375 F. Supp. 3d 1058
N.D. Cal.2019Background
- Plaintiffs are current and former Division I FBS football and Division I men's and women's basketball student‑athletes who received or were offered full grants‑in‑aid; defendants are the NCAA and eleven Division I conferences. Plaintiffs challenge NCAA rules that limit compensation and benefits student‑athletes may receive in exchange for athletic services.
- The NCAA historically capped grants‑in‑aid and restricted other compensation; in 2015 the Power Five (Autonomy) raised the grant‑in‑aid cap to each school’s federally calculated cost of attendance and expanded several permitted benefits. Many NCAA and conference rules still cap or prohibit additional education‑related and non‑education compensation.
- On summary judgment the court found Defendants agreed to fix prices (limits on compensation), that the restraints affect interstate commerce, and that Rule of Reason applies (not per se) because cooperation is required to market college sports.
- Plaintiffs proceeded on a monopsony theory: Division I schools (via NCAA) are buyers with monopsony power in national markets for elite recruits’ athletic services; the rules compress and cap compensation and reduce competition for recruits.
- The court found significant anticompetitive effects (student‑athletes receive less than competitive compensation) and evaluated Defendants’ procompetitive defenses: (1) preserving consumer demand by protecting ‘‘amateurism’’ and (2) promoting academic integration.
- The court concluded limited procompetitive benefit exists only insofar as rules prevent unlimited cash payments (professional‑style salaries). It adopted a less restrictive alternative: allow NCAA to cap grants‑in‑aid at not less than cost of attendance and to limit non‑education compensation, but prohibit NCAA caps on most education‑related benefits (except cash academic/graduation awards, which may be capped no lower than current athletics participation award limits). An injunction implementing that relief was ordered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of concerted agreement restraining trade | NCAA and conferences agree via bylaws to fix compensation; this suppresses pay for recruits | NCAA conceded rules are enacted by agreement but argued they are procompetitive and necessary | Agreement to limit compensation exists; Rule of Reason governs because cooperation is required to run college sports |
| Market definition / monopsony | Relevant markets are national markets for athletic services in FBS football and Division I basketball; NCAA/conferences exercise monopsony power | Defendants proposed (untimely/inadmissible) multi‑sided market theory | Court adopted market as recruits’ athletic‑services markets; found monopsony power and high concentration |
| Anticompetitive effects | Rules artificially compress and cap compensation; athletes harmed | Defendants disputed magnitude and relied on asserted procompetitive benefits | Court found significant anticompetitive effects: suppressed competition and deprived athletes of compensation |
| Procompetitive justifications (amateurism / integration) | Any needed limits are narrowly tailored; many education‑related benefits can be uncapped without harming demand | NCAA: limits preserve amateurism and consumer demand; limits foster academic integration | Court rejected integration justification; accepted limited amateurism defense only to the extent rules prevent unlimited non‑education cash payments; otherwise defenses failed |
| Less‑restrictive alternative / remedy | Plaintiffs proposed alternatives removing or narrowing NCAA caps; proposed allowing education‑related benefits uncapped | Defendants argued removal would risk unlimited cash payments and harm demand or cause disruption | Court adopted modified third alternative: NCAA may cap grants at >= cost of attendance and non‑education pay; NCAA may cap cash academic/graduation awards only at no less than athletics participation award limits; other education‑related benefits cannot be capped by NCAA; injunction entered |
Key Cases Cited
- O'Bannon v. Nat'l Collegiate Athletic Ass'n, 802 F.3d 1049 (9th Cir. 2015) (affirming that NCAA amateurism rules are subject to Rule of Reason and recognizing anticompetitive effects of compensation restraints)
- Nat'l Collegiate Athletic Ass'n v. Bd. of Regents of Univ. of Okla., 468 U.S. 85 (1984) (cooperation among schools justified Rule of Reason treatment in college sports antitrust analysis)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (explaining modern Rule of Reason balancing for vertical restraints)
- Ohio v. Am. Express Co., 138 S. Ct. 2274 (2018) (articulating a three‑step, burden‑shifting framework for Rule of Reason analysis)
- Associated Press v. United States, 326 U.S. 1 (1945) (price‑fixing among competitors is unlawful despite asserted good motives)