Three Legal Issues That Could Derail the Blockbuster NCAA Lawsuit

by Marc Tracy | March 26, 2014

photo credit: Andy Lyons/Getty Images

Last week, just three days before March Madness commenced, a proposed class-action lawsuit was filed in New Jersey federal court. Citing antitrust law, it accused the National Collegiate Athletic Association and its five major conferences of colluding to prevent student-athletes in “top-tier” football and men’s basketball programs from earning more money than their scholarships. It asked the court to find such collusion illegal. 

This argument is familiar and unimpeachable to most people who have thought about the NCAA’s outdated notion of amateurism. Because the lead attorney is Jeffrey Kessler, who has represented players in all “Big Four” professional American sports leagues and even litigated the case that ushered in the present system of National Football League free agency, the suit received substantial media attention (Deadspin: “The NCAA-Killing Lawsuit Might Finally Be Here”). 

“The case law is very clear,” Kessler, who speaks in a slightly sardonic tone and a comforting Brooklyn accent, told me. “The NCAA and schools are subject to the antitrust laws, and the restriction that they have [imposed], which is that the schools cannot compete against each other for the players, is the clearest form of antitrust violation.”

But according to conversations with several legal experts, Kessler’s suit—as well as the similar Ed O’Bannon case, which aims, also on antitrust grounds, at the NCAA’s withholding of student-athletes’ intellectual-property rights—could run afoul of legal precedent and the law itself. “I think they’re going to have a tough task,” said Brian Porto, a University of Vermont law professor. 

There are three particular obstacles the Kessler suit could trip over.

Legal Precedent

The relevant precedent for Kessler’s suit is the 1984 Supreme Court case NCAA v. Board of Regents of the University of Oklahoma. A seven-justice majority found that an NCAA plan to restrict the number of times a football team could be televised violated the Clayton and Sherman Acts.

However, the Court affirmed that the NCAA does have an interest in keeping college athletics pre-professional: “The NCAA plays a critical role in the maintenance of a revered tradition of amateurism,” wrote Justice John Paul Stevens for the majority. And it further found that the NCAA has “ample latitude” to set rules that might otherwise be anticompetitive in order to further that tradition. (The Court simply found that this particular TV restriction accomplished little toward that end.) 

Notoriously, Stevens added: 

The NCAA seeks to market a particular brand of football—college football. The identification of this “product” with an academic tradition differentiates college football from and makes it more popular than professional sports to which it might otherwise be comparable, such as, for example, minor league baseball. In order to preserve the character and quality of the “product,” athletes must not be paid, must be required to attend class, and the like. 

Kessler dismissed this passage as a “stray reference.” Similarly, in an interview, Michael Hausfeld, the main lawyer representing the O’Bannon plaintiffs, termed it a “gratuitous inclusion” and argued, “You rightly state the NCAA lost that lawsuit.” Moreover, Hausfeld noted that last October the judge overseeing his case ruled that the ’84 decision did not necessarily reserve for the NCAA the “sweeping” ability to bar athletes’ compensation “for the commercial use of their names, images, and likenesses.” 

Whether Stevens’ words are “stray” and “gratuitous” or not, though, they are right there on the page. As Steve Ross, a law professor at Penn State University, put it in an email, “The Supreme Court held in the 1984 TV restraints case that the NCAA can legitimately enact rules that successfully differentiate their product from minor league sports.”

Title IX

Next, there’s Title IX, the 1972 law mandating that athletic funding from institutions that receive federal money—which is virtually every NCAA member—“should be available on a substantially proportional basis to the number of male and female participants in the institution's athletic program.”

Title IX is not mentioned in Kessler’s suit, and the relief it seeks would not require violating it. However, noted Erin Buzuvis, a professor at Western New England School of Law, there are Title IX implications. Should the suit succeed, NCAA members would all but certainly end up paying top male athletes, forcing them either to spend also on female athletes or violate the law. “It’s not that the outcome would directly violate Title IX,” Buzuvis noted, “but if an effort to comply resulted in a one-sided thing, that would.”

To some extent, Kessler agreed. “Under the antitrust laws, there’s no Title IX exemption,” he stated. But he insisted that Title IX does not guarantee equality of funding: “It’s well established that Title IX has nothing to do with spending the same amount of money on the same sports with different revenues. … It’s a total canard.” Buzuvis begged to differ: “Generally the regulations speak about equal treatment of male and female athletes,” she said, with a note of restraint. “Many believe this is an area of law that's under-enforced, and in which a lot of sex discrimination persists.”

Lesser athletes

Finally, Kessler’s decision to focus solely on the two most lucrative and popular college sports—football and men’s basketball—could end up dooming the case. According to Penn State’s Ross, antitrust law requires that prices be free of restraints, which means that Kessler’s suit seeks to apply the free market to college sports. And the free market would heavily reward not all athletes, but rather the most talented stars. (By contrast, Ross noted, American professional leagues’ compensations are regulated by collective bargaining agreements—it is not a free market system, ensuring that lesser players get their checks.) Most athletes, he suspected, would be “worse off.” And that might give a judge pause before certifying Kessler’s proposed class.

So what is the alternative to the free-market relief Kessler wants? One is to bring football and men’s basketball back into the college fold. Ross and Marquette University Law School’s Matt Mitten support “an independent commission,” Ross told me, that “would ensure that college athletes actually receive an education, their health is protected, and that the benefits of intercollegiate sports are ‘reasonably’ spread among student-athletes.”

But that solution misunderstands what college athletics have become. Today, college basketball’s best players are one-and-dones, and the big conferences are capable of inking a $5.64 billion media contract just for their football playoff tournament.

Current precedent and law are guilty of the same misunderstanding (although this is mostly the NCAA’s fault). It only makes sense to preserve amateurism, per the 1984 NCAA decision, and to ensure that all athletes are compensated proportionately, per Title IX and class-action rules, if you think of these top programs as amateur endeavors. But everything important about them is professional, except for the way the players are compensated.

According to the NCAA, football and men’s basketball were the only two sports that as of 2010 had programs that turned profits. With some imagination, we could envision a universe in which those two sports maintained a symbolic and vestigial tie to their host institutes of higher learning but were formally decoupled from them (and, crucially, from their federal funding) and became professionalized. This would change precious little about how the programs bring in money. It would, however, enable them much more easily to compensate their players.

“You have to accept the world as it is,” Kessler said. “It’s absurd to realize they’re not businesses.”

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