College Basketball

What the appeals court ruling means for O'Bannon's ongoing NCAA lawsuit

Life Comes Next Moment: Ninth Circuit upholds district court's O'Bannon decision
The Ninth Circuit Court of Appeals on Wednesday upheld a district court's decision that NCAA amateurism rules violate antitrust laws, but struck down an injunction that would have compelled schools to pay athletes cash.

Amateurism in college sports may be on life support, but it’s not dead yet.

The U.S. Court of Appeals for the Ninth Circuit on Wednesday affirmed Ed O’Bannon’s central thesis that certain NCAA amateurism rules violate federal antitrust law. The court, however, limited the scope of O’Bannon’s victory by holding that member schools only need to provide up to the cost of attendance to their student athletes. Consequently, an injunction devised by U.S. District Court Judge Claudia Wilken in 2014 that would have required member schools to pay Division I football and men’s basketball players up to $5,000 a year for name, image and likeness rights (“NIL rights”) has been scrapped.

Writing for a three-judge panel, Judge Jay Bybee expressed concern that “offering [student-athletes] cash sums untethered to educational expenses”—such as $5,000 a year for NIL rights—would transform NCAA sports into ‘minor league status.’” Advocates for college sports reform who contend that student-athletes should receive greater compensation will likely greet Judge Bybee’s worry with hostility. They have insisted that a system where student-athletes do not receive compensation for NIL rights is exploitative, particularly in an era where the NCAA and top conferences negotiate billion-dollar TV contracts and where college coaches earn millions of dollars a year to coach student-athletes. For these advocates, the cost of attendance—which is already in the process of being provided to student-athletes—is much less than what ought to be paid.

The $5,000 figure was vulnerable on appeal likely because Judge Wilken never fully explained why the NCAA and its members colluding to cap NIL rights at $0 is unlawful, but their colluding to cap NIL rights at $5,000—or any fixed amount not determined by a competitive market—would be lawful. The three-judge panel on the Ninth Circuit appeared perplexed by this and, as noted above, the panel was uncomfortable with the idea of linking “cash sums” that are unrelated to education to compensation for student-athletes.

While the NCAA and its members are pleased that they will not need to fund trusts for student-athletes’ NIL rights, they are equally displeased by other parts of Judge Bybee’s opinion. Most significantly, he affirmed the core of Judge Wilken’s reasoning that the NCAA has been violating Section 1 of the Sherman Act for years. Indeed, Judge Bybee agreed with Judge Wilken that NCAA amateurism rules unlawfully prevent member schools and conferences from competing to compensate Division I men’s basketball and football players. He also rejected the NCAA’s use of a 1984 Supreme Court decision (NCAA v. Board of Regents) to assert that challenges to amateurism rules must fail as a matter of law. As Judge Bybee stressed, NCAA rules are clearly subject to the same antitrust scrutiny as are rules adopted in other industries. This language is a setback for the NCAA since it makes the NCAA more vulnerable to antitrust lawsuits, including those brought by other student-athletes.

At various points in his 63-page opinion, Judge Bybee also identified how NCAA rules have injured student-athletes. For instance, in regards to players appearing in video games, he wrote, “the plaintiffs have shown that they are injured in fact as a result of the NCAA’s rules having foreclosed the market for their NILs in video games.” Further, in a separate 15-page partial concurrence and partial dissent, Judge Sidney Thomas opined that, given the NCAA’s problematic application of amateurism rules, Judge Wilken’s $5,000 plan would have been an appropriate remedy.

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Next steps: the appeal

The process for O’Bannon’s lawsuit is far from over. A final and conclusive outcome might be over a year away, leaving college athletes and college administrators in a continued state of uncertainty.

As explained above, both the NCAA and O’Bannon have reasons to dislike today’s ruling. Both can appeal it. The first type of appeal would likely be for an en banc review by 11 of the 29 judges who serve on the Ninth Circuit. En banc hearings are rare and courts almost always reject petitions by for them. One study, in fact, finds that in the Ninth Circuit less than 1/7th of one percent (.14%) of the court’s docket consists of en banc appeals.

If an en banc appeal doesn’t prove successful, the NCAA and/or O’Bannon could then petition the U.S. Supreme Court. The odds are extremely low that the Supreme Court would take the case. The Supreme Court only grants cert to approximately one percent of petitions and routinely declines to review cases that attract national media attention and seem important. The methodology typically used by the Supreme Court in selecting cases also disfavors the O’Bannon case getting to that level. The Supreme Court regularly declines to hear a legal controversy until there is a so-called “split” between federal circuits on a matter of federal law. Put another way, if the Ninth Circuit had ruled for the NCAA but a different federal appeals circuit in a similar case had ruled against the NCAA, that would have created a split. Only the Supreme Court (or perhaps Congress through a new law) could resolve such a split. Issues raised in the O’Bannon case are relatively novel, however, and not directly addressed by courts in other federal circuits. No circuit split therefore exists.

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Other factors, however, suggest there is a real possibility the Supreme Court reviews O’Bannon v. NCAA. While the Supreme Court rarely reviews a case, when that case is from the Ninth Circuit it has higher odds of being picked by the Court and higher odds of a reversal than do cases from other federal appeals circuits. Last year, Attorney Stephen Wermiel of SCOTUSblog revealed the key data:

[Supreme Court] Justices have long had a seemingly contentious relationship with the Ninth Circuit, which covers most of the western United States and Hawaii and Alaska. Far more cases come to the Court from the Ninth Circuit than any other court, and—not surprisingly—Ninth Circuit rulings make up a sizeable portion of the docket of argued and decided cases—75 cases, or 25.7% for the last four Terms including the current session. During that period, the Court has reversed or vacated and sent back 79.5% of the Ninth Circuit decisions it has reviewed.

Another appellate factor in favor of the NCAA is that Supreme Court Justices may be moved to hear the dispute given that it impacts thousands of colleges and students. The O’Bannon case may be from California, but its practical impact is national. This factor could help to persuade the Justices to hear the case.

Lastly, both the NCAA and O’Bannon can stress that the O’Bannon case raises unique applications of antitrust law that deserve attention from the national’s highest court. Should antitrust law—an area of law designed to promote competition in the economy—be used to reshape sports played by college students? Clearly many, including federal judges at the district court and appellate levels, believe it should, but a more conservative Supreme Court could view it otherwise.

Don’t forget the Jenkins case

The NCAA’s legal challenges are not limited to the O’Bannon case. Shawne Alston, Martin Jenkins and several other current and former players have sued the NCAA, arguing that the cap on athletic scholarships to tuition, room, board, books and fees is a violation of antitrust law. Without a cap, universities would purportedly be pressured to pay student-athletes market value scholarships. Star recruits might then command scholarships that approach or exceed seven figures. This potential game-changing litigation, which will be heard in the U.S. District Court for the Northern District of California (the same federal district court that heard O’Bannon v. NCAA), will be worth following closely.

It should also be noted that Jeffrey Kessler and David Greenspan—the lead attorneys for Tom Brady in his recent victory over the NFL—are representing Jenkins and several other players. Other leading sports attorneys, including Jon King and Steve Berman, have represented Alston, among others. These attorneys are now poised to use Judge Bybee’s opinion to assert more persuasively that NCAA amateurism rules related to athletic scholarships violate antitrust law.

Michael McCann is a Massachusetts attorney and the founding director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law. This fall he is teaching an undergraduate course at UNH titled “Deflategate.” McCann is also the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law and he teaches “Intellectual Property Law in Sports” in the Oregon Law Sports Law Institute.

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