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National Collegiate Athletic Association v. Alston

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Supreme Court of the United States
National Collegiate Athletic Association v. Alston
Term: 2020
Important Dates
Argument: March 31, 2021
Decided: June 21, 2021
Outcome
Affirmed
Vote
9-0
Majority
Neil Gorsuch • Chief Justice John Roberts • Clarence Thomas • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan • Brett Kavanaugh • Amy Coney Barrett
Concurring
Brett Kavanaugh

National Collegiate Athletic Association v. Alston is a case argued before the Supreme Court of the United States on March 31, 2021, during the court's October 2020-2021 term. The case was consolidated with American Athletic Conference v. Alston for one hour of oral argument.

In a unanimous ruling, the U.S. Supreme Court affirmed the U.S. Court of Appeals for the 9th Circuit's ruling, holding that the district court's injunction was consistent with established antitrust principles. Justice Neil Gorsuch authored the court's majority opinion. Justice Brett Kavanaugh filed a concurring opinion.[1] Click here for more information about the ruling.

HIGHLIGHTS
  • The cases: In 2014, a class of Division 1 ("D1") student-athletes, collectively referred to as "Alston" and as "student-athletes", filed several antitrust complaints against the National Collegiate Athletic Association ("NCAA") and 11 D1 conferences in district court, challenging the NCAA's compensation rules for student-athletes. The NCAA claimed that the challenge was settled in a previous case, O'Bannon v. NCAA. The Northern District of California implemented a permanent injunction that the NCAA make its compensation rules less restrictive for student-athletes and that the enjoined, or halted, compensation rules are unlawful restraints of trade under the Sherman Act. On appeal, the 9th Circuit affirmed the district court's conclusion, its injunction, and its assessment of liability. The NCAA appealed to the Supreme Court.
  • The issues: The cases concerned federal antitrust law and the NCAA's compensation rules.
  • The questions presented:
    • Whether the 9th Circuit's holding that the NCAA eligibility rules regarding student-athletes' compensation violate federal antitrust law was in error.[2]
    • "Whether the Sherman Act authorizes a court to subject the product-defining rules of a joint venture to full Rule of Reason review, and to hold those rules unlawful if, in the court’s view, they are not the least restrictive means that could have been used to accomplish their procompetitive goal."[3]
  • The outcome: The U.S. Supreme Court affirmed the U.S. Court of Appeals for the 9th Circuit's ruling.


    • The cases came on a writ of certiorari to the United States Court of Appeals for the 9th Circuit.[4][5] To review the lower court's opinion in the consolidated cases, click here.[6]

    Timeline

    The following timeline details key events in the consolidated cases:

    Background

    The following background details were related to both of the consolidated cases.

    Procedural background

    In 2014, while O'Bannon v. NCAA was being litigated, a class of D1 student-athletes challenged the NCAA's compensation system for its student-athletes with the U.S. District Court for the Northern District Court of California. The NCAA compensation rules allow the NCAA to use the names, images, and likenesses ("NIL") of its student-athletes while prohibiting the student-athletes from being compensated for such use. The NCAA asserted that the rules are in service of preserving student-athletes' amateur status. Student-athletes claimed that there were Less Restrictive Alternatives ("LRAs") to preserving the student-athletes' amateur status, rather than the compensation system implemented by the NCAA. The NCAA argued that changing the compensation rules would have an anticompetitive effect in relevant consumer markets and would alter the student-athletes' amateur status.[6]

    Following the 9th Circuit's opinion in O'Bannon, the NCAA requested that the Northern District of California issue a judgment on the pleadings in Alston, citing res judicata.[9] The NCAA argued that the O'Bannon proceedings required no more than that the NCAA allow member schools to provide full education-related costs of attendance at schools ("COA") to student-athletes and that since the NCAA had already updated its bylaws according to this ruling, the Alston antitrust challenges must not be allowed to proceed. The district court denied the motion, concluding that the matters at issue in O'Bannon were different from those in Alston. One difference was that the student-athletes in Alston challenged limits on non-cash, education-related benefits, unlike the O'Bannon plaintiffs. Both parties filed for summary judgment. The district court denied the NCAA's motion and granted summary judgment to the plaintiffs. The court applied the antitrust law Rule of Reason standard in order to discern whether or not the NCAA's compensation rules violated Section 1 of the Sherman Act.[10] In its ruling on March 8, 2019, the Northern District of California held that the NCAA's limits on education-related benefits unreasonably restrained trade and enjoined, or prohibited, those limits. The court did not hold that the NCAA's limits on compensation unrelated to education violated the Sherman Act. To resolve the challenges, the district court implemented the student-athletes' proposed LRA via permanent injunction.[6]

