O'Bannon v. National Collegiate Athletic Ass'n
802 F.3d 1049
| 9th Cir. | 2015Background
- NCAA rules cap compensation for student-athletes’ name, image, and likeness (NIL) rights; district court held these comprise an unlawful restraint under Sherman Act §1.
- Courts identified two relevant markets: a college education market (recruiting for FBS football/DI basketball) and a group licensing market for NIL rights (live telecasts, video games, archival footage).
- District court concluded NIL restraints had anticompetitive effects in the college education market but not in the group licensing market, and found procompetitive justifications with limited alternatives.
- District court held the NIL rules were not justified by procompetitive goals and ordered remedies: allow full cost-of-attendance (COA) grants and up to $5,000 deferred compensation in trust, distributable after graduation.
- NCAA appealed, arguing Board of Regents (1984) immunizes amateurism rules and that the compensation rules regulate noncommercial eligibility; plaintiffs cross-appeal on standing and remedies.
- Appellate panel affirmed in part, vacated in part, and applied Rule of Reason, ultimately upholding COA grants but vacating the $5,000 deferred-compensation remedy as not substantially equivalent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NIL compensation rules are subject to Sherman Act scrutiny under Rule of Reason | NCAA rules affect NIL rights; should be reviewed under Rule of Reason | Board of Regents presumes validity of amateurism-related rules | Subject to Rule of Reason scrutiny (not per se) |
| Do the NIL rules anticompetitively affect the college education market | Rules fix price of NIL rights, harming athletes | Amateurism rules serve procompetitive purposes | Yes, at least in the college education market, anticompetitive effects shown |
| Are the NIL rules within the scope of “commerce” under §1 | The NIL labor-for-scholarship exchange is economic activity | Eligibility rules are noncommercial | Within the scope of commerce; restraints subject to antitrust law |
| Are plaintiffs’ standing/antitrust injury satisfied | Foreclosure of NIL rights in video games injures athletes | No injury or expectancy of compensation | Antitrust injury shown via injury in fact in video-game NIL market |
| Are there less restrictive alternatives that would preserve procompetitive aims | Grant full COA and hold NIL revenues in trust; cheaper reform | Restrictive but necessary amateurism framework; cash payments unlikely viable | Partial success: COA cap up to full COA affirmed; deferred cash payments not upheld |
Key Cases Cited
- Board of Regents v. NCAA, 468 U.S. 85 (1984) (Rule-of-Reason analysis; amateurism as procompetitive but not immune from scrutiny)
- NCAA v. Keller, 724 F.3d 1268 (9th Cir. 2013) (Right-of-publicity standing in NIL context (basis for injury))
- Smith v. NCAA, 139 F.3d 180 (3d Cir. 1998) (Eligibility rule as noncommercial (limited applicability))
- Agnew v. NCAA, 683 F.3d 328 (7th Cir. 2012) (Procompetitive presumption not controlling; limits on amateurism questioned)
- Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643 (1980) (Per se price-fixing analogy; not required here but informative for price-fixing concern)
- Bassett v. NCAA, 528 F.3d 426 (6th Cir. 2008) (Rules against improper inducements treated as commercial constraints)
- O’Bannon v. NCAA Flight, 7 F. Supp. 3d 955 (N.D. Cal. 2014) (District court decision applying Rule-of-Reason to NIL restraints)