While the panel was in agreement with the first part of Judge Wilken’s ruling, Chief Judge Sidney R. Thomas disagreed with the other two judges on the merits of Wilken’s acceptance of the deferred-compensation option. Defending the majority opinion of vacating this portion of Wilken’s ruling, Judge Bybee wrote “The difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap,” Bybee added, “Once that line is crossed, we see no basis for returning to a rule of amateurism and no defined stopping point.”
In what could possibly be a prelude to an upcoming Supreme Court case, the 9th Circuit Court of Appeals in San Francisco issued a split three-judge panel ruling in a lengthy high-profile lawsuit against the National Collegiate Athletic Association (NCAA). O’Bannon, the lead plaintiff in the suit filed in 2009, is a former UCLA hoops standout who helped lead his Bruins to the 1995 NCAA championship. He and the case have become a rallying cry for those questioning how an organization which generates millions in annual revenue from college athletics can claim that the participating athletes are “amateurs.” Beyond revenue gained from fan attendance and broadcasts, O’Bannon’s main reason for suing was the NCAA’s requirement that athletes sign a waiver allowing for the use of their images and likeness for products like clothing, video games, and other products licensed by the association. After years of litigation, Northern California District Judge Claudia Wilken ruled in favor of O’Bannon in August 2014 that the current NCAA standards violate aspects of the Sherman Antitrust Act.
Wilken ruled that the NCAA cannot prohibit member institutions from paying athletes the full cost of attendance (which is usually a few thousand dollars more than what traditional “grant-in-aid” athletic scholarships, also accounting for books, travel, and other costs), as well as allow institutions the option of paying athletes up to $5,000 per year in deferred compensation upon leaving the institution for the use of the athletes likeness and image. The appeals panel unanimously concurred that, “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,” adding, “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 Rule of Reason requires that the NCAA permit its schools to provide up to cost of attendance to their student athletes.” Judge Jay Baybee, who wrote the majority opinion, added, “It does not require more.”
While the panel was in agreement with the first part of Judge Wilken’s ruling, Chief Judge Sidney R. Thomas disagreed with the other two judges on the merits of Wilken’s acceptance of the deferred-compensation option. Defending the majority opinion of vacating this portion of Wilken’s ruling, Judge Bybee wrote “The difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap,” Bybee added, “Once that line is crossed, we see no basis for returning to a rule of amateurism and no defined stopping point.” NCAA president Marc Emmert replied to the ruling by saying, “We have not completely reviewed the court’s 78-page decision, but we agree with the court that the injunction ‘allowing students to be paid cash compensation of up to $5,000 per year was erroneous. Since Aug. 1, the NCAA has allowed member schools to provide up to full cost of attendance; however, we disagree that it should be mandated by the courts.” Both the NCAA and O’Bannon’s attorneys have 14 days to appeal the ruling before a full 9th Circuit panel, or 90 days to petition the Supreme Court to hear the case.
It would appear that both parties are aiming for the latter. Seth Waxman, one of the attorneys for the NCAA said, “There are plenty of important issues for the Supreme Court to decide if we decide to petition it.” The NCAA is facing another major class-action lawsuit involving similar subject matter over the coming months, and some legal analysts believe that the lack of further clarification from the court system could open the organization up to significant liability. O’Bannon’s attorney Michael Hausfeld noted as well, that the appeals panel rejected the NCAA’s argument that a 1984 Supreme Court decision regarding revenues from televised college games in which majority opinion-writer John Paul Stevens wrote that “athletes must not be paid,” although not explaining in detail the definition of payment. Hausfeld said, “That’s extremely significant; the appellate court acknowledges that the athletes are being paid — they’re just being paid in the form of economic educational benefits. They’re getting their education paid for.” One of Hausfeld’s advisors, Sonny Vaccaro, believes that the Supreme Court would rule against Bybee’s rationale for vacating the deferred compensation portion, saying “What this ruling did was throw out amateurism. The NCAA just needs to sit down and make a deal now. It’s better than spending millions of dollars to keep dragging this out.”
ESPN – Mark Schlabaugh
New York Times – Marc Tracy and Ben Strauss
Washington Post – Susan Volokh