U.S. Supreme Court to Hear NCAA Athlete Pay Limits Case
In what will be a historic case for American sports law and the college sports industry, the United States Supreme Court announced on Wednesday that it has granted certiorari in two companion cases, NCAA v. Shawne Alston et al. and AAC v. Shawne Alston et al. The Court didn’t indicate how the nine justices voted, but the granting of cert requires at least four justices voting in favor. Such granting is also rare: In a typical year, only between 1% and 2% of petitions gain the green light.
On a date to-be-determined in spring 2021, there will be a hearing with one hour allocated for oral arguments. Several months thereafter, the Court will issue a ruling.
Although it’s unclear how the Court will rule (particularly since oral arguments—where the justices often signal their views—haven’t yet occurred), the decision to grant cert is likely encouraging news for the NCAA and its legal team. At least four justices believe the case’s current status ought to be reviewed. The current status favors the grant-in-aid class action led by former West Virginia football player Shawne Alston and former Cal basketball player Justine Hartman.
“We are pleased the U.S. Supreme Court will review the NCAA’s right to provide student-athletes with the educational benefits they need to succeed in school and beyond,” NCAA chief legal officer Donald Remy said in a statement. “The NCAA and its members continue to believe that college campuses should be able to improve the student-athlete experience without facing never-ending litigation regarding these changes.”
Seven months ago, the U.S. Court of Appeals for the Ninth Circuit held that the NCAA and its members conspired to unlawfully cap the value of athletic scholarships. The ruling, which affirmed a 2019 order by U.S. District Judge Claudia Wilken, draws on the same basic principles found in Ed O’Bannon’s successful antitrust case against the NCAA, also in the Ninth Circuit.
Under federal antitrust law, the Ninth Circuit reasoned in both cases, the NCAA and its member schools and conferences must behave in the same way that competing businesses are obligated to behave and as schools often behave. For instance, NCAA members compete for coaches, offering them multimillion-dollar salaries to lead a program and defeat rival programs. They also compete in the design and construction of state-of-the art stadiums and training facilities, so they can better distinguish themselves in athlete recruitment. This is the type of activity one would expect of educational institutions that aggressively battle on so many dimensions, including in the pursuit of high school students, federal grants, alumni donations, media attention, faculty and staff. Colleges are businesses, after all.
Yet with regard to athlete compensation, these same rivals back off from meaningful clashes. Therein lies the heart of amateurism, the system of NCAA rules that, by forbidding compensation, distinguishes college athletes from professional athletes. Stated bluntly, the colleges all agree to not pay the athletes.
In O’Bannon, the Ninth Circuit held that it is illegal under antitrust law for the NCAA and its members to fix the prices of college athletes’ name, image and likeness in video games and other goods and services to $0. In Alston, the Ninth Circuit held that is illegal under antitrust law for the NCAA and its members to limit grants-in-aid to tuition, fees, room, board, books and other expenses up to the value of the full cost of attendance.
The Ninth Circuit’s remedies, however, have fallen short of the kind of transformative change some college athlete advocates have sought. In O’Bannon, the Ninth Circuit determined that the antitrust violation is cured so long as member schools are allowed to offer college athletes the full cost of attendance (generally worth several thousands of dollars per year). Meanwhile, in Alston, the Ninth Circuit reasoned that although the NCAA and its members can’t agree to limit compensation “related to education,” they can agree to ban numerous other types of compensation.
In other words, the Alston ruling doesn’t create a world where high-school athletes are akin to pro free agents, where they could sign with a college for scholarship amounts that reflect their market value. Imagine what Trevor Lawrence might have received if top college football programs could have used a seven-figure scholarship package as an inducement.
Under the current system, schools must be allowed to offer reimbursements for expenses pertaining to “computers, science equipment, musical instruments and other tangible items not included in the cost of attendance calculation but nonetheless related to the pursuit of academic studies.” The Alston ruling also declares that while the NCAA can’t limit internships for college athletes after their eligibility expires, the NCAA can cap cash graduation and academic awards to (for the current academic year, the cap is $5,600). These are real changes and create hurdles for compliance officers at the universities, but they are more incremental than tectonic.
While the Supreme Court has heard several cases involving college sports—including the 1988 case NCAA v. Jerry Tarkanian, where the Court held the NCAA is not a “state actor” and thus doesn’t have to adhere to constitutional safeguards—Alston is arguably the most significant player-related decision since the 1984 ruling in NCAA v. Board of Regents. Writing for the majority in that case, Justice John Paul Stevens stressed that that “the NCAA plays a critical role in the maintenance of a revered tradition of amateurism in college sports . . . there can be no question but that it needs ample latitude to play that role, or that the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics.”
Over the years, the Justice Stevens’s words have supplied the NCAA with a de facto exemption from antitrust law. That is, until O’Bannon and Alston, where the Ninth Circuit made clear the NCAA is subject to antitrust scrutiny.
The Supreme Court could rule on Alston in a number of ways. The Court has a much-discussed 6-3 conservative majority, but “conservative” and “liberal” are not necessarily helpful monikers in handicapping how the justices might rule here. A “conservative” judge who values free markets and private enterprise could be inclined to favor Alston, with the idea that college athletes should be paid their market value. That viewpoint could lead the Court to rule that schools can’t agree to conspire—a far more industry-altering ruling than the one enunciated by the Ninth Circuit in May. The word “conservative” could alternatively refer to a judge who seeks to restore the more traditional role of college sports, where athletes aren’t paid and where the NCAA doesn’t have to worry about antitrust law. In short, reading the tea leaves based on the 6 to 3 “conservative” majority is a speculative endeavor.
The Court’s eventual ruling could impact other areas of the college sports industry. This is important given ongoing legal developments related to name, image and likeness and calls for college athletes to be recognized as employees or to be able to form a trade association.
It’s also worth noting that no matter how the Court rules, there’s another potential check: Congress and incoming President Joe Biden could pass a law that creates new rights for college athletes.
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