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O'Bannon v. NCAA

O'Bannon v. NCAA

United States Court of Appeals for the Ninth Circuit

March 17, 2015, Argued and Submitted, San Francisco, California; September 30, 2015, Filed

Nos. 14-16601, 14-17068

Opinion

 [*1052]  BYBEE, Circuit Judge:

] Section 1 of the Sherman Antitrust Act of 1890, 15 U.S.C. § 1, prohibits "[e]very contract, combination . . . , or conspiracy, in restraint of trade or commerce." For more than a century, the National Collegiate Athletic Association (NCAA) has prescribed rules governing the eligibility of athletes at its more than 1,000 member colleges and universities. Those rules prohibit student-athletes from being paid for the use of their names, images, and likenesses (NILs). The question presented in this momentous case is whether the NCAA's rules [**7]  are subject to the antitrust laws and, if so, whether they are an unlawful restraint of trade.

After a bench trial and in a thorough opinion, the district court concluded that  [*1053]  the NCAA's compensation rules were an unlawful restraint of trade. It then enjoined the NCAA from prohibiting its member schools from giving student-athletes scholarships up to the full cost of attendance at their respective schools and up to $5,000 per year in deferred compensation, to be held in trust for student-athletes until after they leave college. As far as we are aware, the district court's decision is the first by any federal court to hold that any aspect of the NCAA's amateurism rules violate the antitrust laws, let alone to mandate by injunction that the NCAA change its practices.

We conclude that the district court's decision was largely correct. Although we agree with the Supreme Court and our sister circuits that many of the NCAA's amateurism rules are likely to be procompetitive, we hold that those rules are not exempt from antitrust scrutiny; rather, they must be analyzed under the Rule of Reason. Applying the Rule of Reason, we conclude that the district court correctly identified one proper alternative [**8]  to the current NCAA compensation rules—i.e., allowing NCAA members to give scholarships up to the full cost of attendance—but that the district court's other remedy, allowing students to be paid cash compensation of up to $5,000 per year, was erroneous. We therefore affirm in part and reverse in part.

A. The NCAA

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802 F.3d 1049 *; 2015 U.S. App. LEXIS 17193 **; 166 Lab. Cas. (CCH) P10,814; 2015-2 Trade Cas. (CCH) P79,311

EDWARD C. O'BANNON, JR., On Behalf of Himself and All Others Similarly Situated, Plaintiff-Appellee, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, AKA The NCAA, Defendant-Appellant, and ELECTRONIC ARTS, INC.; COLLEGIATE LICENSING COMPANY, AKA CLC, Defendants.

Subsequent History: US Supreme Court certiorari denied by Ncaa v. O'Bannon, 2016 U.S. LEXIS 5140 (U.S., Oct. 3, 2016)

US Supreme Court certiorari denied by O'Bannon v. Ncaa, 2016 U.S. LEXIS 5164 (U.S., Oct. 3, 2016)

Prior History:  [**1] Appeal from the United States District Court for the Northern District of California. D.C. No. 4:09-cv-03329-CW. Claudia Wilken, Senior District Judge, Presiding.

O'Bannon v. NCAA, 7 F. Supp. 3d 955, 2014 U.S. Dist. LEXIS 110036 (N.D. Cal., 2014)

Disposition: AFFIRMED IN PART AND VACATED IN PART.

CORE TERMS

student-athletes, amateurism, athletes, district court, sports, schools, procompetitive, video game, football, attendance, paying, players, antitrust, consumer demand, college football, licensing, preserving, basketball, effective, college education, anticompetitive, consumers, recruits, Sherman Act, rights, television, output, full cost, plaintiffs', purposes

Antitrust & Trade Law, Sherman Act, Scope, General Overview, Regulated Practices, Private Actions, Sherman Act, Civil Procedure, Trials, Bench Trials, Appeals, Standards of Review, De Novo Review, Clearly Erroneous Review, Standing, Requirements, Price Fixing & Restraints of Trade, Per Se Rule & Rule of Reason