Appeals Court Upholds Trial Win for College-Athletes in NCAA Scholarships Antitrust Class-Action Lawsuit

Appellate judge recognizes the “grueling” impact of college sports on student-athletes

SAN FRANCISCO – Today, the 9th U.S. Circuit Court of Appeals upheld a ruling by U.S. District Judge Claudia Wilken in favor of a nationwide class of college-athletes challenging NCAA-imposed caps on college-athlete scholarships who had requested an injunction, according to Hagens Berman.

The injunction upheld by the federal appeals court prohibits the NCAA from enforcing any rules that fix or limit compensation provided to college-athletes by schools or conferences in consideration for their athletic services other than cash compensation untethered to education-related expenses. According to the injunction, the NCAA is “permanently restrained and enjoined from agreeing to fix or limit compensation or benefits related to education” that conferences may make available.

The appeal, which was argued in March before circuit judges Sidney R. Thomas, Ronald M. Gould and Milan D. Smith, Jr. states, “[T]he district court properly applied the Rule of Reason in determining that the enjoined rules are unlawful restraints of trade under section 1 of the Sherman Act.”  The court’s findings that, “the NCAA’s rules have ‘significant anticompetitive effects in the relevant market’ for Student-Athletes’ labor on the gridiron and the court... ‘have substantial support in the record.’”

The opinion added that the NCAA’s rules restricting non-cash educational-related benefits, “have no demand-preserving effect and, therefore, lack of procompetitive justification.” The appeals court wrote that the record evidence is consistent with a recent statement from NCAA President Dr. Mark Emmert, which, “announced the NCAA’s approval of the [district] court’s order to the extent that it would foster competition among conferences and schools ‘over who can provide the best educational experience’–‘an inherently good thing.’”

Today’s decision clears the way for individual Division I athletic conferences to independently set the rules for education-related compensation or benefits that their member institutions may provide to college-athletes, free from NCAA rules that the court found violate the antitrust laws.

Judge Smith went on to add in a concurring opinion his, “…concern that the current state of our antitrust law reflects an unwitting expansion of the Rule of Reason inquiry in a way that deprives the young athletes in this case (Student-Athletes) of the fundamental protections that our antitrust laws were meant to provide them,” adding that the “grueling hours and physical demands of college sports” significantly impact student-athletes’ health, sleep, stress, academic competitiveness, focus on academics and more.

“We are incredibly pleased that the appeals court has sided with the lower federal court’s previous decision and with our plaintiffs, the student-athletes who have worked so hard under the NCAA’s regulations to balance their needs with the intense demands of college sports,” said Steve Berman, managing partner of Hagens Berman, an attorney representing the class. “We know that the court’s ruling in this case will have a lasting positive impact for college-athletes and look forward to seeing them reap the rewards of this injunction.”

The plaintiffs are represented by Steve Berman of Hagens Berman, Jeffrey Kessler of Winston & Strawn, and Bruce Simon of Pearson Simon. In fall 2018, Berman argued the case during a 10-day bench trial before Judge Wilken, which pitted the plaintiffs against the NCAA and the most powerful athletic conferences, including the Pac-12, Big Ten, Big 12, SEC and ACC.

“[W]e hold that the district court properly concluded that the NCAA limits on education-related benefits do not ‘play by the Sherman Act’s rules,’” Judge Smith said in the opinion. “Accordingly, we affirm its liability determination and injunction in all respects.”

In late 2017, Judge Wilken also granted final approval of a $208 million settlement on behalf of tens of thousands of current and former NCAA Division 1 college-athletes impacted by a prior NCAA cap on grant-in-aid scholarships.

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