NCAA has its day in Supreme Court Wednesday after 12 years, millions of dollars

Nearly 12 years of non-stop antitrust challenges to the NCAA’s athlete-compensation rules will reach a momentous occasion Wednesday when the Supreme Court hears arguments in a case that is narrowly about the association’s ability to limit benefits that are related to education, but broadly about its ability to limit benefits at all.

However, it is far from certain that the justices will have the final say.

As the case has progressed, six states have passed laws to enhance college athletes’ ability to make money from their name, image and likeness (NIL), beginning as early as this year. In some instances, they would do so in ways that conflict not only with current NCAA rules, but also in ways that could conflict with more liberalized NIL rules the association has proposed.

The state actions have prompted Congressional interest. Two bills now pending in the House and/or Senate also would help athletes capitalize on their NIL. But these measures also could provide additional benefits for athletes and — especially important to the NCAA — they would set some of the terms of the association’s future exposure to antitrust cases like the one before the justices on Wednesday.

“This is just part of a complicated, multipronged challenge to the NCAA's traditional amateurism model, and all of the pieces are interrelated,” Gabe Feldman, director of the Tulane Sports Law Program and Tulane University's associate provost for NCAA compliance, said.

This court challenge has cost the NCAA and its 11 conference co-defendants a combined total of well over $250 million in settlements to athletes and legal fees — and that’s without counting at least $34 million in plaintiffs’ legal fees that the defendants will owe if the lower-court rulings stand. Some of the NCAA’s costs have been covered by insurance, butan association lawsuit against a group of insurers over other coverage ended earlier this month — after more than five years — with a loss in the Indiana Supreme Court.   

Giving Wednesday’s arguments some additional intrigue is the legal matchup. The NCAA and its co-defendants will be represented by Seth Waxman, a former U.S. solicitor general who, according to his law firm’s website, has argued more than 80 cases before the justices.

The plaintiffs' primary advocate will be Jeff Kessler, a renown sports lawyer and litigator who has taken on every major American pro sports league and handled numerous appellate cases, but never has argued a case before the Supreme Court. Because the Justice Department has decided to side with the plaintiffs, Acting U.S. Solicitor General Elizabeth Prelogar also will be arguing on their behalf.

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The case began in March 2014 on behalf of former West Virginia football player Shawne Alston. It built on the success of a case that began in 2009 on behalf of former UCLA basketball player Ed O’Bannon. The Supreme Court was asked to hear the O’Bannon case, but refused. Between court rulings and NCAA rules votes, the outcome was the NCAA’s basic athletic scholarship being changed from one that covered tuition, mandatory fees, room, board and books to one that covers the actual cost of attending college. The cost-of-attendance-based scholarship includes money for a variety out-of-pocket costs such as transportation to and from school.

Because of that change, the Alston case also originally included a claim for damages based on the difference in values of the old type of scholarship and the new one. The NCAA settled that portion of the case in 2017 for $208.7 million that eventually was distributed to former and then-current athletes.

The remainder of the case went to trial before U.S. District Court Judge Claudia Wilken, who also handled the O’Bannon trial. And she again found the NCAA in violation of antitrust law.

She left intact the NCAA’s ability to set limits on compensation not connected to education. But under an injunction that was unanimously upheld by a three-judge panel of the 9th U.S. Circuit Court of Appeals, athletes playing Division I men’s or women’s basketball or Bowl Subdivision football would be able to receive a variety of new items. Among them are cash payments for various academic achievements, scholarships to complete undergraduate or graduate degrees at any school and paid internships after they have completed their collegiate-sports eligibility. 

Schools would not be required to provide these types of benefits, and conferences would be allowed to impose prohibitions on certain benefits if their member schools so chose. However, conferences could not act in concert. So, if a conference chose to limit or prevent certain benefits, it would risk giving a competitive advantage to others that did not.

The NCAA’s argument against the lower-court rulings is grounded in the Supreme Court’s decision in NCAA v. Board of Regents of the University of Oklahoma, a case relating to control of football television rights that the high court decided in 1984. The NCAA lost that case, but, as it has in many other legal filings over the years, it now points to language from that ruling that says NCAA rules prohibiting athletes from being paid to play are essential if its “product” — amateur college sports — “is to be available at all.”

In the present instance, the NCAA contends that the new benefits athletes would be allowed to receive under the lower-court rulings — especially the payments for academic achievement — are "pay-for-play, pure and simple." 

The NCAA argues that decision in Board of Regents requires that it be given “ample latitude” to “decide what rules preserve and promote amateurism, while accounting for the ever-evolving circumstances in which schools and student-athletes participate in intercollegiate athletics.” 

In other words, the NCAA says that even though its compensation rules are anticompetitive and ever-changing, they are necessary for the preservation of a version of sports that is different from the pros and, thus, those rules are allowed under antitrust law. The NCAA even takes this a step further. It argues that it’s so clear that the public benefits from having a choice between pro and amateur sports — as the NCAA defines amateur sports — that challenges to its compensation rules should be thrown out without trials like the ones Wilken held.

Given the role that the O’Bannon case played in Alston case and that the Alston case has played to this point in yet another antitrust case against the NCAA that is pending before Wilken, the association badly wants the litigation cycle to end.    

“The most important thing in the case for us, obviously, is for the Supreme Court to articulate the correct level of (legal) standard that our rules are going to be subject to, and get us out of a world in which every time any rule is changed … yet another lawsuit is filed … subjecting the NCAA to years of incredibly expensive litigation,” Waxman said during a presentation that was part of the NCAA’s virtual convention in January.

Of course, the plaintiffs argue that it is quite plain how the antitrust laws should work when it comes to the NCAA — unless Congress says otherwise.

“FBS football, Division I basketball are billion-dollar businesses — and there is absolutely no reason why they should be immune from the same antitrust rules that apply to everyone because of the premise that competition is always in the public interest,” Kessler told USA TODAY Sports.

“What we argued is that if the NCAA wants an exemption from the antitrust laws, the only place they can get it is Congress. But that doesn't mean we think they should ask for one because we don't think one's appropriate.”

And around it goes. States have spoken. A Supreme Court ruling that reverses the lower-court decisions could allow the NCAA to knock out state laws. A federal law would pre-empt state laws and potentially undo a Supreme Court decision. But if Congress and the President can’t agree on a law, and the Supreme Court issues a narrow ruling, state measures could go into effect. And the NCAA might sue to prevent that.

“This,” said Feldman, “is not the last step in the battle.”