Quintilone & Associates focuses in Class Actions, Employment Law, Personal Injury, Trade Secrets Litigation, and Business Litigation in Orange County, CA area.

US Supreme Court Says NCAA Cannot Limit Athlete Education Compensation

The U.S. Supreme Court on Monday affirmed a ruling that struck down NCAA rules restricting compensation and benefits for college athletes, finding that the organization should not get special treatment under antitrust law.

The Court ruled unanimously that the lower courts properly applied antitrust scrutiny to the NCAA in striking down rules restricting education-related benefits. The top court said the NCAA cannot rely on the 1984 Board of Regents v. NCAA case to avoid such scrutiny. The decision upholds a Ninth Circuit ruling that opened the door for schools to provide athletes more benefits, such as pay, reimbursements for computers and musical instruments, free tutoring, and internship stipends. Such benefits have been closely monitored and limited under NCAA amateurism rules, but to date, no discussion on the taxation of these benefits has been provided.

The NCAA and Division I college athletics conferences argued that courts should defer to its “amateurism rules,” which they said make college sports distinct and promote schools’ noncommercial objective of higher education as well as makes them boatloads of money on the backs of the athletes, especially football and basketball, which for larger schools, ofter pay for an entire school’s athletic programs. The conferences further argued that such deference is necessary for joint ventures to be able to operate, or for any other industry where joint action is necessary to “create a desirable product,” which the Court found laughable. “The NCAA is free to argue that, because of the special characteristics of its particular industry, it should be exempt from the usual operation of the antitrust laws — but that appeal is properly addressed to Congress,” Justice Neil Gorsuch wrote in the opinion for the court.

The ruling will have broad implications in the debate over how college athletes are treated and whether they should receive a greater share of the revenue generated by college sports, which the U.S. Department of Education estimates at more than $14 billion per year.

Justice Brett Kavanaugh hammered the NCAA over its arguments that the defining characteristic of college sports is that the athletes are unpaid amateurs, noting “law firms cannot conspire to cabin lawyers’ salaries in the name of providing legal services out of a ‘love of the law.'” “Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate,” Justice Kavanaugh wrote. “[u]nder ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law.”

There are deeper legal and policy questions that are yet to be answered and which could redefine the nature of college sports, he said, even suggesting that “colleges and student athletes could potentially engage in collective bargaining.”

There is currently an antitrust class action challenging the NCAA’s prohibition on athletes being paid for use of their names, images and likenesses, or NIL. Nearly 20 states have passed laws over the past two years that will allow athletes in those states to earn money from third parties for the use of their NIL, such as through sponsorships, endorsements and through social media influencer deals, even though such pay is banned by NCAA amateurism rules. Some of those laws take effect as early as July 1, 2021. The NCAA earlier this year tabled proposed rule changes to allow limited NIL pay.

“Even though the decision does not directly address name, image and likeness, the NCAA remains committed to supporting NIL benefits for student-athletes,” NCAA President Mark Emmert said in a statement Monday. “Additionally, we remain committed to working with Congress to chart a path forward, which is a point the Supreme Court expressly stated in its ruling.”

The employment issues, like workers compensation and agent and manager compensation will likely be legislated, litigatred, or both. If you are an athlete with questions about the ruling please contact Richard Quintilone II Esq or Kyle Gallego Esq. Mr. Gallego is a Major League Baseball Player Agent and associate attorney in Quintilone & Associates

Quintilone & Associates focuses in Class Actions, Employment Law, Personal Injury, and Business Litigation in Orange County, CA area.