Landmark ruling in O'Bannon v. NCAA

8/12/2019 Landmark ruling in O'Bannon v. NCAA

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r t h e r n D i s t r i c t o f C a l i f o r n i a

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I N THE UNI TED STATES DI STRI CT COURT

FOR THE NORTHERN DI STRI CT OF CALI FORNI A

EDWARD O’ BANNON, et al .Pl ai nt i f f s,

v.

NATI ONAL COLLEGI ATE ATHLETI CASSOCI ATI ON; ELECTRONI C ARTSI NC. ; and COLLEGI ATE LI CENSI NGCOMPANY,

Def endant s. ________________________________/

No. C 09- 3329 CW FI NDI NGS OF FACTAND CONCLUSI ONS OFLAW

I NTRODUCTI ON

Compet i t i on t akes many f or ms. Al t hough t hi s case r ai ses

quest i ons about at hl et i c compet i t i on on t he f oot bal l f i el d and t he

basket bal l cour t , i t i s pr i nci pal l y about t he r ul es gover ni ng

compet i t i on i n a di f f er ent ar ena - - namel y, t he mar ket pl ace.

Pl ai nt i f f s ar e a gr oup of cur r ent and f or mer col l ege st udent -

at hl et es. They br ought t hi s ant i t r ust cl ass act i on agai nst t he

Nat i onal Col l egi at e At hl et i c Associ at i on ( NCAA) i n 2009 t o

chal l enge t he associ at i on’ s r ul es r est r i ct i ng compensat i on f or

el i t e men’ s f oot bal l and basket bal l pl ayer s. I n par t i cul ar ,

Pl ai nt i f f s seek t o chal l enge t he set of r ul es t hat bar st udent -

at hl et es f r om r ecei vi ng a shar e of t he r evenue t hat t he NCAA and

i t s member school s ear n f r om t he sal e of l i censes t o use the

st udent - at hl et es’ names, i mages, and l i kenesses i n vi deogames,

l i ve game t el ecast s, and ot her f oot age. Pl ai nt i f f s cont end t hat

t hese r ul es vi ol at e t he Sher man Ant i t r ust Act . The NCAA deni es

t hi s char ge and asser t s t hat i t s rest r i ct i ons on st udent - at hl et e

Case4:09-cv-03329-CW Document291 Filed08/08/14 Page1 of 99



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compensat i on ar e necessar y t o uphol d i t s educat i onal mi ssi on and

t o pr ot ect t he popul ar i t y of col l egi at e spor t s.

A non- j ur y t r i al on Pl ai nt i f f s’ cl ai ms was hel d bet ween J une

9, 2014 and J une 27, 2014. Af t er consi der i ng al l of t he

t est i mony, document ary evi dence, and argument s of counsel

pr esent ed dur i ng and af t er t r i al , t he Cour t f i nds t hat t he

chal l enged NCAA r ul es unr easonabl y r est r ai n t r ade i n t he mar ket

f or cer t ai n educat i onal and at hl et i c oppor t uni t i es of f er ed by NCAA

Di vi si on I school s. The pr ocompet i t i ve j ust i f i cat i ons t hat t he

NCAA of f er s do not j ust i f y t hi s r est r ai nt and coul d be achi eved

t hr ough l ess r est r i ct i ve means. The Cour t makes t he f ol l owi ng

f i ndi ngs of f act and concl usi ons of l aw, and wi l l ent er as a

r emedy a per manent i nj unct i on pr ohi bi t i ng cer t ai n over l y

res t r i ct i ve res t r ai nt s .

FI NDI NGS OF FACT

I . Backgr ound

A. The NCAA

The NCAA was f ounded i n 1905 by t he presi dent s of si xt y- t wo

col l eges and uni ver si t i es i n or der t o creat e a uni f or m set of

r ul es t o r egul at e i nt er col l egi at e f oot bal l . Docket No. 189, St i p.

Undi sput ed Fact s, at ¶ 6. Today, t he associ at i on has r oughl y

el even hundr ed member school s and regul at es i nt er col l egi at e

at hl et i c compet i t i ons i n r oughl y t wo dozen spor t s. Accor di ng t o

i t s cur r ent const i t ut i on, t he associ at i on seeks t o “i ni t i at e,

st i mul at e and i mpr ove i nt er col l egi at e at hl et i cs pr ogr ams f or

st udent - at hl et es and t o pr omot e and devel op educat i onal

l eader shi p, physi cal f i t ness, at hl et i cs excel l ence and at hl et i cs




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par t i ci pat i on as a r ecr eat i onal pur sui t . ” Ex. 2340, 2013- 14 NCAA

Di vi si on I Manual , at 15.1

To achi eve t hese goal s, t he NCAA i ssues and enf or ces r ul es

gover ni ng at hl et i c compet i t i ons among i t s member school s. I d. at

4. These r ul es ar e out l i ned i n t he associ at i on’ s const i t ut i on and

byl aws and cover a br oad r ange of subj ect s. Among other t hi ngs,

t he r ul es est abl i sh academi c el i gi bi l i t y r equi r ement s f or st udent -

at hl et es, set f or t h gui del i nes and r est r i cti ons f or r ecrui t i ng

hi gh school at hl et es, and i mpose l i mi t s on t he number and si ze of

at hl et i c schol ar shi ps t hat each school may pr ovi de. I d. at 3- 5.

Si nce 1973, t he NCAA’ s member school s have been organi zed

i nt o t hr ee di vi s i ons - - Di vi s i ons I , I I , and I I I - - based on t he

number and qual i t y of oppor t uni t i es t hat t hey pr ovi de t o

par t i ci pat e i n i nt er col l egi at e at hl et i cs. St i p. Undi sput ed Facts

¶ 27. Di vi si on I school s pr ovi de t he gr eat est number and hi ghest

qual i t y of oppor t uni t i es t o par t i ci pat e i n i nt er col l egi at e

athl et i cs because t hey sponsor more spor t s t eams and pr ovi de more

f i nanci al ai d t o st udent - at hl et es t han school s i n Di vi si ons I I and

I I I . 2 To qual i f y f or member shi p i n Di vi si on I , a school must

sponsor a mi ni mum of f our t een var si t y spor t s t eams, i ncl udi ng

f oot bal l , and di st r i but e a basel i ne amount of f i nanci al ai d t o i t s

st udent - at hl et es. Tr i al Tr . 2043: 13- : 25 ( Del any) ; Ex. 2340 at

365, 367. Roughl y t hr ee- hundr ed and f i f t y of t he NCAA’ s el even

1 Al l exhi bi t ci t at i ons i n t hi s or der ar e t o t he page number s

pr ovi ded by t he par t i es at t r i al , whi ch do not necessar i l y cor r espond t ot he page number s cr eat ed by t he or i gi nal aut hor of t he exhi bi t .

2 The NCAA’ s byl aws def i ne f i nanci al ai d to mean “f unds pr ovi ded t o

st udent - at hl et es f r om var i ous sour ces t o pay or assi st i n payi ng t hei rcost of educat i on at t he i nst i t ut i on. ” Ex. 2340 at 206. The Cour tadopt s t hi s def i ni t i on f or t he pur poses of t hi s or der .




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hundr ed school s cur r ent l y compet e i n Di vi si on I . Tr i al Tr .

1743: 23 ( Emmer t ) .

Di vi si on I i t sel f f ur t her i s di vi ded, f or t he pur poses of

f oot bal l compet i t i on, i nt o t wo subdi vi si ons: t he Foot bal l Bowl

Subdi vi si on ( FBS) and t he Foot bal l Champi onshi p Subdi vi si on

( FCS) .3 Tr i al Tr . 2144: 9- : 11 ( Pet r ) ; Ex. 2340 at 364- 67. FBS

school s ar e al l owed t o of f er up t o ei ght y- f i ve f ul l schol ar shi ps

t o member s of t hei r f oot bal l t eams. I n cont r ast , FCS school s ar e

per mi t t ed t o of f er onl y a smal l er number of f ul l schol ar shi ps t o

members of t hei r t eams. St i p. Undi sput ed Fact s ¶ 28. Because FBS

school s are abl e to of f er mor e f oot bal l schol ar shi ps t han FCS

school s, t he l evel of f oot bal l compet i t i on wi t hi n FBS i s gener al l y

hi gher t han wi t hi n FCS. Cur r ent l y, about one hundr ed and t went y

school s compet e i n FBS. I d. ¶ 45.

I n addi t i on t o t he t wo f oot bal l subdi vi si ons, Di vi si on I

school s ar e al so or gani zed i nt o a number of conf er ences, whi ch

essent i al l y f unct i on as smal l er l eagues wi t hi n t he NCAA. The

conf er ences - - most of whi ch cont ai n bet ween ei ght and f i f t een

school s - - t ypi cal l y have t hei r own member shi p r equi r ement s. Most

conf er ences al so or gani ze conf er ence- speci f i c games and event s

f eat ur i ng t hei r member school s, i ncl udi ng r egul ar season f oot bal l

games, r egul ar season basket bal l games, and post - season basket bal l

t our nament s. Al t hough t he conf erences ar e consi dered members of

t he NCAA and must compl y wi t h i t s const i t ut i on and byl aws, t hey

oper at e i ndependent l y f or t he most par t and have t he aut hor i t y t o

3 Pr i or t o 2006, FBS was known as Di vi si on I - A and FCS was known as

Di vi si on I - AA. For t he pur poses of si mpl i ci t y, t hi s or der uses “FBS”and “FCS” t o r ef er t o these subdi vi si ons even when di scussi ng st udent -at hl et es who pl ayed Di vi si on I f oot bal l bef or e 2006.




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gener at e thei r own r evenue and set t hei r own r ul es, pr ovi ded t hose

r ul es ar e consi st ent wi t h NCAA pol i cy. Ex. 2340 at 22.

The r ul es gover ni ng par t i ci pat i on and compet i t i on i n Di vi si on

I are enact ed by an ei ght een- member body known as t he Di vi si on I

Boar d of Di r ect or s, whi ch t ypi cal l y recei ves pr oposal s f r om t he

di vi si on’ s member school s and conf er ences. Tr i al Tr . 1744: 16-

1745: 2 ( Emmer t ) ; Ex. 2340 at 35. The Boar d i s made up of

uni ver si t y pr esi dent s and chancel l or s f r om ei ght een di f f er ent

col l eges or uni ver si t i es. Ex. 2340 at 35.

A school or conf erence that seeks t o pr opose a new r ul e or

r ul e change typi cal l y does so by submi t t i ng t he pr oposal t o a

desi gnat ed commi t t ee or t ask f or ce appoi nt ed by t he Board. Tr i al

Tr . 1745: 20- 1746: 15. That commi t t ee or t ask f or ce t hen consi der s

t he pr oposal and, i f i t appr oves, may f or war d t he pr oposal t o a

body known as t he Di vi si on I Legi sl at i ve Counci l , whi ch i s made up

of at hl et i cs admi ni st r at or s f r om school s i n each of t he t hi r t y- t wo

Di vi si on I conf er ences. I d. ; Ex. 2340 at 37. The Legi sl at i ve

Counci l may then f or war d t he pr oposal t o t he Boar d of Di r ect or s,

whi ch has t he ul t i mat e aut hor i t y t o appr ove t he pr oposal by a

maj or i t y vot e. Tr i al Tr . 1745: 20- 1746: 15. Act i ons by t he Boar d

may onl y be r epeal ed t hr ough an over r i de pr ocess t hat i nvol ves a

vot e of si xt y- t wo per cent of t he NCAA’ s member i nst i t ut i ons. I d.

1747: 6- : 20. The NCAA’ s cur r ent pr esi dent , Dr . Mark Emmert , does

not have any vot i ng power i n t hi s pr ocess. I d. 1746: 19- : 24.

B. El ect r oni c Ar t s I nc. & Col l egi at e Li censi ng Company

El ect r oni c Ar t s I nc. ( EA) i s a cor por at i on whi ch devel ops and

manuf act ur es vi deogames. St i p. Undi sput ed Fact s ¶ 35. I t cr eat ed

and sol d an annual NCAA- br anded col l ege f oot bal l vi deogame every




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year between 1997 and 2013. I d. ¶ 39. I t al so cr eat ed and sol d

an annual NCAA- branded col l ege basket bal l game every year bet ween

1998 and 2010. I d. ¶ 40. I n or der t o cr eat e t hese games, i t

ent ered i nt o l i censi ng agr eement s wi t h t he NCAA and i t s member

school s and pai d t hem f or per mi ssi on t o use t hei r i nt el l ect ual

pr oper t y, i ncl udi ng t hei r mar ks, i n t he vi deogames. I d. ¶¶ 37- 38;

Exs. 1125, 1126. Col l egi at e Li censi ng Company ( CLC) i s a Geor gi a

cor por at i on t hat l i censes t r ademar ks of t he NCAA and sever al of

i t s member school s and conf erences. St i p. Undi sput ed Fact s ¶¶ 32-

34. Al t hough Pl ai nt i f f s or i gi nal l y br ought cl ai ms agai nst bot h EA

and CLC i n t hi s act i on, t hey subsequent l y agr eed t o set t l e t hose

cl ai ms.

C. Pl ai nt i f f s

Pl ai nt i f f s ar e t went y cur r ent and f or mer st udent - at hl et es,

al l of whom pl ay or pl ayed f or an FBS f oot bal l or Di vi si on I men’ s

basket bal l t eam bet ween 1956 and t he pr esent . Some, but not al l ,

Pl ai nt i f f s went on t o pl ay pr of essi onal spor t s af t er t hey l ef t

col l ege. They r epr esent t he f ol l owi ng cl ass, whi ch t hi s Cour t

cer t i f i ed under Feder al Rul e of Ci vi l Pr ocedur e 23( b) ( 2) i n

November 2013:

Al l cur r ent and f or mer st udent - at hl et esr esi di ng i n the Uni t ed St at es who compet e on,or competed on, an NCAA Di vi si on I ( f ormer l yknown as “Uni ver si t y Di vi si on” bef or e 1973)col l ege or uni ver si t y men’ s basket bal l t eam oron an NCAA Foot bal l Bowl Subdi vi si on ( f or mer l yknown as Di vi si on I - A unt i l 2006) men’ sf oot bal l t eam and whose i mages, l i kenessesand/ or names may be, or have been, i ncl uded orcoul d have been i ncl uded ( by vi r t ue of t hei rappear ance i n a t eam r ost er ) i n game f oot ageor i n vi deogames l i censed or sol d byDef endant s, t hei r co- conspi r at or s, or t hei rl i censees.




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Case No. 09- 1967, Docket No. 1025, Apr i l 11, 2014 Or der , at 47- 48

( amendi ng def i ni t i on of pr evi ousl y cer t i f i ed cl ass) .

I I . The Rel evant Mar ket s

As expl ai ned i n pr evi ous or der s, Pl ai nt i f f s al l ege t hat t he

NCAA has r est r ai ned t r ade i n t wo r el at ed nat i onal mar ket s, whi ch

t hey ref er t o as t he “col l ege educat i on mar ket ” and t he “gr oup

l i censi ng mar ket . ” Al t hough t hese al l eged mar ket s i nvol ve many of

t he same par t i ci pant s, each mar ket ul t i mat el y i nvol ves a di f f er ent

set of buyer s, sel l er s, and pr oduct s. Accor di ngl y, t hi s or der

addr esses each market separatel y.

A. Col l ege Educat i on Mar ket

The evi dence present ed at t r i al , i ncl udi ng t est i mony f r om

bot h exper t s and l ay wi t nesses, est abl i shes t hat FBS f oot bal l and

Di vi si on I basket bal l school s compet e t o r ecr ui t t he best hi gh

school f oot bal l and basket bal l pl ayer s. Tr i al Tr . 9: 1- : 7

( O’ Bannon) ; 114: 21- 117: 17 ( Nol l ) ; 831: 8- : 11 ( Rascher ) ; 1759: 21- : 22

( Emmer t ) ; Ex. 2530. Speci f i cal l y, t hese school s compet e t o sel l

uni que bundl es of goods and servi ces t o el i t e f oot bal l and

basket bal l r ecr ui t s. The bundl es i ncl ude schol ar shi ps t o cover

t he cost of t ui t i on, f ees, r oom and boar d, books, cer t ai n school

suppl i es, t ut or i ng, and academi c suppor t ser vi ces. Tr i al Tr .

40: 2- : 20 ( O’ Bannon) ; 582: 6- : 18 ( Pr ot hr o) ; 1741: 10- : 20 ( Emmer t ) ;

Ex. 2340 at 207. They al so i ncl ude access t o hi gh- qual i t y

coachi ng, medi cal t r eat ment , st at e- of - t hear t at hl et i c f aci l i t i es,

and oppor t uni t i es t o compet e at t he hi ghest l evel of col l ege

spor t s, of t en i n f r ont of l ar ge crowds and t el evi si on audi ences.

Tr i al Tr . 13: 4- : 12 ( O’ Bannon) ; 556: 8- 558: 2 ( Pr ot hro) ; 1157: 20-

1158: 7 ( St aur owsky) ; 1721: 3- 1722: 19 ( Emmert ) . I n exchange f or




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t hese uni que bundl es of goods and ser vi ces, f oot bal l and

basket bal l r ecr ui t s must pr ovi de t hei r school s wi t h t hei r at hl et i c

servi ces and acqui esce i n t he use of t hei r names, i mages, and

l i kenesses f or commer ci al and pr omot i onal pur poses. I d. 109: 5-

110: 12 ( Nol l ) . They al so i mpl i ci t l y agr ee t o pay any cost s of

at t endi ng col l ege and par t i ci pat i ng i n i nt er col l egi at e at hl et i cs

t hat ar e not cover ed by t hei r schol ar shi ps. See Ex. 2340 at 207.

The evi dence present ed at t r i al demonst r at es t hat FBS

f oot bal l and Di vi si on I basket bal l school s ar e t he onl y suppl i er s

of t he uni que bundl es of goods and ser vi ces descr i bed above.

Recr ui t s who ar e ski l l ed enough t o pl ay FBS f oot bal l or Di vi si on I

basket bal l do not t ypi cal l y pur sue ot her opt i ons f or cont i nui ng

t hei r educat i on and at hl et i c car eer s beyond hi gh school .

Pl ai nt i f f s’ economi c exper t , Dr . Roger Nol l , exami ned t he r at es at

whi ch el i t e f oot bal l and basket bal l r ecrui t s accept at hl et i c

schol ar shi ps t o pl ay FBS f oot bal l or Di vi si on I basket bal l . He

obser ved t hat , between 2007 and 2011, more than ni nety- ei ght

per cent of f oot bal l r ecr ui t s cl assi f i ed as f our - or f i ve- star

r ecrui t s ( t he t wo hi ghest r at i ngs avai l abl e) by Ri val s. com

accept ed of f er s to pl ay FBS f oot bal l . Tr i al Tr . 113: 2- 114: 13; Ex.

2529. None of t he f i ve- st ar r ecrui t s and onl y 0. 2% of f our - st ar

r ecr ui t s chose t o pl ay f oot bal l at an FCS school and none chose to

pl ay at a Di vi si on I I or I I I school dur i ng t hat per i od. Ex. 2529.

Among t hr ee- st ar r ecr ui t s, ni net y- t wo per cent of t hose of f er ed a

schol ar shi p f r om an FBS school accept ed one. I d. Less t han f our

per cent of al l t hr ee- st ar r ecrui t s accept ed an of f er t o pl ay

f oot bal l at a non- FBS school . I d.




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Thi s pat t er n i s even mor e st ar k f or basket bal l r ecr ui t s.

Bet ween 2007 and 2011, no f our - or f i ve- st ar basket bal l r ecr ui t s

and l ess t han one per cent of al l t wo- and t hr ee- st ar r ecr ui t s

accept ed of f er s t o pl ay f or a non- Di vi si on I school . I d. Even

among zer o- st ar r ecr ui t s, onl y one per cent accept ed of f er s t o pl ay

basket bal l out si de of Di vi si on I . I d. I n cont r ast , r oughl y

ni net y- f i ve per cent of al l r ecrui t s of f er ed Di vi si on I basket bal l

schol ar shi ps i n t he Ri val s. com sampl e accept ed one. I d. Thi s

dat a suppor t s Dr . Nol l ’ s concl usi on t hat “i f t he t op at hl et es ar e

of f er ed a D- I schol ar shi p, t hey t ake i t . They do not go anywher e

el se. ” Tr i al Tr . 114: 6- : 7.

On cr oss- exami nat i on, Dr . Nol l conceded t hat t he Ri val s. com

dat a he used i n hi s anal ysi s came f r om r ecrui t s’ sel f - r epor t ed

i nf or mat i on about t he schol ar shi p of f er s t hey r ecei ved and

accept ed. I d. 486: 7- : 9. However , t hi s f act does not r ender Dr .

Nol l ’ s opi ni on unr el i abl e. Recrui t s have a st r ong i ncent i ve t o

r epor t accur at e i nf or mat i on t o Ri val s. com because t he i nf or mat i on

i s rel at i vel y easy t o ver i f y; af t er al l , a recrui t ’ s l i e about

accept i ng a schol ar shi p f r om a par t i cul ar school wi l l be

di scover ed as soon as hi s name does not appear on t hat school ’ s

r ost er or l i st of commi t t ed r ecr ui t s. I n any event , t he NCAA has

not pr esent ed any dat a of i t s own t o cont r adi ct t he Ri val s. com

dat a nor any ot her evi dence, exper t or ot her wi se, t o cast doubt on

Dr . Nol l ’ s concl usi on t hat t her e ar e no subst i t ut es f or t he

oppor t uni t i es of f er ed by FBS f oot bal l and Di vi si on I basket bal l

school s.

The onl y pot ent i al subst i t utes t hat t he NCAA has i dent i f i ed

ar e t he oppor t uni t i es of f er ed by school s i n ot her di vi si ons,




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col l egi at e at hl et i cs associ at i ons, or mi nor and f or ei gn

pr of essi onal spor t s l eagues. None of t hese ot her di vi si ons,

associ at i ons, or pr of essi onal l eagues, however , pr ovi des t he same

combi nat i on of goods and servi ces of f er ed by FBS f oot bal l and

Di vi si on I basket bal l school s. School s i n FCS and Di vi si ons I I

and I I I al l pr ovi de a l ower number of schol ar shi ps t han FBS

f oot bal l and Di vi si on I basket bal l school s, whi ch r esul t s i n a

l ower l evel of at hl et i c compet i t i on. The Nat i onal I nt er col l egi at e

At hl et i c Associ at i on ( NAI A) , Nat i onal J uni or Col l ege At hl et i c

Associ at i on ( NJ CAA) , Nat i onal Chr i st i an Col l egi at e At hl et i c

Associ at i on ( NCCAA) , and Uni t ed St at es Col l egi at e At hl et i c

Associ at i on ( USCAA) l i kewi se pr ovi de f ewer schol ar shi ps and of f er

a l ower l evel of compet i t i on. What ’ s mor e, t he school s i n t hese

ot her di vi si ons and associ at i ons ar e of t en smal l er t han FBS

f oot bal l and Di vi si on I basket bal l school s, spend much l ess on

at hl et i cs, and may not even pr ovi de oppor t uni t i es t o at t end a

f our - year col l ege. I d. 2824: 14- : 24, 2826: 16- 2827: 7, 2829: 17-

2830: 12 ( St i r oh) . Thi s i s why, as Dr . Nol l concl uded, t hese ot her

school s do not compet e wi t h FBS f oot bal l and Di vi si on I basket bal l

school s f or r ecrui t s .

