Law360 (June 21, 2021) -- The U.S. Supreme Court on Monday affirmed a ruling that struck down NCAA rules restricting education-related compensation and benefits for college athletes, finding that the organization should not get special treatment under antitrust law.
The justices ruled unanimously that the lower courts properly applied antitrust scrutiny to the NCAA in striking down rules restricting education-related benefits. The top court said the NCAA cannot rely on the 1984 Board of Regents v. NCAA case to avoid such scrutiny.
The decision upholds a May 2020 Ninth Circuit ruling that opened the door for schools to provide athletes more benefits, such as reimbursements for computers and musical instruments, free tutoring, internship stipends and cash academic achievement awards. Such benefits have been closely monitored and limited under NCAA amateurism rules.
The NCAA and Division I college athletics conferences had argued that courts should defer to its amateurism rules, which they said make college sports distinct and promote schools' noncommercial objective of higher education. The conferences further argued that such deference is necessary for joint ventures to be able to operate, or for any other industry where joint action is necessary to "create a desirable product."
But the Supreme Court rejected those arguments, finding that the district court properly analyzed the NCAA system and that its decision, which only applies to education-related compensation and benefits, gives the NCAA enough leeway to regulate college sports.
"The NCAA is free to argue that, because of the special characteristics of its particular industry, it should be exempt from the usual operation of the antitrust laws — but that appeal is properly addressed to Congress," Justice Neil Gorsuch wrote in the opinion for the court.
The decision is narrow in that it affirms the lower court and does not immediately upend amateurism in college sports any further.
Still, the ruling will have broad implications in the debate over how college athletes are treated and whether they should receive a greater share of the revenue generated by college sports, which the U.S. Department of Education estimates at more than $14 billion per year.
Significantly, the high court rejected the NCAA's reliance on the Board of Regents case — which had referred to the "revered tradition of amateurism in college sports" — as blanket protection for the NCAA's amateurism system.
"Board of Regents may suggest that courts should take care when assessing the NCAA's restraints on student-athlete compensation, sensitive to their procompetitive possibilities," Justice Gorsuch wrote. "But these remarks do not suggest that courts must reflexively reject all challenges to the NCAA's compensation restrictions."
In a concurring opinion, Justice Brett Kavanaugh hammered the NCAA over its arguments that the defining characteristic of college sports is that the athletes are unpaid amateurs, noting "law firms cannot conspire to cabin lawyers' salaries in the name of providing legal services out of a 'love of the law.'"
"Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate," Justice Kavanaugh wrote. "And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law."
There are deeper legal and policy questions that are yet to be answered and which could redefine the nature of college sports, he said, even suggesting that "colleges and student athletes could potentially engage in collective bargaining."
An attorney for the athletes, Steve Berman of Hagens Berman Sobol Shapiro LLP, told Law360 the decision is a "big win for the athletes" and will boost other challenges to the NCAA's rules.
Berman is representing athletes in another proposed antitrust class action challenging the NCAA's prohibition on athletes being paid for use of their names, images and likenesses, or NIL.
"It is our hope that this victory in the battle for college athletes' rights will carry on a wave of justice uplifting further aspects of athlete compensation," Berman further said in a statement. "This is the fair treatment college athletes deserve."
Meanwhile, nearly 20 states have passed laws over the past two years that will allow athletes in those states to earn money from third parties for the use of their NIL, such as through sponsorships, endorsements and through social media influencer deals, even though such pay is banned by NCAA amateurism rules. Some of those laws take effect as early as July 1. The NCAA earlier this year tabled proposed rule changes to allow limited NIL pay.
"Even though the decision does not directly address name, image and likeness, the NCAA remains committed to supporting NIL benefits for student-athletes," NCAA President Mark Emmert said in a statement Monday. "Additionally, we remain committed to working with Congress to chart a path forward, which is a point the Supreme Court expressly stated in its ruling."
There are also bills before Congress to allow NIL pay nationally. Some lawmakers have proposed giving the NCAA greater freedom from further litigation over amateurism, while others advocate even greater changes to the system than what has been ordered by the courts.
