Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Ex-college football, basketball players allege restraint of trade from NCAA cap on athletic financial aid, (Nov 20, 2014)

By Linda O’Brien, J.D., LL.M.

The National Collegiate Athletic Association and 11 major conferences unlawfully engaged in an unreasonable restraint of trade by limiting the value of financial aid given to college student athletes, in violation of the Sherman Act, according to a complaint filed in the federal district court of the Northern District of California (Johnson v. National Collegiate Athletic Association, November 19, 2014).

The National Collegiate Athletic Association (NCAA) is a nonprofit organization of approximately 1,200 educational institutions that organizes athletic programs in many of those institutions in the United States. The Big Ten Conference, Pacific 12 Conference, Big Twelve Conference, Southeastern Conference, Atlantic Coast Conference, American Athletic Conference, Western Athletic Conference, Conference USA, Mid-American Conference, Mountain West Conference, and Sun Belt Conference are multi-sport collegiate athletic conferences and conference members of Division I, one of three divisions of the NCAA. Through the NCAA Constitution and By-Laws, the NCAA adopted regulations governing all aspects of college sports, including athletic (grant-in-aid) scholarships.

Kenyata Johnson, Barry Brunetti, and Dalenta Jameral Stephens were members of the football or basketball teams in one of the eleven conferences and received grants-in-aid since 2010.

On its website, the NCAA reports that it was founded in 1906 to protect students from dangerous and exploitive athletic practices at that time. NCAA rules allow its member schools to provide athletes with minimal compensation to cover tuition and related expenses at an amount set by the NCAA. The grant-in-aid restrictions are strictly enforced by the NCAA with sanctions that include a complete ban on athletic participation. As a result of the NCAA rules, no NCAA member school has provided any college athlete with a grant-in-aid in excess of the limit, the complaint alleges.

According to the complaint, college athletes are essentially working full-time football or basketball jobs while attending school. The defendants have studied and acknowledged that the grant-in-aid scholarships do not cover the full cost of attending school. Athletes are often thousands of dollars short for the typical expenses of a student. While the players scrimp, the universities and coaches do not. Member schools earn millions of dollars in revenue each year from their football and basketball programs and the average salary for a major college football coach is over $2 million per year.

There is intense competition among Division I schools to recruit and retain the athletic services of college football players. Although the schools do not engage in price competition due to NCAA rules restraining them from doing so, the NCAA members compete by marketing in-kind benefits. For instance, schools may hire a coach who is perceived as best able to launch players from the NCAA to the National Football League or may provide top of the line training facilities, designed to attract and retain college athletes, the complaint states.

According to the complaint, despite the nonprofit status of NCAA member schools, the provision of full grants-in-aid to students in exchange for athletic services is commercial in nature. The universities that are members of the NCAA’s Division 1 and generate substantial revenue annually and the NCAA definition of “amateurism” is a façade to cover up its monopolization of the industry and collective price fixing.

The plaintiffs assert claims for unreasonable restraint of trade and group boycott/refusal to deal in violation of Section 1 of the Sherman Act. The action seeks actual and treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 4:14-cv-05126.

Attorneys: L. Timothy Fisher (Bursor & Fisher, P.A.) and Cafferty Clobes Meriwether & Sprengel LLP) for Kenyata Johnson, Barry Brunetti, and Dalenta Jameral Stephens

Companies: National Collegiate Athletic Association

News: Antitrust CaliforniaNews