Supreme Court Hears Oral Argument in “Pay for Play” Case: NCAA v. Alston

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On March 31, the Supreme Court heard oral argument in the closely watched case of NCAA v. Alston, the so-called “pay for play” case. The Supreme Court’s ruling in this case could have important ramifications not only for college athletics but also for antitrust law and its application to other sports leagues as well as to joint ventures more broadly.

Background

This case was brought by student-athletes who participate in Division I football (in the Football Bowl Subdivision), and Division I men’s and women’s basketball. They challenged, under Section I of the Sherman Act, all of the interconnected rules issued by the NCAA that prevent student-athletes from receiving compensation for their athletic activities. Following a trial, the student-athletes had a partial victory at the district court that was affirmed by the Ninth Circuit: the NCAA was enjoined from imposing limits on non-cash benefits related to education that may be received by student-athletes.

The injunction also provides that the NCAA may not limit the amount of cash or cash-like benefits related to education that student-athletes may receive annually to a level lower than the amount that student-athletes may receive for athletic achievements on top of a cost-of-attendance scholarship. (That amount is currently $5,890.)

Supreme Court Review

Before the Supreme Court, the NCAA primarily argues that its rules defining amateurism should be reviewed under the antitrust laws using “an abbreviated deferential review” called a “quick look,” rather than being scrutinized in a more detailed manner using the standard rule of reason analysis. The NCAA argues that this more deferential review is appropriate because the NCAA offers a distinct product—college athletics—that is defined by the restraint between competitors that would otherwise violate the antitrust laws, i.e., the agreement that student-athletes are amateurs.

When it comes to the question of who gets to define “amateurism,” the NCAA argues that the courts should not be in the business of defining the particular rules around amateurism. Instead, the NCAA argues, it is the joint venture itself, not the courts, that defines the product to be offered. Accordingly, the NCAA argues, it is appropriate for the NCAA to define what amateurism is, rather than the courts. In addition, the NCAA relies on language from the Supreme Court’s 1984 decision in Board of Regents v. NCAA, to argue that the Supreme Court has already determined that NCAA rules defining amateurism deserve a less searching review.

As a fallback argument, the NCAA also argues that the courts below erred in their application of the rule of reason in entering the injunction against it. The NCAA particularly points to the fact that the injunction allows student-athletes to be provided post-eligibility internships through which they can be paid unlimited amounts, as well as the fact that the cash awards of $5,890 per year for academic achievement could be provided to any student-athlete who maintains athletic eligibility, to argue that the district court’s conception of “amateurism” will eviscerate college athletics as it has been long understood.

The student-athletes, joined by the United States as amicus curiae, argue that the courts below appropriately applied the rule of reason under the antitrust laws to enter an injunction that fits the evidence that was brought forth at trial. They argue that the language the NCAA relies on in Board of Regents is dicta, and in any event, the market for college athletics has changed markedly in the 37 years since the decision was rendered. They argue that the NCAA is looking for an exemption from the antitrust laws and that only Congress may grant such an exemption.

At oral argument, lawyers for both sides faced engaged and skeptical questioning from the Justices. Several members of the Court indicated that the lawyer for the NCAA was putting too much weight on the “history” and “tradition” of college athletics, and seemed to agree with the notion that the language in Board of Regents was dicta or had been overtaken by changes in the market for college athletics.

Several Justices used variations of the term “exploitation” when describing the treatment of student-athletes. At the same time, there was open questioning, from Justices who are typically considered both conservative and liberal, as to whether subjecting the NCAA amateurism rules to a standard rule of reason analysis would destroy college athletics. The lawyers for the student-athletes and the United States faced repeated questions as to what would be the “next case” that the NCAA would have to fend off if the decision was affirmed.

While not as much a feature of the oral argument, the NCAA also argued in its briefs that if the Court were to affirm the decision it would have detrimental effects on the application of antitrust law for other sports leagues and joint ventures more broadly. The NCAA argues that the courts below improperly redefined the product that it offers by holding that college athletics may be engaged in by student-athletes who are “amateurs” so long as they are not paid unlimited amounts for their athletic achievements.

The NCAA predicts that if the decision stands, courts applying the antitrust laws to other joint ventures could likewise dictate the changes that a joint venture must make to the product it makes available to the market. Justice Gorsuch seemed most interested in this line of questioning at oral argument, suggesting that the difference between the NCAA and other joint ventures is that the NCAA has monopsony power (because it is the only buyer) in the labor market for student-athletes. The student-athletes, supported by the United States, argued that there was no misapplication of law and the NCAA’s only real complaint is that it could not show as a matter of fact that its conception of amateurism promoted market differentiation. In other words, the evidence at trial showed that marked demand would remain the same for college athletics if the student-athletes received limited monetary awards for their athletic achievements so long as they were students.

Next Steps

It is difficult to predict the outcome from any oral argument and this is particularly true of this case. While it seems unlikely that the NCAA will receive five votes for its broadest argument, it is also unclear that there are five votes for an unqualified endorsement of the decision below.

We will provide further guidance shortly (see alert issued on April 15) on what this all means for institutions of higher education in the context of other legal developments in the realm of college sports. We expect the Court to issue a ruling in this case by the end of June.

If you have any questions, please do not hesitate to contact the authors.

