Still No NCAA Pay for Play—Supreme Court Denies Cert. in O’Bannon v. NCAA

On October 3, 2016, the Supreme Court of the United States denied certiorari requested in O’Bannon, et al.  v. NCAA, et al., by both the plaintiffs (No. 15-1167) and the National Collegiate Athletic Association (NCAA) (No. 15-1388).

The questions on which O’Bannon sought review were:

1. Whether, in determining an appropriate remedy for a violation of Section 1 of the Sherman [Antitrust] Act under the “Rule of Reason,” a court may treat the restraint itself – here, the agreement among the NCAA and its members prohibiting college athlete compensation, or what the NCAA calls “amateurism” – as a legitimate procompetitive effect.
2. Whether, after finding a violation of Section 1 of the Sherman Act under the Rule of Reason, a court is restricted to awarding relief that the plaintiff proves is “virtually as effective” as the restraint in serving its alleged purposes, “without significantly increased cost.”

 

The questions on which the NCAA sought review were:

1. Whether the Ninth Circuit erred in holding that NCAA rules defining “the eligibility of participants” in NCAA-sponsored athletic contests, NCAA v. Board of Regents of Univ. of Okla., 468 U.S. 85, 117 (1984), violated the Sherman Act.
2. Whether the First Amendment protects a speaker against a state-law right-of-publicity claim based on the realistic portrayal of a person in an expressive work (here, a student-athlete in a college-sports videogame).

 

As a result of the cert. denial, for now, the Ninth Circuit Court of Appeals’ September 30, 2015 decision in O’Bannon v. National Collegiate Athletic Association (Nos. 14-16601 and 14-17068) remains in effect. That decision upheld a lower court’s ruling that the NCAA’s amateurism rules violate federal antitrust laws.

The 2015 Ninth Circuit decision also rejected the most dramatic change that had been ordered by U.S. District Judge Claudia Wilken. In the 2014 lower court case, Judge Wilken ordered that the NCAA could no longer enforce its rules limiting payments to athletes and directed the NCAA to allow its member institutions to pay male Division I football and basketball players up to $5,000 per year in deferred compensation “for the licensing or use of . . . [their] names, images, and likenesses” (NIL) in addition to the federally-defined “cost of attendance” for scholarships awarded after August 1, 2015. In August of 2014, the NCAA announced that it would allow its members to pay male Division I football and basketball players the full “cost of attendance.”

In considering the NCAA’s appeal of the lower court’s ruling, the Ninth Circuit panel applied a “Rule of Reason” analysis to the NCAA’s proposed limits on payments to athletes and upheld Judge Wilken’s finding that past NCAA restrictions violated the Sherman Antitrust Act. The panel also approved a remedy of ordering the NCAA to permit “full cost of attendance” scholarships. However, a split panel rejected Judge Wilken’s order requiring the NCAA to allow payment of up to $5,000 per year for NIL.

After rejecting many of the NCAA’s arguments, the panel focused on the third step of the Rule of Reason analysis—determining whether there are substantially less restrictive alternatives to the challenged rules that are “virtually as effective” as the challenged rules “without significantly increased cost.” The district court had found full-cost-of-attendance scholarships and NIL payments to be such alternatives. The Ninth Circuit panel found no clear error in the decision that full-cost-of-attendance-scholarships are an appropriate alternative, but the majority found that the direction of NIL payments was clear error:

[I]n finding that paying students cash compensation would promote amateurism as effectively as not paying them, the district court ignored that not paying student-athletes is precisely what makes them amateurs.

The NCAA has implemented the Ninth Circuit’s order by allowing Division I college athletes to receive athletics scholarships that provide funds to help pay the full costs of attending college, such as travel and other expenses. This change allows schools to provide more money for college athletes to use on elements of attending college that are formally defined by federal guidelines, but the Supreme Court’s denial of certiorari means that the time has not yet come—and may not come—for Judge Wilken’s proposed payments of up to $5,000 for NIL.