DISAPPROVAL OF QUICK-LOOK APPROVAL: ANTITRUST AFTER NCAA v. ALSTON.

• Author: Leslie, Christopher R.

ABSTRACT

In its most recent antitrust opinion, National Collegiate Athletic Association v. Alston (2021), the Supreme Court condemned the NCAA's policy against compensating student athletes as a violation of the Sherman Act. Although perceived as a pro-plaintiff antitrust decision, the Court's opinion is anything but. While granting a victory to the plaintiffs at hand, the Alston opinion surreptitiously created a powerful new weapon for future antitrust defendants to evade liability and even trials: "quick-look approval. "

Alston birthed quick-look approval as the evil doppelganger of the quick-look rule, a mode of antitrust analysis that the Supreme Court created over forty years ago to make it easier to condemn obviously anticompetitive agreements. Without acknowledging the rationale for antitrust law's quick-look rule, the Alston Court turned the rule on its head and asserted that the quick-look approach is also a method for quickly exonerating challenged restraints of trade.

The Alston opinion inappropriately and unnecessarily upends decades of antitrust jurisprudence, while pretending to do nothing of the sort. This Article explains the dangers of quick-look approval, especially in light of the abundance of other pro-defendant tools that courts have created and misapplied against antitrust plaintiffs. Unfortunately, federal judges have routinely failed to appreciate the anticompetitive effects of challenged agreements, and this problem will be exacerbated if quick-look approval gains acceptance. This Article calls for coordinated rejection of quick-look approval before it takes root and inflicts great damage on America's antitrust regime.

TABLE OF CONTENTS I. QUICK-LOOK CONDEMNATION OE ANTICOMPETITIVE RESTRAINTS A. The Birth of the Quick-Look Rule B. Quick Look as a Mode of Condemnation C. Quick Look as Presumption and Burden Shifting II. ALSTON'S CONVERSION OF CONDEMNATION INTO APPROVAL III. THE DANGERS AHEAD: REASONS TO DISAPPROVE OF QUICK-LOOK APPROVAL A. The Competing Quick-Look Approaches Are Divergent B. Quick-Look Approval is Unnecessary to Reduce False Positives C. The Risks Posed by Quick-Look Approval 1. Intellectual Property' Settlements 2. Deference to Proffered Justifications 3. False Indicia of Harmlessness 4. Long-Term Effects 5. Non-Obvious Anticompetitive Effects D. Summary IV. QUICK-LOOK APPROVAL BY A DIFFERENT NAME? A. Antitrust Deference Toward the NCAA B. Safe Harbors and Pro-Defendant Factors V. RESISTANCE IS FERTILE: RESPONDING TO ALSTON CONCLUSION INTRODUCTION

A short-term loss can presage long-term victories. In some professional sports leagues, the team with the worst win-loss record in a season receives the first draft pick for the following season. This reward for losing can generate a race to the bottom. In 2011, when the Indianapolis Colts were at risk of having the worst record in the NFL, many Colts fans urged their team to lose on purpose to secure the first draft pick, which could be used to select Andrew Luck, a quarterback phenom at Stanford University. (1) Colts fans launched a "Suck for Luck" campaign, encouraging the Colts to lose their remaining games of the season. (2) Although perhaps not in deference to these fans, the Colts lost their final games, received the first draft pick, and selected Luck, who led the team to two consecutive division titles and a championship game. (3) The Colts' losses laid the groundwork for long-term winning.

Shrewd attorneys are also adept at converting short-term losses into longer-term victories. Social movement leaders use litigation losses to frame their organizational identity, to rally their current constituents, and to build their membership rolls. (4) Civil rights attorneys can translate early judicial losses into calls for legislative action or into revised litigation strategies. (5) In retrospect, some litigation losses are actually victories in disguise. And, conversely, for the apparently winning litigants, their victories are pyrrhic.

