Supreme Court Unanimously Rules Against NCAA in Compensation Case

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Photo Courtesy: NCAA Media

Supreme Court Unanimously Rules Against NCAA in Compensation Case

The Supreme Court Monday ruled by a 9-0 margin to affirm a decision that allows a pathway for NCAA student-athletes to be compensated by schools.

The decision upheld a district court ruling that the NCAA violated antitrust law in limiting the education-related benefits that athletes can receive from schools. It removes the caps on education-related compensation that schools can provide. The case, NCAA vs. Alston et al, applies further pressure on the NCAA, in addition to the growing calls for athletes to profit off their name, image and likeness (NIL) via third-party endorsements that have prompted legislation in 19 states.

Read the full court opinion here.

Writing for the majority, Justice Neil Gorsuch penned a narrow opinion asserting that the 9th Circuit Court ruling in 2018 was correct by holding that, “the student-athletes had shown the NCAA enjoys the power to set wages in the market for student-athletes’ labor—and that the NCAA has exercised that power in ways that have produced significant anticompetitive effects.” However, Gorsuch does not prescribe solutions, urging judicial caution in stepping in to fix private business relationships. While the decision does serve to further chip away at the NCAA’s view of amateurism, it does not explicitly declare it as violating anti-trust laws.

The specific issue is over academic-adjacent expenses, such as computer costs, study abroad and internships, can be handled. The NCAA rules on those now must be modified or replaced, which gives individual schools more discretion on how to allocate those resources. The larger picture sets Alston as precedent for future litigation against the NCAA and its anti-trust standing.

The more forceful rebuke of the NCAA was provided in Justice Brett Kavanaugh’s concurring opinion. It begins by explicitly stating that “the NCAA has violated the antitrust laws” dating to the Sherman Act of 1890, passed little more than a decade before the NCAA was formed. While reasserting that Monday’s decision is narrow in the portion of the NCAA’s business it is ruling on, Kavanaugh highlights that “the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws.”

Among the three points Kavanaugh makes:

  • The Supreme Court is not now addressing the legality of said rules.
  • The Court’s decision does, however, “establish how any such rules should be analyzed going forward” (i.e. via “ordinary rule of reason scrutiny,” as Gorsuch writes was applied in the Alston case)
  • There are “serious questions” about whether the NCAA’s rules can survive such scrutiny, Kavanaugh calling the NCAA’s larger argument that its policies are pro-competitive “circular and unpersuasive”

From Kavanaugh’s opinion:

“The NCAA’s business model would be flatly illegal in almost any other industry in America. All of the restaurants in a region cannot come together to cut cooks’ wages on the theory that “customers prefer” to eat food from low-paid cooks. Law firms cannot conspire to cabin lawyers’ salaries in the name of providing legal services out of a “love of the law.” Hospitals cannot agree to cap nurses’ income in order to create a “purer” form of helping the sick. News organizations cannot join forces to curtail pay to reporters to preserve a “tradition” of public-minded journalism. Movie studios cannot collude to slash benefits to camera crews to kindle a “spirit of amateurism” in Hollywood. …

“The bottom line is that the NCAA and its member colleges are suppressing the pay of student athletes who collectively generate billions of dollars in revenues for colleges every year.”

The NCAA released a brief statement hewing to procedural grounds in which Gorsuch reaffirms the NCAA’s authority on certain matters. The statement also introduces the NIL legislation, which Gorsuch only makes passing reference to.

“Even though the decision does not directly address name, image and likeness, the NCAA remains committed to supporting NIL benefits for student-athletes,” NCAA President Mark Emmert said in the statement. “Additionally, we remain committed to working with Congress to chart a path forward, which is a point the Supreme Court expressly stated in its ruling.”

That statement appears to be looking at the next battle already. Certainly, Kavanaugh’s opinion is, as well. He concludes:

“Traditions alone cannot justify the NCAA’s decision 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.”

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