958 F.3d 1239
9th Cir.2020Background
- Consolidated antitrust litigation (Alston) by FBS football and Division I basketball players challenged NCAA rules limiting education-related and other compensation; bench trial resulted in partial judgment for plaintiffs.
- District court found NCAA limits on education-related benefits unreasonable under the Sherman Act §1 (Rule of Reason) and enjoined those limits, but declined to enjoin limits on cash payments untethered to education.
- NCAA had amended bylaws (2015) to permit full cost-of-attendance (COA) scholarships and allowed a range of above-COA payments (SAF/AEF distributions, stipends, athletic participation awards, etc.).
- Ninth Circuit in O’Bannon II (2015) previously applied the Rule of Reason to some NCAA compensation rules, affirmed COA scholarships but rejected broader NIL remedy; Alston differs factually because of post‑O’Bannon changes in permissible payments.
- District court defined the relevant market as student-athletes’ labor and found monopsony/anticompetitive effects; it accepted that preserving a distinction between college and professional sports can be procompetitive but held many limits on education-related benefits do not advance that goal.
- Permanent injunction: NCAA may not cap or prohibit certain non-cash education-related benefits (listed), may cap some academic/graduation awards up to the level of athletic participation awards, and conferences may set limits; Ninth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did O’Bannon II preclude Alston (stare decisis/res judicata)? | O’Bannon did not decide claims about education-related benefits; new facts arose post-O’Bannon. | O’Bannon requires nothing more than permitting COA scholarships, so new claims are precluded. | O’Bannon is distinguishable; neither stare decisis nor res judicata bars Alston because facts and issues differ. |
| Proper standard: apply Rule of Reason? | Yes — restraints on compensation require Rule of Reason analysis. | Same. | Court correctly applied the Rule of Reason. |
| Step 1 — Do NCAA rules cause anticompetitive effects? | Yes — monopsony power and fixed caps suppress compensation below competitive levels. | Disputed magnitude; but largely conceded. | Plaintiffs met step‑one burden; significant anticompetitive effects found. |
| Step 2 — Do rules have procompetitive justifications (amateurism/demand)? | Many challenged limits do not preserve consumer demand; education‑related benefits are distinct from salaries. | Limits preserve amateurism and consumer demand by distinguishing college from pro sports. | Some rules (limits on cash unrelated to education, COA cap, some cash awards) are procompetitive; limits on non‑cash education‑related benefits are not supported by record. |
| Step 3 — Are less restrictive alternatives (LRAs) available? | Yes — uncapping many education‑related benefits and allowing conferences to set limits would be virtually as effective. | LRAs risk "trial‑and‑error" and professionalization; courts should not micromanage. | District court’s LRA (uncap many education‑related benefits; cap certain academic awards no lower than athletic participation awards; leave conferences free to limit) is viable and not clearly erroneous. |
| Remedy vagueness / judicial usurpation (Rule 65(d))? | Injunction is specific and permits NCAA to propose definitions; courts need not defer entirely. | Injunction is vague and intrudes on NCAA rulemaking. | Injunction sufficiently specific; does not usurp NCAA’s role. |
Key Cases Cited
- O’Bannon v. NCAA, 802 F.3d 1049 (9th Cir. 2015) (applied Rule of Reason to NCAA compensation rules; affirmed COA relief and limited remedies for NIL claims)
- NCAA v. Board of Regents of the Univ. of Oklahoma, 468 U.S. 85 (1984) (recognized role of NCAA rulemaking but applied antitrust scrutiny to television restraints)
- Tanaka v. Univ. of S. Cal., 252 F.3d 1059 (9th Cir. 2001) (describes three‑step Rule of Reason framework used in NCAA cases)
- Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643 (1980) (‘‘it is no excuse that the prices fixed are themselves reasonable’’ in per se/Rule of Reason context)
- United States v. Topco Assocs., Inc., 405 U.S. 596 (1972) (limits on judicially balancing competition across markets; congressional role emphasized)
- Smith v. Pro Football, Inc., 593 F.2d 1173 (D.C. Cir. 1978) (declined cross‑market procompetitive justification for NFL draft monopsony in players’ labor market)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (Rule of Reason contours for vertical restraints)