    The NCAA appealed to the United States Court of Appeals for the 9th Circuit. After the NCAA filed their appeal, the State of California enacted the Fair Pay to Play Act, requiring the NCAA and its member institutions to allow student-athletes who are enrolled in California-based member schools to earn compensation from the use of their NILs. In response, the NCAA created a working group that recommended allowing NIL benefits that are education-related and maintain the distinction between college and professional sports, as recognized in the O’Bannon litigation.[6]

    On appeal, the 9th Circuit affirmed the district court's judgment of liability and injunction, holding that the district court was proper in its conclusion that the NCAA limits on education-related benefits violated the Sherman Act.[6]

    O'Bannon v. NCAA

    In 2009, former University of California, Los Angeles ("UCLA") basketball player Ed O’Bannon filed an antitrust lawsuit against the NCAA with the U.S. District Court for the Northern District Court of California for using his likeness in a video game and for not allowing himself or other players to be compensated for use of their NILs. The court ruled for the plaintiffs under the antitrust law standard Rule of Reason and awarded relief on their behalf.[10] The district court acknowledged the NCAA's evidence that college sports' relation to being among amateur players helps maintain popularity distinct from professional sports.[6] However, the court concluded that this did not justify the NCAA's prohibition on NIL compensation. The court also held that the NCAA could justify restrictions on what the court deemed to be large cash payments to student-athletes, but not on small cash payments, based on evidence that consumer demand is primarily driven by geography and school loyalty, and a dearth of evidence that small payments would limit college sports' popularity.[6]

    The Northern District of California implemented LRAs through an injunction that required the NCAA to permit affiliated schools to use the licensing revenue from use of student-athletes' NILs to fund stipends covering the COA, and to make deferred, post-eligibility cash payments in NIL revenue to student-athletes, in amounts no more than $5,000.00.[6]

    The NCAA appealed to the U.S. Court of Appeals for the 9th Circuit. On appeal, the 9th Circuit affirmed the district court's injunction as far as it required the NCAA to allow athletic scholarships for the full cost of attendance at a school, and reversed and vacated the injunction's requirement that the NCAA allow deferred NIL payments. The court majority rejected the NCAA's argument that rules about the amateur nature of college sports are valid in terms of the law, and refused to exempt the NCAA from antitrust scrutiny.[6]

    Click here to read the 9th Circuit opinion in the case O'Bannon v. NCAA.

    National Collegiate Athletic Association (NCAA)

    The National Collegiate Athletic Association (NCAA) is a regulatory body for intercollegiate sports. According to its bylaws, the NCAA's Basic Purpose is:[11]

    “ 1.3.1 Basic Purpose. [*] The competitive athletics programs of member institutions are designed to be a vital part of the educational system. A basic purpose of this Association is to maintain intercollegiate athletics as an integral part of the educational program and the athlete as an integral part of the student body and, by so doing, retain a clear line of demarcation between intercollegiate athletics and professional sports.[12] ”
    —National Collegiate Athletic Association (NCAA)
    "Amateurism rule"

    The NCAA bylaws define amateur status in Article 12, "Amateurism and Athletics Eligibility":[11]

    “ 12.1.2 Amateur Status. An individual loses amateur status and thus shall not be eligible for intercollegiate competition in aparticular sport if the individual:


    (a) Uses his or her athletics skill (directly or indirectly) for pay in any form in that sport; ...[12]

    		”
    Compensation rules

    The NCAA bylaws define pay in Article 12, "Amateurism and Athletics Eligibility":[11]

    “ 12.02.10 Pay. Pay is the receipt of funds, awards or benefits not permitted by the governing legislation of the Association for participation in athletics.[12] ”