This phenomenon of winning by losing observed in both sports and law may describe the Supreme Court's most recent foray into the intersection of sports and antitrust law. On its face, the Supreme Court's 2021 decision in National Collegiate Athletic Association v. Alston (6) ("Alston")--which affirmed the Ninth Circuit's invalidation of the NCAA's rules against compensating student athletes--seems like a pro-plaintiff antitrust opinion. It is not. While granting a victory to the plaintiffs at hand, the Alston opinion surreptitiously created a powerful new weapon for future antitrust defendants (not just athletic leagues) to evade liability and even trials: quick-look approval. Alston birthed quick-look approval as the evil doppelganger of quick-look condemnation, a mode of antitrust analysis that the Supreme Court created over forty years ago to make it easier to condemn obviously anticompetitive agreements. Without acknowledging the rationale for antitrust's quick-look rule for condemning anticompetitive restraints, the Alston Court turned the rule on its head and asserted that the quick-look approach is also a method for quickly exonerating challenged restraints of trade.

In Alston, a group of current and former college athletes sued the NCAA for violating antitrust laws by strictly limiting the amount and forms of compensation available to student-athletes. (7) After winning a bench trial, the plaintiffs secured an injunction against those NCAA rules that restricted the education-related benefits that member schools could give student-athletes but not against corollary rules limiting athletic scholarships and other compensation pegged to athletic performance. (8) Both parties appealed, the NCAA as to liability and the athletes as to remedy. (9) And the Ninth Circuit affirmed liability without altering the remedy. (10) The Supreme Court, in turn, affirmed, but not without creating some pro-defendant mischief along the way. (11)

Like a basketball team dominating March Madness, the athletes won every round of their antitrust litigation on the issue of liability. (12) But this string of victories does not bode well for future antitrust plaintiffs. The athletes' triumph at the Supreme Court has little meaning for future antitrust plaintiffs writ large because the Alston holding is narrow and exceptionally fact specific. And Alston's fact pattern is unique and non-analogous to the more conventional antitrust cases that plaintiffs are likely to bring. The most significant impact of the Alston opinion will be its sly maneuver to create a new mode of pro-defendant antitrust analysis--its spin on the quick-look rule.

This Article presents the origins and purposes of antitrust law's quick-look rule. It then explores how Alston inappropriately and unnecessarily upends decades of antitrust jurisprudence, while pretending to do nothing of the sort. The Article then explains the dangers of quick-look approval, especially in light of the abundance of other pro-defendant tools that courts have created and misapplied against antitrust plaintiffs. Federal judges routinely fail to appreciate the anticompetitive effects of challenged agreements, a problem that will be exacerbated if quick-look approval gains acceptance. Finally, this Article calls for coordinated rejection of quick-look approval before it takes root and inflicts great damage on America's antitrust regime.

1. QUICK-LOOK CONDEMNATION OF ANTICOMPETITIVE RESTRAINTS

   Although Section One of the Sherman Act condemns "[e]very contract, combination ... or conspiracy, in restraint of trade," (13) the Supreme Court in its 1911 Standard Oil Co. v. United States opinion held that Section One condemns only those restraints that unreasonably restrain trade. (14) Antitrust liability thus turns on whether the plaintiff can prove that the defendants' agreement constitutes an unreasonable restraint on trade. For three quarters of a century, courts applied one of two modes of analysis to determine whether an agreement constituted an unreasonable restraint of trade in violation of Section One of the Sherman Act: the per se rule or the rule of reason. (15)

   Under the per se rule, certain restraints are deemed unreasonably anticompetitive as a matter of law. The Supreme Court has proscribed as per se illegal "certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use." (16) Examples of per se illegal restraints include horizontal agreements (17) to fix prices, to reduce output, to divide markets, or to allocate customers. (18) When the per se rule applies, the plaintiff does not have to prove the agreement had, or is likely to have, anticompetitive effects because such effects are presumed. (19) Thus, the plaintiff is spared the burden of defining the relevant market, and the defendants cannot argue that their low collective market share negates antitrust liability. (20) Finally, the defendants cannot argue that they had a procompetitive justification for their agreement. (21) The agreement is illegal, full stop.

   For decades, courts subjected all agreements that did not fall in a per se category to rule-of-reason analysis, the default mode of antitrust analysis. (22) Under the rule of reason, the plaintiff must prove that the challenged restraint unreasonably injures competition. (23) This generally requires the plaintiffs to define the relevant market, to show the defendants' market power, (24) and to demonstrate actual or likely anticompetitive effects. (25) The latter inquiry means that "the factfinder weighs all of the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition." (26) The Supreme Court has instructed courts to take "into...