O’Bannon v. NCAA

Plaintiff O'Bannon filed suit against the NCAA and CLC, alleging that the NCAA’s amateurism rules, insofar as they prevented student-athletes from being compensated for the use of their names, images, and likenesses (NILs), were an illegal restraint of trade under Section 1 of the Sherman Act, 15 U.S.C. 1. Plaintiff Keller filed suit against the NCAA, CLC, and EA, alleging that EA had impermissibly used student-athletes’ NILs in its video games and that the NCAA and CLC had wrongfully turned a blind eye to EA’s misappropriation of these NILs. Both cases were consolidated. The district court entered judgment for plaintiffs, concluding that the NCAA’s rules prohibiting student-athletes from receiving compensation for their NILs violate Section 1 of the Sherman Act. The court concluded that it was not precluded from reaching the merits of the appeal and found none of plaintiffs' claims persuasive. The court reaffirmed that NCAA regulations are subject to antitrust scrutiny and must be analyzed under the Rule of Reason; when those regulations truly serve procompetitive purposes, courts should not hesitate to uphold them; but the NCAA is not above the antitrust laws, and courts cannot and must not shy away from requiring the NCAA to play by the Sherman Act’s rules. In this case, the NCAA’s rules have been more restrictive than necessary to maintain its tradition of amateurism in support of the college sports market. The court concluded that the Rule of Reason requires that the NCAA permit its schools to provide up to the cost of attendance to their student athletes. The court concluded that it does not require more. Accordingly, the court vacated the district court’s judgment and permanent injunction insofar as they require the NCAA to allow its member schools to pay student-athletes up to $5,000 per year in deferred compensation. The court affirmed otherwise. View "O'Bannon v. NCAA" on Justia Law