Dr . Nol l al so anal yzed t he Ri val s. com dat a t o show t hat FBS

school s al most al ways def eat ed non- FBS school s i n head- t o- head

r ecr ui t i ng cont est s f or t he same f oot bal l r ecr ui t bet ween 2007 and

2011. I d. 116: 6- 118: 11, 474: 23- 475: 14; Ex. 2530. Hi s anal ysi s of

head- t o- head r ecr ui t i ng cont est s f or basket bal l pl ayer s r eveal ed

t he same di scr epancy bet ween Di vi si on I and non- Di vi si on I

school s. Tr i al Tr . 116: 6- 118: 11. Not abl y, he di d not obser ve

t hi s di scr epancy when compar i ng head- t o- head r ecr ui t i ng cont est s




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among FBS f oot bal l school s or Di vi si on I basket bal l school s. I d. ;

Ex. 2530 at 3. Even when he compared t he success of t he school s

wi t hi n t he f i ve maj or Di vi si on I conf er ences - - namel y, t he

Paci f i c 12 Conf er ence ( Pac 12) , Bi g 12 Conf er ence, At l ant i c Coast

Conf erence, Sout heast ern Conf erence ( SEC) , and Bi g 10

Conf er ence - - t o t hat of school s i n l ess pr omi nent Di vi si on I

conf er ences, he f ound t hat t hey wer e st i l l i n compet i t i on wi t h

each ot her . Tr i al Tr . 116: 9- : 13 ( “And unl i ke t he f i ndi ng f or

ot her di vi si ons and j uni or col l eges and NAI A and al l t he r est t hat

was i n t he f i r st pi ct ur e, what we f i nd her e i s t hat al t hough t he

maj or conf erences wi n more than t hey l ose, i n compet i ng agai nst

t he l esser conf er ences, t her e i s consi der abl e compet i t i ve

over l ap. ”) . Thus, t he bundl es of goods and servi ces of f er ed by

school s i n FCS, Di vi si ons I I and I I I , and ot her non- NCAA

col l egi at e at hl et i cs associ at i ons ar e not subst i t ut es f or t he

bundl es of goods and servi ces of f er ed by FBS f oot bal l and Di vi si on

I basket bal l school s.

Nor ar e t he oppor t uni t i es of f er ed by t he pr of essi onal l eagues

t hat t he NCAA has i dent i f i ed her e. Dr . Nol l not ed t hat el i t e

f oot bal l and basket bal l r ecrui t s r ar el y f or ego oppor t uni t i es t o

pl ay FBS f oot bal l or Di vi si on I basket bal l i n or der t o pl ay

pr of essi onal l y. Nei t her t he Nat i onal Foot bal l League ( NFL) nor

t he Nat i onal Basket bal l Associ at i on (NBA) per mi t s pl ayer s t o ent er

t he l eague i mmedi at el y af t er hi gh school . I d. 68: 17- 69: 6

( O’ Bannon) . Al t hough ot her prof essi onal l eagues - - such as t he

NBA Devel opment League ( D- League) , t he Ar ena Foot bal l League

( AFL) , and cer t ai n f or ei gn f oot bal l and basket bal l l eagues - -

per mi t pl ayer s t o j oi n i mmedi at el y af t er hi gh school , r ecr ui t s do




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not t ypi cal l y pur sue oppor t uni t i es i n t hose l eagues. I d.

482: 11- : 13 ( Nol l ) . When Dr . Nol l was asked why he di d not conduct

an anal ysi s of r ecr ui t s who chose t o pl ay pr of essi onal l y i n t hese

l eagues, he r epl i ed t hat t oo f ew had ever done so t o conduct such

an anal ysi s. I d. 484: 19- 485: 13 ( “I t woul d be har d t o do an

anal ysi s of zer o. ”) . He al so not ed t hat many r ecr ui t s may not

even be gi ven an oppor t uni t y t o pl ay i n t hese l eagues. I d.

482: 14- : 17 ( “The oppor t uni t y i s not gi ven t o ver y many hi gh school

at hl et es t o pl ay i n Eur ope. ”) . What ’ s mor e, none of t hese l eagues

of f er s t he same oppor t uni t y t o ear n a hi gher educat i on t hat FBS

f oot bal l and Di vi si on I basket bal l school s pr ovi de. For al l of

t hese reasons, t he Cour t f i nds t hat t her e ar e no pr of essi onal

f oot bal l or basket bal l l eagues capabl e of suppl yi ng a subst i t ut e

f or t he bundl e of goods and servi ces t hat FBS f oot bal l and

Di vi si on I basket bal l school s pr ovi de. These school s compr i se a

r el evant col l ege educat i on mar ket , as descr i bed above.

B. Gr oup Li censi ng Market

Pr of essi onal at hl et es of t en sel l gr oup l i censes t o use t hei r

names, i mages, and l i kenesses i n l i ve game tel ecast s, vi deogames,

game r e- br oadcast s, adver t i sement s, and ot her ar chi val f oot age. 4

Pl ai nt i f f s al l ege t hat , i n t he absence of t he NCAA’ s chal l enged

r ul es, FBS f oot bal l and Di vi si on I basket bal l pl ayer s woul d al so

be abl e t o sel l gr oup l i censes f or t he use of t hei r names, i mages,

4 Pl ai nt i f f s pr esent ed some evi dence at t r i al of a mar ket f or

l i censes to use st udent - at hl et es’ names, i mages, and l i kenesses i n ot hermerchandi se, such as j erseys and bobbl eheads. The Cour t does notaddr ess t hi s mar ket because Pl ai nt i f f s pr evi ousl y abandoned al l of t hei rcl ai ms r el ated t o such market s. Docket No. 827, J une 20, 2013 Hr g. Tr .54: 13- : 16. I n addi t i on, t he evi dence t hey pr esent ed at t r i al r egar di ngmer chandi se- r el at ed l i censes di d not const i t ut e pr oof of a mar ket f orgr oup l i censes but , r at her , onl y i ndi vi dual l i censes.




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and l i kenesses. Speci f i cal l y, t hey cont end t hat member s of

cer t ai n FBS f oot bal l and Di vi si on I basket bal l t eams woul d be abl e

t o j oi n t oget her t o of f er gr oup l i censes, whi ch t hey woul d t hen be

abl e t o sel l t o t hei r r especti ve school s, t hi r d- par t y l i censi ng

compani es, or medi a compani es seeki ng t o use st udent - athl etes’

names, i mages, and l i kenesses. Pl ai nt i f f s have i dent i f i ed t hr ee

submar ket s wi t hi n t hi s br oader gr oup l i censi ng mar ket : ( 1) a

submar ket f or gr oup l i censes t o use st udent - at hl et es’ names,

i mages, and l i kenesses i n l i ve f oot bal l and basket bal l game

t el ecast s; ( 2) a submar ket f or gr oup l i censes to use st udent -

at hl et es’ names, i mages, and l i kenesses i n vi deogames; and ( 3) a

submar ket f or gr oup l i censes t o use st udent - at hl et es’ names,

i mages, and l i kenesses i n game re- br oadcast s, adver t i sement s, and

ot her ar chi val f oot age.

1. Submarket f or Gr oup Li censes t o Use St udent -At hl et es’ Names, I mages, and Li kenesses i n Li veGame Tel ecast s

The Cour t f i nds t hat a submar ket exi st s i n whi ch t el evi si on

net wor ks seek t o acqui r e gr oup l i censes t o use FBS f oot bal l and

Di vi si on I basket bal l pl ayer s’ names, i mages, and l i kenesses i n

l i ve game t el ecast s. Tel evi si on net wor ks f r equent l y ent er i nt o

l i censi ng agr eement s t o use t he i nt el l ect ual pr oper t y of school s,

conf erences, and event organi zer s - - such as t he NCAA or a bowl

commi t t ee - - i n l i ve t el ecast s of f oot bal l and basket bal l games.

I n t hese agr eement s, t he net wor ks of t en seek to acqui r e t he r i ght s

t o use t he names, i mages, and l i kenesses of t he par t i ci pat i ng

st udent - at hl et es dur i ng t he t el ecast . For i nst ance, t he NCAA’ s

1994 l i censi ng agr eement gr ant i ng CBS t he r i ght s t o t el ecast t he




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Di vi si on I men’ s basket bal l t our nament ever y year f r om 1995 t o

2002 i ncl udes a “Name & Li keness” provi si on t hat st at es:

The Net wor k, i t s sponsor s, t hei r adver t i si ng

r epr esent at i ves and t he stat i ons car r yi ng t het el ecast s of t he games wi l l have t he r i ght t omake appr opr i at e ref er ences ( i ncl udi ng wi t houtl i mi t at i on, use of pi ct ur es) t o NCAA and t heuni ver si t i es and col l eges of t he t eams, t hesi t es, t he games and t he par t i ci pant s i n andot her s i dent i f i ed wi t h t he games and i n t het el ecast i ng t her eof , pr ovi ded t hat t he same donot const i t ut e endorsement s of a commerci alpr oduct .

Ex. 2104 at 16 ( emphasi s added) . A 1999 agr eement bet ween t he

NCAA and CBS f or t he r i ght s t o t el ecast cer t ai n Di vi si on I

basket bal l games cont ai ns a “Name & Li keness” pr ovi si on wi t h

near l y i dent i cal l anguage. Ex. 2116 at 17 ( gr ant i ng t he “r i ght t o

make appr opr i at e r ef er ences ( i ncl udi ng wi t hout l i mi t at i on, use of

pi ctur es) t o . . . t he par t i ci pant s i n and ot her s i dent i f i ed wi t h

t he games” ( emphasi s added) ) . An agreement bet ween t he FBS

conf er ences, t he Uni ver si t y of Not r e Dame, and Fox Br oadcast i ng

Company f or t he r i ght s t o t el ecast cer t ai n 2007, 2008, and 2009

bowl games si mi l ar l y pr ovi des t hat t he event or gani zer wi l l be

sol el y r esponsi bl e f or ensur i ng t hat Fox has “t he r i ght s t o use

t he name and l i keness, phot ogr aphs and bi ogr aphi es of al l

par t i ci pant s, game of f i ci al s, cheer l eader s” and ot her i ndi vi dual s

connect ed t o t he game. Ex. 2162 at 9. Pl ai nt i f f s al so pr ovi ded

ot her cont r act s cont ai ni ng si mi l ar l anguage. See, e. g. , Ex. 2230

at 10 ( gr ant i ng t he br oadcast er “al l name and l i keness r i ght s of

al l par t i ci pant s, of f i ci al s, compet i ng t eams and any ot her per sons

connect ed wi t h t he Event s t hat ar e reasonabl e or necessar y f or t he

Tel ecast of t he Event s”) ; Ex. 3078 at 2- 3 ( provi di ng t hat t he Bi g

10 woul d use “r easonabl e commer ci al ef f or t s” t o obt ai n f r om any




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non- conf er ence opponent t he “r i ght . . . t o use i t s r espect i ve

pl ayer s’ names, l i kenesses, and t hat school ’ s t r ademar ks, l ogos

and ot her i t ems i n pr omot i ng, adver t i si ng and Tel ecast i ng any such

game”) . These cont r act s demonst r ate t hat t here i s a demand f or

t hese r i ght s among t el evi si on net wor ks.

Pl ai nt i f f s’ br oadcast i ng i ndust r y exper t , Edwi n Desser ,

conf i r med t hat pr ovi si ons l i ke t hese ar e common and t hat t hey have

economi c val ue t o t el evi si on net wor ks. Tr i al Tr . 651: 9- : 11,

699: 18- 700: 3, 681: 18- : 23 ( “I f you’ r e r unni ng a busi ness l i ke a

t el evi si on net wor k, a br oadcast st at i on, you woul d pr ef er t o have

consents, and you woul d l i ke t o have somebody st and behi nd those

consent s so t hat you don’ t have t o wor r y about somebody comi ng

af t er you l at er wi t h a cl ai m. ”) . Thus, a mar ket f or t hese r i ght s

exi st s. Pl ai nt i f f s al so demonst r at ed t hat t hi s i s a mar ket f or

gr oup l i censes - - not i ndi vi dual l i censes. Mr . Desser t est i f i ed

t hat a “t el evi si on spor t s agr eement i s a bundl e of r i ght s and

r esponsi bi l i t i es t hat ar e al l i nt er r el at ed and t hat , you know,

cr eat e val ue, pr ovi de comf or t , and ar e [ ] i nt egr at ed i nt o t he

agr eement . ” I d. 658: 14- : 19. A l i cense t o use an i ndi vi dual

st udent - at hl et e’ s name, i mage, and l i keness dur i ng a game t el ecast

woul d not have any val ue to a t el evi si on net wor k unl ess i t was

bundl ed wi t h l i censes t o use ever y ot her par t i ci pat i ng st udent -

at hl et e’ s name, i mage, and l i keness.

The NCAA’ s broadcast i ng i ndust r y exper t , Neal Pi l son,

t est i f i ed t hat spor t s br oadcast er s need not acqui r e t he r i ght s t o

use st udent - at hl et es’ names, i mages, and l i kenesses and t hat t he

pr i mar y reason t hey ent er i nt o l i censi ng agr eement s wi t h event

or gani zer s i s t o gai n excl usi ve access t o t he f aci l i t y wher e t he




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event wi l l occur . Tr i al Tr . 720: 5- : 17. Thi s t est i mony i s not

convi nci ng. Mr . Pi l son admi t t ed t hat br oadcast er s must acqui r e

cer t ai n r i ght s even f r om vi si t i ng t eams who do not cont r ol access

t o t he event f aci l i t y. I d. 803: 5- 804: 8. He al so acknowl edged

t hat br oadcast i ng agr eement s - - l i ke t hose quot ed above - -

somet i mes r ef er expr essl y t o name, i mage, and l i keness “r i ght s. ”

I d. 805: 2- : 16. Accor di ngl y, t he Cour t f i nds t hat , absent t he

chal l enged NCAA r ul es, t eams of FBS f oot bal l and Di vi si on I

basket bal l pl ayer s woul d be abl e t o cr eat e and sel l gr oup l i censes

f or t he use of t hei r names, i mages, and l i kenesses i n l i ve game

t el ecasts.

2. Submarket f or Gr oup Li censes t o Use St udent -At hl et es’ Names, I mages, and Li kenesses i nVi deogames

Li ke t el evi si on net wor ks, vi deogame devel oper s woul d seek t o

acqui r e gr oup l i censes t o use t he names, i mages, and l i kenesses of

FBS f oot bal l and Di vi si on I basket bal l pl ayer s i f t he NCAA di d not

pr ohi bi t st udent - at hl et es f r om sel l i ng such l i censes. EA seeks to

make al l of i t s spor t s- t hemed vi deogames “as aut hent i c as

possi bl e. ” Tr i al Tr . 1656: 7 ( Li nzner ) . One of t he company’ s vi ce

pr esi dent s, J oel Li nzner , expl ai ned, “We have f ound t hat i t i s

pl easi ng t o our cust omer s t o be abl e t o use the r eal at hl et es

depi cted as r eal i st i cal l y as possi bl e and acti ng as r eal i st i cal l y

as possi bl e. ” I d. 1658: 3- : 6; see al so Ex. 2007 at 50- 54

( descr i bi ng demand f or use of st udent - at hl et es’ names, i mages, and

l i kenesses i n vi deogames) . To do t hi s, t he company t ypi cal l y

negot i at es l i censes wi t h pr of essi onal spor t s l eagues and t eams t o

use t hei r t r ademar ks, l ogos, and ot her i nt el l ect ual pr oper t y i n

vi deogames. Tr i al Tr . 1656: 10- 1657: 25. I t al so negot i at es wi t h




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gr oups of pr of essi onal at hl et es f or l i censes t o use t hei r names,

i mages, and l i kenesses. I d. EA woul d be i nt er est ed i n acqui r i ng

t he same r i ght s f r om st udent - at hl et es i n or der t o pr oduce col l ege

spor t s- t hemed vi deogames, i f i t wer e per mi t t ed t o do so. I d.

1669: 24- 1670: 24. Accor di ngl y, t he Cour t f i nds t hat , absent t he

chal l enged NCAA r ul es, t here woul d be a demand among vi deogame

devel oper s f or gr oup l i censes to use st udent - at hl et es’ names,

i mages, and l i kenesses.

The NCAA asser t s t hat such demand woul d not exi st because i t

has ceased l i censi ng i t s i nt el l ectual pr oper t y f or use i n

vi deogames, maki ng i t unl i kel y t hat any devel oper woul d seek t o

devel op a vi deogame usi ng t he names, i mages, and l i kenesses of

st udent - at hl et es. Thi s asser t i on i s not suppor t ed by t he t r i al

r ecor d. Al t hough t he NCAA r ecent l y decl i ned t o r enew i t s l i cense

wi t h EA, i t has not pr esent ed any evi dence suggest i ng t hat i t wi l l

never ent er i nt o such an agr eement agai n i n t he f ut ur e. None of

i t s cur r ent byl aws pr ecl ude i t f r om ent er i ng i nt o such an

agr eement . Fur t her mor e, t he evi dence pr esent ed at t r i al

demonst r at es t hat , pr i or t o t hi s l i t i gat i on, t he NCAA f ound i t

pr of i t abl e t o l i cense i t s i nt el l ectual pr oper t y f or use i n

vi deogames. I ndeed, i t cont i nued t o r enew i t s annual l i censi ng

agr eement wi t h EA, even as t he company evaded t he NCAA’ s r ul es

pr ohi bi t i ng i t f r om usi ng st udent - at hl et es’ i mages and l i kenesses

i n vi deogames. Thr oughout t he l ate 2000s, EA’ s NCAA- br anded

vi deogames f eat ur ed pl ayabl e avat ar s t hat coul d easi l y be

i dent i f i ed as r eal st udent - at hl et es despi t e t he NCAA’ s expr ess

pr ohi bi t i on on f eat ur i ng st udent - at hl et es i n vi deogames. The EA

avat ar s pl ayed t he same posi t i ons as t hei r r eal - l i f e count er par t s,




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wor e the same j er sey number s and uni f or m accessor i es, hal ed f r om

t he same home st ate, and shared t he same hei ght , wei ght ,

handedness, and ski n col or . Tr i al Tr . 27: 14- 28: 11 ( O’ Bannon) ;

568: 6- 569: 24 ( Pr ot hr o) ; 930: 5- 931: 7 ( Rascher ) . For al l of t hese

r easons, t he Cour t f i nds t hat a submar ket woul d exi st f or gr oup

l i censes to use st udent - at hl et es’ names, i mages, and l i kenesses i n

vi deogames i f st udent - at hl et es wer e per mi t t ed t o recei ve

compensat i on f or such l i censes.

3. Submarket f or Gr oup Li censes t o Use St udent -At hl etes’ Names, I mages, and Li kenesses i n Game Re-

Br oadcast s, Adver t i sement s, and Ot her Ar chi valFootage

Pl ai nt i f f s have shown t hat t el evi si on net wor ks, adver t i ser s,

and t hi r d- par t y l i censi ng compani es seek t o use ar chi val f oot age

of st udent - at hl et es i n game re- br oadcast s, commer ci al s, and ot her

pr oduct s. Sever al of t he l i ve t el ecast i ng agr eement s di scussed

above i ncl uded pr ovi si ons gr ant i ng t he t el evi si on net wor k the

r i ght s t o use ar chi val f oot age, as wel l . See, e. g. Ex. 3078 at 2-

3 ( gr ant i ng t he Bi g 10 Net wor k t he r i ght s t o use cer t ai n st udent -

at hl et es’ names and l i kenesses i n “pr omot i ng, adver t i si ng and

Tel ecast i ng” a game) ; Ex. 2230 at 2 ( grant i ng Fox Spor t s Net t he

“r i ght t o r e- Tel ecast t he Sel ect ed Event s, ” t he “r i ght t o

di st r i but e hi ghl i ght s of t he Sel ect ed Event s, ” and t he speci f i c

r i ght t o use t he “names and l i kenesses of t he pl ayer s” t o pr omot e

cer t ai n games as wel l as t he net wor k i t sel f ) . Tyr one Pr ot hr o, a

f or mer wi de recei ver f or t he Uni ver si t y of Al abama, saw f oot age i n

a commerci al of a f amous cat ch t hat he made dur i ng a game. Tr i al

Tr . 565: 24- 566: 8. Fi nal l y, one of t he NCAA’ s vi ce presi dent s,

Mar k Lewi s, est abl i shed t hat t he NCAA has l i censed al l of i t s




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ar chi val f oot age f r om past NCAA champi onshi ps t o a t hi r d- par t y

l i censi ng company, T3Medi a, whi ch acts as t he associ at i on’ s agent

i n l i censi ng t hat f oot age f or use i n game r e- br oadcast s,

adver t i sement s, and any ot her pr oduct s. I d. 3206: 13- : 25.

Al t hough T3Medi a i s not per mi t t ed t o l i cense f oot age of cur r ent

st udent - at hl et es, i t st i l l acqui r es t he r i ght s to t hi s f oot age

whi l e t he st udent - at hl et es ar e i n school f or l at er use ( af t er

acqui r i ng t he st udent - at hl et es’ consent ) . Thi s i s enough t o show

t hat demand f or t hi s f oot age exi st s. Based on t hi s evi dence, t he

Cour t f i nds t hat , absent t he NCAA’ s chal l enged r ul es, t her e woul d

be a demand among t el evi si on net wor ks, t hi r d- par t y l i censi ng

compani es, and adver t i sers f or gr oup l i censes t o use st udent -

at hl et es i n game r e- br oadcast s, adver t i sement s, and ot her ar chi val

f oot age.

I I I . The Chal l enged Rest r ai nt

NCAA r ul es pr ohi bi t cur r ent st udent - at hl et es f r om r ecei vi ng

any compensat i on f r om t hei r school s or out si de sour ces f or t he use

of t hei r names, i mages, and l i kenesses i n l i ve game t el ecast s,

vi deogames, game r e- br oadcast s, adver t i sement s, and other f oot age.

Pl ai nt i f f s cont end t hat t hese r ul es r est r ai n t r ade i n t he t wo

mar ket s i dent i f i ed above.

The NCAA i mposes st r i ct l i mi t s on t he amount of compensat i on

t hat st udent - at hl et es may r ecei ve f r om t hei r school s. Most

i mpor t ant l y, i t pr ohi bi t s any st udent - at hl et e f r om r ecei vi ng

“f i nanci al ai d based on at hl et i cs abi l i t y” t hat exceeds t he val ue

of a f ul l “gr ant - i n- ai d. ” Ex. 2340 at 208. The byl aws def i ne a

f ul l “gr ant - i n- ai d” as “f i nanci al ai d t hat consi st s of t ui t i on and

f ees, r oom and boar d, and r equi r ed cour se- r el at ed books. ” I d. at




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207. Thi s amount var i es f r om school t o school and f r om year t o

year . Any st udent - at hl et e who r ecei ves f i nanci al ai d i n excess of

t hi s amount f or f ei t s hi s at hl et i c el i gi bi l i t y. I d. at 208.

