Dec 10, 2015

Ninth Circuit punts on college athletes’ rights

The Ninth Circuit Court of Appeals has recently both expanded and limited collegiate athletes’ rights under federal antitrust laws. In the 2014 case of O’Bannon v. NCAA, the District Court for the District of Columbia held that NCAA rules regarding compensation for student athletes unnecessarily restrained trade and established that there were less restrictive means of preserving student athletes’ amateur status. For that District Court, preserving the concept of “amateurism” was not enough; it exempted the NCAA from federal antitrust laws finding there were potentially valid means of compensation for student athletes that would not affect the integrity of the “amateur” status. Specifically, the District Court in O’Bannon held that (i) universities may grant student athletes the full cost of attendance and (ii) universities may allow student athletes to receive as much as $5,000 per year for use of their name and likeness in various external markets, such as sports video games.

The O’Bannon decision was appealed to the Ninth Circuit which only partially agreed with that finding. The Ninth Circuit upheld the determination that universities may grant student athletes the full cost of attendance but reversed the holding that universities may allow student athletes to receive up to $5,000 per year for use of their name and likeness. In reversing the latter, the Court found that “in finding that paying students cash compensation would promote amateurism as effectively as not paying them, the District Court ignored that not paying student athletes is precisely what makes them amateurs.” So, the Ninth Circuit determined that there would be no pay to college athletes outside of scholarships, which was previously permitted.

This case follows a generally cautious approach to purported labor rights of student athletes. Earlier this year, the National Labor Relations Board (NLRB) unanimously rejected a request by the Northwestern University football team to unionize. Essentially punting, the NLRB voted not to assert jurisdiction in the matter. In what appears to be mostly a determination justified by stability and consistency, the NLRB held that its consideration of the case would not promote labor stability due to the nature and structure of the NCAA Division I football subdivision. The NLRB also pointed out that 108 of the 125 teams in that subdivision are state-run universities and thus are not under the jurisdiction of the NLRB. Despite all of this, the NLRB stated that its decision on this issue does not “preclude reconsideration of the issue further.”

Considering the NLRB’s decision on the proposed unionization of the Northwestern Football team in light of the Ninth Circuit’s decision in O’Bannon, it is clear that courts and administrative bodies are carefully navigating the social and legal complexities of this issue. On one hand, the Ninth Circuit limited the District Court’s expansive interpretation of antitrust laws while still opening some opportunities for student athletes. And while the NLRB chose not to make any official determination of the labor rights of student athletes, it left open the question to be addressed later. As we gear up for bowl season and revenues to universities start to flow in, student athletes will almost certainly continue to press for their labor rights. Whether the courts will acknowledge those rights remains to be seen. Stay tuned, sports fans!

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.

Client alert authored by: Evan D. Blewett