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Law v. NCAA

United States Court of Appeals for the Tenth Circuit

January 23, 1998, Filed

No. 96-3034


 [*1012]  EBEL, Circuit Judge.

Defendant-Appellant the National Collegiate Athletic Association ("NCAA") promulgated a rule limiting annual compensation of [**2]  certain Division I entry-level coaches to $ 16,000. Basketball coaches affected by the rule filed a class action challenging the restriction under Section 1 of the Sherman Antitrust Act. The district court granted summary judgment on the issue of liability to the coaches and issued a permanent injunction restraining the NCAA from promulgating this or any other rules embodying similar compensation restrictions. The NCAA now appeals, and we affirm.

I. Background

The NCAA is a voluntary unincorporated association of approximately 1,100 educational institutions. 1 The association coordinates the intercollegiate athletic programs of its members by adopting and promulgating playing rules, standards of amateurism, standards for academic eligibility, regulations concerning recruitment of student athletes, rules governing the size of athletic squads and coaching staffs, and the like. The NCAA aims to "promote opportunity for equity in competition to assure that individual student-athletes and institutions will not be prevented unfairly from achieving the benefits inherent in participation in intercollegiate athletics."

 [**3]  The NCAA classifies sports programs into separate divisions to reflect differences in program size and scope. NCAA Division I basketball programs are generally of a higher stature and have more visibility than Division II and III basketball programs. Over 300 schools play in Division I, and each Division I member hires and employs its own basketball coaches.

During the 1980s, the NCAA became concerned over the steadily rising costs of maintaining competitive athletic programs, especially in light of the requirements imposed by Title IX of the 1972 Education Amendments Act to increase support for women's athletic programs. The NCAA observed that some college presidents had to close academic departments, fire tenured faculty, and reduce the number of sports offered to students due to economic constraints. At the same time, many institutions felt pressure to "keep up with the Joneses" by increasing spending on recruiting talented players and coaches and on other aspects of their sports programs in order to remain competitive with rival schools. In addition, a report commissioned by the NCAA known as the "Raiborn Report" found that in 1985 42% of NCAA Division I schools reported deficits [**4]  in their overall athletic program budgets, with the deficit averaging $ 824,000 per school. The Raiborn Report noted that athletic expenses at all  [*1013]  Division I institutions rose more than 100% over the eight-year period from 1978 to 1985. Finally, the Report stated that 51% of Division I schools responding to NCAA inquiries on the subject suffered a net loss in their basketball programs alone that averaged $ 145,000 per school.

Part of the problem identified by the NCAA involved the costs associated with part-time assistant coaches. The NCAA allowed Division I basketball teams to employ three full-time coaches, including one head coach and two assistant coaches, and two part-time coaches. The part-time positions could be filled by part-time assistants, graduate assistants, or volunteer coaches. The NCAA imposed salary restrictions on all of the part-time positions. A volunteer coach could not receive any compensation from a member institution's athletic department. A graduate assistant coach was required to be enrolled in a graduate studies program of a member institution and could only receive compensation equal to the value of the cost of the educational experience (grant-in-aid)  [**5]  depending on the coach's residential status (i.e. a non-resident graduate assistant coach could receive greater compensation to reflect the higher cost of out-of-state tuition than could an in-state student). The NCAA limited compensation to part-time assistants to the value of full grant-in-aid compensation based on the value of out-of-state graduate studies.

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134 F.3d 1010 *; 1998 U.S. App. LEXIS 940 **; 1998-1 Trade Cas. (CCH) P72,047; 1998 Colo. J. C.A.R. 609

NORMAN LAW, ANDREW GREER, PETER HERRMANN, MICHAEL JARVIS, JR., and CHARLES M. RIEB, individually and on behalf of others similarly situated, Plaintiffs-Appellees, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Defendant-Appellant, and WILLIAM HALL, Amicus Curiae.

Subsequent History:  [**1]  Certiorari Denied October 5, 1998, Reported at: 1998 U.S. LEXIS 4921.

Prior History: Appeal from the United States District Court for the District of Kansas. (D.C. No. 94-2053-KHV). KATHRYN H. VRATIL.

Disposition: AFFIRMED.


coaches, REC Rule, rule of reason, sports, procompetitive, horizontal, athletics, anti trust law, anticompetitive, restricted-earnings, salary, basketball, part-time, positions, effects, programs, schools, institutions, summary judgment, market power, intercollegiate, graduate, limits, prices, costs, price-fixing, entry-level, output, cases, assistant coach

Civil Procedure, Subject Matter Jurisdiction, Federal Questions, General Overview, Antitrust & Trade Law, Private Actions, Remedies, Standing, Appeals, Standards of Review, Summary Judgment Review, Injunctions, Permanent Injunctions, Jurisdiction Over Actions, Appellate Jurisdiction, Interlocutory Orders, Judgments, Summary Judgment, Standards of Review, Discovery, Methods of Discovery, Opposing Materials, Entitlement as Matter of Law, Appropriateness, Genuine Disputes, Materiality of Facts, Supporting Materials, Discovery Materials, Burdens of Proof, Movant Persuasion & Proof, Nonmovant Persuasion & Proof, Sherman Act, Claims, Price Fixing & Restraints of Trade, Cartels & Horizontal Restraints, Regulated Industries, Higher Education & Professional Associations, Per Se Rule & Rule of Reason, Price Fixing, Per Se Rule Tests, Manifestly Anticompetitive Effects, Regulated Practices, Market Definition, Relevant Market, Sherman Act, Education Law, Intercollegiate & Interscholastic Athletics, Student Eligibility