O'bannon V. National Collegiate Athletic Association</Em>
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Washington and Lee Law Review Volume 71 | Issue 4 Article 6 Fall 9-1-2014 The District Court Decision in O’Bannon v. National Collegiate Athletic Association: A Small Step Forward for College-Athlete Rights, and a Gateway for Far Grander Change Marc Edelman Baruch College, City University of New York Follow this and additional works at: https://scholarlycommons.law.wlu.edu/wlulr Part of the Law Commons Recommended Citation Marc Edelman, The District Court Decision in O’Bannon v. National Collegiate Athletic Association: A Small Step Forward for College-Athlete Rights, and a Gateway for Far Grander Change, 71 Wash. & Lee L. Rev. 2319 (2014), https://scholarlycommons.law.wlu.edu/wlulr/vol71/iss4/6 This Article is brought to you for free and open access by the Washington and Lee Law Review at Washington & Lee University School of Law Scholarly Commons. It has been accepted for inclusion in Washington and Lee Law Review by an authorized editor of Washington & Lee University School of Law Scholarly Commons. For more information, please contact [email protected]. The District Court Decision in O’Bannon v. National Collegiate Athletic Association: A Small Step Forward for College-Athlete Rights, and a Gateway for Far Grander Change Marc Edelman Table of Contents I. Introduction ................................................................... 2320 II. A Trial More Than Five Years in the Making: The Procedural History in O’Bannon v. NCAA ............. 2322 A. Pleadings and Early Decisions ................................ 2322 B. Summary Judgment Motions .................................. 2325 III. The District Court’s Ruling at Trial .............................. 2330 A. Finding of Facts and Conclusions of Law ............... 2330 1. Relevant Markets and Anticompetitive Effects of NCAA Rules ....................................... 2331 2. Alleged Procompetitive Benefits of the NCAA Rules ....................................................... 2332 3. Allegedly Less Restrictive Alternatives ............ 2335 B. Permanent Injunction ............................................. 2337 Professor Marc Edelman ([email protected]) is an Associate Professor of Law at the Zicklin School of Business, Baruch College, City University of New York. He is also a summer adjunct professor at Fordham University School of Law and a columnist for Forbes Sports Money. Professor Edelman earned his B.S. in economics from the Wharton School (University of Pennsylvania) and both his J.D. and M.A. from the University of Michigan. He has published more than twenty-five law review articles on the intersection of sports and the law, and he has lectured nationally on sports law topics. Professor Edelman wishes to thank the participants at the Marquette University Sports Law Works in Progress Conference for their comments on an earlier draft of this Article. He also wishes to thank his wife, Rachel Leeds Edelman, for reviewing an earlier draft of this Article. 2319 2320 71 WASH. & LEE L. REV. 2319 (2014) IV. Why the District Court Was Correct to Find the NCAA’s Restraints on Revenue Sharing to Violate Section 1 of the Sherman Act ........................................ 2338 V. Why the District Court’s Permanent Injunction in O’Bannon Was Insufficient, and Does Not Fully Ameliorate the NCAA’s Restraints ...................... 2343 VI. Implications of the O’Bannon Decision and Logical Next Steps ...................................................................... 2347 A. Grounds for an NCAA Appeal ................................. 2348 B. Grounds for a Plaintiffs’ Appeal .............................. 2351 C. Subject Matter for Subsequent Lawsuits Against the NCAA ................................................................. 2352 D. Impact of the O’Bannon Ruling on College- Athlete Unionizing and Title IX Compliance .......... 2355 E. Potential NCAA Advocacy Before Congress for a Statutory Antitrust Exemption ...................... 2359 VII. Conclusion ...................................................................... 2363 I. Introduction On August 8, 2014, the U.S. District Court for the Northern District of California held in O’Bannon v. National Collegiate Athletic Association1 that the NCAA rules that prevent men’s college basketball and football players from controlling the commercial rights to their names and likenesses “unreasonably restrain trade in the market for certain educational and athletic opportunities offered by NCAA Division I schools.”2 The court then issued an injunction preventing the NCAA from restraining its members from compensating their men’s basketball and football players up to $5,000 per year for the use of their likenesses.3 The court further enjoined the NCAA from prohibiting monetary awards to college athletes in the amounts 1. Findings of Fact and Conclusions of Law, O’Bannon v. NCAA, No. C-09- 3329-CW, 2014 WL 3899815 (N.D. Cal. Aug. 8, 2014). 