Federal Appeals Court Upholds Ruling NCAA Violates Antitrust Laws

The 9th U.S. Circuit Court of Appeals on Wednesday upheld a lower court ruling that NCAA rules limiting what athletes can receive while playing sports violate antitrust laws, but the three­ judge panel also threw out a plan that would have allowed schools to provide deferred athletes compensation of as much as $5,000 per year.

“The NCAA is not above the antitrust laws, and courts cannot and must not shy away from requiring the NCAA to play by the Sherman Act’s rules,” the panel wrote. “In this case, the NCAA’s rules have been more restrictive than necessary to maintain its tradition of amateurism in support of the college sports market. The Rule of Reason requires that the NCAA permit its schools to provide up to the cost of attendance to their student athletes. It does not require more.”

The three ­judge appellate panel of Sidney R. Thomas, Jay S. Bybee and Gordon J. Quist was unanimous in its finding that the NCAA’s rules violate antitrust laws.

Thomas added in a partial concurrence and partial dissent that he would have concurred with U.S. District Judge Claudia Wilken “in all respects,” including allowing the $5,000 per year above the cost of attendance.

MORE: Read the entire ruling by the appeal panel (http://www.gannett­cdn.com/experiments/usatoday/Sports/2015­09­30­ncaa­federal­appeal­rulingobannon.pdf)

While the NCAA emerges victorious in avoiding the prospect of schools being able to offer additional money to athletes, the appellate panel’s finding relative to the antitrust laws pleased lawyers for the plaintiffs. It sets the stage for the association to attempt to seek a re­hearing of the case from a wider panel of 9th Circuit judges or to try to take the case to the Supreme Court.

Ed O’Bannon – The former UCLA basketball star sued the NCAA after he realized his likeness was used in a video game.

During a conference call Monday, the NCAA’s chief legal officer Donald Remy said it was too soon for the association to determine whether it will pursue either of those options, which also are available to the plaintiffs.

“We will make those judgments in short order,” Remy said. The sides basically have 14 days to pursue 9th Circuit rehearing and 90 days to seek review from the Supreme Court. Sathya Gosselin, an attorney for the plaintiffs, told USA TODAY Sports his side is reviewing its options about further action.

In addition to the NCAA facing other legal challenges ­­ including one that returns to court Thursday ­­ the appellate panel ruled that language from a 1984 Supreme Court ruling that the NCAA has relied upon to preserve its amateurism system is “dicta” ­­ essentially related commentary, but not part of the case’s value as precedent.

That case, NCAA v. Board of Regents, was about control of college football TV rights but the Supreme Court’s opinion included the statement that “in order to preserve the character and quality of the (NCAA’s) ‘product,’ athletes must not be paid, must be required to attend class and the like.”

The NCAA has relied upon this – and other ­­ language from the Board of Regents ruling in successfully defending its amateurism system in many prior legal cases.

But the appellate panel wrote, in part “even if the language in Board of Regents addressing amateurism were not dicta, it would not support the tremendous weight that the NCAA seeks to place upon it.”

Gosselin said the importance of that portion of the opinion “cannot be overstated. For decades, the NCAA has brandished the Board of Regents decision and claimed limitless antitrust immunity as to its amateurism rules.”

The NCAA is facing further legal challenges about its athlete­ compensation rules, and Wednesday’s ruling comes one day before Wilken is scheduled to hold a hearing on whether to grant class ­action status to a pair of lawsuits seeking to basically prevent the association from having any limit on what schools can offer athletes in football, men’s basketball and women’s basketball.

The appellate panel appeared to take that case into consideration on a number of levels.

The opinion, written by Bybee, states, in part, “we have little doubt that plaintiffs will continue to challenge the arbitrary limit imposed by the district court until they have captured the full value of their” names, images and likenesses.

Bybee’s opinion also says: “The difference between 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 and no defined stopping point. … At that point the NCAA will have surrendered its amateurism principles entirely and transitioned from its ‘particular brand of football’ to minor league status.”

But Bybee’s opinion also stated in its conclusion that “we wish to emphasize the limited scope of the decision we have reached” – that Wilken’s intended plan to require the NCAA to allow schools to pay athletes pay up to $5,000 is invalid.

During a conference call Monday afternoon NCAA President Mark Emmert said: “I think the ruling does provide greater clarity on a number of fronts … The fundamental notion of pay for play, as it’s often referred to, is at odds with the notion of amateurism and at odds with the fundamental underpinnings of collegiate athletics. The ruling has those statements in there in pretty direct language. I hope that will, in some ways limit some of the legal arguments that are being made.”

The case began in the summer of 2009 with a suit filed on behalf of Ed O’Bannon, a former UCLA basketball player. It eventually boiled down to the plaintiffs seeking an injunction that would heavily overhaul the NCAA’s limits on what Bowl Subdivision football and Division I men’s basketball players can receive for playing sports and for the use of the names, images and likenesses in in live television broadcasts, rebroadcasts of games and video games.

A trial was held in June 2014 and Wilken ruled in August. She found that the NCAA’s rules at the time – which basically limited athletes to tuition, room, board, books and fees ­­ “unreasonably restrain trade” in violation of antitrust laws.

In her ruling, injunction and a subsequent interpretation of the injunction, she said the NCAA would be able to cap the amount of new compensation that the football and men’s basketball players can receive while they are in school, but that cap would not be allowed to be an amount that is less than the athletes’ cost of attending school.

In addition, Wilken decided to let schools and conferences deposit money in trust for football and men’s basketball players that will become payable when they leave school or their eligibility expires. Under this setup, the NCAA would be allowed to set a cap on the amount of money that may be held in trust, but that cap cannot be less than $5,000 in 2014 dollars ­­ now about $5,040 ­­ for every year the athletes remain academically eligible.

The new benefits were set to be put in place for both incoming and returning athletes, beginning with the 2016­17 school year.

In January 2015 ­­ taking advantage of a new NCAA governance setup that allows them greater autonomy in rules making ­­ schools and athlete representatives from the NCAA’s five wealthiest conferences voted to let athletes in any sport receive scholarships that cover the cost of attendance. The rules change means any Division I school can make such awards, beginning with the upcoming fall semester, but none are required to do so.

Steve Berkowitz, USA TODAY Sports, September 30, 2015