On March 9, 2019, Judge Claudia Wilken of the Northern District of California submitted an opinion in the most recent student-athlete antitrust action against the NCAA: In re NCAA Grant-in-Aid Cap Antitrust Litigation. The plaintiff-athletes won the heavily-anticipated decision, however, the extent of the win is up for debate. Even assuming that the athlete’s victory was a small one, whittling away at the defendant’s arguments is successful in many long-term litigation strategies. While a sweeping victory did not come from the athletes in the most recent antitrust decision, the small victories should still be celebrated.

Successful Bit-by-Bit Litigation Strategies

The NAACP boasts the hallmark mechanism for successfully implementing change in the legal field. In 1896, the Supreme Court’s Plessy v. Ferguson decision upheld government-levied racial segregation under the doctrine that government separation on the basis of race was constitutional so long as the facilities were equal.

Over the next fifty-eight years, the NAACP eroded the separate-but-equal principle bit-by-bit.

First, in the 1930s, it used empirical evidence to argue that certain separate facilities were not equal in Murray v. Maryland – desegregating Maryland’s Law School – and in State ex rel. Gaines v. Canada – admitting a black student to the University of Missouri Law School. Second, it continued to show that intangible factors such as alumni base and post-graduate opportunities prevented other separate graduate school opportunities from being “equal” in Sweat v. Painter and in McLaurin v. Oklahoma State Regents in 1950.

These cases were essential, incremental foundations that set the stage for Brown v. Board of Education in 1954, where the Supreme Court found that separate was inherently unequal, and ordered the desegregation of schools in the U.S.

One of the more unique bit-by-bit litigation strategies was utilized in the women’s rights movement. In 1976 in Craig v. Boren, the plaintiffs sued on a theory of discrimination against young men in Oklahoma because an Oklahoma law permitted women to purchase alcohol at age eighteen, while it prohibited men from buying alcohol until age twenty-one. A similar strategy was used to help admit men to nursing school in Mississippi University for Women v. Hogan in 1982.

These cases contributed to set the stage for similar actions of discrimination against women in United States v. Virginia, where the court found that women could not be categorically excluded from the military-esque education offered at the Virginia Military Institute.

Athlete’s Continuing to Erode the NCAA’s Defenses Should Yield Long-Term Benefits

The first major antitrust decision levied against the NCAA came in 1984 in NCAA v. Board of Regents of the University of Oklahoma (Board of Regents).

The plaintiff universities argued that the NCAA’s policy of restricting television output constituted an unreasonable restraint of trade in violation of the Sherman Antitrust Act. The court applied a “Rule of Reason” analysis––requiring each party to articulate why the challenged restriction either suppresses competition in the relevant market, or enhances it.

The dicta in Board of Regents exemplified the judiciary’s view on amateurism. While not essential to the holding, the Court explained that the very notion of amateurism was such that the players are not paid. Ultimately, the Court found that preserving competitive balance and protecting gate attendance profits were not valid “procompetitive justifications” for the challenged restriction and enjoined the NCAA from following its television plan.

In the two most recent antitrust cases, the plaintiff athletes started to chip away at the NCAA’s defenses to its rules and at the court’s view of the notion of amateurism.

O’Bannon v. NCAA

Ed O’Bannon, a college basketball player at UCLA, served as the lead plaintiff for a class of student-athletes who sued EA Sports and the NCAA for restricting the market for their names, images, and likenesses (NIL) by prohibiting payments in exchange for any such NIL rights.

Applying the same Rule of Reason framework as the Court in Board of Regents, the district court became the first federal court to find that any portion of the NCAA’s policies violated the antitrust laws. The ruling, however, was not a total win for the plaintiffs. At the district court level, Judge Wilken considered four procompetitive justifications offered by the NCAA.

  1. Preserving the notion of amateurism;
  2. Encouraging competitive balance in NCAA football and basketball;
  3. Balancing students’ on-field experience with their in-classroom experience; and
  4. Growing output in the market for college education.

The district court accepted the first and third justifications, but rejected the second and the fourth. Encouraging competitive balance was rejected because the elite schools in the Power 5 conferences already maintained a strong competitive advantage over other programs through lavish facilities. Growing output in the market for college education was likewise rejected. The court explained that another likely scenario exists where more athletes receive access to education if the cap on compensation was eliminated.

At the appellate level, the Ninth Circuit only examined the procompetitive justification of the “notion of amateurism”, essentially combining the district court’s acceptance of the first and third justifications. The court agreed with the NCAA, finding that procompetitive effects were caused by amateurism, and this a restriction was permissible. The Ninth Circuit adjusted Judge Wilken’s remedy by allowing the NCAA to cap payments for athletes at the cost of attendance.

In re NCAA Athletic Grant-in-Aid Cap Antitrust Litigation

On March 9, 2019, student-athletes were declared winners of the next major antitrust litigation levied against the NCAA in the wake of O’Bannon. Again, Judge Claudia Wilken was tasked with evaluating NCAA policies under a Rule of Reason analysis, and again the NCAA offered four justifications:

  1. Preserving consumer demand of collegiate athletics;
  2. Integrating student-athletes with students;
  3. Encouraging competitive balance; and
  4. Growing output in the market for college education.

Look familiar? Judge Wilken dismissed the first two justifications–encouraging competitive balance and growing the output in the market for college education–at the summary judgment stage for similar reasons as in O’Bannon.

Unlike O’Bannon, however, the district court did not accept integrating student-athletes with students as a permissible procompetitive justification. In fact, the remedy ordered in O’Bannon effectively served as a case study for the plaintiffs in the Grant-in-Aid Cap Litigation. Because the Ninth Circuit’s remedy ordered the NCAA to permit payments up to the cost of attendance, it allowed for payments to athletes to increase from the prior rules. Judge Wilken observed that integration suffered no negative effects despite this increase, and thus, capping payments at the cost of attendance did not improve competition in the market.

Judge Wilken criticized the final justification remaining, preserving consumer demand for collegiate athletics, before eventually accepting it as a procompetitive justification. Unlike the general notion of amateurism accepted in O’Bannon, this accepted procompetitive justification was limited to preserving college athletics as an alternative to professional athletics for consumers. In other words, Judge Wilken limited amateurism as a procompetitive justification so long as amateurism prevents unlimited cash payments–recognizing the very nature of college athletics as different than professional athletics.

The remedy ordered in the Grant-in-Aid Cap Litigation requires the NCAA to adjust its rules, yet again, to permit student-athletes to receive compensation related to education above the current cap at the cost of attendance. While it wasn’t a sweeping victory for the student-athletes who desire to have a completely free market for their services, incremental gains were advanced yet again and will certainly contribute to the greater pursuit of a free market for student-athletes.

Grant Newton

 

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