National Collegiate Athletic Assn. v. Alston
594 U. S. ____ (2021) (2021)
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Rule of Law:
The National Collegiate Athletic Association's (NCAA) rules restricting student-athlete compensation are subject to a full rule of reason analysis under antitrust law. An injunction against specific NCAA rules is appropriate if a court finds the rules produce significant anticompetitive effects and substantially less restrictive alternatives exist to achieve the same procompetitive goals.
Facts:
- The National Collegiate Athletic Association (NCAA) is the principal governing body for intercollegiate athletics and is comprised of approximately 1,100 member colleges and universities.
- The NCAA and its member institutions collectively agree upon and enforce rules that limit the compensation student-athletes can receive in exchange for their athletic services, based on a principle of amateurism.
- College sports, particularly Division I football and basketball, have evolved into a massive commercial enterprise, generating billions of dollars annually from television rights, ticket sales, and other revenue streams.
- The NCAA's definition of amateurism and its corresponding compensation rules have changed significantly over time, gradually expanding to permit benefits such as scholarships up to the full cost of attendance and payments from student assistance funds.
- Current and former student-athletes in Division I FBS football and Division I basketball, represented by Shawne Alston, contended that the NCAA's compensation limits artificially suppressed their compensation below what a competitive market would yield.
Procedural Posture:
- Current and former student-athletes (plaintiffs), led by Shawne Alston, filed a class-action antitrust lawsuit against the NCAA and 11 of its conferences (defendants) in the U.S. District Court for the Northern District of California.
- Following a 10-day bench trial, the district court issued a permanent injunction prohibiting the NCAA from enforcing its rules limiting education-related compensation and benefits.
- The district court upheld the NCAA's rules limiting compensation unrelated to education, such as limits on scholarships to the cost of attendance.
- Both the NCAA (as appellant) and the student-athletes (as cross-appellants) appealed to the U.S. Court of Appeals for the Ninth Circuit.
- The Ninth Circuit affirmed the district court's judgment in its entirety.
- The NCAA (petitioner) filed a petition for a writ of certiorari with the U.S. Supreme Court, which was granted. The student-athletes (respondents) did not cross-petition to challenge the rules that the lower courts left in place.
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Issue:
Do the National Collegiate Athletic Association's (NCAA) rules limiting the education-related benefits that member schools may offer student-athletes constitute an illegal restraint of trade in violation of Section 1 of the Sherman Act?
Opinions:
Majority - Justice Gorsuch
Yes, the NCAA's rules limiting education-related benefits constitute an illegal restraint of trade in violation of Section 1 of the Sherman Act. The district court correctly applied a full rule of reason analysis, rejecting the NCAA's request for a more deferential 'quick look' review. The NCAA exercises monopsony power in the market for elite student-athlete labor, and its compensation limits have significant anticompetitive effects by depressing wages below competitive levels. While the NCAA asserted a procompetitive justification of preserving consumer demand for its unique 'amateur' product, the district court found little evidence to support this claim and correctly concluded that substantially less restrictive alternatives—namely, allowing schools to provide education-related benefits—could achieve any legitimate procompetitive goal. The resulting injunction was narrowly tailored, left the NCAA with considerable flexibility, and did not constitute improper judicial micromanagement.
Concurring - Justice Kavanaugh
Yes, the NCAA's rules on education-related benefits violate the Sherman Act, and the NCAA's remaining compensation rules raise serious antitrust questions. The NCAA's business model, which relies on not paying student-athletes who generate billions in revenue, would be 'flatly illegal in almost any other industry in America.' The justification that amateurism is part of the 'product' is circular and unpersuasive, as price-fixing labor does not become legal when incorporated into a product's definition. The remaining compensation rules should be subject to ordinary rule of reason scrutiny, and it is highly questionable whether they can survive such a review.
Analysis:
This decision solidifies that the NCAA is not exempt from standard antitrust scrutiny and cannot rely on dicta from past cases like Board of Regents to receive special judicial deference. While the holding is narrowly confined to education-related benefits, the Court's application of a full rule of reason analysis signals that the NCAA's broader compensation rules are vulnerable to future challenges. Justice Kavanaugh's influential concurrence explicitly invites such challenges, framing the NCAA's entire model of amateurism as a 'textbook antitrust problem.' The case significantly alters the legal landscape for college sports, paving the way for further litigation, legislation, or collective bargaining that could fundamentally change how student-athletes are compensated.