I n addi t i on t o t hi s cap on at hl et i cs- based f i nanci al ai d, t he

NCAA al so i mposes a separate cap on t he t otal amount of f i nanci al

ai d t hat a st udent - at hl et e may r ecei ve. Speci f i cal l y, i t

pr ohi bi t s any st udent - at hl et e f r om r ecei vi ng f i nanci al ai d i n

excess of hi s “cost of at t endance. ” Ex. 2340 at 208. Li ke t he

t er m “gr ant - i n- ai d, ” t he t er m “cost of at t endance” i s a school -

speci f i c f i gur e def i ned i n t he byl aws. I t r ef er s t o “an amount

cal cul at ed by [a school ] ’ s f i nanci al ai d of f i ce, usi ng f eder al

r egul at i ons, t hat i ncl udes t he t ot al cost of t ui t i on and f ees,

r oom and boar d, books and suppl i es, t r anspor t at i on, and ot her

expenses r el at ed t o at t endance” at t hat school . I d. at 206.

Because i t cover s t he cost of “suppl i es, t r anspor t at i on, and ot her

expenses, ” t he cost of at t endance i s gener al l y hi gher t han t he

val ue of a f ul l gr ant - i n- ai d. The gap bet ween t he f ul l gr ant - i n-

ai d and t he cost of at t endance var i es f r om school t o school but i s

t ypi cal l y a f ew t housand dol l ar s.5

The NCAA al so prohi bi t s any st udent - at hl et e f r om r ecei vi ng

compensat i on f r om out si de sour ces based on hi s at hl et i c ski l l s or

abi l i t y.6 Thus, whi l e a st udent - athl ete may general l y ear n money

5 Under cert ai n ci r cumst ances, a st udent - athl et e who has anunexpect ed “speci al f i nanci al need” may be per mi t t ed t o recei veaddi t i onal ai d beyond t he cost of at t endance. Tr i al Tr . 2144: 25-2145: 14 ( Pet r ) . Thi s addi t i onal ai d comes f r om hi s school ’ s “st udentassi st ance f und” and coul d i ncl ude money f or “needed cl ot hi ng, neededsuppl i es, a comput er, ” or ot her academi c needs. Ex. 2340 at 238.

6 The NCAA’ s byl aws cont ai n a mi nor except i on permi t t i ng st udent -

at hl et es t o recei ve l i mi t ed compensat i on f or educat i onal expenses“awarded by t he U. S. Ol ympi c Commi t t ee or a U. S. nat i onal governi ngbody. ” Ex. 2340 at 211.




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f r om any “on- or of f - campus empl oyment ” unr el at ed t o hi s at hl et i c

abi l i t y, he may not r ecei ve “any r emuner at i on f or val ue or ut i l i t y

t hat t he st udent - athl ete may have f or t he empl oyer because of t he

publ i ci t y, r eput at i on, f ame or per sonal f ol l owi ng t hat he or she

has obt ai ned because of athl et i cs abi l i t y. ” I d. at 211. St udent -

at hl et es ar e al so bar r ed f r om endor si ng any commer ci al pr oduct or

ser vi ce whi l e t hey ar e i n school , r egar dl ess of whet her or not

t hey r ecei ve any compensat i on t o do so. I d. at 86.

Dr . Nol l t est i f i ed t hat t hese r ul es r est r ai n compet i t i on

among school s f or r ecrui t s. I f t he gr ant - i n- ai d l i mi t wer e

hi gher , school s woul d compet e f or t he best r ecr ui t s by of f er i ng

t hem l ar ger gr ant s- i n- ai d. Si mi l ar l y, i f t ot al f i nanci al ai d was

not capped at t he cost of at t endance, school s woul d compete f or

t he best r ecr ui t s by of f er i ng t hem compensat i on exceedi ng t he cost

of at t endance. Thi s compet i t i on woul d ef f ect i vel y l ower t he pr i ce

t hat t he recr ui t s must pay f or t he combi nat i on of educat i onal and

at hl et i c oppor t uni t i es t hat t he school s pr ovi de. As Dr . Nol l

expl ai ned, “i f t he schol ar shi p val ue i s suppr essed, t hat means t he

net pr i ce pai d by a st udent - at hl et e to at t end col l ege i s hi gher . ”

Tr i al Tr . 105: 24- 107: 1. Thus, he expl ai ned, because t he NCAA has

t he power t o and does suppr ess t he val ue of at hl et i c schol ar shi ps

t hr ough i t s gr ant - i n- ai d r ul es, i t has i ncreased t he pr i ces

school s char ge r ecrui t s. I d. 127: 20- 129: 13.

Dr . Nol l ’ s opi ni ons ar e consi st ent wi t h t he opi ni ons of t he

NCAA’ s own economi c exper t , Dr . Dani el Rubi nf el d, who t est i f i ed

t hat t he NCAA operates as a “j oi nt vent ur e whi ch i mposes

r est r ai nt s” on t r ade. I d. 2922: 20- : 21. Dr . Rubi nf el d

speci f i cal l y acknowl edged t hat “t he NCAA does i mpose a r est r ai nt ,




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t he r est r ai nt we have been di scussi ng i n t hi s case. ” I d.

2921: 8- : 9. Al t hough he opi ned t hat t hi s rest r ai nt was l awf ul

because i t serves procompet i t i ve pur poses, he never deni ed t hat

t he NCAA r est r i ct s compet i t i on among i t s member s f or r ecr ui t s. I n

f act , hi s own economi cs t extbook speci f i cal l y r ef er s t o t he NCAA

as a “car t el , ” whi ch he def i ned dur i ng hi s t est i mony as “a gr oup

of f i r ms t hat i mpose a r est r ai nt . ” I d. 2975: 3- : 4. Al t hough t he

NCAA’ s other economi c exper t , Dr . Laur en St i r oh, t est i f i ed t hat

t he NCAA does not r est r ai n compet i t i on i n any mar ket , her opi ni ons

wer e based on t he theor y t hat ant i compet i t i ve ef f ect s cannot ar i se

unl ess consumers i n a “downst r eam market ” ar e harmed. I d.

2766: 16- : 22. I n t hi s case, t hose consumers woul d be peopl e who

wat ch or at t end col l ege f oot bal l and basket bal l games or pur chase

goods usi ng t he names, i mages, and l i kenesses of st udent - at hl et es.

The Cour t r ej ect s Dr . St i r oh’ s t heor y t hat Pl ai nt i f f s cannot show

any ant i compet i t i ve ef f ect s caused by the al l eged r est r ai nt

wi t hout demonst r at i ng some harm t o t hese consumers. The evi dence

ci t ed above demonst r at es t hat st udent - at hl et es t hemsel ves are

harmed by the pr i ce- f i xi ng agr eement among FBS f oot bal l and

Di vi si on I basket bal l school s. I n t he compl ex exchange

r epr esent ed by a r ecr ui t ’ s deci si on t o at t end and pl ay f or a

par t i cul ar school , t he school pr ovi des t ui t i on, r oom and boar d,

f ees, and book expenses, of t en at l i t t l e or no cost t o t he school .

The r ecr ui t provi des hi s at hl et i c per f or mance and t he use of hi s

name, i mage, and l i keness. However , t he school s agr ee t o val ue

t he l at t er at zero by agr eei ng not t o compet e wi t h each ot her t o

cr edi t any ot her val ue t o t he r ecr ui t i n t he exchange. Thi s i s an

ant i compet i t i ve ef f ect . Thus, t he Cour t f i nds that t he NCAA has




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t he power - - and exer ci ses t hat power - - t o f i x pr i ces and

r est r ai n compet i t i on i n t he col l ege educat i on mar ket t hat

Pl ai nt i f f s have i dent i f i ed.

Dr . Nol l t est i f i ed t hat el i t e f oot bal l and basket bal l

r ecrui t s - - t he buyer s i n Pl ai nt i f f s’ col l ege educat i on mar ket - -

coul d al so be char act er i zed as sel l er s i n an al most i dent i cal

mar ket f or t hei r at hl et i c ser vi ces and l i censi ng r i ght s. I d.

143: 21- 144: 8. I n t hat mar ket , FBS f oot bal l and Di vi si on I

basket bal l school s ar e buyer s seeki ng t o acqui r e r ecr ui t s’

at hl et i c ser vi ces and l i censi ng r i ght s, payi ng f or t hem wi t h f ul l

gr ant s- i n- ai d but no mor e. From t hat per spect i ve, t he NCAA’ s

r est r i ct i ons on st udent - at hl et e compensat i on st i l l r epr esent a

f or m of pr i ce f i xi ng but creat e a buyer s’ car t el , r at her t han a

sel l er s’ car t el . J ust as i n Pl ai nt i f f s ’ col l ege educat i on mar ket ,

school s woul d engage i n pr i ce compet i t i on i n t he mar ket f or

r ecrui t s’ at hl et i c ser vi ces and l i censi ng r i ght s i f t her e wer e no

r est r i ct i ons on st udent - at hl et e compensat i on; t he onl y di f f er ence

woul d be that t hey woul d be vi ewed as buyer s i n t he t r ansact i ons

r at her t han sel l er s. Thus, because Pl ai nt i f f s’ col l ege educat i on

mar ket i s essent i al l y a mi r r or i mage of t he mar ket f or r ecr ui t s’

at hl et i c ser vi ces and l i censi ng r i ght s, t he Cour t f i nds t hat t he

NCAA exer ci ses mar ket power , f i xes pr i ces, and r est r ai ns

compet i t i on i n bot h mar ket s.

I V. Asser t ed Pur poses of t he Rest r ai nt

The NCAA asser t s t hat t he chal l enged r est r i ct i ons on st udent -

athl ete compensat i on are reasonabl e because t hey are necessary t o

pr eserve i t s t r adi t i on of amat eur i sm, mai nt ai n compet i t i ve bal ance

among FBS f oot bal l and Di vi si on I basket bal l t eams, pr omot e the




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i nt egr at i on of academi cs and at hl et i cs, and i ncr ease t he t ot al

out put of i t s pr oduct .

A. Pr eservat i on of Amat eur i sm

The NCAA asser t s t hat i t s chal l enged r ul es promot e consumer

demand f or i t s pr oduct by pr eser vi ng i t s t r adi t i on of amat eur i sm

i n col l ege spor t s. I t r el i es on hi st or i cal evi dence, consumer

sur vey dat a, and l ay wi t ness t est i mony t o suppor t t hi s asser t i on.

The Cour t does not f i nd t hi s evi dence suf f i ci ent t o j ust i f y t he

chal l enged r est r ai nt .

Dr . Emmer t t est i f i ed t hat “t he r ul es over t he hundr ed- year

hi st or y of t he NCAA ar ound amat eur i sm have f ocused on, f i r st of

al l , maki ng sur e t hat any resour ces t hat ar e pr ovi ded t o a

st udent - at hl et e ar e onl y t hose t hat ar e f ocused on hi s or her

get t i ng an educat i on. ” Tr i al Tr . 1737: 8- : 12. The hi st or i cal

evi dence pr esent ed at t r i al , however , demonst r at es t hat t he

associ at i on’ s amat eur i sm r ul es have not been near l y as consi st ent

as Dr . Emmer t r epr esent s. I n f act , t hese r ul es have changed

numerous t i mes si nce the NCAA - - t hen known as t he I nt ercol l egi ate

At hl et i c Associ at i on ( I AA) - - enacted i t s f i r st set of byl aws i n

1906. The I AA’ s f i r st byl aws gover ni ng amat eur i sm pr ovi ded,

No st udent shal l r epr esent a Col l ege orUni ver si t y i n an i nt er col l egi at e game orcont est who i s pai d or r ecei ves, di r ect l y or

i ndi r ect l y, any money or f i nanci al concessi onor emol ument as past or present compensat i onf or , or as pr i or consi der at i on or i nducementt o pl ay i n, or ent er any at hl et i c cont est ,whether t he sai d remunerat i on be recei vedf r om, or pai d by, or at t he i nst ance of anyor gani zat i on, commi t t ee or f acul t y of suchCol l ege or Uni ver si t y, or any i ndi vi dualwhatever .




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St i p. Undi sput ed Fact s ¶¶ 6- 7. Thi s r ul e woul d have barr ed even

t oday’ s at hl et i c schol ar shi ps. Despi t e t he br eadt h of t hi s

wr i t t en pr ohi bi t i on, t he I AA’ s member school s r ecr ui t ed student s

usi ng “pl ayer subsi di es” and ot her i l l i ci t f or ms of payment . I d.

¶ 10.

I n 1916, af t er changi ng i t s name t o t he NCAA, t he associ at i on

adopt ed a new r ul e st at i ng t hat an amat eur was “one who

par t i ci pat es i n compet i t i ve physi cal spor t s onl y f or pl easur e, and

t he physi cal , ment al , mor al , and soci al benef i t s di r ect l y der i ved

t heref r om. ” I d. The NCAA amended t hat def i ni t i on i n 1922 t o

def i ne an amateur as “one who engages i n spor t sol el y f or t he

physi cal , ment al or soci al benef i t s he der i ves t her ef r om, and t o

whom t he spor t i s not hi ng mor e t han an avocat i on. ” I d. ¶ 14.

Most school s cont i nued t o i gnor e t hese r ul es f or t he f i r st

f ew decades of t he NCAA’ s exi st ence. I d. ¶¶ 17- 20. Then, i n

1948, t he NCAA enact ed a st r i ct set of r ul es known as t he “Sani t y

Code” desi gned t o cur b vi ol at i ons of i t s byl aws. I d. ¶ 20. The

Sani t y Code “r equi r ed t hat f i nanci al ai d be awar ded wi t hout

consi der at i on of at hl et i cs abi l i t y, ” whi ch, agai n, woul d have

pr ohi bi t ed t oday’ s at hl et i c schol ar shi ps. I d. The NCAA r epeal ed

t he Sani t y Code t he f ol l owi ng year and, i n 1952, cr eat ed i t s f i r st

enf or cement commi t t ee t o addr ess and pr event r ul es i nf r act i ons.

I d. ¶ 24.

I n 1956, t he NCAA enacted a new set of amateur i sm r ul es

per mi t t i ng school s t o awar d at hl et i c schol ar shi ps t o st udent -

at hl et es. I d. ¶ 25. These r ul es est abl i shed a nat i onal st andar d

gover ni ng at hl et i cs- based f i nanci al ai d and i mposed a l i mi t on t he

si ze of at hl et i c schol ar shi ps t hat school s wer e per mi t t ed t o




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of f er . I d. That l i mi t - - now known as a f ul l “gr ant - i n- ai d” - -

pr ecl uded st udent - at hl et es f r om r ecei vi ng any f i nanci al ai d beyond

t hat needed f or “commonl y accept ed educat i onal expenses, ”

i ncl udi ng t ui t i on, f ees, r oom and boar d, books, and cash f or

i nci dent al expenses such as l aundr y. I d.

The NCAA cont i nued t o r evi se i t s schol ar shi p l i mi t s af t er

i mpl ement i ng t he gr ant - i n- ai d l i mi t i n 1956. I n 1975, f or

i nst ance, i t r emoved t he cash f or i nci dent al expenses f r om t he

f ul l gr ant - i n- ai d. Wal t er Byer s Depo. 21: 21- 22: 14, 24: 6- : 17. I t

amended t he gr ant - i n- ai d r ul es agai n i n 2004 by al l owi ng st udent -

at hl et es who r ecei ve f eder al Pel l gr ant s t o r ecei ve t ot al

assi st ance i n excess of a f ul l gr ant - i n- ai d and even i n excess of

t he cost of at t endance. Tr i al Tr . 161: 10- 162: 4 ( Nol l ) ; Ex. 2340

at 208. As a r esul t , st udent - at hl et es who qual i f y f or a Pel l

gr ant ar e now el i gi bl e t o r ecei ve a f ul l gr ant - i n- ai d pl us t he

val ue of t hei r Pel l gr ant - - cur r ent l y, j ust over $5, 500 - - even

i f t hat t ot al exceeds the cost of at t endance. Tr i al Tr .

1573: 8- : 16 ( Past i des) ; Ex. 2340 at 208. The NCAA amended i t s

r ul es agai n i n 2013 t o per mi t di f f er ent l evel s of compensat i on f or

r ecrui t s i n di f f er ent spor t s. The new r ul es per mi t Di vi si on I

t enni s r ecr ui t s t o ear n up t o t en t housand dol l ar s per year i n

pr i ze money f r om at hl et i c event s bef or e t hey enr ol l i n col l ege.

Ex. 2340 at 75. Ot her Di vi si on I r ecrui t s, i n cont r ast , r emai n

bar r ed f r om r ecei vi ng any pr i ze money i n excess of t hei r act ual

and necessar y cost s of compet i ng i n an event . I d.

The amat eur i sm provi si on i n t he NCAA’ s cur r ent const i t ut i on

st at es t hat st udent - at hl et es “shal l be amat eur s i n an

i nt er col l egi at e spor t , and t hei r par t i ci pat i on shoul d be mot i vat ed




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pr i mar i l y by educat i on and by t he physi cal , ment al and soci al

benef i t s t o be der i ved. St udent par t i ci pat i on i n i nt er col l egi at e

at hl et i cs i s an avocat i on, and st udent - at hl et es shoul d be

pr ot ect ed f r om expl oi t at i on by pr of essi onal and commer ci al

ent er pr i ses. ” Ex. 2340 at 18. Thi s concept i on of amat eur i sm

st ands i n st ar k cont r ast t o t he def i ni t i ons set f or t h i n t he

NCAA’ s ear l y byl aws. I ndeed, educat i on - - whi ch t he NCAA now

consi der s t he pr i mar y mot i vat i on f or par t i ci pat i ng i n

i nt er col l egi at e at hl et i cs - - was not even a r ecogni zed mot i vat i on

f or amateur athl etes dur i ng t he year s when t he NCAA pr ohi bi t ed

at hl et i c schol ar shi ps. The Cour t f i nds t hat t he NCAA’ s cur r ent

r est r i ct i ons on st udent - at hl et e compensat i on, whi ch cap at hl et i cs-

based f i nanci al ai d bel ow t he cost of at t endance, ar e not

j ust i f i ed by t he def i ni t i on of amat eur i sm set f or t h i n i t s cur r ent

byl aws.

Al t hough t he NCAA sought t o est abl i sh t he i mport ance of t hese

r est r i ct i ons by asser t i ng t hat t hey i ncr ease consumer i nt er est i n

FBS f oot bal l and Di vi si on I basket bal l , i t s evi dence suppor t i ng

t hi s asser t i on i s unper suasi ve. I t pr esent ed t est i mony f r om a

survey resear ch exper t , Dr . J . Mi chael Denni s, who conduct ed a

sur vey of consumer at t i t udes concer ni ng col l ege spor t s i n 2013.

Dr . Denni s sur veyed 2, 455 r espondent s acr oss t he Uni t ed St ates and

observed t hat t hey gener al l y opposed t he i dea of payi ng col l ege

f oot bal l and basket bal l pl ayer s. Tr i al Tr. 2613: 24- 2614: 6. Hi s

sur vey cont ai ned an i ni t i al quest i on t hat appar ent l y af f ect ed many

r espondent s’ answer s t o t he sur vey’ s subst ant i ve quest i ons. The

i ni t i al open- ended quest i on asked r espondent s what t hey had hear d

about st udent - at hl et es bei ng pai d. I d. 2716: 15- 2717: 7; Exs. 2629,




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2630. Pl ai nt i f f s’ sur vey exper t , Hal Por et , not ed t hat t he

“s i ngl e most common r esponse” t o t hi s quest i on was t hat

r espondent s had hear d about st udent - at hl et es r ecei vi ng some f or m

of i l l egal or i l l i ci t payment s. Tr i al Tr . 2714: 2- : 20; Ex. 2629.

Many ot her r espondent s ment i oned payi ng st udent - at hl et es a sal ar y.

Tr i al Tr . 2714: 21- 2715: 2 ( Poret ) ; Ex. 2630. Al t hough Dr . Denni s

t est i f i ed t hat hi s r esul t s r emai ned t he same even af t er he r emoved

t hese speci f i c 274 r espondent s f r om hi s sampl e, t he f act t hat

t hese r espondent s expr essl y ment i oned i l l i ci t payment s or sal ar i es

at t he st ar t of t he sur vey st r ongl y suggest s t hat t he quest i on

pr i med r espondent s t o thi nk about such i l l i ci t payment s when

answer i ng t he other survey quest i ons.

The NCAA r el i es heavi l y on t he f act t hat si xt y- ni ne per cent

of r espondent s t o Dr . Denni s’ s sur vey expr essed opposi t i on t o

payi ng st udent - at hl et es whi l e onl y t went y- ei ght per cent f avor ed

payi ng t hem. Tr i al Tr . 2604: 21- 2605: 2; Ex. 4045 at 19. These

r esponses, however , ar e not r el evant t o t he speci f i c i ssues r ai sed

her e and say l i t t l e about how consumer s woul d act ual l y behave i f

t he NCAA’ s r est r i ct i ons on st udent - at hl et e compensat i on wer e

l i f t ed. Al t hough Dr . Denni s t est i f i ed t hat t hese r esponses wer e

consi st ent wi t h t hose observed i n ot her pol l s and sur veys

concer ni ng col l ege spor t s, he acknowl edged t hat t hose ot her

st udi es may “var y i n t hei r qual i t y or t hei r met hodol ogy and t hei r

i mpl ement at i on. ” Tr i al Tr . 2641: 24- 2642: 11; Ex. 4045 at 20.

Accor di ngl y, t he Cour t does not f i nd t hese f i ndi ngs t o be cr edi bl e

evi dence that consumer demand f or t he NCAA’ s product woul d

decr ease i f st udent - at hl et es wer e per mi t t ed t o r ecei ve

compensat i on.




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The most r el evant quest i ons i n Dr . Denni s’ s survey asked

r espondent s speci f i cal l y whet her t hey woul d be mor e or l ess l i kel y

t o wat ch, l i st en t o, or at t end col l ege f oot bal l and basket bal l

games i f st udent - at hl et es wer e pai d. Thi r t y- ei ght per cent of al l

r espondent s st at ed t hey woul d be l ess l i kel y t o wat ch, l i st en t o,

or at t end games i f st udent - at hl et es wer e pai d $20, 000 per year .

Ex. 4045 at 23. For t y- seven per cent st at ed t hat t hey woul d be

l ess l i kel y t o wat ch, l i st en t o, or at t end games i f st udent -

at hl et es wer e pai d $50, 000 per year . I d. I n cont r ast , onl y about

f our or f i ve percent of r espondent s sai d t hat t hey woul d be mor e

l i kel y t o wat ch, l i st en t o, or at t end games i f st udent - at hl et es

wer e pai d $20, 000 or $50, 000 per year . Tr i al Tr . 2651: 14- 2652: 8

( Denni s) . The r emai ni ng r espondent s st ated t hat t hey woul d be no

mor e or l ess l i kel y to wat ch, l i st en t o, or at t end games i f

st udent - at hl et es wer e pai d t hese amount s. I d.

