Why and How the Supreme Court Should Have Decided O’Bannon v. NCAA

• Date: 01 March 2017
• DOI: 10.1177/0003603X17691383
• Published date: 01 March 2017

Article

Why and How the Supreme

Court Should Have Decided

O’Bannon v. NCAA

Matthew J. Mitten*

Abstract

Despite requests by both parties, the U.S. Supreme Court refused to grant a writ of certiorari in

O’Bannon v. NCAA, the first federal appellate court decision holding that an N CAA student-ath lete

eligibility rule violates Section 1 of the Sherman Act. The Ninth Circuit ruled that NCAA rules

prohibiting intercollegiate athletes from receiving any revenue from videogames and telecasts

incorporating their names, images, or likenesses unreasonably restrain economic competition

among its member universities in the college education market in which these athletes purchase

higher education services and sell their athletic services, which violates federal antitrust law. Circuit

court rulings conflict regarding whether student-athlete eligibility rules are commercial restraints

subject to the Sherman Act, and lower courts have inconsistently interpreted and applied NCAA v.

Board of Regents of University of Oklahoma, the Supreme Court’s only intercollegiate athletics antitrust

law precedent. The Supreme Court’s refusal to resolve this conflict continues the significant judicial

confusion regarding how antitrust law constrains the NCAA’s governance of intercollegiate ath-

letics, which has evolved into a multi-billion-dollar part of the entertainment industry with millions of

fans and more than 460,000 student-athletes. Itsdecisionnottodoalsocreatesuncertainty

regarding how lower courts will resolve pending antitrust challenges to other NCAA amateurism

rules and input market restraints such as limits on the duration and maximum number of athletic

scholarships per sport as well as transfer rules. This article makes some recommendations for

applying Section 1 to NCAA student-athlete eligibility rules and input market restraints, which will

better promote consumer welfare, protect student-athletes’ economic rights, and permit the

NCAA to promote the unique features of intercollegiate sports without unwarranted judicial

micromanagement.

Keywords

O’Bannon v. NCAA, amateurism rules, input market restraint, rule of reason; less restrictive alternative

*Marquette University Law School, Milwaukee, WI, USA

Corresponding Author:

Matthew J. Mitten, Marquette University Law School, 1215 W. Michigan St. Milwaukee, WI 53233, USA.

Email: matt.mitten@marquette.edu

The Antitrust Bulletin

2017, Vol. 62(1) 62-90

ªThe Author(s) 2017

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DOI: 10.1177/0003603X17691383

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I. Introduction

O’Bannon v. NCAA

1

is the first federal appellate court decision holding that a National Collegiate

Athletic Association (NCAA) student-athlete eligibility rule unreasonably restrains trade in violation

of Section 1 of the Sherman Act. More specifically, the Ninth Circuit ruled that NCAA amateurism

rules prohibiting student-athletes from receiving any revenue from videogames and telecasts incorpor-

ating their names, images, or likenesses unreasonably restrain economic competition among its mem-

ber universities in the college education market in which student-athletes purchase higher education

services and sell their athletic services. Both sides petitioned for a writ of certiorari to review O’Ban-

non, but the Supreme Court denied both petitions despite: (1) conflicting rulings among circuit courts

regarding whether student-athlete eligibility rules are commercial restraints subject to the Sherman

Act; (2) lower courts’ inconsistent interpretation and application of NCAA v. Board of Regents of

University of Oklahoma (Board of Regents),

2

its only intercollegiate athletics antitrust law precedent;

and (3) pending Section 1 litigation challenging other NCAA student-athlete eligibility rules and input

market restraints, which would benefit significantly from its guidance.

In particular, there is sharp disagreement among federal appellate courts regarding whether student-

athlete eligibility rules and their enforcement are valid as a matter of law, or whether they should be

subject to rule of reason scrutiny. There also are differing judicial views concerning whether main-

tenance of NCAA-defined “amateurism” is appropriately characterized as a procompetitive justifica-

tion. In addition, there is no principled and uniform jurisprudence applying Section 1 to NCAA input

market restraints that is consistent with generally accepted and sports industry-specific antitrust law

principles.

In prior scholarship, I advocated that NCAA amateurism eligibility rules prohibiting price compe-

tition for student-athletes’ playing services constitute commercial restraints subject to Section 1 rule of

reason analysis rather than being judicially presumed to be valid.

3

However, I recognize that the

principled application of Section 1 to input market restraints such as NCAA student-athlete eligibility

rules is a very complex, expensive, and time-consuming endeavor and that using antitrust law to create

free market economic competition for intercollegiate athletes’ services may conflict with the achieve-

ment of legitimate social welfare objectives in higher education. Thus, in subsequent scholarship, my

coauthors and I argued in favor of alternative intercollegiate athletics regulatory systems along with

congressional antitrust immunity if certain conditions to achieve these objectives are satisfied, which

continues to be my preferred approach.

4

Given the uncertainty of future congressional adoption of

either proposal, this article asserts that the Supreme Court should have granted certiorari in O’Bannon

and suggests how it should have decided this case, thereby clarifying the appropriate application of

Section 1 to intercollegiate athletics input market restraints as well as providing guidance regarding its

application to professional sports and potentially other joint ventures.

This article begins by briefly comparing the key characteristics of NCAA intercollegiate athletics

(particularly Division I Football Bowl Series [FBS] football and men’s basketball) to major league

professional team sports. It then summarizes judicial application of Section 1 to professional sports

league labor market restraints, which is followed by a corresponding discussion of its application by

1. 802 F.3d 1049 (9th Cir. 2015), cert. denied, 137 S. Ct. 277 (2016).

2. 468 U.S. 85 (1984).

3. Matthew J. Mitten, Applying Antitrust Law to NCAA Regulation of “Big Time” College Athletics: The Need to Shift from

Nostalgic 19th and 20th Century Ideals of Amateurism to the Economic Realities of the 21st Century,11M

ARQ.SPORTS L.

REV. 1 (2000); Matthew J. Mitten, University Price Competition for Elite Students and Athletes: Illusions and Realities,36

SO.TEX.L.REV. 59 (1995) [hereinafter Mitten, University Price Competition].

4. Matthew J. Mitten & Stephen F. Ross, A Regulatory Solution to Better Promote the Educational Values and Economic

Sustainability of Intercollegiate Athletics,92O

RE.L.REV. 837 (2014); Matthew J. Mitten, James L. Musselman, & Bruce W.

Burton, Targeted Reform of Commercialized Intercollegiate Athletics,47SAN DIEGO L. REV. 779 (2010).

Mitten 63