At the end of January, attorneys general Jonathan Skrmetti of Tennessee and Jason Miyares of Virginia filed a complaint in the U.S. District Court for the Eastern District of Tennessee alleging that the NCAA’s newest name, image, and likeness (NIL) policies places “anticompetitive restrictions” on the NIL rights of current and prospective athletes. Specifically, the suit alleges that the ban on NIL discussions during recruiting violates federal antitrust law by “restrict[ing] competition among schools and third parties [] to arrange the best NIL opportunities for prospective athletes.”[1] Alongside the complaint, the attorneys general moved for a temporary restraining order (TRO) and a preliminary injunction halting the enforcement of the NIL recruitment policy.[2] Judge Clifton Corker denied the TRO and preliminary injunction on February 6, finding, among other things, that the plaintiffs failed to demonstrate irreparable harm in order to sustain the granting of the TRO.

The Complaint

According to the complaint, the NCAA’s new NIL policy violates Section I of the Sherman Act, prohibiting agreements and conspiracies unreasonably restraining trade.

The new NCAA NIL policy[3] was unveiled and approved earlier in the year and is set to become effective August 1. Notably, the policy prohibits any NIL entity from engaging in communication with (or providing any benefits to) a prospective or potential student-athlete until that athlete signs a letter of intent, participates in summer activities or otherwise practices with a team, or enrolls at a school and attends classes. According to the complaint, because this prohibition bans student-athletes from participating in conversations regarding NIL opportunities before committing to an institution, they cannot “obtain[] full, fair-market value for [their NIL] rights.”[4]

The complaint pitches the NCAA policy against state NIL laws, including Tennessee’s, which (1) provides that high school athletes may enter into NIL agreements so long as the agreements comply with Tennessee’s law governing performances by minors and (2) prevents athletic associations from interfering with a college athlete’s ability to earn compensation for the use of their NIL so long as that use otherwise complies with Tennessee law.[5]

The Decision on the TRO

The plaintiffs requested a decision on their motion by February 6, the day before signing day for Division I athletes. In its decision, the court preliminarily weighed the anti- and pro-competitive effects of the policy in determining the merits of the plaintiffs’ antitrust claim. Critically, the court noted that “[P]laintiffs do not claim that student-athletes will miss out on all NIL opportunities; rather, the claim is that student-athletes will receive less compensation in the absence of a TRO. But the difference is purely monetary, and Plaintiffs offer no support for the conclusory assertion that any loss in monetary compensation could not be recovered or would be too speculative.”[6]

Having prevailed on major issues like NIL and education-related compensation, plaintiffs’ attorneys may, perversely, find fewer and fewer victories against the NCAA. While amateurism may not have withstood the Rule of Reason in the specific context of education-related compensation in the U.S. Supreme Court’s Alston decision, the current jurisprudence is still far from deeming all of the NCAA’s unique rulemaking power unlawful. Both the core mission and conflict facing the NCAA are making rules that do not unreasonably restrain trade while also creating a product that is competitive and desirable in the current sports and entertainment landscape. When the court turns to the merits of this dispute, it may conclude that not having NIL compensation drive student matriculation decisions is a proper decision for the NCAA to make. With so much commentary critical of amateurism, some may overlook that college athletics must maintain some differences from professional athletics in order to retain its unique value and fandom. Without reasonable restraints on the demands of student-athletes and their attorneys and with policy being made through ad hoc litigation and the courts, the value that those student-athletes are seeking to share in may well be destroyed, and college athletics could be reduced to a mere minor league.

Whether the state attorneys general will ultimately be successful in this latest challenge to the NCAA and its NIL rules remains to be seen, and we will be monitoring the case for further developments. BakerHostetler’s interdisciplinary approach to NIL matters provides administrators, athletes, advertisers and collectives with the opportunity to fully understand their deals while providing the necessary legal protections.

[1] Compl., Tennessee v. NCAA, 24-cv-33 at ¶ 5 (E.D. Tenn. Jan. 31, 2024).

[2] Plaintiffs’ Motion for Temporary Restraining Order and Preliminary Injunction, Tennessee v. NCAA, 24-cv-33 (E.D. Tenn. Jan. 31, 2024).

[3] https://www.bakerlaw.com/insights/division-i-council-approves-nil-disclosure-and-transparency-rules-introduces-new-proposals-for-school-involvement/.

[4] Compl. at ¶ 7.

[5] Compl. at ¶¶ 21, 23.

[6] Order on the Motion, Tennessee v. NCAA, 24-cv-33 at 10 (E.D. Tenn. Feb. 6, 2024).

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