Audrey Anderson shared her insight with CNN, Inside Higher Ed and the Bloomberg Law Podcast about this possibly precedent setting case. The full articles are available online and linked below:

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On March 31, the Supreme Court heard oral argument in the closely watched case of NCAA v. Alston, the so-called “pay for play” case. The Supreme Court’s ruling in this case could have important ramifications not only for college athletics but also for antitrust law and its application to other sports leagues as well as to joint ventures more broadly.

Background

This case was brought by student-athletes who participate in Division I football (in the Football Bowl Subdivision), and Division I men’s and women’s basketball. They challenged, under Section I of the Sherman Act, all of the interconnected rules issued by the NCAA that prevent student-athletes from receiving compensation for their athletic activities. Following a trial, the student-athletes had a partial victory at the district court that was affirmed by the Ninth Circuit: the NCAA was enjoined from imposing limits on non-cash benefits related to education that may be received by student-athletes.

The injunction also provides that the NCAA may not limit the amount of cash or cash-like benefits related to education that student-athletes may receive annually to a level lower than the amount that student-athletes may receive for athletic achievements on top of a cost-of-attendance scholarship. (That amount is currently $5,890.)

Supreme Court Review

Before the Supreme Court, the NCAA primarily argues that its rules defining amateurism should be reviewed under the antitrust laws using “an abbreviated deferential review” called a “quick look,” rather than being scrutinized in a more detailed manner using the standard rule of reason analysis. The NCAA argues that this more deferential review is appropriate because the NCAA offers a distinct product—college athletics—that is defined by the restraint between competitors that would otherwise violate the antitrust laws, i.e., the agreement that student-athletes are amateurs.

When it comes to the question of who gets to define “amateurism,” the NCAA argues that the courts should not be in the business of defining the particular rules around amateurism. Instead, the NCAA argues, it is the joint venture itself, not the courts, that defines the product to be offered. Accordingly, the NCAA argues, it is appropriate for the NCAA to define what amateurism is, rather than the courts. In addition, the NCAA relies on language from the Supreme Court’s 1984 decision in Board of Regents v. NCAA, to argue that the Supreme Court has already determined that NCAA rules defining amateurism deserve a less searching review.

As a fallback argument, the NCAA also argues that the courts below erred in their application of the rule of reason in entering the injunction against it. The NCAA particularly points to the fact that the injunction allows student-athletes to be provided post-eligibility internships through which they can be paid unlimited amounts, as well as the fact that the cash awards of $5,890 per year for academic achievement could be provided to any student-athlete who maintains athletic eligibility, to argue that the district court’s conception of “amateurism” will eviscerate college athletics as it has been long understood.

The student-athletes, joined by the United States as amicus curiae, argue that the courts below appropriately applied the rule of reason under the antitrust laws to enter an injunction that fits the evidence that was brought forth at trial. They argue that the language the NCAA relies on in Board of Regents is dicta, and in any event, the market for college athletics has changed markedly in the 37 years since the decision was rendered. They argue that the NCAA is looking for an exemption from the antitrust laws and that only Congress may grant such an exemption.

At oral argument, lawyers for both sides faced engaged and skeptical questioning from the Justices. Several members of the Court indicated that the lawyer for the NCAA was putting too much weight on the “history” and “tradition” of college athletics, and seemed to agree with the notion that the language in Board of Regents was dicta or had been overtaken by changes in the market for college athletics.

Several Justices used variations of the term “exploitation” when describing the treatment of student-athletes. At the same time, there was open questioning, from Justices who are typically considered both conservative and liberal, as to whether subjecting the NCAA amateurism rules to a standard rule of reason analysis would destroy college athletics. The lawyers for the student-athletes and the United States faced repeated questions as to what would be the “next case” that the NCAA would have to fend off if the decision was affirmed.

While not as much a feature of the oral argument, the NCAA also argued in its briefs that if the Court were to affirm the decision it would have detrimental effects on the application of antitrust law for other sports leagues and joint ventures more broadly. The NCAA argues that the courts below improperly redefined the product that it offers by holding that college athletics may be engaged in by student-athletes who are “amateurs” so long as they are not paid unlimited amounts for their athletic achievements.

The NCAA predicts that if the decision stands, courts applying the antitrust laws to other joint ventures could likewise dictate the changes that a joint venture must make to the product it makes available to the market. Justice Gorsuch seemed most interested in this line of questioning at oral argument, suggesting that the difference between the NCAA and other joint ventures is that the NCAA has monopsony power (because it is the only buyer) in the labor market for student-athletes. The student-athletes, supported by the United States, argued that there was no misapplication of law and the NCAA’s only real complaint is that it could not show as a matter of fact that its conception of amateurism promoted market differentiation. In other words, the evidence at trial showed that marked demand would remain the same for college athletics if the student-athletes received limited monetary awards for their athletic achievements so long as they were students.

Next Steps

It is difficult to predict the outcome from any oral argument and this is particularly true of this case. While it seems unlikely that the NCAA will receive five votes for its broadest argument, it is also unclear that there are five votes for an unqualified endorsement of the decision below.

We will provide further guidance shortly (see alert issued on April 15) on what this all means for institutions of higher education in the context of other legal developments in the realm of college sports. We expect the Court to issue a ruling in this case by the end of June.

If you have any questions, please do not hesitate to contact the authors.

Audrey Anderson shared her insight with CNN, Inside Higher Ed and the Bloomberg Law Podcast about this possibly precedent setting case. The full articles are available online and linked below:

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