Whi l e t hese quest i ons ar e mor e germane to consumer behavi or

t han t he sur vey’ s f i ndi ngs about r espondent s’ gener al opi ni ons

about compensat i ng st udent - at hl et es, t hey st i l l do not cr edi bl y

est abl i sh t hat t he speci f i c r ul es chal l enged her e cont r i but e t o

consumer demand. Dr . Denni s di d not ask r espondent s f or t hei r

opi ni ons about pr ovi di ng st udent - at hl et es wi t h a shar e of

l i censi ng r evenue gener at ed f r om t he use of t hei r own names,

i mages, and l i kenesses. I d. 2669: 15- : 18 ( Denni s) ; 2709: 6- : 18

( Por et ) . Nor di d he ask t hei r opi ni ons about payi ng st udent -

at hl et es t he f ul l cost of at t endance, or any amount l ess t han

$20, 000 per year . Dr . Denni s al so f ai l ed t o ask respondent s how

t hei r behavi or woul d be af f ect ed i f smal l or l ar ge amount s of

compensat i on f or t he use of st udent - at hl et es’ names, i mages, and




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l i kenesses wer e hel d i n t r ust f or t hem unt i l t hey l ef t school - -

one of Pl ai nt i f f s’ pr oposed al t er nat i ves her e. I d. 2686: 18- 2687: 3

( Denni s) ; 2711: 21- 2712: 9, 2718: 19- 2714: 12 ( Por et ) .

I n addi t i on, numer ous r espondent s pr ovi ded i nt er nal l y

i nconsi st ent r esponses t o di f f er ent sur vey quest i ons. Ei ght y-

t hr ee of t he respondent s who sai d t hat t hey f avor ed payi ng

st udent - at hl et es al so st at ed t hat t hey woul d be l ess l i kel y to

wat ch, l i st en t o, or at t end games i f st udent - at hl et es wer e pai d.

I d. 2729: 25- 2730: 9. Anot her t hi r t y- t hr ee r espondent s st at ed t hat

t hey opposed payi ng st udent - at hl et es but sai d t hat t hey woul d be

mor e l i kel y t o wat ch, l i st en t o, or at t end games i f st udent -

at hl et es wer e pai d. I d. These r esponses suggest t hat some

r espondent s di d not under st and or di d not t ake ser i ousl y some of

t he sur vey quest i ons and i l l ust r at e t he l i mi t s of Dr . Denni s’ s

concl usi ons.

Based on t hese f l aws i n Dr . Denni s’ s survey, t he Cour t f i nds

t hat i t does not pr ovi de cr edi bl e evi dence t hat demand f or t he

NCAA’ s pr oduct woul d decr ease i f st udent - at hl et es wer e per mi t t ed,

under cer t ai n ci r cumst ances, t o recei ve a l i mi t ed shar e of t he

r evenue generated f r omt he use of t hei r own names, i mages, and

l i kenesses. Al t hough Pl ai nt i f f s di d not pr ovi de t hei r own opi ni on

sur vey t o count er Dr . Denni s’ s survey, t he Cour t not es t hat t he

NCAA pr oduced Dr . Denni s’ s survey as a r ebut t al r eport , whi ch may

have l i mi t ed Pl ai nt i f f s’ oppor t uni t y t o commi ssi on such a sur vey.

What ’ s more, Dr . Denni s hi msel f acknowl edged t hat i t woul d be

ext r emel y di f f i cul t t o ask the speci f i c ki nds of det ai l ed sur vey

quest i ons most r el evant t o t hi s case - - speci f i cal l y, t hose




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r el at i ng to varyi ng amount s and methods of payment f or t he use of

st udent - at hl et es’ names, i mages, and l i kenesses.

Pl ai nt i f f s pr esent ed ot her evi dence i l l ust r at i ng t he l i mi t s

of opi ni on surveys as pr edi ct or s of consumer demand f or spor t s-

ent ert ai nment pr oduct s. Thei r exper t on spor t s management , Dr .

Dani el Rascher , descr i bed how opi ni on sur veys conduct ed between

1970 and t he pr esent consi st ent l y showed t hat t he publ i c

over whel mi ngl y opposed r i si ng basebal l pl ayer sal ar i es but

cont i nued t o wat ch, l i st en t o, and at t end Maj or League Basebal l

games at a hi gh r at e even as pl ayer sal ar i es r ose dur i ng t hi s

per i od. I d. 901: 12- 903: 24; Ex. 2549. He speci f i cal l y not ed t hat

many peopl e f el t t hat t he r emoval of t he r eserve cl ause i n t he

1970s - - whi ch ul t i mat el y enabl ed pl ayer s t o become f r ee agent s,

t hus l eadi ng t o hi gher sal ar i es - - woul d under mi ne t he popul ar i t y

of pr of essi onal basebal l . However , despi t e t hese pr edi ct i ons and

f ans’ st at ed opposi t i on t o r i si ng sal ar i es, Maj or League Basebal l

r evenues cont i nued t o r i se af t er t he removal of t he reserve

cl ause. I d. 903: 13- : 16 ( “So even t hough t he f ans i n pol l s say,

‘ Hey, we don’ t want t he pl ayers t o make so much money, ’ ul t i matel y

t hey cont i nue t o wat ch on t el evi si on, you know, buy t i cket s,

concessi ons, t he whol e t hi ng. ” ( i nt er nal quot at i on mar ks added) ) .

Dr . Rascher hi ghl i ght ed anot her sur vey showi ng publ i c opposi t i on

t o t he deci si on of t he I nt er nat i onal Ol ympi c Commi t t ee ( I OC) t o

per mi t pr of essi onal at hl et es t o compet e i n t he Ol ympi cs, even as

consumer i nt erest i n t he Ol ympi cs r emai ned hi gh and r evenues

gener at ed by t he event cont i nued t o r i se dur i ng t he same per i od.

I d. 904: 22- 905: 18; see al so i d. 226: 15- 227: 17 ( t est i mony of Dr .

Nol l t hat t he Ol ympi cs are “much mor e popul ar now t han they were




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[ when] amat eur ”) . I n addi t i on t o t he Ol ympi cs, Dr . Rascher al so

poi nt ed t o var i ous other f or mer l y amat eur spor t s associ at i ons - -

such as t hose governi ng rugby and t enni s - - whose event s gr ew i n

popul ar i t y af t er t hey began t o al l ow t hei r at hl et es t o accept

payment s. I d. 903: 25- 904: 21.

Al t hough t he NCAA pr esent ed evi dence showi ng t hat t he Ni el sen

r at i ngs f or pr of essi onal basebal l and t he Ol ympi cs have decl i ned

si nce the 1970s and 1980s, t hi s does not cast doubt on Dr .

Rascher ’ s f i ndi ngs. As Dr . Rascher expl ai ned, Ni el sen r at i ngs

measure t he shar e of t he popul at i on wat chi ng a par t i cul ar event ,

not t he r aw number of vi ewer s. I d. 986: 7- : 10, 1019: 20- 1020: 9. As

a r esul t , Ni el sen r at i ngs have decl i ned f or vi r t ual l y ever y

t el evi si on pr ogr am or spor t i ng event over t he past f ew decades as

t he vi ewi ng popul at i on and number of t el evi si on channel s has

gr own. I d. Even a si ngl e event as popul ar as t he Super Bowl ,

whi ch has seen a dr amat i c i ncr ease i n t he raw number of vi ewers

over t he year s, has exper i enced f l at Ni el sen r at i ngs f or sever al

decades. I d. 1024: 18- 1026: 7, 1025: 6- : 15.

Ot her hi st or i cal evi dence suggest s t hat t he NCAA’ s

r est r i ct i ons on st udent - at hl et e compensat i on have not cont r i but ed

si gni f i cant l y t o t he popul ar i t y of FBS f oot bal l and Di vi si on I

basket bal l . The NCAA’ s f or mer pr esi dent , t he l at e Wal t er Byer s,

t est i f i ed dur i ng hi s 2007 deposi t i on, f or i nst ance, t hat t he

NCAA’ s deci si on t o r emove i nci dent al expenses f r om t he gr ant - i n-

ai d coverage i n 1975 was not mot i vat ed by a desi r e to i ncr ease

consumer demand f or i t s pr oduct . Byer s Depo. 21: 21- 22: 14,

24: 6- : 17. I n f act , he speci f i cal l y not ed t hat NCAA spor t s

exper i enced a t r emendous gr owt h i n popul ar i t y dur i ng t he per i od




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bet ween 1956 and 1975 when gr ant s- i n- ai d st i l l cover ed t he f ul l

cost of at t endance. I d. 25: 15- 26: 8.7 None of t he evi dence i n t he

t r i al r ecor d suggest s t hat t he r emoval of i nci dent al expenses or

any ot her changes t o t he gr ant - i n- ai d l i mi t had an i mpact on t he

popul ar i t y of col l ege spor t s dur i ng t hi s t i me.

Thus, t he Cour t f i nds t hat t he NCAA’ s r est r i ct i ons on

st udent - at hl et e compensat i on ar e not t he dr i vi ng f or ce behi nd

consumer demand f or FBS f oot bal l and Di vi si on I basket bal l - r el at ed

pr oduct s. Rat her , t he evi dence pr esent ed at t r i al suggest s t hat

consumer s ar e i nt er est ed i n col l ege spor t s f or ot her r easons. Mr .

Pi l son t est i f i ed, f or i nst ance, t hat t he popul ar i t y of col l ege

spor t s i s dr i ven by f eel i ngs of “l oyal t y t o t he school , ” whi ch ar e

shar ed by both al umni and peopl e “who l i ve i n t he regi on or t he

conf er ence. ” Tr i al Tr . 757: 20- 758: 13. Si mi l ar l y, Chr i st i ne

Pl onsky, an associ at e at hl et i cs di r ector at t he Uni ver si t y of

Texas ( UT) , t est i f i ed t hat UT spor t s woul d r emai n popul ar as l ong

as t hey had “anythi ng i n our wor l d t o do wi t h t he Uni ver si t y of

Texas. ” I d. 1414: 23- : 24; see al so i d. 1376: 13 ( “Longhorns ar e

pr et t y l oyal . ”) . Dr . Emmer t hi msel f not ed t hat much of t he

popul ar i t y of t he NCAA’ s annual men’ s basket bal l t our nament st ems

f r om t he f act t hat school s f r om al l over t he count r y par t i ci pat e

“so t he f an base has an opport uni t y t o cheer f or someone f r om

t hei r r egi on of t he count r y. ” I d. 1757: 1- : 9; see al so i d. ( “I t ’ s

become ext r emel y popul ar at l east i n part because t here’ s someone

7 The NCAA’ s obj ect i ons t o t hi s t est i mony under Feder al Rul es of

Evi dence 602 and 701 are overr ul ed. Wal t er Byer s was the execut i vedi r ect or of t he NCAA between 1956 and 1975, St i p. Undi sput ed Fact s ¶ 23,and t her ef ore had personal knowl edge of t he popul ar i t y of NCAA spor t sdur i ng t hi s per i od.




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f r om your nei ghbor hood l i kel y t o be i n t he t our nament . ”) . He

t est i f i ed t hat col l ege bowl games have t he same appeal . I d.

1757: 16- : 19. Thi s evi dence demonst r ates t hat t he NCAA’ s

r est r i ct i ons on st udent - at hl et e pay i s not t he dr i vi ng f or ce

behi nd consumer i nt er est i n FBS f oot bal l and Di vi si on I

basket bal l . Thus, whi l e consumer pr ef er ences mi ght j ust i f y

cer t ai n l i mi t ed r est r ai nt s on st udent - at hl et e compensat i on, t hey

do not j ust i f y t he r i gi d r est r i cti ons chal l enged i n t hi s case.

B. Compet i t i ve Bal ance

The NCAA asser t s t hat i t s chal l enged r est r ai nt s ar e

r easonabl e and pr ocompet i t i ve because t hey are needed t o mai nt ai n

t he cur r ent l evel of compet i t i ve bal ance among FBS f oot bal l and

Di vi si on I basket bal l t eams. I t f ur t her asser t s t hat i t must

mai nt ai n t hi s par t i cul ar l evel of compet i t i ve bal ance i n or der t o

sust ai n consumer demand f or i t s pr oduct .

The Cour t f i nds t hat t he NCAA’ s cur r ent r est r i ct i ons on

st udent - athl ete compensat i on do not pr omote compet i t i ve bal ance.

As Dr . Nol l t est i f i ed, si nce t he 1970s, numer ous spor t s economi st s

have st udi ed t he NCAA’ s amat eur i sm r ul es and near l y al l have

concl uded t hat t he r ul es have no di scer ni bl e ef f ect on t he l evel

of compet i t i ve bal ance. Tr i al Tr . 229: 8- 234: 2. He not ed t hat one

of t he mor e r ecent ar t i cl es addr essi ng t he subj ect , a 2007 st udy

by economi st J i m Peach publ i shed i n t he Soci al Sci ence J our nal ,

f ound t hat t her e i s “‘ l i t t l e evi dence t hat t he NCAA r ul es and

r egul at i ons have pr omot ed compet i t i ve bal ance i n col l ege at hl et i cs

and no a pr i or i r eason t o t hi nk t hat el i mi nat i ng t he r ul es woul d

change t he compet i t i ve bal ance si t uat i on. ’ ” I d. 232: 22- 233: 1

( quot i ng Peach ar t i cl e) . Dr . Rascher r eached t he same concl usi on




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based on hi s r evi ew of t he economi cs l i t er at ur e. I d. 920: 9-

922: 16. He speci f i cal l y ci t ed one of t he l eadi ng t ext books i n t he

f i el d of spor t s economi cs, by Rod For t , whi ch f ound t hat t he

NCAA’ s r est r i ct i ons on st udent - at hl et e pay do not appear t o have

any i mpact on compet i t i ve bal ance. I d. 921: 10- : 18.

The academi c consensus on t hi s i ssue i s not surpr i si ng gi ven

t hat many of t he NCAA’ s ot her r ul es and pr act i ces suggest t hat t he

associ at i on i s unconcer ned wi t h achi evi ng compet i t i ve bal ance.

Sever al wi t nesses t est i f i ed t hat t he r est r i ct i ons on st udent -

athl ete compensat i on l ead many school s s i mpl y t o spend l arger

por t i ons of t hei r at hl et i c budget s on coachi ng, r ecrui t i ng, and

t r ai ni ng f aci l i t i es. I d. 296: 14- 297: 18 ( Nol l ) ; 865: 11- 866: 2,

910: 2- 911: 7 ( Rascher ) . I n t he maj or conf er ences, f or i nst ance,

t he aver age sal ar y f or a head f oot bal l coach exceeds $1. 5 mi l l i on.

I d. 1151: 20- 1152: 14 ( St aur owsky) . The f act t hat hi gh- r evenue

school s are abl e t o spend f r eel y i n t hese ot her ar eas cancel s out

what ever l evel i ng ef f ect t he r est r i ct i ons on st udent - at hl et e pay

mi ght otherwi se have. The NCAA does not do anyt hi ng t o r ei n i n

spendi ng by the hi gh- r evenue school s or mi ni mi ze exi st i ng

di spar i t i es i n r evenue and r ecrui t i ng. I n f act , Dr . Emmer t

speci f i cal l y conceded t hat i t i s “not t he mi ssi on of t he

associ at i on t o . . . t r y and t ake away the advant ages of a

uni ver si t y t hat ’ s made a si gni f i cant commi t ment t o f aci l i t i es and

t r adi t i on and al l of t he t hi ngs t hat go al ong wi t h bui l di ng a

pr ogr am. ” Tr i al Tr . 1774: 23- 1775: 6.

Thi s same sent i ment under l i es t he NCAA’ s unequal r evenue

di st r i but i on f or mul a, whi ch r ewar ds t he school s and conf er ences

t hat al r eady have t he l ar gest at hl et i c budget s. Revenues




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gener at ed f r om t he NCAA’ s annual Di vi si on I men’ s basket bal l

t our nament ar e di st r i but ed to t he conf er ences based on how t hei r

member school s per f ormed i n t he t our nament i n r ecent year s.

Docket No. 207, St i p. Re: Br oadcast Money, at ¶ 10. As a r esul t ,

t he maj or conf erences - - and t he hi ghest r evenue school s - -

t ypi cal l y r ecei ve t he gr eat est payout s, whi ch hi nder s, r at her t han

pr omot es, compet i t i ve bal ance.

The onl y quant i t at i ve evi dence t hat t he NCAA present ed

r el at ed t o compet i t i ve bal ance i s a cur sor y st at i st i cal anal ysi s

conduct ed by Dr . Rubi nf el d compar i ng t he l evel s of compet i t i ve

bal ance i n FBS f oot bal l and Di vi si on I basket bal l t o t he l evel s i n

t he NFL and NBA. Not hi ng i n Dr . Rubi nf el d’ s anal ysi s suggest s

t hat t he NFL and NBA - - each of whi ch has f ewer t eams t han

Di vi si on I - - pr ovi de an appr opr i at e basel i ne f or compar i ng

compet i t i ve bal ance. Mor e i mpor t ant l y, hi s anal ysi s does not

suggest t hat t he NCAA’ s chal l enged r ul es actual l y pr oduce t he

l evel s of compet i t i ve bal ance he observed.

Even i f t he NCAA had presented some evi dence of a causal

connect i on bet ween i t s chal l enged r ul es and i t s cur r ent l evel of

compet i t i ve bal ance, i t has not shown t hat t he cur r ent l evel of

compet i t i ve bal ance i s necessar y t o mai nt ai n i t s cur r ent l evel of

consumer demand. Tr i al Tr . 228: 20- 229: 2 ( Nol l ) . I t i s undi sput ed

t hat t he i deal l evel of compet i t i ve bal ance f or a spor t s l eague i s

somewhere between per f ect compet i t i ve bal ance ( where every t eam

has an equal chance of wi nni ng ever y game) and per f ect i mbal ance

( where every game has a pr edi ct abl e out come) . I d. 453: 8- : 22

( Nol l ) ; 3127: 2- : 21 ( Rubi nf el d) . The NCAA has not even at t empt ed

t o i dent i f y t he speci f i c l evel of compet i t i ve bal ance bet ween




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t hose ext r emes t hat i s i deal or necessar y t o sust ai n i t s cur r ent

popul ar i t y. Gi ven t he l ack of such evi dence i n t he r ecor d, t he

Cour t f i nds t hat t he NCAA’ s chal l enged r ul es are not needed t o

achi eve a l evel of compet i t i ve bal ance necessar y, or even l i kel y,

t o mai nt ai n cur r ent l evel s of consumer demand f or FBS f oot bal l and

Di vi s i on I basket bal l .

C. I nt egr at i on of Academi cs and At hl et i cs

The NCAA cont ends t hat i t s r est r i ct i ons on st udent - at hl et e

compensat i on are reasonabl e and pr ocompet i t i ve because t hey

pr omot e t he i nt egr at i on of academi cs and at hl et i cs. I n

par t i cul ar , i t asser t s t hat i t s chal l enged r ul es ensur e t hat

st udent - at hl et es ar e abl e t o obt ai n al l of t he educat i onal

benef i t s t hat t hei r school s pr ovi de and par t i ci pat e i n t hei r

school s’ academi c communi t i es. Accor di ng t o t he NCAA, t he

i nt egr at i on of academi cs and at hl et i cs i ncr eases t he qual i t y of

t he educat i onal servi ces i t s member school s pr ovi de t o st udent -

at hl et es i n t he col l ege educat i on mar ket t hat Pl ai nt i f f s have

i dent i f i ed.

For support , t he NCAA r el i es on evi dence showi ng that

st udent - at hl et es recei ve bot h shor t - t er m and l ong- t er m benef i t s

f r om bei ng st udent - at hl et es. One of i t s exper t s, Dr . J ames

Heckman, t est i f i ed t hat par t i ci pat i on i n i nt er col l egi at e at hl et i cs

l eads t o bet t er academi c and l abor market out comes f or many

st udent - athl etes as compared t o other members of t hei r

soci oeconomi c gr oups. Tr i al Tr . 1493: 13- 1494: 25. Dr . Heckman

f ound t hat t hese benef i t s are par t i cul ar l y pr onounced f or st udent -

at hl et es f r om di sadvant aged backgr ounds. I d. The NCAA pr esent ed

addi t i onal evi dence, i ncl udi ng i t s own dat a on st udent - at hl et e




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gr aduat i on r at es, t o show t hat st udent - at hl et es enj oy subst ant i al

benef i t s f r om par t i ci pat i ng i n i nt er col l egi at e at hl et i cs.

However , none of t hi s dat a nor any of Dr . Heckman’ s obser vat i ons

suggest s t hat st udent - at hl et es benef i t speci f i cal l y f r om t he

r est r i ct i ons on st udent - at hl et e compensat i on t hat ar e chal l enged

i n t hi s case. To t he cont r ar y, Dr . Heckman speci f i cal l y t est i f i ed

t hat t he l ong- t er m educat i onal and academi c benef i t s t hat st udent -

at hl et es enj oy st em f r om t hei r i ncreased access t o f i nanci al ai d,

t ut or i ng, academi c suppor t , ment or shi p, st r uct ur ed schedul es, and

ot her educat i onal servi ces t hat ar e unr el at ed t o t he chal l enged

r ul es i n t hi s case. I d. 1512: 23- 1516: 17. FBS f oot bal l and

Di vi si on I basket bal l school s of f er most of t hese ser vi ces t o

t hei r st udent - athl et es i ndependent l y and ar e not compel l ed t o do

so by t he NCAA, par t i cul ar l y not by the chal l enged r ul es.

The same i s t r ue of t he var i ous ot her benef i t s of i ntegr at i on

t hat t he NCAA has i dent i f i ed. For i nst ance, t he benef i t s t hat

st udent - at hl et es der i ve f r om i nt er act i ng wi t h f acul t y and non-

st udent - athl etes on campus ar e achi eved most l y thr ough t he NCAA’ s

r ul es r equi r i ng st udent - at hl et es t o at t end cl ass and meet cer t ai n

academi c requi r ement s. They are al so achi eved t hr ough t he

associ at i on’ s r ul es pr ohi bi t i ng school s f r om creat i ng dor ms sol el y

f or st udent - at hl et es or f r om r equi r i ng st udent - at hl et es t o

pr act i ce more t han a cer t ai n number of hour s each week. None of

t hese r ul es i s chal l enged her e.

The onl y evi dence t hat t he NCAA has present ed t hat suggest s

t hat i t s chal l enged r ul es mi ght be necessar y to pr omot e t he

i nt egr at i on of academi cs and at hl et i cs i s t he t est i mony of

uni ver si t y admi ni st r at or s, who asser t ed t hat payi ng st udent -




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athl etes l arge sums of money woul d potent i al l y “cr eat e a wedge”

bet ween st udent - at hl et es and ot her s on campus. I d. 1591: 2- : 20

( Past i des) . These admi ni st r at or s not ed t hat , dependi ng on how

much compensat i on was ul t i matel y awarded, some st udent - athl etes

mi ght r ecei ve mor e money f r om t he school t han t hei r pr of essor s.

St udent - at hl et es mi ght al so be i ncl i ned t o separ at e themsel ves

f r om t he br oader campus communi t y by l i vi ng and soci al i zi ng of f

campus.

I t i s not cl ear t hat any of t he pot ent i al pr obl ems i dent i f i ed

by t he NCAA’ s wi t nesses woul d be uni que t o st udent - at hl et es. I n

f act , when t he Cour t asked Dr . Emmer t whether other weal t hy

st udent s - - such as t hose who come f r om r i ch f ami l i es or st ar t

successf ul busi nesses dur i ng school - - r ai se al l of t he same

pr obl ems f or campus rel at i ons, he r epl i ed t hat t hey di d. I d.

1790: 18- : 22. I t i s al so not cl ear why payi ng st udent - at hl et es

woul d be any more pr obl emat i c f or campus r el at i ons t han payi ng

ot her st udent s who pr ovi de servi ces t o t he uni ver si t y, such as

member s of t he st udent government or school newspaper .

