A win for now – the NCAA and O’Bannon (updates below)

A three judge panel of the 9th circuit court of appeals has ruled on the NCAA’s O’Bannon appeal. The top line legal outcome is that the court held that the NCAA is not presumptively exempt from federal anti-trust scrutiny and rejected the NCAA’s insistence that the Supreme Court had held in the 1984 Regents case that it was.

However, from Lester Munson’s analysis:

“In a decision that the judges themselves labeled as “momentous” and “far reaching,” the high court rejected a lower court ruling that would have allowed Division I schools to pay football and men’s basketball players $5,000 per year in deferred compensation. In sum, the court ruled that the NCAA has indeed violated antitrust laws, but as long as it pays the full cost of an athlete’s college education going forward, it will no longer be in violation of those laws.”

The reasoning behind this split-the-baby ruling is that the NCAA does, indeed, per the court, have a legitimate interest in preserving “amateurism” as the NCAA has defined it.

Again, Munson:

The majority opinion is based on the NCAA’s long-standing principle that “not paying student-athletes is precisely what makes them amateurs.” Judges Jay S. Bybee and Gordon J. Quist felt compelled to use italics to make a point that has been the centerpiece of Emmert’s response to the O’Bannon litigation and to other demands for change. He used almost the same language in his testimony in the trial in Oakland, California, in June 2014 when he said, “If you’re paid anything, you are no longer an amateur.”

It is an idea that the NCAA has offered in several lawsuits similar to the O’Bannon litigation, but the judges’ adoption of it in the decision Wednesday is one of the first and most important occasions when the idea has been accepted.

Therefore, it would appear that, at least in the short term, this is a win for the NCAA. A federal court has affirmed the NCAA’s (entirely circular) notion of amateurism, and the member schools can continue to make money hand over fist while sharing a relative pittance of their earnings with the players.

As Munson says, there are some alarm bells for the NCAA, however. The first, noted above, is the rejection of presumptive exemption from anti-trust laws, a prized status the NCAA has jealously guarded over many decades. Furthermore, even as it celebrated its victory yesterday, the NCAA bristled at the implication that courts have standing to determine allowable compensation levels for college athletes.

There’s another nugget in the 2-1 majority’s opinion that, while connected to the anti-trust status of the NCAA, also appears to bear directly on the question of whether college athletes are employees. From the ruling (H/T Andy Schwarz):

 

“The NCAA points out that Section 1 of the Sherman Act applies only to “restraint[s] of trade or commerce,” 15 U.S.C. § 1, and claims that its compensation rules are mere “eligibility rules” that do not regulate any “commercial activity.” This argument is not credible.”

“The intent behind the NCAA’s compensation rules does not change the fact that the exchange they regulate—labor for in-kind compensation (my bold)—is a quintessentially commercial transaction. We therefore conclude that the NCAA’s compensation rules are within the ambit of the Sherman Act.”

 

I’m no lawyer, but that sure sounds like the Court declaring that the players are, indeed, employees, and to assert otherwise is “not credible.”

Munson says the O’Bannon plaintiffs, led by the attorney Michael Hausfeld will appeal, perhaps to the full ninth circuit and that the case may well end up at the Supreme Court, now thirty years removed from its last major decision on the status and standing of collegiate athletics.

In the mean time, as my friend and colleague Dr. Richard Southall said to me yesterday, the college sport paradigm continues to exert a powerful hold over judges. He’s been telling me this for years, even as the seemingly inescapable contradictions in the collegiate model become evermore apparent. All of which is to say that one underestimates the paradigm’s continuing sway at one’s peril.

Interesting note: Judge Jay Bybee, who wrote the opinion for the majority, was the White House Counsel for President George W. Bush who wrote the legal memo authorizing torture (euphemistically called “enhanced interrogation techniques) at Guantanamo and Abu Ghraib. For a particularly scathing attack on Bybee’s role in that shameful era, see Glenn Greenwald here).

Update: Joe Nocera, in the New York Times, calls this a “hollow win” for O’Bannon. But this will just be a hiccup if the full circuit court reverses. The Chief Justice of that court, Sidney Thomas, wrote the dissenting opinion in last week’s 2-1 ruling and said, “The N.C.A.A. insists that this multibillion dollar industry would be lost if the teenagers and young adults who play for these college teams earn one dollar above their cost of school attendance,” he wrote. “That is a difficult argument to swallow.”

I noted over the weekend that we’re in an interesting new phase of the fight:

A new book, Billion-Dollar Ball, by the journalist Gilbert Gaul, details the lavishness and excess that is big time college football. Sometimes, legal change doesn’t come until a sort of critical cultural mass has been reached. I remain confident that we’re getting ever close to that point.

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