A federal judge found that certain NCAA rules illegally restrain trade.
In August 2014, a federal trial judge ordered that the National Collegiate Athletic Association, popularly known as the NCAA, stop enforcing certain of its student-athlete compensation rules that the court found to violate federal antitrust law by illegally restricting competition and trade.
Specifically, U.S. District Court Judge Claudia Wilken, sitting in the Northern District of California, wrote in her lengthy opinion that the rules are an unjustifiable and unreasonable trade restraint within the market in which colleges offer top male athletes “educational and athletic opportunities.” She also found that the rules restrain trade in the market in which students offer their “athletic services and licensing rights.”
The NCAA has publicly denied that its rules violate antitrust laws and appealed the decision to the 9th U.S. Circuit Court of Appeals, which has agreed to the requests of both sides to expedite the appellate process to conclude the appeal before the judge’s injunction is scheduled to take effect in August 2015.
The class action lawsuit was brought by Ed O’Bannon, a former UCLA basketball standout, and a group of elite male college football and basketball players, both currently in college and already graduated, some decades ago. The plaintiffs challenged NCAA rules that do not allow top Division I football and basketball players to share in NCAA and university earnings from the licensing of student-athlete names, likenesses and images for use in the media and in video games.
The judge wrote that the plaintiffs showed that two less restrictive alternatives to current rules would still achieve the limited “procompetitive benefits” of the rules. These alternatives are:
- To allow licensing income to pay for full college attendance costs for those athletes
- To let schools set up limited trust accounts for each team member to hold an equal share of licensing income to be released upon leaving college or becoming ineligible to play
Accordingly, the judge issued her order “to remove any unreasonable elements of the restraint found in this case.” The order sets detailed parameters for allowing this class of elite football and basketball players to receive these two less restrictive financial benefits and stops enforcement of NCAA rules to the contrary.
Many people are watching to see what the 9th Circuit will do on appeal and whether Judge Wilken’s opinion will stand. What the current decision does do is put student athletes and their parents on alert that these students may become eligible for more financial benefits based on licensing revenues going forward.
Any top college athlete or high school athlete contemplating athletic participation in a Division I college program, along with his or her parents, should seek the legal advice of an attorney with sports management experience, such as those at Zagrans Law Firm LLC in Cleveland and with offices nationally. Knowledgeable sports counsel can advise student athletes of their legal rights and assist in important decision making as college and athletic careers begin in this changing legal climate.
Keywords: NCAA, trade restraint, college, athlete, National Collegiate Athletic Association, compensation, student, lawsuit, judge, antitrust, competition, market, rules, appeal, class action, football, basketball, Division I, university, licensing, names, likenesses, images, media, video game, less restrictive alternative, trust, injunction, school