Nonet hel ess, t he Cour t f i nds t hat cer t ai n l i mi t ed r est r i ct i ons on

st udent - at hl et e compensat i on may hel p t o i nt egr at e st udent -

at hl et es i nt o t he academi c communi t i es of t hei r school s, whi ch may

i n t ur n i mpr ove t he school s’ col l ege educat i on pr oduct .

Pl ai nt i f f s have pr oduced anecdot al and st at i st i cal evi dence

suggest i ng t hat t he NCAA’ s cur r ent r ul es do not serve t o i nt egr at e

FBS f oot bal l pl ayer s or Di vi si on I basket bal l pl ayer s i nt o t he

academi c communi t i es at t hei r school s. For exampl e, Ed O’ Bannon,

t he f or mer UCLA basket bal l st ar , t est i f i ed t hat he f el t l i ke “an

at hl et e masquer adi ng as a st udent ” dur i ng hi s col l ege year s. I d.




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33: 11- : 14. Pl ai nt i f f s al so pr esent ed t est i mony f r om Dr . El l en

St aur owsky, a spor t s management pr of essor , who st udi ed t he

exper i ences of FBS f oot bal l and Di vi si on I basket bal l pl ayer s and

concl uded t hat t he t i me demands of t hei r at hl et i c obl i gat i ons

pr event many of t hem f r om achi evi ng si gni f i cant academi c success.

I d. 1175: 12- 1176: 21. Some of t hi s evi dence conf l i ct s wi t h t he

NCAA’ s dat a on st udent - athl ete gr aduat i on r ates and Dr . Heckman’ s

observat i ons sur r oundi ng academi c out comes f or st udent - at hl et es.

However , t he Cour t need not r esol ve t hese f act ual di sput es

because, r egar dl ess of how t hey ar e r esol ved, t he r est r ai nt s on

st udent - at hl et e compensat i on chal l enged i n t hi s case gener al l y do

not ser ve t o enhance academi c out comes f or s t udent - athl etes.

D. I ncr eased Out put

The NCAA asser t s t hat i t s chal l enged r ul es ar e r easonabl e and

pr ocompet i t i ve because t hey enabl e i t t o i ncr ease t he number of

oppor t uni t i es avai l abl e t o school s and st udent - at hl et es t o

par t i ci pat e i n FBS f oot bal l and Di vi si on I basket bal l , whi ch

ul t i mat el y i ncr eases the number of games t hat can be pl ayed. I t

r ef er s t o t hi s i ncr eased number of FBS f oot bal l and Di vi si on I

school s, st udent - at hl et es, and games as i ncr eased out put .

The Cour t f i nds t hat t he NCAA’ s r est r i ct i ons on st udent -

at hl et e compensat i on do not hi ng t o i ncr ease t hi s out put . The

number of school s par t i ci pat i ng i n FBS f oot bal l and Di vi si on I

basket bal l has i ncr eased st eadi l y over t i me and cont i nues t o

i ncr ease t oday. St i p. Undi sput ed Fact s ¶¶ 42- 49. Thi s i s because

par t i ci pat i on i n FBS f oot bal l and Di vi si on I basket bal l t ypi cal l y

r ai ses a school ’ s pr of i l e and l eads t o i ncreased at hl et i cs- based

r evenue. Tr i al Tr . 872: 1- 874: 20 ( Rascher ) . Al t hough Dr . Emmer t




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and ot her NCAA and conf er ence of f i ci al s say t hat t hi s t r end i s not

t he r esul t of i ncr eased Di vi si on I r evenues but , r at her , because

of school s’ phi l osophi cal commi t ment t o amat eur i sm, t hi s t heor y i s

i mpl ausi bl e. I d. 1783: 2- : 14; 2080: 11- : 23 ( Del any) ; 2418: 5- : 25

( Sankey) ; 3188: 25- 3189: 17 ( Lewi s) . School s i n some of t he maj or

conf er ences have speci f i cal l y under t aken ef f or t s t o change t he

NCAA’ s exi st i ng schol ar shi p r ul es, whi ch suggest s t hat t he r ul es

ar e not t he r eason t hat t hey choose to par t i ci pat e i n Di vi si on I .

Ex. 2095 at 4 ( 2013 pr esent at i on by repr esent at i ves of t he f i ve

maj or conf er ences r equest i ng aut onomy to r ai se exi st i ng

schol ar shi p l i mi t s) ; Ex. 2527 at 2 ( 2014 l et t er f r om Pac 12 ur gi ng

ot her maj or conf er ences t o suppor t r ul e changes, i ncl udi ng r ai si ng

t he gr ant - i n- ai d l i mi t ) . What ’ s mor e, t her e i s no evi dence t o

suggest t hat any school s j oi ned Di vi si on I or i gi nal l y because of

i t s amat eur i sm r ul es. These school s had numer ous ot her opt i ons t o

par t i ci pat e i n col l egi at e spor t s associ at i ons t hat r est r i ct

compensat i on f or st udent - at hl et es, i ncl udi ng t he NCAA’ s l ower

di vi si ons and t he NAI A. I ndeed, school s i n FCS, Di vi si on I I , and

Di vi si on I I I ar e bound by t he same amat eur i sm pr ovi si ons of t he

NCAA’ s const i t ut i on as t he school s i n Di vi si on I . The r eal

di f f er ence bet ween school s i n Di vi si on I and school s i n ot her

di vi si ons and at hl et i cs associ at i ons, as expl ai ned above, i s t he

amount of r esour ces t hat Di vi si on I school s commi t t o at hl et i cs.

Thus, whi l e t here may be t angi bl e di f f er ences bet ween Di vi si on I

school s and ot her school s t hat par t i ci pat e i n i nt er col l egi at e

spor t s, t hese di f f er ences ar e f i nanci al , not phi l osophi cal .

For t hi s r eason, t he NCAA’ s asser t i on t hat school s woul d

l eave FBS and Di vi si on I f or f i nanci al r easons i f t he chal l enged




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r est r ai nt s wer e r emoved i s not cr edi bl e. The t est i mony of Dr .

Emmer t and var i ous other at hl et i cs admi ni st r at or s t hat most

Di vi si on I at hl et i c pr ogr ams oper at e at a l oss and woul d not

r emai n i n Di vi si on I i f t he chal l enged r ul es wer e r emoved

conf l i ct s wi t h t he cl ear wei ght of t he evi dence. Tr i al Tr .

1784: 6- : 18 ( Emmert ) ; 3188: 25- 3189: 3 ( Lewi s) . I ndeed, some of t he

NCAA’ s own wi t nesses under mi ned t hi s cl ai m. Dr . Har r i s Past i des,

t he pr esi dent of t he Uni ver si t y of Sout h Car ol i na, f or i nst ance,

speci f i cal l y t est i f i ed t hat hi s school “woul d pr obabl y cont i nue t o

compet e i n f oot bal l and men’ s basket bal l ” i f t he chal l enged

r est r i ct i ons on st udent - at hl et e compensat i on wer e l i f t ed. I d.

1598: 23- : 25. The commi ss i oner of Conf erence USA, Br i t t on

Banowsky, si mi l ar l y expr essed skept i ci sm t hat uni ver si t i es woul d

l eave Di vi si on I i f t he r est r i ct i ons wer e r emoved. I d. 2371: 25-

2372: 20. Ms. Pl onsky al so cast doubt on Dr . Emmer t ’ s asser t i on

t hat most Di vi si on I spor t s pr ogr ams oper at e at a l oss by not i ng

t hat UT’ s at hl et i cs depar t ment i s not onl y sel f - sust ai ni ng but , i n

f act , gener at es surpl us r evenue t hat f unds other uni ver si t y

pr ogr ams and expenses. I d. 1385: 12- : 18, 1465: 20- 1466: 10. She

i ndi cat ed t hat UT was not abnor mal i n t hi s r egar d and t hat t he

“vast pr opor t i on” of at hl et i cs pr ogr ams acr oss t he count r y ar e

oper at ed by “sel f - sour ced, sel f - gener at ed” r evenues. I d. 1467: 22-

1468: 11. Mr . Lewi s hi msel f acknowl edged t hat t he NCAA’ s r evenues,

most of whi ch are di st r i but ed back t o i t s member school s and

conf er ences, have i ncr eased i n r ecent year s. I d. 3195: 19- 3196: 3.

Dr . Rascher of f ered si mi l ar t est i mony and document ed t hat

par t i ci pat i on i n FBS f oot bal l and Di vi si on I basket bal l gener at es

si gni f i cant r evenue and i s hi ghl y pr of i t abl e f or most school s.




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I d. 830: 4- 831: 15. These r evenues are what enabl e t hem t o spend so

much on coaches and t r ai ni ng f aci l i t i es. Dr . Rascher al so not ed

t hat most FBS f oot bal l school s used t o spend even more on t hei r

st udent - at hl et es bef or e t he NCAA l ower ed i t s t eam schol ar shi p cap

f r om 105 t o ei ght y- f i ve. I d. 873: 20- 874: 20. Fur t her mor e, Dr .

Nol l t est i f i ed t hat some of t he school s t hat cur r ent l y compet e i n

FBS and Di vi si on I do so wi t hout pr ovi di ng the maxi mum amount of

f i nanci al ai d per mi t t ed under NCAA r ul es.

Based on thi s evi dence, t he Cour t f i nds t hat school s woul d

not exi t FBS f oot bal l and Di vi si on I basket bal l i f t hey wer e

per mi t t ed t o pay t hei r st udent - at hl et es a l i mi t ed amount of

compensat i on beyond t he val ue of t hei r schol arshi ps. The NCAA’ s

chal l enged rest r i ct i ons on compensat i on do not i ncr ease t he number

of oppor t uni t i es f or school s or st udent - at hl et es t o par t i ci pat e i n

Di vi s i on I .

V. Al t er nat i ves t o t he Rest r ai nt

Pl ai nt i f f s have pr oposed t hr ee modi f i cat i ons t o t he NCAA’ s

chal l enged r ul es whi ch, t hey cont end, woul d al l ow t he NCAA t o

achi eve t he pur poses of i t s chal l enged r ul es i n a l ess r est r i ct i ve

manner : ( 1) r ai se t he gr ant - i n- ai d l i mi t t o al l ow school s t o awar d

st i pends, der i ved f r om speci f i ed sour ces of l i censi ng r evenue, t o

st udent - at hl et es; ( 2) al l ow school s t o deposi t a shar e of

l i censi ng r evenue i nt o a t r ust f und f or st udent - at hl et es whi ch

coul d be pai d af t er t he st udent - at hl et es gr aduat e or l eave school

f or ot her r easons; or ( 3) per mi t st udent - at hl et es t o r ecei ve

l i mi t ed compensat i on f or t hi r d- par t y endor sement s appr oved by

t hei r school s.




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The Cour t f i nds t hat Pl ai nt i f f s’ f i r st proposed

al t er nat i ve - - al l owi ng school s t o awar d st i pends - - woul d l i mi t

t he ant i compet i t i ve ef f ect s of t he NCAA’ s cur r ent r est r ai nt

wi t hout i mpedi ng t he NCAA’ s ef f or t s t o achi eve i t s st at ed

pur poses, pr ovi ded t hat t he st i pends do not exceed t he cost of

at t endance as t hat t er m i s def i ned i n t he NCAA’ s byl aws. A

st i pend capped at t he cost of at t endance woul d not vi ol at e t he

NCAA’ s own def i ni t i on of amat eur i sm because i t woul d onl y cover

educat i onal expenses. I ndeed, as noted above, t he NCAA’ s member

school s used t o pr ovi de st udent - at hl et es wi t h si mi l ar st i pends

bef or e t he NCAA l ower ed i t s cap on gr ant s- i n- ai d. Byer s Depo.

21: 21- 22: 14, 24: 6- : 17. Dr . Emmer t t est i f i ed t hat r ai si ng t he

gr ant - i n- ai d l i mi t t o cover t he f ul l cost of at t endance woul d not

vi ol at e t he NCAA’ s amat eur i sm r ul es. Tr i al Tr . 1742: 15- : 18. Gr eg

Sankey, t he execut i ve associ at e commi ssi oner and chi ef oper at i ng

of f i cer of t he SEC, expr essed t he same vi ew dur i ng hi s t est i mony,

as di d Dr . Rubi nf el d. I d. 2430: 23- : 24 ( Sankey) ; 3117: 2- : 4

( Rubi nf el d) .

None of t he evi dence pr esent ed at t r i al suggest s t hat

consumer demand f or t he NCAA’ s pr oduct woul d decr ease i f school s

wer e per mi t t ed t o pr ovi de such st i pends t o st udent - at hl et es once

agai n. Nor does any of t he evi dence suggest t hat pr ovi di ng such

st i pends woul d hi nder any school ’ s ef f or t s t o educat e i t s st udent -

athl etes or i nt egr ate t hemi nt o t he academi c communi t y on campus.

I f anyt hi ng, pr ovi di ng st udent - at hl et es wi t h such st i pends woul d

f aci l i t at e t hei r i nt egr at i on i nt o academi c l i f e by r emovi ng some

of t he educat i onal expenses t hat t hey woul d otherwi se have t o

bear , such as school suppl i es, whi ch ar e not cover ed by a f ul l




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gr ant - i n- ai d. Ex. 2340 at 207. Rai si ng t he gr ant - i n- ai d cap t o

al l ow f or such st i pends al so woul d not have any ef f ect on t he

NCAA’ s ef f or t s t o achi eve compet i t i ve bal ance or i ncr ease i t s

out put because, as expl ai ned above, i t s exi st i ng r est r i ct i ons on

st udent - at hl et e compensat i on do not advance t hese goal s.

Pl ai nt i f f s’ second pr oposed l ess rest r i cti ve al t er nat i ve - -

al l owi ng school s t o hol d payment s i n t r ust f or st udent - at hl et es - -

woul d l i kewi se enabl e the NCAA t o achi eve i t s goal s i n a l ess

r est r i ct i ve manner , pr ovi ded t he compensat i on was l i mi t ed and

di st r i but ed equal l y among t eam member s. The NCAA’ s own wi t ness,

Mr . Pi l son, t est i f i ed t hat he woul d not be t r oubl ed i f school s

were al l owed t o make f i ve t housand dol l ar payment s t o t hei r

st udent - at hl et es and that hi s gener al concer ns about payi ng

st udent - at hl et es woul d be par t i al l y assuaged i f t he payment s wer e

hel d i n t r ust . Tr i al Tr . 770: 25- 771: 18. St anf or d’ s at hl et i c

di r ect or , Ber nar d Mui r , si mi l ar l y acknowl edged t hat hi s concer ns

about payi ng st udent - at hl et es var i ed dependi ng on t he si ze of t he

payment s t hat t hey woul d r ecei ve. I d. 254: 3- : 18 ( “Wher e I set t he

dol l ar l i mi t , you know, t hat var i es, but i t does concer n me when

we’ r e t al ki ng about si x f i gur es, seven f i gur es i n some cases. ”) .

Thi s t est i mony i s consi st ent wi t h Dr . Denni s’ s gener al obser vat i on

t hat , i f t he NCAA’ s r est r i ct i ons on st udent - at hl et e pay wer e

r emoved, t he popul ar i t y of col l ege spor t s woul d l i kel y depend on

t he si ze of payment s awar ded t o st udent - at hl et es. The Cour t

t her ef or e f i nds t hat per mi t t i ng school s t o make l i mi t ed payment s

t o st udent - at hl et es above t he cost of at t endance woul d not har m

consumer demand f or t he NCAA’ s pr oduct - - par t i cul ar l y i f t he

st udent - at hl et es wer e not pai d mor e or l ess based on t hei r




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at hl et i c abi l i t y or t he qual i t y of t hei r per f or mances and t he

payment s were der i ved onl y f r omr evenue generated f r om t he use of

t hei r own names, i mages, and l i kenesses.

Hol di ng t hese l i mi t ed and equal shar es of l i censi ng r evenue

i n t r ust unt i l af t er st udent - at hl et es l eave school woul d f ur t her

mi ni mi ze any pot ent i al i mpact on consumer demand. I ndeed, f ormer

st udent - at hl et es are al r eady per mi t t ed t o r ecei ve compensat i on f or

t he use of t hei r names, i mages, and l i kenesses i n game re-

br oadcast s and ot her ar chi val f oot age of t hei r col l ege

perf ormances as l ong as t hey ent er i nt o such agr eement s af t er t hey

l eave school . The popul ar i t y of col l ege spor t s woul d not suf f er

i f cur r ent and f ut ur e st udent - at hl et es wer e gi ven t he oppor t uni t y

t o r ecei ve compensat i on f r om t hei r school s af t er t hey l eave

col l ege. Li kewi se, hol di ng compensat i on i n t r ust f or st udent -

at hl et es whi l e t hey ar e enr ol l ed woul d not er ect any new bar r i er s

t o school s’ ef f or t s t o educat e st udent - at hl et es or i nt egr at e t hem

i nt o t hei r school s’ academi c communi t i es. The Cour t t her ef or e

f i nds t hat consumer demand f or t he NCAA’ s pr oduct s woul d not

change i f school s wer e al l owed t o of f er and st udent - at hl et es on

FBS f oot bal l and Di vi si on I basket bal l t eams wer e al l owed, af t er

l eavi ng col l ege, t o r ecei ve l i mi t ed and equal shar es of l i censi ng

r evenue generated f r omt he use of t hei r names, i mages, and

l i kenesses dur i ng col l ege.

Al t hough Dr s. Emmert and Rubi nf el d suggest ed t hat st udent -

at hl et es coul d pot ent i al l y monet i ze these f ut ur e ear ni ngs whi l e

t hey ar e st i l l i n school by t aki ng out l oans agai nst t he t r ust ,

t he NCAA coul d easi l y pr ohi bi t such bor r owi ng, j ust as i t

cur r ent l y pr ohi bi t s st udent - at hl et es f r om bor r owi ng agai nst t hei r




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f ut ur e ear ni ngs as pr of essi onal at hl et es. See Ex. 2340 at 236

( pr ohi bi t i ng st udent - at hl et es f r om accept i ng any l oan i ssued based

on t he “st udent - at hl et e’ s at hl et i cs r eput at i on, ski l l or pay- back

pot ent i al as a f ut ur e pr of essi onal at hl et e”) . None of t he NCAA’ s

wi t nesses t est i f i ed t hat i t s cur r ent r ul es woul d not suf f i ce t o

pr event st udent - at hl et es f r om bor r owi ng agai nst t hei r f ut ur e

compensat i on. Nor di d t hey r ul e out t hat t he NCAA and i t s member

school s coul d pl ace the money i n a speci al account , such as a

spendt hr i f t t r ust , t o pr event such bor r owi ng. Accor di ngl y, t he

Cour t f i nds t hat al l owi ng FBS f oot bal l and Di vi si on I basket bal l

school s t o hol d i n t r ust a l i mi t ed and equal shar e of l i censi ng

r evenue f or t hei r r ecr ui t s woul d pr ovi de a l ess r est r i ct i ve means

of achi evi ng t he NCAA’ s st at ed pur poses.

Pl ai nt i f f s’ t hi r d pr oposed al t er nat i ve, however - - al l owi ng

st udent - at hl et es t o recei ve money f or endor sement s - - does not

of f er a l ess r est r i ct i ve way f or t he NCAA t o achi eve i t s pur poses.

Al l owi ng st udent - at hl et es t o endor se commer ci al pr oduct s woul d

undermi ne the ef f or t s of both t he NCAA and i t s member school s t o

pr ot ect agai nst t he “commer ci al expl oi t at i on” of st udent - at hl et es.

Al t hough t he t r i al r ecor d cont ai ns evi dence - - and Dr . Emmer t

hi msel f acknowl edged - - t hat t he NCAA has not al ways succeeded i n

pr ot ect i ng st udent - at hl et es f r om commer ci al expl oi t at i on, t hi s

f ai l ur e does not j ust i f y expandi ng oppor t uni t i es f or commer ci al

expl oi t at i on of st udent - at hl et es i n t he f ut ur e. Pl ai nt i f f s

t hemsel ves pr evi ousl y i ndi cat ed t hat t hey wer e not seeki ng t o

enj oi n t he NCAA f r om enf or ci ng i t s cur r ent r ul es pr ohi bi t i ng such

endor sement s. I n l i ght of t hi s recor d, t he Cour t f i nds that




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Pl ai nt i f f s’ t hi r d pr oposed l ess rest r i cti ve al t er nat i ve does not

of f er t he NCAA a vi abl e means of achi evi ng i t s st at ed goal s.

CONCLUSI ONS OF LAW

I . Legal St andard under t he Sect i on 1 of t he Sherman Act

Sect i on 1 of t he Sher man Act makes i t i l l egal t o f or m any

“cont r act , combi nat i on i n t he f or m of t r ust or ot her wi se, or

conspi r acy, i n r est r ai nt of t r ade or commer ce among t he sever al

St at es. ” 15 U. S. C. § 1. To pr evai l on a cl ai m under t hi s

sect i on, a pl ai nt i f f must show “‘ ( 1) t hat t her e was a cont r act ,

combi nat i on, or conspi r acy; ( 2) t hat t he agr eement unr easonabl y

r est r ai ned t r ade under ei t her a per se r ul e of i l l egal i t y or a

r ul e of r eason anal ysi s; and ( 3) t hat t he r est r ai nt af f ect ed

i nt er st at e commer ce. ’ ” Tanaka v. Uni v. of S. Cal . , 252 F. 3d 1059,

1062 ( 9t h Ci r . 2001) ( ci t i ng Hai r st on v. Paci f i c 10 Conf er ence,

101 F. 3d 1315, 1318 ( 9t h Ci r . 1996) ) .

I n t hi s case, Pl ai nt i f f s al l ege t hat t he NCAA’ s r ul es and

byl aws oper at e as an unr easonabl e r est r ai nt of t r ade. I n

par t i cul ar , t hey seek t o chal l enge the set of r ul es t hat pr ecl ude

FBS f oot bal l pl ayer s and Di vi si on I men’ s basket bal l pl ayer s f r om

r ecei vi ng any compensat i on, beyond t he val ue of t hei r at hl et i c

schol ar shi ps, f or t he use of t hei r names, i mages, and l i kenesses

i n vi deogames, l i ve game t el ecast s, r e- br oadcast s, and ar chi val

game f oot age. The NCAA does not di sput e t hat t hese r ul es were

enact ed and are enf orced pur suant t o an agr eement among i t s

Di vi si on I member school s and conf erences. Nor does i t di sput e

t hat t hese r ul es af f ect i nt er st at e commer ce. Accor di ngl y, t he

onl y r emai ni ng quest i on her e i s whether t he chal l enged r ul es

r est r ai n t r ade unr easonabl y.




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“The r ul e of r eason i s t he pr esumpt i ve or def aul t st andar d”

f or maki ng t hi s det er mi nat i on. Cal i f or ni a ex r el . Har r i s v.