    According to the 9th Circuit opinion in Alston v. NCAA, NCAA regulations include governance of "... the payments that student-athletes may receive in exchange for and incidental to their athletic participation as well as in connection with their academic pursuits."[6]

    Detailed in the 9th Circuit opinion, in August 2014, the NCAA amended its Division 1 ("D1") bylaws to grant the football bowl subdivision ("FBS") athletic conferences that generate the most revenue ("Power Five") the power to collectively legislate areas including limits on athletic scholarships, also referred to as grants-in-aid. Following a Power Five vote to increase the aid limit to the cost of attendance at each school ("COA"), the bylaws were updated to outline that full grants-in-aid included certain education-related expenses. However, student-athletes were also permitted to receive other payments above COA limits unrelated to education. According to the 9th Circuit opinion, the expanded compensation rose along with increased revenue from D1 basketball and FBS football for the NCAA and its members.[6]

    Sherman Act

    The Sherman Antitrust Act is a federal law passed in 1890 that banned trusts and monopolies in industry, authorizing the federal government to dissolve trusts and break up monopolies as part of its power to regulate interstate commerce. It was the first modern American antitrust law and laid the foundation for Presidents Theodore Roosevelt and William Howard Taft's attempts to break up large industrial trusts.[13]

    Section 1 of the act banned all industrial trusts.[13]

    “ Every contract, combination in the form of trust or other- wise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal.[12] ”

    Questions presented

    The petitioner presented the following questions to the court:[2][3]

    Questions presented:
    • Whether the Ninth Circuit's holding that the National Collegiate Athletic Association ("NCAA") eligibility rules related to compensating student-athletes violate federal antitrust law was in error.
    • "Whether the Sherman Act authorizes a court to subject the product-defining rules of a joint venture to full Rule of Reason review, and to hold those rules unlawful if, in the court’s view, they are not the least restrictive means that could have been used to accomplish their procompetitive goal."

    Oral argument

    Audio

    Audio of oral argument:[14]



    Transcript

    Transcript of oral argument:

    Outcome

    In a unanimous ruling, the U.S. Supreme Court affirmed the U.S. Court of Appeals for the 9th Circuit's ruling, holding that the district court's injunction was consistent with established antitrust principles. Justice Neil Gorsuch authored the court's majority opinion. Justice Brett Kavanaugh filed a concurring opinion.[1]

    Opinion

    In the court's majority opinion, Justice Neil Gorsuch wrote:[1]

    “ In the Sherman Act, Congress tasked courts with enforcing a policy of competition on the belief that market forces “yield the best allocation” of the Nation’s resources. National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85, 104, n. 27 (1984). The plaintiffs before us brought this lawsuit alleging that the National Collegiate Athletic Association (NCAA) and certain of its member institutions violated this policy by agreeing to restrict the compensation colleges and universities may offer the student-athletes who play for their teams. After amassing a vast record and conducting an exhaustive trial, the district court issued a 50-page opinion that cut both ways. The court refused to disturb the NCAA’s rules limiting undergraduate athletic scholarships and other compensation related to athletic performance. At the same time, the court struck down NCAA rules limiting the education-related benefits schools may offer student-athletes—such as rules that prohibit schools from offering graduate or vocational school scholarships. Before us, the student-athletes do not challenge the district court’s judgment. But the NCAA does. In essence, it seeks immunity from the normal operation of the antitrust laws and argues, in any event, that the district court should have approved all of its existing restraints. We took this case to consider those objections.


    ... Some will think the district court did not go far enough. By permitting colleges and universities to offer enhanced education-related benefits, its decision may encourage scholastic achievement and allow student-athletes a measure of compensation more consistent with the value they bring to their schools. Still, some will see this as a poor substitute for fuller relief. At the same time, others will think the district court went too far by undervaluing the social benefits associated with amateur athletics. For our part, though, we can only agree with the Ninth Circuit:“ ‘The national debate about amateurism in college sports is important. But our task as appellate judges is not to resolve it. Nor could we. Our task is simply to review the district court judgment through the appropriate lens of antitrust law.’” 958 F. 3d, at 1265. That review persuades us the district court acted within the law’s bounds.[12]

    		”
    —Justice Neil Gorsuch

    Concurring opinion

    Justice Brett Kavanaugh filed a concurring opinion.[1]

    In their concurring opinion, Justice Kavanaugh wrote:

    “ The NCAA has long restricted the compensation and benefits that student athletes may receive. And with surprising success, the NCAA has long shielded its compensation rules from ordinary antitrust scrutiny. Today, however, the Court holds that the NCAA has violated the antitrust laws. The Court’s decision marks an important and overdue course correction, and I join the Court’s excellent opinion in full.


