Supreme Court Sides with Student Athletes in NCAA Pay Case

The NCAA can't enforce certain rules on student-athlete pay that limit the education-related benefits players can receive, according to a recent U.S. Supreme Court decision. Such benefits include computers, equipment, postgraduate scholarships and paid internships.

The NCAA challenged a decision holding that the association and other athletic conferences can't cap certain education-related compensation for the Division I football and basketball players who filed the lawsuit. The players argued that the limitations violate federal antitrust laws that encourage competition.

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 U.S. Circuit Court of Appeals affirmed the decision, and on June 21, the Supreme Court upheld the ruling in a unanimous opinion.

"Schools across the country sought to leverage sports to bring in revenue, attract attention, boost enrollment and raise money from alumni," wrote Justice Neil Gorsuch for the court.

Gorsuch noted that some people will think the lower court's ruling did not go far enough. "By permitting colleges and universities to offer enhanced education-related benefits, its decision may encourage scholastic achievement and allow student-athletes a measure of compensation more consistent with the value they bring to their schools. Still, some will see this as a poor substitute for fuller relief."

Others may think the lower court went too far "by undervaluing the social benefits associated with amateur athletics," according to the high court.

The justices said they agree with the following statement from the 9th Circuit: "The national debate about amateurism in college sports is important. But our task as appellate judges is not to resolve it. Nor could we. Our task is simply to review the district court judgment through the appropriate lens of antitrust law."

Gorsuch said, "That review persuades us the district court acted within the law's bounds."

'Amateur' Status

The 9th Circuit has ruled in the past that college football players don't have to be paid minimum wage and overtime premiums. However, the current case, NCAA v. Alston, involves antitrust laws and education-related benefits. Although the district court held that NCAA limits on education-related benefits unreasonably restrain trade, the court rejected the student athletes' claims related to other compensation restrictions.

The appeals court 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. 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."

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 in April. "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.

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

In response to the Supreme Court's ruling, Steve Berman, an attorney with Hagens Berman in Seattle, who represented the athletes, said, "It is our hope that this victory in the battle for college athletes' rights will carry on a wave of justice uplifting further aspects of athlete compensation. This is the fair treatment college athletes deserve."

The NCAA said that while the decision preserves the lower court ruling, "it also reaffirms the NCAA's authority to adopt reasonable rules and repeatedly notes that the NCAA remains free to articulate what are and are not truly educational benefits, consistent with the NCAA's mission to support student-athletes."

Additional Pay Considerations

In a concurring opinion, Justice Brett Kavanaugh noted that the case involves "only a narrow subset of the NCAA's compensation rules—namely, the rules restricting the education-related benefits that student athletes may receive, such as post-eligibility scholarships at graduate or vocational schools."

He said the rest of the NCAA's compensation rules are not at issue in the case and remain on the books. "Those remaining compensation rules generally restrict student athletes from receiving compensation or benefits from their colleges for playing sports. And those rules have also historically restricted student athletes from receiving money from endorsement deals and the like."

Kavanaugh said serious questions remain as to whether the NCAA's remaining pay rules pass muster.

Officials at the state level also are addressing student-athlete pay. For example, some state lawmakers have been asking the NCAA to allow student athletes to receive direct compensation for the use of their names, images and likenesses. California Gov. Gavin Newsom signed a bill in 2019 permitting college athletes in the state to be paid for endorsements and sponsorships. Other states have passed or considered similar legislation, and federal lawmakers have also shown interest in the issue.

In response, the NCAA said it will allow student athletes to receive some endorsement money beginning in the 2021-22 school year. "Several state laws covering name, image and likeness go into effect on July 1, 2021," the NCAA observed. "Committees across all three divisions of governance are working to provide a solution at that time."

NCAA President Mark Emmert said the association remains "committed to working with Congress to chart a path forward, which is a point the Supreme Court expressly stated in its ruling."