Saf eway, I nc. , 651 F. 3d 1118, 1133 ( 9t h Ci r . 2011) ( ci t i ng Texaco

I nc. v. Dagher , 547 U. S. 1, 5 ( 2006) ) . Al t hough cer t ai n

r est r ai nt s may be exami ned under a t r uncated “qui ck l ook” or per

se anal ysi s, t he Supr eme Cour t has “expr essed r el uct ance to adopt

per se r ul es wi t h r egar d t o ‘ r est r ai nt s i mposed i n t he cont ext of

busi ness r el at i onshi ps wher e t he economi c i mpact of cer t ai n

pr act i ces i s not i mmedi at el y obvi ous. ’ ” St at e Oi l Co. v. Khan,

522 U. S. 3, 10 ( 1997) ( ci t i ng FTC v. I ndi ana Feder at i on of

Dent i st s, 476 U. S. 447, 458- 459 ( 1986) ) . The Supr eme Cour t has

speci f i cal l y hel d t hat concer t ed act i ons under t aken by j oi nt

vent ur es shoul d be anal yzed under t he r ul e of r eason. Amer i can

Needl e, I nc. v. Nat ’ l Foot bal l League, 560 U. S. 183, 203 ( 2010)

( “When ‘ r est r ai nt s on compet i t i on ar e essent i al i f t he pr oduct i s

t o be avai l abl e at al l , ’ per se r ul es of i l l egal i t y ar e

i nappl i cabl e, and i nst ead t he r est r ai nt must be j udged accor di ng

t o t he f l exi bl e Rul e of Reason. ” ( ci t i ng NCAA v. Boar d of Regent s

of Uni v. of Okl ahoma, 468 U. S. 85, 101 ( 1984) ) ) . Thus, as

expl ai ned i n pr i or or der s, t he Cour t anal yzes t he chal l enged

r est r ai nt i n t hi s case under t he r ul e of r eason r at her t han a

“qui ck l ook” or per se r ul e. See Case No. 09- 1967, Docket No.

1025, Apr i l 11, 2014 Or der , at 8- 9; Case No. 09- 1967, Docket No.

151, Feb. 8, 2010 Or der , at 9–10.

“A r est r ai nt vi ol at es t he r ul e of r eason i f t he r est r ai nt ’ s

har m t o compet i t i on out wei ghs i t s pr ocompet i t i ve ef f ect s. ”

Tanaka, 252 F. 3d at 1063. Cour t s t ypi cal l y r el y on a bur den-

shi f t i ng f r amewor k t o conduct t hi s bal anci ng. Under t hat






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whi ch vi deogame devel oper s, t el evi si on net wor ks, and ot her s

compete f or gr oup l i censes t o use t he names, i mages, and

l i kenesses of FBS f oot bal l and Di vi si on I men’ s basket bal l pl ayer s

i n vi deogames, t el ecast s, and cl i ps. The Cour t addr esses each of

t hese mar ket s i n t ur n.

A. Col l ege Educat i on Mar ket

1. Mar ket Def i ni t i on

As out l i ned i n t he f i ndi ngs of f act , Pl ai nt i f f s pr oduced

suf f i ci ent evi dence at t r i al t o est abl i sh t he exi st ence of a

nat i onal mar ket i n whi ch NCAA Di vi si on I school s compet e t o sel l

uni que bundl es of goods and servi ces t o el i t e f oot bal l and

basket bal l r ecrui t s. Speci f i cal l y, t hese school s compet e t o of f er

r ecr ui t s t he oppor t uni t y t o ear n a hi gher educat i on whi l e pl ayi ng

f or an FBS f oot bal l or Di vi si on I men’ s basket bal l t eam.8 I n

exchange, t he r ecr ui t s who accept t hese of f er s pr ovi de t hei r

school s wi t h t hei r at hl et i c ser vi ces and acqui esce i n t hei r

school s’ use of t hei r names, i mages, and l i kenesses whi l e they ar e

enr ol l ed. The r ecr ui t s must al so pay f or any ot her cost s of

at t endance not cover ed by thei r gr ant s- i n- ai d.

The NCAA cont ends t hat i t does not r est r ai n compet i t i on i n

t hi s mar ket . I n par t i cul ar , i t ar gues t hat FBS f oot bal l and

Di vi si on I basket bal l school s l ack t he power t o f i x pr i ces i n t hi s

market because t hey must compet e wi t h ot her col l eges and

uni ver si t i es - - such as t hose i n ot her di vi si ons and col l ege

8 Thi s market coul d be di vi ded i nt o t wo submarket s - - one i n whi ch

Di vi si on I basket bal l school s compet e f or el i t e basket bal l r ecrui t s andone i n whi ch FBS f oot bal l school s compet e f or el i t e f oot bal l r ecrui t s.However , because t he part i es’ evi dence and argument s i n t hi s case appl ygener al l y t o bot h of t hese submarket s, t her e i s no need t o subdi vi de t hebr oader mar ket f or t he pur poses of t hi s anal ysi s.




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at hl et i c associ at i ons - - i n suppl yi ng educat i onal and at hl et i c

oppor t uni t i es t o el i t e r ecrui t s. The NCAA al so poi nt s to f or ei gn

pr of essi onal spor t s l eagues and domest i c mi nor l eagues whi ch mi ght

l i kewi se pr ovi de al t er nat i ves t o pl ayi ng FBS f oot bal l or Di vi si on

I basket bal l . By f ai l i ng t o account f or t hese ot her school s and

l eagues, t he NCAA ar gues, Pl ai nt i f f s have def i ned t he f i el d of

compet i t i on i n t he col l ege educat i on mar ket t oo nar r owl y.

The “f i el d of compet i t i on” wi t hi n a gi ven product mar ket

consi st s of “t he gr oup or gr oups of sel l er s or producer s who have

actual or pot ent i al abi l i t y t o depr i ve each ot her of si gni f i cant

l evel s of busi ness. ” Thur man I ndus. , I nc. v. Pay ‘ N Pak St or es,

I nc. , 875 F. 2d 1369, 1374 ( 9t h Ci r . 1989) . Thi s gr oup i s not

l i mi t ed t o pr oducer s of t he par t i cul ar “pr oduct at i ssue” but al so

i ncl udes t he pr oducer s of “al l economi c subst i t ut es f or t he

pr oduct . ” Newcal I ndus. , I nc. v. I kon Of f i ce Sol ut i on, 513 F. 3d

1038, 1045 ( 9t h Ci r . 2008) . To determi ne whether a pr oduct has

economi c subst i t ut es, cour t s t ypi cal l y consi der t wo f act or s:

“f i r st , [ t he pr oduct ’ s] r easonabl e i nt er changeabi l i t y f or t he same

or si mi l ar uses; and second, cr oss- el ast i ci t y of demand, an

economi c t er m descr i bi ng t he responsi veness of sal es of one

pr oduct t o pr i ce changes i n anot her . ” Los Angel es Memor i al

Col i seum Comm’ n v. Nat ’ l Foot bal l League, 726 F. 2d 1381, 1393 (9t h

Ci r . 1984) ; see al so Br own Shoe Co. v. Uni t ed St at es, 370 U. S.

294, 325 ( 1962) ( “The out er boundar i es of a pr oduct market are

det er mi ned by t he reasonabl e i nt er changeabi l i t y of use or t he

cr oss- el ast i ci t y of demand bet ween t he pr oduct i t sel f and

subst i t ut es f or i t . ”) . Thi s anal ysi s r equi r es an exami nat i on of

t he pr i ce, use, and qual i t i es of al l pot ent i al subst i t ut es f or t he




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pr oduct at i ssue. See Pal adi n Associ at es, I nc. v. Mont ana Power

Co. , 328 F. 3d 1145, 1163 ( 9t h Ci r . 2003) ( “For ant i t r ust pur poses,

a ‘ market i s composed of pr oduct s t hat have reasonabl e

i nt er changeabi l i t y f or t he pur poses f or whi ch t hey ar e pr oduced - -

pr i ce, use and qual i t i es consi der ed. ’ ” ( ci t at i ons omi t t ed) ) . An

anal ysi s of t hese f act or s i n t he pr esent case demonst r at es t hat

Pl ai nt i f f s have pr oper l y def i ned t he scope of a r el evant col l ege

educat i on market .

As set f or t h i n t he f i ndi ngs of f act , t he pr oduct t hat FBS

and Di vi si on I school s of f er i s uni que. The combi nat i on of

educat i onal and at hl et i c oppor t uni t i es of f er ed by school s out si de

of FBS f oot bal l and Di vi si on I - - i ncl udi ng school s i n FCS,

Di vi si ons I I and I I I , and associ at i ons l i ke t he NAI A, USCAA,

NJ CAA, or NCCAA - - di f f er si gni f i cant l y i n bot h pr i ce and qual i t y

f r om t hose of f er ed by FBS and Di vi si on I school s. Non- Di vi si on I

school s t ypi cal l y of f er a l ower l evel of at hl et i c compet i t i on,

i nf er i or t r ai ni ng f aci l i t i es, l ower - pai d coaches, and f ewer

oppor t uni t i es t o pl ay i n f r ont of l ar ge crowds and on t el evi si on.

Fur t her mor e, because many of t hese school s do not of f er at hl et i c

schol ar shi ps, t he cost of at t endi ng t hese i nst i t ut i ons i s much

hi gher f or many st udent - at hl et es t han t he cost of at t endi ng an FBS

f oot bal l or Di vi si on I basket bal l school . Thi s i s why r ecrui t s

who r ecei ve schol ar shi p of f er s t o pl ay FBS f oot bal l or Di vi si on I

basket bal l r ar el y t ur n them down and, when they do, al most never

do so t o pl ay f oot bal l or basket bal l at a school out si de of FBS or

Di vi si on I . I n shor t , non- FBS and non- Di vi si on I school s do not

compet e wi t h FBS and Di vi si on I school s i n t he r ecr ui t i ng mar ket ,

j ust as t hey do not on t he f ootbal l f i el d or t he basket bal l cour t .




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The same hol ds t r ue f or prof essi onal spor t s l eagues such as

t he AFL, NBA D- League, and f or ei gn f oot bal l and basket bal l

l eagues. These l eagues do not of f er r ecr ui t s oppor t uni t i es t o

ear n a hi gher educat i on or r egul ar l y showcase thei r at hl et i c

t al ent s on nat i onal t el evi si on. The NCAA’ s own evi dence

demonst r at es t hat FBS f oot bal l and Di vi si on I basket bal l command a

si gni f i cant l y l ar ger domest i c t el evi si on audi ence t han vi r t ual l y

ever y ot her f oot bal l or basket bal l l eague, wi t h t he except i ons of

t he NFL and NBA ( nei t her of whi ch per mi t s an at hl et e t o ent er i t s

l eague di r ect l y f r om hi gh school ) . The evi dence shows t hat el i t e

f oot bal l and basket bal l r ecrui t s r ar el y pur sue car eer s i n t hese

second- t i er l eagues i mmedi at el y af t er hi gh school and

over whel mi ngl y pr ef er t o pl ay f or FBS f oot bal l t eams and Di vi si on

I basket bal l t eams.

I n sum, t he qual i t at i ve di f f er ences bet ween t he oppor t uni t i es

of f er ed by FBS f oot bal l and Di vi si on I basket bal l school s and

t hose of f er ed by ot her school s and spor t s l eagues i l l ust r at e t hat

FBS f oot bal l school s and Di vi si on I basket bal l school s oper at e i n

a di st i nct market . See Rock v. NCAA, 2013 WL 4479815, at *13

( S. D. I nd. ) ( f i ndi ng pl ai nt i f f ’ s al l egat i ons r egar di ng “the

super i or compet i t i on, i nst i t ut i onal suppor t , over al l pr ef er ence,

hi gher r evenue, and mor e schol ar shi p oppor t uni t i es pr ovi ded i n

Di vi si on I f oot bal l , as opposed t o Di vi si on I I or NAI A f oot bal l ”

suf f i ci ent t o suppor t hi s asser t i on t hat “Di vi si on I I and NAI A

f oot bal l ar e not adequat e subst i t ut es f or Di vi si on I f oot bal l and,

t hus, not par t of t he same rel evant mar ket ”) ; Whi t e v. NCAA, Case

No. 06- 999, Docket No. 72, at 3 ( C. D. Cal . Sept . 20, 2006)

( f i ndi ng pl ai nt i f f ’ s al l egat i ons t hat st udent - at hl et es had no




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r easonabl y i nt er changeabl e al t er nat i ves f or t he “uni que

combi nat i on of coachi ng- ser vi ces and academi cs” of f ered by FBS

f oot bal l and Di vi si on I basket bal l school s suf f i ci ent t o pl ead a

r el evant mar ket ) . So, t oo, does t he f act t hat hi st or i c

f l uct uat i ons i n t he pr i ce of at t endi ng FBS and Di vi si on I school s

r esul t i ng f r om changes i n t he gr ant - i n- ai d l i mi t have not caused

l ar ge number s of FBS f oot bal l and Di vi si on I basket bal l r ecr ui t s

t o mi gr at e t owar d ot her school s or pr of essi onal l eagues. See

Tr i al Tr . 127: 4- : 17 ( Nol l ) ; Lucas Auto. Engi neer i ng, I nc. v.

Br i dgest one/ Fi r est one, I nc. , 275 F. 3d 762, 767 ( 9t h Ci r . 2001)

( “The det er mi nat i on of what const i t ut es t he r el evant pr oduct

mar ket hi nges, t her ef or e, on a det er mi nat i on of t hose pr oduct s t o

whi ch consumer s wi l l t ur n, gi ven r easonabl e var i at i ons i n

pr i ce. ”) . Taken t oget her , t hi s evi dence shows that t he var i ous

school s and pr of essi onal l eagues t hat t he NCAA has i dent i f i ed l ack

t he power t o depr i ve FBS f oot bal l and Di vi si on I basket bal l

school s of a si gni f i cant number of r ecrui t s. Accor di ngl y, t hese

ot her school s and l eagues ar e not suppl i er s i n t he mar ket t hat

Pl ai nt i f f s have i dent i f i ed.

2. The Chal l enged Rest r ai nt

Because FBS f oot bal l and Di vi si on I basket bal l school s are

t he onl y suppl i er s i n t he rel evant mar ket , t hey have t he power ,

when act i ng i n concer t t hr ough t he NCAA and i t s conf erences, t o

f i x t he pr i ce of t hei r product . They have chosen t o exer ci se t hi s

power by f ormi ng an agr eement t o char ge every r ecr ui t t he same

pr i ce f or t he bundl e of educat i onal and at hl et i c oppor t uni t i es

t hat t hey of f er : t o wi t , t he r ecrui t ’ s at hl et i c ser vi ces al ong

wi t h t he use of hi s name, i mage, and l i keness whi l e he i s i n




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school . I f any school seeks t o l ower t hi s f i xed pr i ce - - by

of f er i ng any r ecr ui t a cash r ebat e, def er r ed payment , or ot her

f or m of di r ect compensat i on - - t hat school may be subj ect t o

sanct i ons by t he NCAA.

Thi s pr i ce- f i xi ng agr eement const i t utes a r est r ai nt of t r ade.

The evi dence present ed at t r i al makes cl ear t hat , i n t he absence

of t hi s agr eement , cer t ai n school s woul d compet e f or r ecr ui t s by

of f er i ng t hem a l ower pr i ce f or t he oppor t uni t y t o pl ay FBS

f oot bal l or Di vi si on I basket bal l whi l e t hey at t end col l ege.

I ndeed, t he NCAA’ s own expert , Dr . Rubi nf el d, acknowl edged t hat

t he NCAA oper at es as a car t el t hat i mposes a r est r ai nt on t r ade i n

t hi s mar ket .

Despi t e t hi s undi sput ed evi dence, t he NCAA cont ends t hat i t s

conduct does not amount t o pr i ce- f i xi ng because the pr i ce t hat

most st udent - at hl et es act ual l y pay i s “at or cl ose t o zer o” due t o

t hei r at hl et i c schol ar shi ps. Thi s ar gument mi schar act er i zes t he

commer ci al nat ur e of t he t r ansact i ons bet ween FBS f oot bal l and

Di vi si on I basket bal l school s and t hei r r ecrui t s. Whi l e i t i s

t r ue t hat many FBS f oot bal l and Di vi si on I basket bal l pl ayer s do

not pay f or t ui t i on, r oom, or boar d i n a t r adi t i onal sense, t hey

never t hel ess pr ovi de t hei r school s wi t h somet hi ng of si gni f i cant

val ue: t hei r at hl et i c ser vi ces and t he r i ght s t o use t hei r names,

i mages, and l i kenesses whi l e t hey are enr ol l ed. They must al so

pay t he i nci dent al expenses of t hei r col l ege at t endance. The

Sevent h Ci r cui t r ecent l y observed t hat t hese “t r ansact i ons bet ween

NCAA school s and st udent - athl etes are, t o some degr ee, commerci al

i n nat ur e, and t her ef or e t ake pl ace i n a r el evant mar ket wi t h

r espect t o t he Sherman Act . ” Agnew v. NCAA, 683 F. 3d 328, 341




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( 7t h Ci r . 2012) . The cour t r easoned t hat “ t he t r ansact i ons t hose

school s make wi t h pr emi er at hl et es - - f ul l schol ar shi ps i n

exchange f or at hl et i c ser vi ces - - ar e not noncommer ci al , si nce

school s can make mi l l i ons of dol l ar s as a resul t of t hese

t r ansact i ons. ” I d. at 340.

A cour t i n t he Cent r al Di st r i ct of Cal i f or ni a si mi l ar l y

concl uded t hat t hese t r ansact i ons t ake pl ace wi t hi n a cogni zabl e

ant i t r ust mar ket . I n Whi t e, t he cour t f ound t hat a gr oup of

st udent - at hl et es had st at ed a val i d Sher man Act cl ai m agai nst t he

NCAA by al l egi ng t hat i t s cap on t he val ue of gr ant s- i n- ai d

operated as a pr i ce- f i xi ng agr eement among FBS f oot bal l and

Di vi si on I basket bal l school s. Case No. 06- 999, Docket No. 72, at

4. The cour t speci f i cal l y r ej ect ed t he NCAA’ s ar gument t hat t he

pl ai nt i f f s had f ai l ed t o al l ege a suf f i ci ent har m t o compet i t i on.

I t expl ai ned,

Pl ai nt i f f s’ [ compl ai nt ] al l eges t hat st udent -at hl et es ar e consumer s of t he hi gher educat i onand coachi ng ser vi ces t hat t he NCAA school spr ovi de. Pl ai nt i f f s al l ege t hat t he GI A[ gr ant - i n- ai d] cap oper at es t o r est r i ct t hepr i ce at whi ch st udent - at hl et es pur chase thoseser vi ces by f or ci ng st udent - at hl et es t o bear agr eat er por t i on of t he cost of at t endance t hant hey woul d have borne i f t he GI A cap had notbeen i n pl ace. Taken i n a l i ght mostf avor abl e t o t he Pl ai nt i f f s, t hese al l egat i onssuggest t hat t he GI A cap harms woul d- bebuyer s, f or ci ng t hem t o pay hi gher pr i ces t han

woul d r esul t f r om unf et t er ed compet i t i on.I d. ( ci t at i ons omi t t ed) . The same r easoni ng gover ns her e, wher e

Pl ai nt i f f s have shown t hat FBS f oot bal l and Di vi si on I basket bal l

school s have f i xed t he pr i ce of t hei r pr oduct by agr eei ng not t o

of f er any r ecr ui t a shar e of t he l i censi ng r evenues der i ved f r om

t he use of hi s name, i mage, and l i keness.




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The f act t hat t hi s pr i ce- f i xi ng agr eement oper at es by

under val ui ng t he name, i mage, and l i keness r i ght s t hat t he

r ecrui t s pr ovi de t o t he school s - - r at her t han by expl i ci t l y

r equi r i ng school s t o char ge a speci f i c monet ar y pr i ce - - does not

pr ecl ude ant i t r ust l i abi l i t y her e. Feder al ant i t r ust l aw

pr ohi bi t s var i ous ki nds of pr i ce- f i xi ng agr eement s, even i ndi r ect

r est r ai nt s on pr i ce. See Uni t ed St at es v. Socony- Vacuum Oi l Co. ,

310 U. S. 150, 223 ( 1940) ( “[ T]he machi nery empl oyed by a

combi nat i on f or pr i ce- f i xi ng i s i mmat er i al . Under t he Sher man Act

a combi nat i on f or med f or t he pur pose and wi t h t he ef f ect of

r ai si ng, depr essi ng, f i xi ng, peggi ng, or st abi l i zi ng t he pr i ce of

a commodi t y i n i nt er st at e or f or ei gn commer ce i s i l l egal per

se. ”) . I n Cat al ano, I nc. v. Tar get Sal es, I nc. , f or i nst ance, t he

Supreme Cour t hel d t hat an agr eement among beer whol esal er s t o

cease pr ovi di ng i nt er est - f r ee cr edi t s t o r et ai l er s was “mer el y one

f or m of pr i ce f i xi ng” and coul d t her ef or e be “pr esumed i l l egal ”

under § 1 of t he Sherman Act . 446 U. S. 643, 650 ( 1980) . The

Cour t r easoned t hat t he “agr eement t o ter mi nat e the pr act i ce of

gi vi ng cr edi t i s [ ] t ant amount t o an agr eement t o el i mi nat e

di scount s, and t hus f al l s squar el y wi t hi n t he t r adi t i onal per se

r ul e agai nst pr i ce f i xi ng. ” I d. at 648; see al so i d. ( “[ C] r edi t

t er ms must be char act er i zed as an i nsepar abl e par t of t he

pr i ce. ”) . I t not ed t hat , pr i or t o t hei r agr eement , t he

“whol esal ers had competed wi t h each other wi t h r espect t o t r ade

credi t , and t he credi t t er ms f or i ndi vi dual r et ai l er s had var i ed

subst ant i al l y. ” I d. at 644- 45. The agr eement t o el i mi nat e t hi s

pr act i ce t hus “ext i ngui sh[ ed] one f or m of compet i t i on among t he

sel l er s” and coul d be pr esumed unl awf ul , even t hough i t di d not




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ul t i mat el y r equi r e t he sel l er s t o set t hei r pr i ces at some

speci f i c, pr e- det er mi ned l evel . I d.

Li ke t he whol esal ers’ agr eement i n Catal ano, t he agr eement

among FBS f oot bal l and Di vi si on I basket bal l school s not t o of f er

r ecrui t s a shar e of t hei r l i censi ng r evenue el i mi nat es one f or m of

pr i ce compet i t i on. Al t hough t hi s agr eement may oper at e t o f i x

pr i ces i ndi r ectl y, r at her t han di r ectl y, i t i s never t hel ess

suf f i ci ent t o sat i sf y Pl ai nt i f f s ’ i ni t i al bur den under t he r ul e of

r eason. Pl ai nt i f f s need not i dent i f y an agr eement as obvi ousl y

unl awf ul as t he whol esal er s’ agr eement i n Cat al ano to est abl i sh a

per se vi ol at i on, l et al one t o meet t he l ower bur den i mposed by

t he f i r st st ep of a r ul e of r eason anal ysi s. See 446 U. S. at 644-

45 ( “[ W] e have hel d agr eement s t o be unl awf ul per se t hat had

subst ant i al l y l ess di r ect i mpact on pr i ce t han t he agr eement

al l eged i n t hi s case. ”) .

I ndeed, i n another case i nvol vi ng concer t ed act i on by members

of a spor t s l eague, t hen- J udge Sotomayor obser ved t hat an

ant i t r ust pl ai nt i f f may somet i mes meet i t s bur den by i dent i f yi ng

an agr eement t o f i x pr i ces i ndi r ect l y. See Maj or League Basebal l

Pr oper t i es, I nc. v. Sal vi no, I nc. , 542 F. 3d 290, 337 ( 2d Ci r .

