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Supreme Court says it will hear case challenging NCAA’s athlete-compensation rules

The Supreme Court announced Wednesday it will hear an appeal from the NCAA and 11 of its top-level conferences in a case that challenges the association’s restrictions on the compensation athletes can receive for playing college sports.

The justices’ decision to take the case adds a momentous element of uncertainty to an enterprise that has been shaken by state and Congressional legislative efforts concerning not only athletes’ ability to make money from their name, image and likeness, but also the fairness of their overall treatment by the schools for which they help generate billions of dollars annually.

“I think it would be hard to overstate the potential significance of it for a number of reasons, primarily because it is so rare for the Supreme Court to hear any cases involving the sports industry, much less college sports,” Gabe Feldman, director of the Tulane Sports Law Program and Tulane University's associate provost for NCAA compliance, said in an interview last week. “And then, in this case, particularly to hear a challenge to the NCAA amateurism rules.”

The NCAA has long contended that while its member schools compete on the field, antitrust law allows them to agree to impose certain restrictions – including on athlete compensation – in an effort to promote relative competitive equity and to have a product for fans that is distinct from professional sports. The NCAA maintains that a fundamental change to this arrangement also would have implications for pro sports leagues and other joint-venture businesses.

If the lower courts’ rulings are allowed to stand and the NCAA continues to be found in violation of antitrust law, it would lose its ability to determine, on a nationwide basis, the rules about the types and amounts of education-related benefits schools can give athletes. Such benefits could include cash payments for academic performance. 

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The lower courts have left intact the NCAA ability to set limits on compensation not connected to education, and the association has unveiled a set of proposed rules changes concerning athletes’ ability to make money from their names, images and likeness. Those changes are set for a vote in January.

But under a district-court ruling and injunction that was unanimously upheld by a three-judge panel of the 9th U.S. Circuit Court of Appeals, athletes playing Division I men’s or women’s basketball or Bowl Subdivision football would be able to receive a variety of new items. Among them are scholarships to complete undergraduate or graduate degrees at any school and paid internships after athletes have completed their collegiate-sports eligibility. 

Schools would not be required to provide these types of benefits, and conferences would be allowed to impose prohibitions on certain benefits if their member schools so chose. However, conferences could not act in concert. So, if a conference chose to limit or prevent certain benefits, it would risk giving a competitive advantage to others that did not.

If the high court were to agree with this arrangement, “it would certainly open the door for potentially radical change and for potentially massive increases in the benefits that schools are permitted to offer college athletes,” Feldman said.

"We'll win in the Supreme Court — that's my comment," one of the plaintiffs' lead attorneys, Jeff Kessler, said just after Wednesday's announcement. "We feel very confident in our position and we're looking forward to having this case heard."

The case began in March 2014 on behalf of former West Virginia football player Shawne Alston.

In filings urging the Supreme Court to take the case, the conferences wrote “we recognize that there currently is an intense policy debate ongoing about the claimed exploitation of student-athletes.” But they and the NCAA argued that such a fundamental change in the limits on compensation should not be triggered by court rulings in an antitrust case, but rather by the NCAA or by Congress.

Lawyers for the association wrote that the Supreme Court's "intervention is needed to correct the Ninth Circuit’s improper use of antitrust law.”

In offering their view of the proper application of antitrust law in this case, the NCAA and the conferences both reached back to one of the few other college-sports disputes to be heard by the Supreme Court: the 1980s case NCAA v. Board of Regents.  It was about control of college football TV rights, but the Court’s 1984 opinion included the statement that "in order to preserve the character and quality of the (NCAA's) 'product,' athletes must not be paid, must be required to attend class and the like."

The NCAA has relied upon this — and other — language from the Board of Regents ruling in not only successfully defending its amateurism system in many prior federal cases in various parts of the country, but also creating a body of case law that indicates the NCAA’s amateurism rules should be upheld by courts without detailed analysis.

Ninth Circuit judges called the Board of Regents language “dicta,” or legal commentary that does not constitute binding precedent, and it upheld the analysis that resulted in the finding of an antitrust violation.

The NCAA and the conferences also took issue with aspects of the injunction in this case that was crafted by U.S. District Judge Claudia Wilken. Wilken also oversaw another antitrust case against the NCAA that was filed on behalf of former UCLA basketball star Ed O’Bannon and resulted in the finding of an antitrust violation. Both parties ultimately asked the Supreme Court to hear that case, but in October 2016, the justices declined.

In the injunction in this case, she set up several circumstances allowing for possible changes in the injunction on which she must rule — and the 9th Circuit let that arrangement stand.

“At issue in this case,” the NCAA wrote, “is whether the nationwide rules that define who is eligible to participate in NCAA sports will henceforth be set by the NCAA or by one federal judge in California, assisted by the imagination of plaintiffs’ lawyers and subject only to deferential Ninth Circuit review.”

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