Tennessee and Virginia AGs File Antitrust Suit Against NCAA Over New NIL Policies

Troutman Pepper

[co-author: Stephanie Kozol]*

On January 31, Tennessee Attorney General (AG) Jonathan Skrmetti, joined by Virginia AG Jason Miyares, filed suit against the NCAA in the U.S. District Court for the Eastern District of Tennessee for alleged violations of the Sherman Antitrust Act over the association’s restrictions on the ability of current and future student-athletes to benefit from their name, image, and likeness (NIL). The lawsuit was filed just one day after the announcement that the National Collegiate Athletics Association (NCAA) is investigating the University of Tennessee for NIL violations.

In 2021, the U.S. Supreme Court held in NCAA v. Alston that the NCAA’s amateurism rules, particularly their restrictions on compensating college athletes, are in fact subject to the Sherman Act. Following the landmark decision in NCAA v. Alston, the NCAA has faced mounting legal pressure to loosen some of their restrictions. They are currently facing a multistate lawsuit that the U.S. Department of Justice (DOJ) Antitrust Division also joined, challenging the association’s transfer rules, as well as additional antitrust suits over the employment status of athletes and the massive revenue generated by media rights deals for schools and conferences. The most recent lawsuit from Tennessee and Virginia concerns the NCAA’s ban on prospective college athletes during recruiting activities, along with current college athletes looking to transfer to another school through the transfer portal, discussing potential NIL opportunities prior to enrollment. Such a prohibition, the states argue, restricts competition among schools and third parties to arrange the best NIL opportunities for prospective student-athletes in violation of antitrust laws. Both Tennessee and Virginia also enacted laws following Alston that protect student-athletes’ right to “earn compensation for the use of [their] own name, image, or likeness” at a “fair market value,” and bar athletic associations and universities from placing restrictions on an athlete’s ability to do so. The complaint sought an order declaring that the NCAA’s NIL-recruiting ban violates the Sherman Act, as well as a temporary restraining order (TRO) barring the NCAA from enforcing the ban.

On February 6, U.S. District Court Judge Clifton L. Corker denied the states’ request for a TRO, stating that they failed to demonstrate that recruits would be irreparably harmed if it was not granted. However, Judge Corker also wrote that the states are “likely to succeed on the merits of their claim under the Sherman Act.” A preliminary injunction hearing was held on February 13, and the federal judge wrote that he plans to rule “in short order” on the request to stop the NCAA from enforcing its rules. A decision in favor of Tennessee and Virginia would complicate the investigation into the University of Tennessee over alleged violations of rules that the association would no longer have the ability to actively enforce within the state.

NCAA President Charlie Baker, along with college sports leaders, have been requesting assistance from federal lawmakers to regulate NIL compensation and provide an antitrust exemption to allow them to govern without repeatedly being brought into court. As lawsuits against the NCAA continue to pile up in a post-Alston world, and absent any federal legislation, decisions in these cases will have considerable implications on the trajectory of college sports.

*Senior Government Relations Manager

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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