2008) ( Sot omayor , J . , concur r i ng) . I n t hat case, t he pl ai nt i f f

sought t o chal l enge an agr eement among Maj or League Basebal l t eams

t o l i cense thei r t r ademar ks and ot her i nt el l ect ual pr oper t y

excl usi vel y t hr ough a desi gnat ed t hi r d par t y cal l ed Maj or League

Basebal l Pr oper t i es ( MLBP) . The pl ai nt i f f al l eged t hat t he

agr eement vi ol ated t he Sherman Act because i t el i mi nated pr i ce

compet i t i on among t he t eams as suppl i er s of i nt el l ect ual pr oper t y.

A t hr ee- j udge panel of t he Second Ci r cui t r ej ect ed t hi s cl ai m,




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f i ndi ng t hat t he agr eement di d not const i t ut e pr i ce- f i xi ng. I n a

separate concur r ence, t hen- J udge Sotomayor not ed t hat , al t hough

she agr eed t hat t he l i censi ng ar r angement was l awf ul , she bel i eved

t hat t he maj or i t y had endor sed “an over l y f or mal i st i c vi ew of

pr i ce f i xi ng. ” I d. at 334. She r easoned, “Whi l e t he MLBP

agr eement does not speci f y a pr i ce t o be char ged, t he ef f ect of

t he agr eement cl ear l y el i mi nat es pr i ce compet i t i on bet ween t he

[ t eams] f or t r ademar k l i censes. An agr eement t o el i mi nat e pr i ce

compet i t i on f r om t he mar ket i s t he essence of pr i ce f i xi ng. ” I d.

at 335; see al so i d. at 336- 37 ( “I n ot her wor ds, an agr eement

bet ween compet i t or s t o ‘ shar e pr of i t s’ or t o make a t hi r d par t y

t he excl usi ve sel l er of t hei r compet i ng pr oduct s t hat has t he

pur pose and ef f ect of f i xi ng, st abi l i zi ng, or r ai si ng pr i ces may

be a per se vi ol at i on of t he Sher man Act , even i f no expl i ci t

pr i ce i s r ef er enced i n t he agr eement . ”) . Then- J udge Sotomayor

al so not ed t hat such an agr eement coul d be unl awf ul , even i f i t

was onl y meant t o bi nd members of a j oi nt vent ur e. She expl ai ned,

[ T] he ant i t r ust l aws pr ohi bi t t wo compani es Aand B, pr oducer s of X, f r om agr eei ng t o sett he pr i ce of X. Li kewi se, A and B cannotsi mpl y get ar ound t hi s r ul e by agr eei ng t o sett he pr i ce of X t hr ough a t hi r d- par t yi nt er medi ar y or “j oi nt vent ur e” i f t he pur poseand ef f ect of t hat agr eement i s t o r ai se,depr ess, f i x, peg, or st abi l i ze t he pr i ce ofX.

I d. at 336. 9 Al t hough she ul t i matel y concl uded t hat t he MLBP

agr eement ser ved a pr ocompet i t i ve pur pose, because i t i ncr eased

9 The Supreme Cour t r ecent l y r el i ed on t hi s l anguage f r om t hen- J udge Sotomayor ’ s concur r ence i n anot her Sher man Act case i nvol vi ng achal l enge t o concer t ed act i on by members of a spor t s l eague. Amer i canNeedl e, 560 U. S. at 202 ( “[ C] ompet i t ors ‘ cannot si mpl y get around’ant i t r ust l i abi l i t y by acti ng ‘ t hr ough a t hi r d- par t y i nt er medi ar y or




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t he t ot al number of l i censes sol d, her opi ni on never t hel ess

i l l ust r at es t hat pr i ce- f i xi ng agr eement s t ake many f or ms and may

be unl awf ul even i f t hey are i mpl ement ed by members of a j oi nt

vent ur e.

Al t hough Pl ai nt i f f s have char act er i zed FBS f oot bal l and

Di vi si on I basket bal l school s as sel l er s i n t he mar ket f or

educat i onal and at hl et i c oppor t uni t i es, i n t hei r post - t r i al br i ef

t hey ar gued t hat t he school s coul d al t er nat i vel y be char act er i zed

as buyer s i n a mar ket f or r ecrui t s’ at hl et i c ser vi ces and

l i censi ng r i ght s. The r el evant mar ket woul d be t hat f or t he

r ecr ui t ment of t he hi ghest r anked mal e hi gh school f oot bal l and

basket bal l pl ayer s each year . Vi ewed f r om t hi s per spect i ve,

Pl ai nt i f f s’ ant i t r ust cl ai m ar i ses under a t heor y of monopsony,

r ather t han monopol y, al l egi ng an agr eement t o f i x pr i ces among

buyer s r at her t han sel l er s. Such an agr eement , i f pr oven, woul d

vi ol at e § 1 of t he Sher man Act j ust as a pr i ce- f i xi ng agr eement

among sel l er s woul d. See gener al l y Omni car e, I nc. v. Uni t edHeal t h

Gr p. , I nc. , 629 F. 3d 697, 705 ( 7t h Ci r . 2011) ( “Or di nar i l y, pr i ce-

f i xi ng agr eement s exi st bet ween sel l er s who col l ude t o set t hei r

pr i ces above or bel ow pr evai l i ng market pr i ces. But buyer s may

al so vi ol ate § 1 by f ormi ng what i s somet i mes known as a ‘ buyer s’

car t el . ’ ”) ; Vogel v. Am. Soc. of Appr ai ser s, 744 F. 2d 598, 601

( 7t h Ci r . 1984) ( “J ust as a sel l er s’ car t el enabl es t he char gi ng

of monopol y pr i ces, a buyer s’ car t el enabl es t he char gi ng of

monopsony pr i ces; and monopol y and monopsony ar e symmet r i cal

di st or t i ons of compet i t i on f r om an economi c st andpoi nt . ”

‘ j oi nt vent ur e. ’ ’ ” ( quot i ng Sal vi no, 542 F. 3d at 336 ( Sot omayor , J . ,concur r i ng) ) .




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( ci t at i ons omi t t ed) ) . The Supr eme Cour t has not ed t hat t he

“ki nshi p between monopol y and monopsony suggest s t hat si mi l ar

l egal st andar ds shoul d appl y t o cl ai ms of monopol i zat i on and t o

cl ai ms of monopsoni zat i on. ” Weyerhaeuser Co. v. Ross- Si mmons

Hardwood Lumber Co. , I nc. , 549 U. S. 312, 322 ( 2007) ( ci t i ng Roger

G. Nol l , “‘ Buyer Power ’ and Economi c Pol i cy, ” 72 Ant i t r ust L. J .

589, 591 ( 2005) ) .

I n r ecent year s, sever al cour t s have speci f i cal l y recogni zed

t hat monopsoni st i c pr act i ces i n a mar ket f or at hl et i c ser vi ces may

pr ovi de a cogni zabl e basi s f or r el i ef under t he Sher man Act . See,

e. g. , Rock, 2013 WL 4479815, at *11 ( f i ndi ng t hat pl ai nt i f f had

i dent i f i ed a cogni zabl e mar ket i n whi ch “buyer s of l abor ( t he

school s) ar e al l member s of NCAA Di vi si on I f oot bal l and ar e

compet i ng f or t he l abor of t he sel l er s ( t he pr ospect i ve st udent -

at hl et es who seek to pl ay Di vi si on I f oot bal l ) ”) ; I n r e NCAA I - A

Wal k- On Foot bal l Pl ayer s Li t i g. , 398 F. Supp. 2d 1144, 1150 ( W. D.

Wash. 2005) ( “Pl ai nt i f f s have al l eged a suf f i ci ent ‘ i nput ’ mar ket

i n whi ch NCAA member school s compete f or ski l l ed amateur f oot bal l

pl ayer s. ”) . I ndeed, t he Sevent h Ci r cui t r ecent l y not ed i n Agnew

t hat t he “pr oper i dent i f i cat i on of a l abor mar ket f or st udent -

at hl et es . . . woul d meet pl ai nt i f f s’ bur den of descr i bi ng a

cogni zabl e market under t he Sherman Act . ” 683 F. 3d at 346. Gi ven

t hat Pl ai nt i f f s’ al t er nat i ve monopsony t heor y mi r r or s t hei r

monopol y pr i ce- f i xi ng t heor y, t he evi dence pr esent ed and f act s

f ound above ar e suf f i ci ent t o est abl i sh a r est r ai nt of t r ade i n a

mar ket f or r ecrui t s’ at hl et i c ser vi ces j ust as t hey ar e t o

est abl i sh a r est r ai nt of t r ade i n t he col l ege educat i on mar ket .

As expl ai ned above, vi ewed f r om t hi s per spect i ve, t he sel l er s i n




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t hi s mar ket ar e the recrui t s; t he buyer s are FBS f oot bal l and

Di vi si on I basket bal l school s; t he pr oduct i s t he combi nat i on of

t he r ecrui t s’ at hl et i c ser vi ces and l i censi ng r i ght s; and t he

r est r ai nt i s t he agr eement among school s not t o of f er any recr ui t

mor e t han t he val ue of a f ul l gr ant - i n- ai d. I n t he absence of

t hi s r est r ai nt , school s woul d compet e agai nst one anot her by

of f er i ng t o pay mor e f or t he best r ecrui t s’ at hl et i c ser vi ces and

l i censi ng r i ght s - - t hat i s, t hey woul d engage i n pr i ce

compet i t i on.

The NCAA ar gues t hat Pl ai nt i f f s cannot prevai l under a

monopsony t heor y because t hey have not presented evi dence of an

i mpact on pr i ce or out put i n a “downst r eam mar ket . ” Tr i al Tr .

2766: 16- : 22 ( St i r oh) . They ci t e Dr . St i r oh’ s t est i mony t hat t he

onl y way t hat a rest r ai nt on an i nput mar ket - - such as a mar ket

f or r ecrui t s’ at hl et i c ser vi ces and l i censi ng r i ght s - - can gi ve

r i se t o an ant i compet i t i ve har m i s i f t hat r est r ai nt ul t i mat el y

har ms consumer s by r educi ng out put or r ai si ng pr i ces i n a

downst r eam market . Whatever mer i t Dr . St i r oh’ s vi ews mi ght have

among economi st s, t hey are not support ed by t he rel evant case l aw.

The Supreme Court has i ndi cat ed t hat monopsoni st i c pract i ces t hat

har m suppl i er s may vi ol at e ant i t r ust l aw even i f t hey do not

ul t i mat el y har m consumer s. I n Mandevi l l e I sl and Far ms v. Am.

Cr yst al Sugar Co. , 334 U. S. 219 ( 1948) , t he Supr eme Cour t

consi dered whether an agr eement among sugar r ef i ners t o f i x t he

pr i ces t hey pai d f or sugar beet s const i t ut ed a vi ol at i on of t he

Sher man Act . I t concl uded t hat “t he agr eement i s t he sor t of

combi nat i on condemned by t he Act , even t hough the pr i ce- f i xi ng was

by pur chaser s, and t he per sons speci al l y i nj ur ed . . . ar e




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sel l er s, not cust omer s or consumer s. ” I d. at 235. Not abl y, t he

Cour t r eached t hi s concl usi on despi t e a vehement di ssent f r om

J ust i ce J ackson not i ng t hat t he pr i ce of sugar had not been

af f ect ed by t he r ef i ner s’ agr eement . I d. at 247. The maj or i t y’ s

deci si on, t hus, “st r ongl y suggest s t hat suppl i er s . . . ar e

pr ot ect ed by ant i t r ust l aws even when t he ant i - compet i t i ve

act i vi t y does not har m end- user s. ” Tel ecor Communi cat i ons, I nc.

v. Sw. Bel l Tel . Co. , 305 F. 3d 1124, 1134 ( 10t h Ci r . 2002) ; see

al so Knevel baar d Dai r i es v. Kr af t Foods, I nc. , 232 F. 3d 979, 988

( 9t h Ci r . 2000) ( “The Supr eme Cour t ’ s r ef er ences t o the goal s of

achi evi ng ‘ t he l owest pr i ces, t he hi ghest qual i t y and t he gr eat est

mat er i al pr ogr ess’ and of ‘ assur [ i ng] cust omer s t he benef i t s of

pr i ce compet i t i on’ do not mean t hat conspi r aci es among buyer s t o

depr ess acqui si t i on pr i ces ar e t ol er at ed. Ever y pr ecedent i n t he

f i el d makes cl ear t hat t he i nt er act i on of compet i t i ve f or ces, not

pr i ce- r i ggi ng, i s what wi l l benef i t consumer s. ” ( emphasi s added) ) .

Thi s i s consi st ent wi t h a l ong l i ne of cases, i ncl udi ng some

deci ded by the Ni nt h Ci r cui t , r ecogni zi ng t hat r est r ai nt s on

compet i t i on wi t hi n a l abor mar ket may gi ve r i se to an ant i t r ust

vi ol at i on under § 1 of t he Sher man Act . See, e. g. , Ander son v.

Shi powner s’ Ass’ n, 272 U. S. 359, 365 ( 1926) ( hol di ng t hat a mul t i -

empl oyer agr eement among shi p owners r est r ai ned t r ade i n a l abor

mar ket f or sai l or s) ; Todd v. Exxon Cor p. , 275 F. 3d 191, 201 ( 2d

Ci r . 2001) ( Sot omayor , J . ) ( hol di ng t hat a conspi r acy among oi l

i ndust r y empl oyer s t o set sal ar i es at “ar t i f i ci al l y l ow l evel s”

r est r ai ned t r ade i n a l abor mar ket and not i ng t hat “a hor i zont al

conspi r acy among buyer s [ of l abor ] t o st i f l e compet i t i on i s as

unl awf ul as one among sel l er s”) ; Ost r of e v. H. S. Cr ocker Co. ,




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I nc. , 740 F. 2d 739, 740 ( 9t h Ci r . 1984) ( hol di ng t hat a mul t i -

empl oyer agr eement i n t he paper l i t hogr aph l abel i ndust r y may

r est r ai n t r ade i n a “mar ket f or per sonal ser vi ces”) . I t i s al so

consi st ent wi t h t he many r ecent cases, some of whi ch ar e ci t ed

above, r ecogni zi ng t he val i di t y of ant i t r ust cl ai ms agai nst t he

NCAA based on ant i compet i t i ve har ms i n a l abor mar ket . See, e. g. ,

Agnew, 683 F. 3d at 346 ( r ecogni zi ng that t he NCAA’ s schol ar shi p

r ul es may rest r ai n t r ade i n a “l abor mar ket f or st udent - at hl et es”

and not i ng that “l abor market s are cogni zabl e under t he Sherman

Act ”) ; Law v. NCAA, 134 F. 3d 1010, 1015 ( 10t h Ci r . 1998) ( f i ndi ng

t hat an NCAA r ul e cappi ng compensat i on f or ent r y- l evel coaches

r est r ai ned t r ade i n a “l abor mar ket f or coachi ng servi ces” and

not i ng t hat “[ l ] ower pr i ces cannot j ust i f y a car t el ’ s cont r ol of

pr i ces char ged by suppl i er s, because the car t el ul t i mat el y robs

t he suppl i er s of t he nor mal f r ui t s of t hei r ent er pr i ses”) ; I n r e

NCAA I - A Wal k- On Foot bal l Pl ayer s Li t i g. , 398 F. Supp. 2d at 1150

( r ecogni zi ng t hat t he NCAA’ s schol ar shi p r ul es may r est r ai n t r ade

i n an “‘ i nput ’ market i n whi ch NCAA member school s compet e f or

ski l l ed amat eur f oot bal l pl ayer s”) . I n f act , a cour t i n t he

Sout her n Di st r i ct of I ndi ana r ecent l y rej ect ed t he NCAA’ s argument

t hat a st udent - at hl et e woul d need t o pl ead a “‘ mar ket - wi de i mpact

on t he pr i ce or out put of any commerci al pr oduct ’ ” i n order t o

st at e a val i d Sher man Act cl ai m chal l engi ng i t s f or mer pr ohi bi t i on

on mul t i - year f oot bal l schol ar shi ps. Rock, 2013 WL 4479815, at

*14 ( S. D. I nd. ) ( quot i ng NCAA’ s br i ef ) . The cour t i n t hat case

f ound t hat t he st udent - at hl et e’ s compl ai nt “adequat el y pl ead[ ]

ant i compet i t i ve ef f ect s of t he chal l enged byl aws” i n t he

“‘ nat i onwi de mar ket f or t he l abor of Di vi si on I f oot bal l st udent




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at hl et es’ ” based on hi s al l egat i ons t hat , i n t he absence of t he

chal l enged schol ar shi p r ul es, t he school s compet i ng f or hi s

ser vi ces woul d have of f er ed hi m a mul t i - year schol ar shi p. I d. at

*3, *15 ( quot i ng compl ai nt ) . The cour t speci f i cal l y not ed t hat

t he pl ai nt i f f had i dent i f i ed a cogni zabl e har m t o compet i t i on by

al l egi ng t hat r emovi ng t he chal l enged r est r ai nt woul d “woul d f or ce

t he school s t o ‘ compet e’ f or recrui t s. ” I d. at *15. Pl ai nt i f f s

here have pr esent ed suf f i ci ent evi dence to show an anal ogous

ant i compet i t i ve ef f ect i n a si mi l ar l abor mar ket . Accor di ngl y,

t hey have shown a cogni zabl e har m t o compet i t i on under t he rul e of

r eason.

The Cour t not es t hat Pl ai nt i f f s had not ar t i cul at ed a

monopsony t heor y pr i or t o t r i al . Thei r exper t addr essed i t at

t r i al i n r esponse t o t he Cour t ’ s quest i ons. For t hi s r eason, t he

Cour t has addr essed Pl ai nt i f f s’ monopol y t heor y i n gr eat er det ai l .

However , Pl ai nt i f f s pr esent ed si gni f i cant evi dence t o suppor t a

monopsony t heor y dur i ng t r i al . Bot h si des di scussed t he t heor y at

l engt h i n t hei r post - t r i al br i ef s. The evi dence pr esent ed at

t r i al and t he f act s f ound her e, as wel l as t he l aw, suppor t bot h

t heor i es. The NCAA i s not pr ej udi ced by al t er nat i ve r el i ance on a

monopsony t heor y.

B. Gr oup Li censi ng Market

Pl ai nt i f f s al so al l ege t hat t he NCAA has r est r ai ned

compet i t i on i n t hr ee speci f i c nat i onal submar ket s of a br oader

nat i onal gr oup l i censi ng mar ket : namel y, t he submar ket s f or gr oup

l i censes to use st udent - at hl et es’ names, i mages, and l i kenesses i n

( 1) l i ve game tel ecast s, ( 2) vi deogames, and ( 3) game re-




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br oadcast s, hi ghl i ght cl i ps, and ot her ar chi val f oot age. The

Cour t addr esses each of t hese submarket s separ at el y.

1. Submarket f or Gr oup Li censes t o Use St udent -

At hl et es’ Names, I mages, and Li kenesses i n Li veGame Tel ecast s

As not ed above, t el evi si on net wor ks compet e f or t he r i ght s t o

t el ecast l i ve FBS f oot bal l and Di vi si on I basket bal l games. I n

or der t o secur e t hese r i ght s, net wor ks typi cal l y pur chase l i censes

t o use t he i nt el l ect ual pr oper t y of t he par t i ci pat i ng school s and

conf erences dur i ng t he game tel ecast as wel l as t he names, i mages,

and l i kenesses of t he par t i ci pat i ng st udent - at hl et es.10

Because

st udent - at hl et es are not per mi t t ed by NCAA r ul es t o l i cense the

r i ght s t o use t hei r names, i mages, and l i kenesses, t he net wor ks

deal excl usi vel y wi t h school s and conf er ences when acqui r i ng t he

st udent - at hl et es’ r i ght s.

As t he Cour t f ound above, i n t he absence of t he NCAA’ s

r est r i ct i ons on st udent - at hl et e compensat i on, st udent - at hl et es on

cer t ai n FBS f oot bal l and Di vi si on I basket bal l t eams woul d be abl e

t o sel l gr oup l i censes f or t he use of t hei r names, i mages, and

l i kenesses t o t el evi si on net wor ks. They woul d ei t her sel l t hose

l i censes t o t he t el evi si on net wor ks di r ect l y or do so t hr ough some

i nt er medi at e buyer - - such as t hei r school or a t hi r d- par t y

l i censi ng company - - whi ch woul d bundl e t he gr oup l i cense wi t h

ot her i nt el l ect ual pr oper t y and per f or mance r i ght s and sel l t he

10 As di scussed i n t he f i ndi ngs of f act , when a t hi r d par t y - - suchas a bowl commi t t ee or t he NCAA i t sel f - - has organi zed a par t i cul arat hl et i c event , t he net wor ks may al so pur chase a separ at e l i cense f r omt hat par t y to use i t s i nt el l ectual pr oper t y dur i ng t he t el ecast .Because t hese t r ansact i ons do not i nvol ve t he t r ansf er of r i ght s t o usest udent - at hl et es’ names, i mages, and l i kenesses, t hey ar e not r el evantt o t hi s di scussi on.




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f ul l bundl e of r i ght s t o t he net wor k. Regar dl ess of whet her t he

st udent - at hl et es woul d sel l t hei r gr oup l i censes t o t he net wor ks

di r ect l y or t hr ough some i nt ermedi ate buyer , however , a submarket

f or such gr oup l i censes woul d exi st .

The NCAA deni es t hat such a mar ket exi st s as a mat t er of l aw.

I t ar gues t hat t he Fi r st Amendment and cer t ai n st at e l aws precl ude

st udent - at hl et es f r om asser t i ng any ri ght s of publ i ci t y i n t he use

of t hei r names, i mages, and l i kenesses dur i ng l i ve game t el ecast s.

The Cour t has previ ousl y r ej ect ed t hi s ar gument . See Apr i l 11,

2014 Or der at 21. Fur t her mor e, even i f some t el evi si on net wor ks

bel i eved t hat st udent - at hl et es l acked publ i ci t y r i ght s i n t he use

of t hei r names, i mages, and l i kenesses, t hey may have st i l l sought

t o acqui r e t hese r i ght s as a pr ecaut i onar y measure. Busi nesses

of t en negot i at e l i censes t o acqui r e uncer t ai n r i ght s. See C. B. C.

Di st r i but i on & Mktg. , I nc. v. Maj or League Basebal l Advanced

Medi a, L. P. , 505 F. 3d 818, 826 ( 8t h Ci r . 2007) ( Col l ot on, J . ,

di ssent i ng) ( “CBC sur el y can ‘ agr ee, ’ as a mat t er of good busi ness

j udgment , t o bargai n away any uncer t ai n Fi r st Amendment r i ght s

t hat i t may have i n exchange f or t he cer t ai nt y of what i t

consi der s t o be an advant ageous cont r act ual ar r angement . ”) ; Hyni x

Semi conduct ors, I nc. v. Rambus, I nc. , 2006 WL 1991760, at *4 (N. D.

Cal . ) ( cr edi t i ng exper t t est i mony t hat “a negot i at i ng pat ent ee and

l i censee gener al l y agr ee t o a l ower r oyal t y r at e i f t her e i s

uncer t ai nt y as t o whet her t he pat ent s are act ual l y val i d and

i nf r i nged”) . The NCAA’ s ar gument does not under mi ne Pl ai nt i f f s’

evi dence of t he exi st ence of a nat i onal submar ket f or gr oup

l i censes.




