs have
proved only that Judge Bauer's ruling was correct and accurate
when he stated at 5 Trade Reg.Reptr. ¶ 73,891 at 91,703-04:
The service Defendant provides, within the distinct
submarket, is distinctly local.
Defendant's activities in Illinois have only an
indirect effect on other bar review markets and on
I can only add this reminder from the Seventh Circuit,
"Monopolies, as such, the federal government has no control over;
only when a monopoly of some part of interstate commerce is
involved does jurisdiction attach to the federal ...