The Supreme Court of the United States: “The NCAA is Not Above the Law”

Washington, D.C. – On June 21, 2021, the Supreme Court of the United States ruled in favor of collegiate athletes against the NCAA (“NCAA”).

Athletes filed suit against the NCAA in the U.S. District Court for the Northern District of California, alleging that the NCAA’s policy prohibiting universities from paying student athletes a fair amount violates Section One of the Sherman Antitrust Act (”Sherman Act”) because universities gain additional revenue in exchange for student’s athletic performances. The Sherman Act “prohibits contracts, combinations, or conspiracies in restraint of trade or commerce.” The lower court entered an injunction prohibiting the NCAA from limiting an athlete’s award of educational benefits, including post-graduate scholarships, but did not lift any other monetary restrictions, such as cash awards for athletic achievement. Both parties then appealed the decision to the U.S. Court of Appeals for the Ninth Circuit, where the athletes sought a further ban on all award limitations, regardless of the award type, and the NCAA sought to lift educational award caps. The Court of Appeals affirmed the District Court’s judgment, leading the NCAA to appeal to the Supreme Court.

The Supreme Court determined the applicable Antitrust Standard of Review in this context is the “Rule of Reason.” The Rule of Reason analysis is essentially a balance between acts that benefit or harm a consumer within market competition. The NCAA raised various arguments for why they should only be subject to “Quick View” review (the proper analysis only when the Court “can determine the competitive effects of a challenged restraint in the twinklingof an eye.”); however, the Supreme Court rejected them all.

The Court’s majority opinion, written by Justice Gorsuch, held: (1) joint venture restrictions are not always shielded from the Rule of Reason analysis, (2) even “uniquely important social objectives beyond enhancing competition” will not provide immunity for restraints of trades, and (3) a party cannot simply “relabel a restraint as a product feature” to avoid well-established antitrust law or “§1 scrutiny.” Accordingly, the Supreme Court affirmed the lower courts’ judgment, holding that the NCAA is subject to the Sherman Antitrust Act. Justice Kavanaugh concurred, affirming that “the NCAA is not above” the “ordinary principles of antitrust law,” and went on to identify additional issues the NCAA may potentially face in the future regarding antitrust law.

Shelby Roden is actively involved in antitrust litigation; specifically the Blue Cross Blue Shield litigation (MDL 2406) where Attorney Robert Roden, the managing partner of Shelby Roden, is a member of the Litigation Committee on the Plaintiff’s Steering Committee for the Healthcare Provider Track.

SOURCES:

National Collegiate Athletic Assn. v. Alston, 594 U. S. ___ (2021)