Former player faces uphill battle in antitrust lawsuit against NCAA

Ex-W. Virginia RB Shawne Allison argues that the NCAA violates antitrust laws by limiting scholarships.
Justin K. Aller/Getty Images

For more than 40 years, the NCAA has restricted the number, value and guarantee of athletic scholarships. Former West Virginia running back Shawne Alston hopes to change this system. He's suing the NCAA, Pac-12, Big Ten, Big-12, SEC and ACC in the U.S. District Court for the Northern District of California, which is the same court hearing Ed O'Bannon and Sam Keller's class action suit against the NCAA. Alston, who last year filed a separate lawsuit against Electronic Arts, hopes that a judge will certify his case as a class action on behalf thousands of others who played Division I football from 2010 to present. Here is a look at the key arguments in the case.

Alston's legal argument against limits on athletic scholarships

Alston's basic theory is that the NCAA and its member institutions, along with the five major conferences, have unlawfully conspired to save money at the expense of Division I football players. This comes in the form of athletic scholarships (grants-in-aid), which are capped to include the cost of tuition, room and board, books and fees and, until recently, were only guaranteed for one year. Alston charges that these limitations make athletic scholarships several thousand dollars lower in value than the actual cost of attending college and are substantially less valuable than if there were a free market. The NCAA, according to Alston, has "cloaked its actions in government-terminology, such as 'constitution' ... and 'infraction'" to lawmakers into accepting this system as fair.

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The key area of law for Alston's complaint is Section 1 of the Sherman Antitrust Act. This law prohibits competitors -- such as universities and conferences, which compete on and off the field -- from conspiring to unreasonably restrain economic activity. If Alston wins, star college football players would likely be able to negotiate multiyear, high-value scholarships.

Alston's lawsuit is not the first of its kind. In 2012, former Gardner-Webb University quarterback John Rock filed a similar antitrust lawsuit in the U.S. District Court for the Southern District of Indiana. Rock, who is represented by some of Alston's lawyers, had his athletic scholarship revoked by a new coach, who wanted to install a new offense. Rock then unexpectedly had to pay thousands of dollars to graduate. He now contends the NCAA's grant-in-aid rules, which clearly permitted his coach to revoke the athletic scholarship, violate antitrust law. Rock's case remains in litigation.

NCAA defense strategy

In 2012, the U.S. Court of Appeals for the Seventh Circuit ruled against two former Division I football players, Joseph Agnew and Patrick Courtney, who sued the NCAA over losing athletic scholarships due to injuries. The NCAA successfully argued that these players could not establish that the harm of losing an athletic scholarship falls within a market protected by antitrust law. In other words, even if Agnew and Courtney were harmed by the NCAA in a moral or economic sense, the harm was not one remedied by antitrust law. The Seventh Circuit emphasized that while students who pay tuition have a right to education, there is no antitrust harm if they are unable to graduate due to a lost scholarship. That is true for a revoked athletic scholarship just as it is true for a revoked academic scholarship. Although Agnew v. NCAA was decided in a different federal circuit, and is thus not binding in Alston v. NCAA, it will surely be cited by the NCAA.

In addition to arguing that there is no connection between antitrust law and Alston's purported harm, the NCAA will likely describe grants-in-aid as promoting, rather than harming, competition. Limits on the value of athletic scholarships, the NCAA will assert, ensures that universities with large budgets do not "buy" all of the best football talent. Without these limits, some Division I football programs may collapse, leaving fans with fewer teams to follow and thus harming the overall market for college sports. The NCAA could cite evidence from the mid-1940s, when the return of World War II soldiers and the G.I. Bill of Rights led colleges to outbid each other in paying for top football players. Those practices eventually led to reforms that, according to the NCAA, ensure student-athletes remain amateurs. Critics, however, contend those reforms have led to the NCAA, conferences, colleges, coaches, television networks, apparel companies and others unjustly profiting from D-I football players.

The NCAA also benefits by the legal standard likely to be used by a court in evaluating Alston's claims. The so-called "Rule of Reason" test, which is deferential to defendants, would probably be applied. Rule of Reason essentially weighs whether, on balance, a restraint -- in this case, NCAA restrictions on athletic scholarships -- benefits or harms competition. In recent years, defendants have enjoyed extremely high rates of success when a court applies Rule of Reason (more than 90 percent). While those cases have typically not concerned sports, the NCAA's attorneys likely take confidence from them.

Connection to the O'Bannon case and Unionization Efforts

Alston's lawsuit is similar to the O'Bannon and Keller cases and features some of the same attorneys, but the Alston suit asserts different legal arguments under antitrust law. While Alston is focused on restrictions on athletic scholarships, O'Bannon and Keller are focused on compensation for players' names, images and likenesses. Still, the cases are related in terms of potential precedent. They are both before the same court, and a decision in O'Bannon v. NCAA would likely contain language that impacts the legal arguments for both Alston and the NCAA.

The attempt by Northwestern University football players to gain approval by the National Labor Relations Board (NLRB) to unionize is also similar in spirit, but legally distinct from Alston's antitrust case. Kain Colter's petition to the NLRB is centered on federal labor law and whether student-athletes have enough in common with employees to unionize and then enter into collective bargaining. To be sure, college athletes being able to unionize and demand salaries and better working conditions -- perhaps on top of athletic scholarships -- would connect to Alston's case in an economic sense. But Alston's core legal argument about restrictions on athletic scholarships would remain whether or not the Northwestern players are allowed to unionize.

Going forward

Don't expect a resolution in Alston v. NCAA anytime soon. Antitrust litigation often takes years to play out. Along those lines, consider that the O'Bannon case began in 2009. With a trial for O'Bannon scheduled for June and potential appeals to the U.S. Court of Appeals for the Ninth Circuit and the U.S. Supreme Court, there might not be final resolution until 2016.

Still, Alston v. NCAA bears watching. Given that the Seventh Circuit has rendered a decision in favor of the NCAA on athletic scholarships, if the Ninth Circuit now sides with Alston, there would be a split of authority among federal circuits. This would make it more likely that the U.S. Supreme Court hears arguments with the NCAA as a party for the first time since 1999.

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. He is also the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law.

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