2. Id. at *2. 3. See Permanent Injunction at 1, O’Bannon v. NCAA, No. C-09-3329-CW (N.D. Cal. Aug. 8, 2014) (enjoining the NCAA from prohibiting player compensation). DISTRICT COURT DECISION IN O’BANNON 2321 up to “the full cost of attending the respective NCAA member school.”4 The O’Bannon decision is an important step forward for both college-athletes’ rights and sports law jurisprudence because it recognizes that NCAA rules limiting college-athlete pay may violate section 1 of the Sherman Antitrust Act.5 Nevertheless, the ruling’s impact is tempered by the iconoclastic nature of the court’s injunction, which limits the immediate potential for college-athlete compensation beyond a nominal amount.6 At the same time, the ruling seems to ignore the broader implications of NCAA restraints on third-party markets for licensing celebrities’ likenesses for endorsements—restraints that federal courts eventually must overturn.7 This Article explains why the district court decision in O’Bannon v. National Collegiate Athletic Association was correct to hold that the NCAA unreasonably restrained trade by preventing athletes from sharing revenues derived from the use of their names and likenesses, but too narrow in its injunction that only mandated the NCAA to allow compensation through a deferred trust in amounts up to $5,000 per year. Part II of this article provides the procedural history of O’Bannon v. National Collegiate Athletic Association—a case that many believed would fundamentally change the nature of college-athletes’ rights in America.8 Part III explains the findings of fact and conclusions of law in the O’Bannon bench trial, and discusses the court’s 4. Id. at 2; see also Findings of Fact and Conclusions of Law, supra note 1, at 20 (explaining that the “gap between the full grant-in-aid,” which represents the full cost of attending a respective school “and the cost of attendance varies from school to school but is typically a few thousand dollars”). 5. See Findings of Fact and Conclusions of Law, supra note 1, at 1–2 (finding that NCAA rules barring student-athletes from receiving revenue earned from the use of their “names, images, and likenesses in videogames, live game telecasts, and other footage . unreasonably restrain trade in the market for certain educational and athletic opportunities offered by NCAA Division I schools”); see also Sherman Act, 15 U.S.C. § 1 (2012) (“Every contract, combination . or conspiracy, in restraint of trade or commerce . is declared to be illegal.”). 6. See infra notes 81–88 and accompanying text (discussing the permanent injunction in greater detail). 7. See infra notes 109–28 and accompanying text (discussing why the permanent injunction does not fully ameliorate NCAA restraints). 8. Infra Part II. 2322 71 WASH. & LEE L. REV. 2319 (2014) permanent injunction issued against the NCAA.9 Part IV explains why the district court in O’Bannon was legally correct to find the NCAA’s restraints on sharing revenues with college athletes violated section 1 of the Sherman Act.10 Part V explains why the permanent injunction issued by the court in O’Bannon does not fully ameliorate the NCAA’s restraints.11 Finally, Part VI discusses the logical next steps that could follow the district court’s decision in O’Bannon, including the possibility of an appeal by both parties, follow-up lawsuits seeking to further dismantle the NCAA’s amateurism rules, player unionization efforts, Title IX compliance issues, and a petition by the NCAA to Congress for a broad-based antitrust exemption to fully preserve its longstanding restraints on college-athlete pay.12 II. A Trial More Than Five Years in the Making: The Procedural History in O’Bannon v. NCAA A. Pleadings and Early Decisions The recent bench trial in O’Bannon v. National Collegiate Athletic Association represents the culmination of more than five years of litigation by elite men’s basketball and football players against the NCAA.13 This litigation began on June 21, 2009 when twelve former NCAA football and men’s basketball players, led by 9. Infra Part III. 10. Infra Part IV. 11. Infra Part V. 12. Infra Part VI. 13. See infra notes 14–48 and accompanying text (summarizing the procedural history). For further discussion of the case history in O’Bannon v. National Collegiate Athletic Association, see Marc Edelman, The Future of Amateurism After Antitrust Scrutiny: Why a Win for the Plaintiffs in the NCAA Student-Athlete Name & Licensing Litigation Will Not Lead to the Demise of College Sports, 92 OR. L. REV. 1019, 1033–36 (2014) (discussing the O’Bannon case history more thoroughly); Daniel E. Lazaroff, An Antitrust