College Athletes’ Fight for Compensation Continues in Alston v. NCAA
Will any team be able to stop top ranked Alabama this season?[1] Will Zion Williamson, recently compared to Lebron James, help Duke win their sixth national championship in March?[2] Can the UConn’s women’s basketball team accomplish yet another undefeated regular season?[3] These are questions debated among college sports fans. However, a different question has long plagued the minds of the student-athletes themselves: when and if they will ever be paid.
These student athletes may soon have an answer as a decision in the “mother of all pay-for-play lawsuits” is pending in the Northern District of California.[4] Former West Virginia University running back Shawne Alston, the plaintiff in Alston v. NCAA, argued that the NCAA and the major conferences violated federal antitrust law by conspiring to fix the costs of compensation to athletes, and sought to enjoin the NCAA’s cap on grant-in-aid.[5] Put simply, Alston contends the NCAA’s rules unreasonably limit the value of his athletic services to the full cost of attendance, while his actual worth to the university may far exceed that amount.[6] Alston v. NCAA was combined with numerous other cases; three classes were certified in the consolidated case In Re NCAA Athletic Grant-In-Aid Cap Antitrust Litigation (hereinafter NCAA Grant-in-Aid Cap}.[7] Those three certified classes are Division I FBS football players, Division I men’s basketball players, and Division I women’s basketball players.[8]
To properly understand the players’ legal argument in NCAA Grant-In-Aid Cap, it is imperative to look to O’Bannon v. NCAA, which they strongly relied and expanded upon in bringing the current suit.[9] In O’Bannon, current and former college football and men’s basketball players challenged the NCAA’s prohibition of athletes receiving compensation for the use of their name, image, and likeness (NIL).[10] There, plaintiffs argued this was an unlawful restraint on trade and thus a violation of Section 1 of the Sherman Act, which invalidates “[e]very contract, combination…or conspiracy, in restraint of trade or commerce.”[11] At the time, the scholarships available to athletes were limited to the amount of grant in aid, which was comprised of the cost of tuition, room and board, and required course books.[12] Plaintiffs sought to increase the scholarship amount to the full cost of attendance at their respective universities.[13] The full cost of attendance includes other miscellaneous expenses that result from attending school such as non-required books, school supplies, and transportation.[14] This change in scholarship limitations would increase the amount available to each student-athlete by a few thousand dollars.[15] Plaintiffs also sought to receive compensation from the schools for the use of their NILs, and proposed that schools place a portion of their licensing revenues in a trust that would become available to these student athletes upon leaving their school.[16]
The NCAA contended in O’Bannon that Section 1 antitrust challenges to their amateurism rules fail as a matter of law because they are presumed valid under the Supreme Court’s decision in NCAA v. Board of Regents.[17] However, on appeal, the Ninth Circuit rejected that argument and interpreted the Supreme Court’s decision to mean that the “Rule of Reason” test, as explained below, must be used to analyze the NCAA actions’ competitive effects.[18] In essence, the Ninth Circuit affirmed the Northern District of California’s decision that the NCAA is subject to antitrust laws and their unique structure does not exempt them from compliance.[19]
Based on its interpretation of Regents, the circuit court used the three-step “Rule of Reason” framework in its analysis:“[1] The plaintiff bears the initial burden of showing that the restrain produces significant anticompetitive effects within a relevant market. [2] If the plaintiff meets this burden, the defendant must come forward with evidence of the restraint’s procompetitive effects. [3] The plaintiff must then show that any legitimate objective can be achieved in a substantially less restrictive manner.”[20]
The Ninth Circuit found by essentially valuing the student-athletes’ NILs at zero, the NCAA unreasonably restrained trade producing an anticompetitive effect.[21] They also found the rules furthered the NCAA’s commitment to amateurism, which maintains consumer demand.[22] In addition, the rules also protect the integration of athletics and academics.[23] At the third step of the analysis, the Ninth Circuit considered the proposed, less-restrictive alternatives.[24] The Ninth Circuit affirmed the district court’s finding that the NCAA should increase the scholarships available to student-athletes to cover the full cost of attendance rather than only the full grant-in-aid amount, as a less restrictive alternative that does not compromise the NCAA’s purpose.[25]
However, the circuit court also reversed the district court’s decision that schools should share the revenues obtained from using the players’ NILs in the form of a trust available to athletes upon leaving school.[26] The court found that “offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap. Once that line is crossed, we see no basis for returning to a rule of amateurism.”[27]In reversing the district court, the Ninth Circuit relied on the Supreme Court’s statement in Regents that the NCAA must be given “ample latitude” to oversee college athletes, which includes the preservation of amateurism.[28] While the NCAA has changed its bylaws since the 2015 O’Bannon decision, to allow financial aid up to the cost of attendance or potentially more if the student also receives a Pell grant, student-athletes have continued to challenge the system.[29]
NCAA Grant-In-Aid Cap goes one step further than O’Bannon, attacking the restriction on sharing revenue obtained from the use of players’ NILs, as well as contending that the cap on financial aid in general unlawfully restrains trade.[30] In addition, plaintiffs argue NCAA rules also fix prices by regulating and prohibiting additional benefits that are related to education while allowing benefits that are incidental to athletic participation.[31] For example, the NCAA limits academic tutoring and prohibits reimbursement for items such as computers and science equipment, but at the same time permits some reimbursement for players’ families to travel to games.[32]
In his ruling on a motion for summary judgment, Judge Wilken of the Northern District of California stated the allegations were sufficiently distinct from those raised in O’Bannon to permit litigation, as the NCAA rules had changed since that decision.[33] Judge Wilken also ruled the plaintiffs had met their burden of proving anticompetitive effects in the college athletic market.[34] The NCAA must again prove that their rules, which have evolved in the years since O’Bannon continue to advance the NCAA’s procompetitive purposes.[35] Specifically, that they preserve consumer demand because interest in college athletics is in part due to their amateur nature and they promote integration between the academic and athletic aspects of university life.[36]
The student-athletes will try to argue that less restrictive alternatives exist to achieve the same goal.[37] Specifically, the plaintiffs argue the individual conferences should provide the expenses that can be provided to student athletes in their own conference rather than the NCAA setting the amount for all its member schools.[38] They also propose another alternative that all prohibitions on payments or benefits related to educational expenses or athletic participation should be enjoined.[39]
In September 2018, the NCAA Grant-In-Aid Cap bench trial was held over the course of ten days in California.[40] Each side called numerous economic and industry experts to argue in their favor.[41] If the NCAA prevails, little if anything will likely change in the college sports industry.[42] However, if Judge Wilken finds the NCAA violated antitrust law, as she did in O’Bannon, it could mark a significant change in the NCAA’s structure.[43] It may lead to “super-conferences” in which the larger schools can offer recruits significant compensation to attend their school. It could also bring about several questions regarding how such a system would work, and whether athletes would be paid on a yearly basis. Would that amount be fixed at the time of recruiting or would it change every year depending on the value the athlete brings to the university? Would other aspects of the athletic program be compromised if funds were going to the players rather than the programs as a whole—for example, less money to spend on the facilities or coaching staff? How would this impact the other sports and athletes not certified within this case? This case has the potential to alter the college athletic system as we know it, but until the district court renders its decision, we can only continue to speculate about the NCAA’s future.
Footnotes
