Fight Between NCAA and Student-Athletes Continues in Forthcoming Appeal
As laymen regularly debate the topic of paying college athletes for their athletic performance, the courts may ultimately decide the issue in a forthcoming Ninth Circuit appeal. NCAA athletes previously won a limited victory in O’Bannon v. NCAA, when the United States District Court for the Northern District of California ruled that schools can offer full cost-of-attendance scholarships to athletes, covering cost-of-living expenses.[1] The decision in Jenkins v. NCAA was an even greater victory for student athletes. In that case, a federal judge ruled that while the NCAA may continue to restrict paying their student athletes, the organization cannot limit education-related benefits and academic awards.[2] And the upcoming appeal of that case, which merged with Alston v. NCAA, has the potential to change the relationship between the NCAA and its student-athletes even further.[3]
The appeal stems from a class action lawsuit of current and former athletes who played men’s Div. 1 Football Bowl Subdivision (FBS) football and men’s and women’s Div. 1 basketball.[4] Leading the lawsuit is former Cal center Justine Hartman and former West Virginia running back Shawne Alston.[5] The class action suit argued that the NCAA unlawfully prevents conferences as well as individual colleges from competing with each other for the services of college athletes.[6] Instead, the NCAA mandates competition in other ways such as spending millions of dollars on better coaches or improvements to stadiums and arenas.[7] The suit outlined the extraordinary disparity between revenue generated and benefits distributed to the athletes who draw in that revenue.[8] The athletes argued that the court should remove all limitations on compensation and strike down rules prohibiting schools from granting athletes in revenue-generating sports more financial incentives for competing on the team.[9]
In defense, the NCAA argued those limits help preserve demand for college sports.[10] The NCAA highlighted consumer demand, because courts largely decide what constitutes antitrust law violations using the standard of consumer welfare.[11] The NCAA also argued that the rules limiting compensation promoted integration of student-athletes, thereby improving the college education they receive.[12]
The trial court decided in favor of the plaintiffs, at least nominally. Judge Claudia Wilkin explained that the NCAA and its member schools have almost total dominance of, and monopsony in, the college-age athlete market.[13] Monopsony power refers to the existence of only one buyer in a market.[14] While Judge Wilkin did reject the NCAA’s argument that consumers watch NCAA sports because the athletes are not compensated, she reached the conclusion that viewers instead watch because college athletes do not receive specifically unlimited cash payments, especially ones unrelated to education.[15] Therefore, only the NCAA’s limits on benefits related to education, such as those rules limiting graduate school tuition, paid internships, and more, are deemed illegal.[16]
On appeal, the NCAA will argue that the ruling is inconsistent with O’Bannon which they assert left collegiate athletic rules for development outside the courtroom.[17] Jeffrey Kessler of Winston & Strawn LLP, is cross appealing, on behalf of the athletes, for a broader injunction.[18] Although the trial court decision was a technical victory for the athletes, the upcoming appeal is round two in the athletes’ fight for compensation and the NCAA’s struggle to preserve their scholarship-based system.
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