National Collegiate Athletic Association v. Alston

The National Collegiate Athletic Association (NCAA) oversees rules related to student athletes that play in their athletics programs. These athletic programs are generally seen as revenue generation for the individual school, particularly for the popular college football and basketball programs which are widely televised and marketed. Because the school benefits from the performance of the players, the NCAA had established rules to limit the type of compensation that the school could give to student athletes as to distinguish college athletics from professional sports. This had included disallowing "non-cash education-related benefits" such as scholarships and internships so that there is no apparent "pay to play" aspects.[1]

In 2014, a class-action lawsuit O'Bannon v. NCAA was filed in the United States District Court for the Northern District of California. The plaintiffs, numerous college athletes, asserted that the NCAA and its colleges were profiting off their names and likeness in works related to the college athletic programs such as in video games but none of the athletes were receiving any compensation for that pay, in violation of the Sherman Act and antitrust law. District Court judge Claudia Ann Wilken found for the plaintiffs, a decision upheld in part by the Ninth Circuit. In review of the Ninth Circuit's decision, the NCAA agreed to allow student athletes to receive full scholarships for academics in lieu of forgoing the use of the students' names and likenesses.[2] Subsequently, the NCAA had started review of its policies related to how to compensate players for names and likenesses, as well as the impact of California's Fair Pay to Play Act passed in October 2019 and due for enforcement in 2023 which would allow students to have more control on their names and likenesses for sponsorships and endorsements beyond the NCAA's control.[3]

Subsequent to O'Bannon, a number of additional lawsuits challenging the NCAA's restrictions on educational compensation for athletes were raised, led by Shawne Alston and Justine Hartman. The cases were combined into NCAA v. Alston at the Northern District Court of California. Judge Wilken, also overseeing this case, issued her decision in March 2019, ruling against the NCAA that their restrictions on "non-cash education-related benefits" violated antitrust law under the Sherman Act and required the NCAA to allow for certain types of academic benefits beyond the previously-established full scholarships from O'Bannon, such as for "computers, science equipment, musical instruments and other tangible items not included in the cost of attendance calculation but nonetheless related to the pursuit of academic studies".[4] The ruling barred the NCAA from preventing athletes from receiving "post-eligibility scholarships to complete undergraduate or graduate degrees at any school; scholarships to attend vocational school; tutoring; expenses related to studying abroad that are not included in the cost of attendance calculation; and paid post-eligibility internships". Wilken's ruling also established that the conferences within the NCAA may set other allowances. The NCAA may still limit cash or cash-equivalent awards for academic purposes under the ruling. Wilken rationalized her ruling bases on the large differences in compensation that the NCAA receives from the student athletes' performance to what the students themselves receive.[2]

The NCAA appealed Wilken's ruling to the Ninth Circuit. The three-judge Ninth Circuit panel ruled in May 2020 to uphold the District Court's decision.[5] The panel did agree that the NCAA had a necessary interest in "preserving amateurism and thus improving consumer choice by maintaining a distinction between college and professional sports", but their practices still violated antitrust law. Judge Milan Smith wrote "The treatment of Student-Athletes is not the result of free market competition. To the contrary, it is the result of a cartel of buyers acting in concert to artificially depress the price that sellers could otherwise receive for their services. Our antitrust laws were originally meant to prohibit exactly this sort of distortion."[3]

The upheld decision went into effect in August 2020, though the NCAA had sought an emergency request to hold the injunction prior to that. The NCAA along with the American Athletic Conference filed petitions to the Supreme Court in October 2020 to hear their appeal. Both asked the Court to review the Ninth Circuit's decision, arguing that the decision created a new definition of items that could be "related to education" which could be abused by colleges and sponsors to create effective "pay for play" programs in all but name, such as a hypothetical US$500,000-a-semester "internship" with Nike that the NCAA described as "the antithesis of amateurism".[6] The Supreme Court granted certiorari to both petitions in December 2020, consolidating the two petitions into NCAA v. Alston which is expected to be heard in 2021.[1]