Justices Challenge ‘Amateur’ Defense in Student-Athlete Pay Suit

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Basketball on Wooden Court Floor

This year's March Madness college basketball tournament might be over, but the debate about student-athlete pay continues. In recent oral arguments, the U.S. Supreme Court seemed likely to side with student athletes in a challenge to the NCAA's rules limiting the education-related benefits players can receive. Such benefits include computers, equipment, postgraduate scholarships and paid internships.

The 9th U.S. Circuit Court of Appeals ruled that athletic conferences can't cap education-related compensation for the Division I football and basketball players who filed the class action (though the court did not nix limits on other types of compensation). The NCAA appealed the ruling, and the Supreme Court heard oral arguments on March 31.

The justices primarily questioned the NCAA's focus on preserving the amateur status of college sports as a justification for limits on athlete compensation. For example, Justice Samuel Alito Jr. noted that advocates for student-athlete pay "paint a pretty stark picture" by arguing that "colleges with powerhouse football and basketball programs [exploit] the students that they recruit."

Alito observed that such programs "bring in billions of dollars" while college athletes "face training requirements that leave little time or energy for study, constant pressure to put sports above study, pressure to drop out of hard majors and hard classes, [and] really shockingly low graduation rates." He added that "only a tiny percentage ever go on to make any money in professional sports."

Justice Stephen Breyer, however, raised concerns "about judges getting into the business of deciding how amateur sports should be run." He said this is a "tough case" because it's not about an ordinary product. "This is an effort to bring into the world something that's brought joy … to millions and millions of people, and it's only partly economic."

Background

The 9th Circuit has ruled in the past that college football players don't have to be paid minimum wage and overtime premiums. The current case before the Supreme Court, however, involves antitrust laws and education-related benefits. A district court held that NCAA limits on education-related benefits unreasonably restrain trade, but the court did not extend the ruling to other compensation restrictions.

The 9th Circuit upheld the ruling. "In our view, the district court struck the right balance in crafting a remedy that both prevents anticompetitive harm to student athletes while serving the procompetitive purpose of preserving the popularity of college sports," according to the unanimous ruling. "Such benefits are easily distinguishable from professional salaries, as they are connected to education, their value is inherently limited to their actual costs and they can be provided in kind, not in cash."

Distinguishing from Professional Sports

In its petition to the Supreme Court, the NCAA argued that the 9th Circuit's ruling "will fundamentally transform the century-old institution of NCAA sports, blurring the traditional line between college and professional athletes."

Seth Waxman, an attorney with WilmerHale in Washington, D.C., represented the NCAA at oral argument. "For more than a hundred years, the distinct character of college sports has been that it's played by students who are amateurs, which is to say that they are not paid for their play," he told the justices. He said maintaining the distinction promotes competition because it differentiates the NCAA's product from professional sports.

Justice Clarence Thomas said, "Well, it just strikes me as odd that the coaches' salaries have ballooned, and they're in the amateur ranks, as are the players."

Waxman noted that coaches are not student athletes and the 10th U.S. Circuit Court of Appeals struck down a prior NCAA limitation on coaches' salaries.

Justice Elena Kagan said competing schools have "undisputed market power" and can "use that power to fix athletic salaries at extremely low levels, far lower than what the market would set if it were allowed to operate.

"So why shouldn't we think of it in just that kind of way—that these are competitors, all getting together with total market power, fixing prices?"

Waxman said the structure was created 116 years ago "in order to restore integrity and the social value of college athletics."

But Kagan told Waxman he could "only ride on the history … for so long. I mean, a great deal has changed since a hundred years ago in the way that student athletes are treated."

Schools can pay up to $50,000 for a $10 million insurance policy to protect the future earnings of student athletes. "Now that sounds very much like pay for play," said Chief Justice John Roberts Jr.

Waxman responded that the insurance coverage protects against injury, just like disability insurance and extended medical insurance.

Justifying the Rules

In support of the class action, the student athletes argued that the athletic conferences are actually seeking antitrust immunity. The 9th Circuit's instructions "apply only to NCAA restrictions on education-related benefits that schools may offer Division I basketball and [Football Bowl Subdivision] football players—benefits such as computers, science equipment, musical instruments, postgraduate scholarships, tutoring, study abroad, academic awards and internships," the athletes said.

Jeffrey Kessler, an attorney with Winston & Strawn in New York City, argued on behalf of the student athletes that the NCAA raises "the latest iteration of the repeatedly debunked claims that competition will destroy consumer demand for college sports."

Roberts noted that the NCAA has a number of limitations designed to ensure the amateur nature of its athletic competitions. But it becomes "a game of Jenga" as those safeguards are challenged and removed. "You've got this nice solid block that protects the sort of product the schools want to provide, and you pull out one log and then another and everything's fine, then another and another and all of a sudden the whole [thing comes] crashing down."

Kessler doesn't think that's what the lower courts did in this case. Rather, he said, they found that the NCAA could not justify all of its rules under federal antitrust law.

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