Joined: 12 Jul 2005
|Posted: Mon Jun 21, 2021 7:38 am Post subject: Supreme Court Decision on NCAA Player Compensation
|This morning, the Supreme Court decided the NCAA case about compensation of college athletes. I write more-or-less real time summaries of Supreme Court decisions for a lawyer group. I summarized the NCAA decision for that group. I am going to repost my summary here. This gets into a lot of legal jargon, of course, but it may be of interest to some of you. Bear in mind that this is a fast summary of a 45 page opinion.
Next up, the college football case!!! This is the NCAA's appeal from the decision requiring some limited compensation to athletes. The NCAA loses in a unanimous opinion by Gorsuch. Kavanaugh files a concurrence.
To put it mildly, the NCAA learns that it does not have any friends on the Supreme Court. The NCAA's arguments pretty much get tossed on the grill and smoked.
"In the Sherman Act, Congress tasked courts with enforcing a policy of competition on the belief that market forces “yield the best allocation” of the Nation’s resources. National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85, 104, n. 27 (1984). The plaintiffs before us brought this lawsuit alleging that the National Collegiate Athletic Association (NCAA) and certain of its member institutions violated this policy by agreeing to restrict the compensation colleges and universities may offer the student-athletes who play for their teams. After amassing a vast record and conducting an exhaustive trial, the district court issued a 50-page opinion that cut both ways. The court refused to disturb the NCAA’s rules limiting undergraduate athletic scholarships and other compensation related to athletic performance. At the same time, the court struck down NCAA rules limiting the education-related benefits schools may offer student-athletes—such as rules that prohibit schools from offering graduate or vocational school scholarships. Before us, the student-athletes do not challenge the district court’s judgment. But the NCAA does. In essence, it seeks immunity from the normal operation of the antitrust laws and argues, in any event, that the district court should have approved all of its existing restraints. We took this case to consider those objections."
"The court then entered an injunction reflecting its findings and conclusions. Nothing in the order precluded the NCAA from continuing to fix compensation and benefits unrelated to education; limits on athletic scholarships, for example, remained untouched. The court enjoined the NCAA only from limiting education-related compensation or benefits that conferences and schools may provide to student-athletes playing Division I football and basketball. App. to Pet. for Cert. in No. 20–512, p. 167a, ¶1. The court’s injunction further specified that the NCAA could continue to limit cash awards for academic achievement—but only so long as those limits are no lower than the cash awards allowed for athletic achievement (currently $5,980 annually). Id., at 168a–169a, ¶5; Order Granting Motion for Clarification of Injunction in No. 4:14–md–02541, ECF Doc. 1329, pp. 5–6 (ND Cal., Dec. 30, 2020). The court added that the NCAA and its members were free to propose a definition of compensation or benefits “‘related to education.’” App. to Pet. for Cert. in No. 20–512, at 168a, ¶4. And the court explained that the NCAA was free to regulate how conferences and schools provide education-related compensation and benefits. Ibid. The court further emphasized that its injunction applied only to the NCAA and multi-conference agreements—thus allowing individual conferences (and the schools that constitute them) to impose tighter restrictions if they wish. Id., at 169a, ¶6. The district court’s injunction issued in March 2019, and took effect in August 2020."
"In the end, the court of appeals affirmed in full, explaining its view that “the district court struck the right balance in crafting a remedy that both prevents anticompetitive harm to Student-Athletes while serving the procompetitive purpose of preserving the popularity of college sports.” Ibid."
((Gorsuch observes that many of the issues in the case are undisputed on appeal.)
"With all these matters taken as given, we express no views on them. Instead, we focus only on the objections the NCAA does raise. Principally, it suggests that the lower courts erred by subjecting its compensation restrictions to a rule of reason analysis. In the NCAA’s view, the courts should have given its restrictions at most an “abbreviated deferential review,” Brief for Petitioner in No. 20–512, p. 14, or a “‘quick look,’” Brief for Petitioners in No. 20–520, p. 18, before approving them."
"But this insight does not always apply. That some restraints are necessary to create or maintain a league sport does not mean all “aspects of elaborate interleague cooperation are.” Id., at 199, n. 7. While a quick look will often be enough to approve the restraints “necessary to produce a game,” ibid., a fuller review may be appropriate for others. See, e.g., Chicago Professional Sports Ltd. Partnership v. National Basketball Assn., 95 F. 3d 593, 600 (CA7 1996) (“Just as the ability of McDonald’s franchises to coordinate the release of a new hamburger does not imply their ability to agree on wages for counter workers, so the ability of sports teams to agree on a TV contract need not imply an ability to set wages for players”).
"The NCAA’s rules fixing wages for student-athletes fall on the far side of this line. Nobody questions that Division I basketball and FBS football can proceed (and have proceeded) without the education-related compensation restrictions the district court enjoined; the games go on. Instead, the parties dispute whether and to what extent those restrictions in the NCAA’s labor market yield benefits in its consumer market that can be attained using substantially less restrictive means. That dispute presents complex questions requiring more than a blink to answer."
((The NCAA makes a string of additional arguments for some sort of immunity or quasi-immunity. Gorsuch shoots them all down. Then he gets to the merits.))
"While we agree with the NCAA’s legal premise, we cannot say the same for its factual one. Yes, at the first step of its inquiry, the district court held that the student-athletes had met their burden of showing the NCAA’s restraints collectively bear an anticompetitive effect. And, given that, yes, at step two the NCAA had to show only that those same rules collectively yield a procompetitive benefit. The trouble for the NCAA, though, is not the level of generality. It is the fact that the district court found unpersuasive much of its proffered evidence. See D. Ct. Op., at 1070–1076, 1080–1083. Recall that the court found the NCAA failed “to establish that the challenged compensation rules . . . have any direct connection to consumer demand.” Id., at 1070."
"Simply put, the district court nowhere—expressly or effectively—required the NCAA to show that its rules constituted the least restrictive means of preserving consumer demand. Rather, it was only after finding the NCAA’s restraints “‘patently and inexplicably stricter than is necessary’” to achieve the procompetitive benefits the league had demonstrated that the district court proceeded to declare a violation of the Sherman Act. D. Ct. Op., at 1104. That demanding standard hardly presages a future filled with judicial micromanagement of legitimate business decisions."
"Some will think the district court did not go far enough. By permitting colleges and universities to offer enhanced education-related benefits, its decision may encourage scholastic achievement and allow student-athletes a measure of compensation more consistent with the value they bring to their schools. Still, some will see this as a poor substitute for fuller relief. At the same time, others will think the district court went too far by undervaluing the social benefits associated with amateur athletics. For our part, though, we can only agree with the Ninth Circuit: “‘The national debate about amateurism in college sports is important. But our task as appellate judges is not to resolve it. Nor could we. Our task is simply to review the district court judgment through the appropriate lens of antitrust law.’” 958 F. 3d, at 1265. That review persuades us the district court acted within the law’s bounds."
"I add this concurring opinion to underscore that the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws."
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