At the trial court, three classes of college athletes — representing Division I football players and men's and women's basketball players — had argued NCAA rules violate federal antitrust law because they fix or cap the compensation and benefits schools may offer to attract top recruits.
They argued that at the very least, the conferences are the only ones allowed to maintain such restrictions, as there would be competition between conferences to allow compensation and aid packages to attract the best recruits.
The NCAA, meanwhile, had argued that amateurism is essential to the popularity of college sports, seeking to provide an economic justification for keeping its amateurism rules in place after courts have held that those rules clearly restrict the market for college recruits.
After a 10-day bench trial, U.S. District Judge Claudia Wilken ruled that increasing college athletes' compensation and benefits, at least those tethered to education, will not harm the popularity of college sports.
The ruling threaded the needle between allowing more benefits for college athletes while not completely opening the door to a pay-for-play system that the NCAA says would destroy the fundamental character of college sports. The Ninth Circuit affirmed that decision after both sides appealed.
Attorneys for the athletes have said that even the education-related benefits will allow hundreds of millions more dollars generated by college sports to flow to college athletes than previously allowed under NCAA rules.
"Some will think the district court did not go far enough," Justice Gorsuch wrote in Monday's opinion. "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," Gorsuch continued. "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" that it is not the task of judges to solve it, but only review the lower court decision "through the appropriate lens of antitrust law."
The college athletes are represented by Jeffrey L. Kessler, David G. Feher, David L. Greenspan, Linda T. Coberly and Jeanifer E. Parsigian of Winston & Strawn LLP, Steve W. Berman, Craig R. Spiegel and Emilee N. Sisco of Hagens Berman Sobol Shapiro LLP, Bruce L. Simon and Benjamin E. Shiftan of Pearson Simon & Warshaw LLP and Elizabeth C. Pritzker, Jonathan K. Levine and Bethany L. Caracuzzo of Pritzker Levine LLP.
The NCAA is represented in-house by Donald M. Remy and Scott Bearby and by Seth Waxman, Leon B. Greenfield, Daniel S. Volchok, David M. Lehn, Derek A. Woodman, Ruth E. Vinson and Spencer L. Todd of WilmerHale, Jeffrey Mishkin and Karen Hoffman Lent of Skadden Arps Slate Meagher & Flom LLP and Beth Wilkinson and Rakesh N. Kilaru of Wilkinson Stekloff LLP.
The Big Ten is represented by Andrew J. Pincus, Britt M. Miller, Andrew S. Rosenman, Jed W. Glickstein, Charles A. Rothfeld and Richard J. Favretto of Mayer Brown LLP.
The Southeastern Conference is represented by Robert W. Fuller III, Lawrence C. Moore III, Pearlynn G. Houck and Erik R. Zimmerman of Robinson Bradshaw & Hinson PA and Mark Seifert of the Seifert Law Firm.
The Big 12 and Conference USA are represented by Leane K. Capps, Caitlin J. Morgan and Amy D. Fitts of Polsinelli PC.
The American Athletic Conference is represented by Benjamin C. Block of Covington & Burling LLP.
The Pac-12 is represented by Bart H. Williams, Scott P. Cooper, Kyle A. Casazza, Jennifer L. Jones and Shawn S. Ledingham Jr. of Proskauer Rose LLP.
The Mid-American Conference is represented by R. Todd Hunt and Benjamin G. Chojnacki of Walter Haverfield LLP.
The Mountain West Conference is represented by Meryl Macklin, Richard Young and Brent E. Rychener of Bryan Cave Leighton Paisner LLP.
The Western Athletic Conference is represented by Jon Bradley of Bradley Devitt Haas & Watkins PC.
The Sun Belt Conference is represented by Mark A. Cunningham of Jones Walker LLP.
The Atlantic Coast Conference is represented by D. Erik Albright, Gregory G. Holland and Jonathan P. Heyl of Fox Rothschild LLP.
The cases are National Collegiate Athletic Association v. Alston et al., case number 20-512, and American Athletic Conference et al. v. Alston et al., case number 20-520, in the Supreme Court of the United States.
--Editing by Brian Baresch.