    But this case involves only a narrow subset of the NCAA’s compensation rules—namely, the rules restricting the education-related benefits that student athletes may receive, such as post-eligibility scholarships at graduate or vocational schools. The rest of the NCAA’s compensation rules are not at issue here and therefore remain on the books. Those remaining compensation rules generally restrict student athletes from receiving compensation or benefits from their colleges for playing sports. And those rules have also historically restricted student athletes from receiving money from endorsement deals and the like.

    I add this concurring opinion to underscore that the NCAA's remaining compensation rules also raise serious questions under the antitrust laws. ...

    ... To be sure, the NCAA and its member colleges maintain important traditions that have become part of the fabric of America—game days in Tuscaloosa and South Bend; the packed gyms in Storrs and Durham; the women’s and men’s lacrosse championships on Memorial Day weekend; track and field meets in Eugene; the spring softball and baseball World Series in Oklahoma City and Omaha; the list goes on. But those traditions alone cannot justify the NCAA’sdecision to build a massive money-raising enterprise on the backs of student athletes who are not fairly compensated. Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate. And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law.[12]

    		”
    —Justice Brett Kavanaugh

    Text of the opinion

    Read the full opinion here.

    October term 2020-2021

    See also: Supreme Court cases, October term 2020-2021

    The Supreme Court began hearing cases for the term on October 5, 2020. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[15]

    The court issued 67 opinions during its 2020-2021 term. Two cases were decided in one consolidated opinion. Ten cases were decided without argument. Click here for more information on the court's opinions.

    The court agreed to hear 62 cases during its 2020-2021 term. Of those, 12 were originally scheduled for the 2019-2020 term but were delayed due to the coronavirus pandemic. Five cases were removed from the argument calendar.


    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 U.S. Supreme Court, National Collegiate Athletic Association v. Alston, decided June 21, 2021
    2. ↑ 2.0 2.1 Supreme Court of the United States, "NCAA v. Alston: Questions Presented," accessed December 16, 2020
    3. ↑ 3.0 3.1 Supreme Court of the United States, "American Athletic Conference v. Alston: Questions Presented," accessed December 16, 2020
    4. ↑ SCOTUSblog, "National Collegiate Athletic Association v. Alston," accessed December 16, 2020
    5. ↑ SCOTUSblog, "American Athletic Conference v. Alston," accessed December 16, 2020
    6. ↑ 6.00 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10 U.S. Court of Appeals for the 9th Circuit, Alston v. Nat'l Collegiate Athletic Ass'n (In re Nat'l Collegiate Athletic Ass'n Athletic Grant-In-Aid Cap Antitrust Litig.), decided May 18, 2020
    7. ↑ Supreme Court of the United States, "Petition for a writ of certiorari," filed October 15, 2020
    8. ↑ Supreme Court of the United States, "Petition for a writ of certiorari," filed October 15, 2020
    9. ↑ Cornell Law School Legal Information Institute, "Res judicata", accessed December 17, 2020
    10. ↑ 10.0 10.1 Cornell Law School Legal Information Institute, “15 U.S. Code § 4302. Rule of reason standard,” accessed December 17, 2020
    11. ↑ 11.0 11.1 11.2 NCAA, "Constitution, Article 1: Name, Purposes and Fundamental Policy," accessed December 16, 2020
    12. ↑ 12.0 12.1 12.2 12.3 12.4 12.5 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    13. ↑ 13.0 13.1 OurDocuments.gov, "Sherman Anti-Trust Act (1890)," accessed January 2, 2018
    14. ↑ Supreme Court of the United States, "Oral Argument - Audio," accessed March April 1, 2021
    15. ↑ SupremeCourt.gov, "A Brief Overview of the Supreme Court," accessed April 20, 2015
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