Law Professors Suit Up for NCAA in O’Bannon Appeal

by Patterson Belknap Webb & Tyler LLP
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On November 21, 2014, professors of antitrust law from 15 universities filed an amicus  brief in support of the NCAA’s appeal in O’Bannon v. NCAA. (This blog has previously covered the O’Bannon  case; the most recent entry regarding the appeal is here.) Citing their interest in the “proper development of antitrust jurisprudence,” the professors argue that the district court misapplied the rule of reason analysis under the Sherman Act, and that allowing the trial court’s decision to stand could undermine amateurism in college sports and have a broader impact on antitrust law in general.

The professors do not challenge the trial court’s finding that the relevant market for antitrust analysis is the provision of education to athletes competing in FBS football and Division I basketball, or that the existing NCAA rules have resulted in less compensation for those student-athletes than would otherwise be the case. They similarly agree with the trial court that the restrictions nonetheless serve the interests of promoting increased consumer demand for the NCAA’s product (due to its amateur rather than professional character) and including the student athletes within the larger academic community on campus. The professors note that in antitrust cases a finding of both harm to competition and a procompetitive justification is unusual; typically a case is resolved based on either the plaintiff’s failure to establish harm to competition or the defendant’s failure to come forward with a pro-competitive justification.

The professors depart from the trial court, however, in terms of the appropriate remedy. The amici  argue that the court’s decision to “refine [the] existing restraints” imposed by the NCAA by providing “modestly higher” compensation is merely micromanaging, and that it does not present a genuine least restrictive alternative as contemplated by the antitrust law. (Under the NCAA’s rules, student-athletes could receive only scholarships, while under the trial court’s decision the athletes may receive the full cost of attending college plus a deferred payment of $5,000 per year.) Instead, according to the professors, it reaffirms the need for the type of restrictions already imposed by the NCAA to achieve its goals.

The professors further argue that allowing the trial court’s decision to stand would allow it to act as a regulator or a rate-setting authority—a role for which it is not institutionally qualified. The professors caution that beyond the impact on college sports, upholding the trial court’s decision could set a precedent for further decisions of this nature, giving courts “free rein to rewrite any rule adopted by an organization plausibly found to have restrained a relevant market if they can identify modest changes that may (or may not) be fairer” and would expose defendants to liability “based solely on the creativity of antitrust lawyers imagining marginally less restrictive approaches.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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