One of the NCAA’s strongest penalties has been declared illegal in California.

California Superior Court Judge Frederick Shaller issued a final decision finding NCAA “show-cause” penalties to be a violation of California state law.

Arising from a lawsuit filed more than seven years ago by former USC assistant football coach Todd McNair, Judge Shaller, confirming a tentative decision he had reached in August,

“concluded the show-cause penalty provision of the NCAA bylaws is illegal because it constitutes an “unlawful restraint” on McNair’s ability to pursue a lawful profession.

In his eight-page opinion, Judge Shaller explained, “McNair’s ability to practice his profession as a college football coach has been restricted, if not preempted, not only in Los Angeles, but in every state in the country.”

McNair had filed a state court action against the NCAA following the NCAA’s extra-benefit investigation focused on former USC star running back, and Heisman Trophy winner, Reggie Bush. At the conclusion of its 2010 investigation, the NCAA concluded McNair “knew or should have known” that Bush was engaged in violations with a potential agent while still playing at USC, and McNair had “provided false and misleading information to the enforcement staff.” The NCAA then issued McNair a one-year show-cause penalty and a one-year ban preventing McNair from recruiting student-athletes to USC or any other school. As a result of the NCAA penalty, McNair’s contract at USC was not renewed and he has not coached at the college level since the penalty was levied against him.

McNair had the defamation count of his lawsuit against the NCAA rejected in May after a jury voted 9-3 in favor of the NCAA following a three-week trial.

“Judge Schaller’s final decision concluding the NCAA’s show-cause penalty is unlawful was issued after objections were offered by the NCAA in response to the judge’s tentative decision in August.

The NCAA offered written declarations from Pac-12 Commissioner Larry Scott and Big West Conference Commissioner Dennis Farrell in support of its opposition.

Farrell’s declaration expressed concern that his conference schools would be unable to rely on the NCAA’s disciplinary mechanisms if the show-cause penalty was not legal.

Scott asserted, “If California law prevents institutions in that state from honoring such commitments, it is hard to see how the Pac-12’s Member Universities in California could continue to meet the requirements of NCAA membership.” He continued, “[T]he Court’s tentative ruling would place at risk the competitive and scholarship opportunities that flow from NCAA participation for the Pac-12 California Member Universities.”

Judge Schaller rejected the opinions expressed in both declarations, stating that they are “completely speculative and irrelevant to the issue….[T}he proposed testimony of Scott and Farrell is deemed inadmissible and is not considered.”

Following issuance of the court’s opinion, the NCAA stated, “The NCAA disagrees with the court’s ruling, which is wrong as a matter of law….We will explore all avenues for relief to ensure that NCAA member schools in California can continue to abide by the same rules as the rest of the NCAA’s membership.”

While the Commission on College Basketball recently recommended that the NCAA consider potential “lifetime” bans as part of the show-cause penalty process, Judge Shaller’s ruling means that the NCAA has lost the benefit of their disciplinary muscle to deter bylaw violations in California. Will other states follow and conclude similarly?