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That sai d, Pl ai nt i f f s have not i dent i f i ed any har m t o

compet i t i on i n t hi s submar ket . As pr evi ousl y not ed, an “essent i al

el ement of a Sect i on 1 vi ol at i on under t he r ul e of r eason i s

i nj ur y t o compet i t i on i n t he r el evant mar ket . ” Al l i ance Shi pper s,

I nc. v. S. Pac. Tr ansp. Co. , 858 F. 2d 567, 570 ( 9t h Ci r . 1988) .

That i nj ury must go “beyond t he i mpact on t he cl ai mant ” and r each

“a f i el d of commer ce i n whi ch t he cl ai mant i s engaged. ” Aust i n v.

McNamara, 979 F. 2d 728, 738 ( 9t h Ci r . 1992) ( ci t at i ons and

quot at i on mar ks omi t t ed) ; see al so Si cor Lt d. v. Cet us Cor p. , 51

F. 3d 848, 854 ( 9t h Ci r . 1995) ( “Under t he r ul e of r eason appr oach,

t he pl ai nt i f f must show an i nj ur y t o compet i t i on, r at her t han j ust

an i nj ur y t o pl ai nt i f f ’ s busi ness. ” ( emphasi s i n or i gi nal ;

ci t at i ons and quot at i on mar ks omi t t ed) ) . Whi l e Pl ai nt i f f s have

shown t hat t he NCAA’ s chal l enged r ul es har m st udent - at hl et es by

depr i vi ng them of compensat i on that t hey woul d ot her wi se r ecei ve,

t hey have not shown t hat t hi s har m r esul t s f r om a r est r ai nt on

compet i t i on i n t he gr oup l i censi ng mar ket . I n par t i cul ar , t hey

have f ai l ed t o show t hat t he chal l enged r ul es hi nder compet i t i on

among any pot ent i al buyer s or sel l er s of gr oup l i censes.

The sel l er s i n t hi s mar ket woul d be t he st udent - at hl et es.

Pl ai nt i f f s have not pr esent ed any evi dence t o show t hat , i n t he

absence of t he chal l enged r est r ai nt , t eams of st udent - at hl et es

woul d act ual l y compet e agai nst one anot her t o sel l t hei r gr oup

l i censes. I n f act , t he evi dence i n t he r ecor d st r ongl y suggest s

t hat such compet i t i on woul d not occur . Thi s i s because any

net wor k that seeks t o t el ecast a par t i cul ar at hl et i c event woul d

have t o obt ai n a gr oup l i cense f r om ever y t eam t hat coul d

pot ent i al l y par t i ci pat e i n t hat event . For i nst ance, a net wor k




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seeki ng t o t el ecast a conf erence basket bal l t our nament woul d have

t o obt ai n gr oup l i censes f r om al l of t he t eams i n t hat conf er ence.

Under t hose ci r cumst ances, none of t he t eams i n t he conf erence

woul d compet e agai nst each ot her as sel l er s of gr oup l i censes

because t he gr oup l i censes woul d const i t ut e per f ect compl ement s:

t hat i s, ever y gr oup l i cense woul d have t o be sol d i n or der f or

any si ngl e gr oup l i cense t o have val ue. See gener al l y Her ber t

Hovenkamp, “I mpl ement i ng Ant i t r ust ’ s Wel f ar e Goal s, ” 81 For dham L.

Rev. 2471, 2487 ( 2013) ( “Per f ect compl ement s ar e goods t hat are

i nvar i abl y used t oget her - - or , mor e t echni cal l y, si t uat i ons i n

whi ch one good has no val ue unl ess i t can be consumed t oget her

wi t h t he ot her good. ”) . At t he same t i me, t he t eams i n t hat

conf erence woul d never have t o compet e wi t h teams out si de of t he

conf er ence because those teams - - as non- par t i ci pant s i n t he

conf er ence t our nament - - woul d not be abl e t o sel l t hei r gr oup

l i censes wi t h r espect t o t hat event i n t he f i r st pl ace. Thus, i n

t hi s scenar i o, t eams of st udent - at hl et es woul d never act ual l y

compet e agai nst each ot her as sel l er s of gr oup l i censes, even i f

t he chal l enged NCAA r ul es no l onger exi st ed.

The same out come woul d r esul t whenever any net wor k sought t o

t el ecast any ot her FBS f oot bal l and Di vi si on I basket bal l event .

Al t hough t he speci f i c set of gr oup l i censes r equi r ed f or each

event woul d var y, t he l ack of compet i t i on among st udent - at hl et e

t eams woul d r emai n const ant : i n every case, t he network woul d need

t o acqui r e gr oup l i censes f r om a speci f i c set of t eams, none of

whi ch woul d have any i ncent i ve t o compete ei t her agai nst each

other or agai nst any t eams whose gr oup l i censes were not r equi r ed

f or t he t el ecast . These condi t i ons woul d hol d r egar dl ess of




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whet her t he st udent - at hl et e t eams sol d t hei r gr oup l i censes t o t he

t el evi si on net wor ks di r ect l y or t hr ough some i nt er medi ar y, such as

t hei r school s, because t he demand f or gr oup l i censes woul d be

di ct at ed pr i mar i l y by t he i dent i t y of t he t eams el i gi bl e t o

par t i ci pat e i n each event . To t he ext ent t hat ent i r e conf er ences

mi ght compet e agai nst each ot her i n or der t o secur e a speci f i c

t el ecast i ng cont r act wi t h a par t i cul ar net wor k, t he chal l enged

NCAA r ul es do not i nhi bi t t hi s type of compet i t i on. Conf er ences

ar e al r eady f r ee t o compet e agai nst each ot her i n t hi s way. So,

t oo, ar e any i ndi vi dual pai r s of school s whose t eams are schedul ed

t o pl ay agai nst each ot her i n speci f i c r egul ar season games. Li ke

t he conf er ences, t hese pai r s may f r eel y compet e agai nst ot her

pai r s of school s whose games are schedul ed f or t he same t i me i n

order t o secure a cont r act wi t h what ever networks can show games

dur i ng t hat t i me sl ot .11

I n any event , Pl ai nt i f f s have not

pr esent ed suf f i ci ent evi dence t o show t hat st udent - at hl et e t eams

woul d act ual l y compet e agai nst each ot her i n any of t hese ways i f

t hey wer e per mi t t ed t o sel l gr oup l i censes t o use t hei r names,

i mages, and l i kenesses.

Pl ai nt i f f s have al so f ai l ed t o i dent i f y any si t uat i on i n

whi ch buyer s of gr oup l i censes mi ght compete agai nst each other .

As not ed above, t her e ar e t wo sets of pot ent i al buyer s i n t hi s

mar ket : t he t el evi si on net wor ks, whi ch woul d buy gr oup l i censes

di r ect l y f r om t he st udent - at hl et e t eams, and i nt er medi at e buyer s,

11 The evi dence pr esent ed at t r i al suggest s t hat most t el ecast i ng

cont r act s, even f or r egul ar season games, are negot i at ed at t heconf er ence- wi de l evel - - not t he i ndi vi dual t eam l evel . Never t hel ess,t he Cour t not es t hat t he chal l enged r ul es woul d not suppr ess compet i t i oni n thi s mar ket even i f cont r act s t o t el ecast r egul ar season games wer enegot i at ed at t he i ndi vi dual t eam l evel .




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whi ch woul d bundl e t hose l i censes wi t h ot her r i ght s and sel l t hose

bundl es of r i ght s t o t he net wor ks. The f i r st set of pot ent i al

buyer s - - t he t el evi si on net wor ks - - al r eady compet e f r eel y

agai nst one anot her f or t he r i ght s t o use st udent - at hl et es’ names,

i mages, and l i kenesses i n l i ve game t el ecast s. Al t hough t hey may

not be abl e t o pur chase t hese r i ght s di r ect l y f r om t he st udent -

at hl et es, t hey never t hel ess compet e t o acqui r e t hese r i ght s f r om

ot her sour ces, such as school s and conf er ences. The f act t hat t he

net wor ks do not compet e t o pur chase t hese r i ght s di r ect l y f r om t he

st udent - at hl et es i s due t o t he assurances by t he school s,

conf erences, and NCAA t hat t hey have t he aut hor i t y to gr ant t hese

r i ght s. Such assurances mi ght const i t ut e conver si on by t he

school s of t he st udent - at hl et es’ r i ght s, or ot her wi se be unl awf ul ,

but t hey ar e not ant i compet i t i ve because they do not i nhi bi t any

f or m of compet i t i on t hat woul d ot her wi se exi st .12

Al l owi ng

st udent - at hl et es t o seek compensat i on f or gr oup l i censes woul d not

i ncr ease t he number of t el evi si on net wor ks i n t he mar ket or

ot her wi se enhance compet i t i on among t hem.

Nor woul d i t i ncr ease compet i t i on among any pot ent i al

i nt er medi at e buyer s i n t hi s mar ket , such as t hi r d- par t y l i censi ng

compani es and school s. Thi r d- par t y l i censi ng compani es ar e, l i ke

t el evi si on net wor ks, al r eady f r ee t o compet e agai nst one anot her

t o acqui r e t he r i ght s t o use st udent - at hl et es’ names, i mages, and

l i kenesses i n l i ve game t el ecast s. They may be bar r ed f r om

12 Pl ai nt i f f s vol unt ar i l y di smi ssed al l of t hei r cl ai ms agai nst t he

NCAA f or “i ndi vi dual damages, di sgor gement of pr of i t s, and anaccount i ng. ” Docket No. 198, St i p. Di smi ssal , at 2. They al sodi smi ssed t hei r cl ai ms f or unj ust enr i chment . Accor di ngl y, t he Cour tdoes not consi der t hese cl ai ms here.




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pur chasi ng t hese r i ght s di r ect l y f r om t he st udent - at hl et es but

t hey ar e not bar r ed f r om compet i ng to acqui r e t hese r i ght s t hr ough

ot her channel s.

Unl i ke t el evi si on net wor ks and t hi r d- par t y l i censi ng

compani es, school s do not cur r ent l y compet e f or gr oup l i censes t o

use st udent - at hl et es’ names, i mages, and l i kenesses i n l i ve game

t el ecast s. Thi s l ack of compet i t i on, however , does not st em

sol el y f r om t he chal l enged r est r ai nt . Even i f t he r est r ai nt wer e

l i f t ed, each school woul d st i l l onl y be abl e t o pur chase gr oup

l i censes f r om i t s own st udent - at hl et es because those ar e t he onl y

l i censes t hat t he school coul d bundl e wi t h i t s own i nt el l ect ual

pr oper t y r i ght s f or sal e t o a net wor k. No school woul d be abl e t o

pur chase a mar ket abl e gr oup l i cense f r om st udent - at hl et es at

another school . To t he ext ent t hat school s do compete agai nst one

anot her f or t he r i ght s t o use i ndi vi dual st udent - at hl et es’ names,

i mages, and l i kenesses, t hey do so onl y as sel l er s i n t he col l ege

educat i on mar ket or consumer s i n t he mar ket f or r ecr ui t s’ at hl et i c

servi ces and l i censi ng r i ght s. They do not compet e as buyer s i n

t he mar ket f or gr oup l i censes.

Accor di ngl y, Pl ai nt i f f s have f ai l ed t o show t hat t he

chal l enged NCAA r ul es har m compet i t i on i n t hi s submar ket .

Al t hough t hey have pr esent ed suf f i ci ent evi dence t o est abl i sh t hat

t hey wer e i nj ur ed by the NCAA’ s conduct , as not ed above, “[ i ] nj ur y

t o an ant i t r ust pl ai nt i f f i s not enough t o pr ove i nj ur y t o

compet i t i on. ” O. S. C. Cor p. v. Appl e Comput er , I nc. , 792 F. 2d

1464, 1469 ( 9t h Ci r . 1986) . Pl ai nt i f f s have shown an i nj ur y t o

compet i t i on onl y i n t he col l ege educat i on mar ket or t he mar ket f or

r ecrui t s’ at hl et i c ser vi ces and l i censi ng r i ght s.






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conf er ences wer e wi l l i ng t o l i cense t hei r i nt el l ectual pr oper t y

f or use i n vi deogames, a submar ket f or st udent - at hl et es’ gr oup

l i censes woul d l i kel y exi st . I ndeed, Mr . Li nzner speci f i cal l y

t est i f i ed at t r i al t hat EA r emai ns i nt er est ed i n acqui r i ng t he

r i ght s t o use st udent - at hl et es’ names, i mages, and l i kenesses and

woul d seek t o acqui r e t hem i f not f or t he NCAA’ s chal l enged r ul es

and t he pr esent l i t i gat i on. Thi s t est i mony suggest s t hat t he

r ecent deci si ons of t he NCAA and some of i t s conf er ences not t o

l i cense t hei r i nt el l ect ual pr oper t y has not per manent l y el i mi nat ed

t he demand f or gr oup l i censes t o use st udent - at hl et es’ names,

i mages, and l i kenesses.13

Accor di ngl y, t hese deci si ons - - whi ch

coul d have been adopt ed due t o t hi s l i t i gat i on and coul d be

r ever sed at any t i me - - do not est abl i sh the l ack of a vi deogame

submarket .

Never t hel ess, Pl ai nt i f f s have not i dent i f i ed any i nj ur y t o

compet i t i on wi t hi n t hi s submar ket . J ust as i n t he l i ve

t el ecast i ng submar ket , t he ul t i mat e buyer s i n t hi s submar ket - -

vi deogame devel oper s - - woul d need t o acqui r e gr oup l i censes f r om

a speci f i c set of t eams i n or der t o creat e t hei r pr oduct . Thi s

set mi ght i ncl ude al l of t he t eams wi t hi n Di vi si on I , al l of t he

t eams wi t hi n t he maj or conf erences, or some ot her set of t eams

13 The NCAA’ s ot her argument - - t hat vi deogame devel opers woul d not

need t o acqui r e gr oup l i censes because t hei r use of st udent - at hl et es’names, i mages, and l i kenesses i s protect ed under t he Fi r st Amendment - -was rej ect ed by t he Ni nt h Ci r cui t ear l i er i n t hi s l i t i gat i on. I n r eNCAA St udent - At hl ete Name & Li keness Li censi ng Li t i g. , 724 F. 3d 1268,1284 ( 9t h Ci r . 2013) ( concl udi ng t hat “EA’ s use of t he l i kenesses ofcol l ege at hl et es l i ke Samuel Kel l er i n i t s vi deo games i s not , as amat t er of l aw, pr otect ed by t he Fi r st Amendment ”) ; see al so Hart v.El ect r oni c Ar t s, I nc. , 717 F. 3d 141, 170 ( 3d Ci r . 2013) ( hol di ng t hat“t he NCAA Foot bal l 2004, 2005 and 2006 games at i ssue i n t hi s case donot suf f i ci ent l y t r ansf or m Appel l ant ’ s i dent i t y t o escape t he r i ght ofpubl i c i t y c l ai m”).




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t hat t he vi deogame devel oper bel i eved woul d be necessary t o

pr oduce a marketabl e pr oduct . Regardl ess of whi ch t eams were

i ncl uded wi t hi n that set , t hose t eams woul d not compet e agai nst

each ot her as sel l er s of gr oup l i censes, even i n t he absence of

t he chal l enged r ul es, because t hey woul d al l shar e an i nt er est i n

ensur i ng that t he vi deogame devel oper acqui r ed each of t he gr oup

l i censes r equi r ed t o cr eat e i t s pr oduct . These t eams woul d al so

not compete agai nst any t eams out si de of t he set because t he

vi deogame devel oper determi ned t hat t hose ot her t eams’ gr oup

l i censes wer e not r equi r ed t o pr oduce t he vi deogame. I ndeed,

compet i t i on bet ween t eams ( or conf er ences) i s even l ess l i kel y i n

t he vi deogame submarket t han t he l i ve t el ecast i ng submarket

because vi deogame devel oper s - - unl i ke t el evi si on net wor ks - - ar e

not const r ai ned by t he number of gr oup l i censes t hat t hey coul d

use t o pr oduce t hei r product . The evi dence pr esent ed at t r i al

demonst r ates t hat vi deogame compani es coul d, and of t en di d,

f eat ur e near l y ever y FBS f oot bal l and Di vi si on I basket bal l t eam

i n t hei r vi deogames. Under t hese ci r cumst ances, compet i t i on among

i ndi vi dual t eams and conf er ences t o sel l gr oup l i censes i s

ext r emel y unl i kel y. And, t o t he extent t hat i t happens ( or woul d

happen) , i t i s not r est r ai ned by the chal l enged NCAA r est r i ct i ons

on st udent - at hl et e compensat i on. Thus, j ust as wi t h t he l i ve

t el ecast i ng submar ket , t he chal l enged rul es do not suppr ess

compet i t i on i n t hi s submar ket .




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3. Submarket f or Gr oup Li censes t o Use St udent -At hl etes’ Names, I mages, and Li kenesses i n Game Re-Br oadcast s, Hi ghl i ght Cl i ps, and Ot her Ar chi valFootage

Pl ai nt i f f s al l ege t hat t he NCAA’ s chal l enged r ul es i mposer est r ai nt s on a nat i onal submar ket f or gr oup l i censes t o use

st udent - at hl et es’ names, i mages, and l i kenesses i n game re-

br oadcast s, hi ghl i ght cl i ps, and ot her ar chi val game f oot age, bot h

f or ent er t ai nment and t o adver t i se pr oduct s. However , t hey have

not pr esent ed suf f i ci ent evi dence t o show t hat t he NCAA has

i mposed any r est r ai nt s i n t hi s submar ket . As f ound above, t he

undi sput ed evi dence shows t hat t he NCAA has desi gnated a thi r d-

par t y agent t o negot i at e and manage al l l i censi ng r el at ed t o i t s

ar chi val f oot age. That t hi r d- par t y agent , T3Medi a, i s expr essl y

pr ohi bi t ed f r om l i censi ng any f oot age t hat f eat ur es cur r ent

st udent - at hl et es. I t i s al so cont r actual l y r equi r ed t o obt ai n t he

r i ght s t o use t he names, i mages, and l i kenesses of any f or mer

st udent - at hl et es who appear i n f oot age t hat i t has l i censed.

Thus, under t hi s ar r angement , no cur r ent or f or mer st udent -

at hl et es ar e act ual l y depr i ved of any compensat i on f or game re-

br oadcast s or ot her ar chi val f oot age that t hey woul d ot her wi se

r ecei ve i n t he absence of t he chal l enged NCAA r ul es. What ’ s more,

even i f Pl ai nt i f f s had made such a showi ng, t hey have not

pr esent ed suf f i ci ent evi dence t o show an i nj ur y t o compet i t i on i n

t hi s submar ket . I n or der t o l i cense al l of t he f oot age i n t he

NCAA’ s ar chi ves, T3Medi a woul d have t o obt ai n a gr oup l i cense f r om

ever y t eam t hat has ever compet ed i n FBS or Di vi si on I . These

t eams, once agai n, woul d have no i ncent i ve t o compete agai nst each




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ot her i n sel l i ng t hei r gr oup l i censes. Enj oi ni ng t he NCAA f r om

enf or ci ng i t s chal l enged r ul es woul d not change t hat .

I I I . Procompet i t i ve J ust i f i cat i ons

Because Pl ai nt i f f s have pr esent ed suf f i ci ent evi dence t o show

t hat t he NCAA’ s r ul es i mpose a r est r ai nt on compet i t i on i n t he

col l ege educat i on market , t he Cour t must determi ne whether t hat

r est r ai nt i s j ust i f i ed. I n maki ng t hi s det er mi nat i on, i t must

consi der whet her t he “ant i compet i t i ve aspect s of t he chal l enged

pr act i ce out wei gh i t s pr ocompet i t i ve ef f ect s. ” Pal adi n

Associ at es, 328 F. 3d at 1156.

The NCAA has asser t ed f our procompet i t i ve j ust i f i cat i ons f or

i t s r ul es bar r i ng st udent - at hl et es f r om r ecei vi ng compensat i on f or

t he use of t hei r names, i mages, and l i kenesses: ( 1) t he

pr eser vat i on of amat eur i sm i n col l ege spor t s; ( 2) pr omot i ng

compet i t i ve bal ance among FBS f oot bal l and Di vi si on I basket bal l

t eams; ( 3) t he i nt egr at i on of academi cs and at hl et i cs; and ( 4) t he

abi l i t y t o gener at e gr eat er out put i n t he r el evant mar ket s. The

Cour t consi der s each of t hese pr ocompet i t i ve j ust i f i cat i ons i n

t ur n.

A. Amateur i sm

As not ed i n t he f i ndi ngs of f act , t he NCAA asser t s t hat i t s

r est r i ct i ons on st udent - at hl et e compensat i on ar e necessar y t o

pr eser ve t he amat eur t r adi t i on and i dent i t y of col l ege spor t s. I t

cont ends t hat t hi s t r adi t i on and i dent i t y cont r i but e t o t he

popul ar i t y of col l ege spor t s and hel p di st i ngui sh t hem f r om

pr of essi onal spor t s and ot her f or ms of ent er t ai nment i n t he

mar ket pl ace. For suppor t , i t poi nt s to hi st or i cal evi dence of i t s

commi t ment t o amateur i sm, r ecent consumer opi ni on sur veys, and




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t est i mony f r om var i ous wi t nesses regar di ng popul ar per cept i ons of

col l ege spor t s. Al t hough t hi s evi dence coul d j ust i f y some l i mi t ed

r est r i ct i ons on st udent - at hl et e compensat i on, i t does not j ust i f y

t he speci f i c r est r i cti ons chal l enged i n t hi s case. I n par t i cul ar ,

i t does not j ust i f y the NCAA’ s sweepi ng pr ohi bi t i on on FBS

f oot bal l and Di vi si on I basket bal l pl ayer s r ecei vi ng any

compensat i on f or t he use of t hei r names, i mages, and l i kenesses.

Al t hough the NCAA has ci t ed t he Supr eme Cour t ’ s deci si on i n

Boar d of Regent s as suppor t f or i t s amat eur i sm j ust i f i cat i on, i t s

r el i ance on t he case r emai ns unavai l i ng. As expl ai ned i n pr evi ous

or der s, Boar d of Regent s addr essed l i mi t s on t el evi si on

br oadcast i ng, not payment s t o st udent - at hl et es, and “does not

st and f or t he sweepi ng pr oposi t i on t hat st udent - at hl et es must be

bar r ed, bot h dur i ng t hei r col l ege year s and f or ever t her eaf t er ,

f r omr ecei vi ng any monetary compensat i on f or t he commerci al use of

t hei r names, i mages, and l i kenesses. ” Oct . 25, 2013 Or der at 15.

The Supreme Court ’ s suggest i on i n Board of Regent s t hat , i n or der

t o pr eser ve the qual i t y of t he NCAA’ s pr oduct , st udent - at hl et es

“must not be pai d, ” 468 U. S. at 102, was not based on any f actual

f i ndi ngs i n t he t r i al r ecor d and di d not ser ve t o r esol ve any

di sput ed i ssues of l aw. I n f act , t he st at ement r an count er t o t he

asser t i ons of t he NCAA’ s own counsel i n the case, who st at ed

dur i ng or al argument t hat t he NCAA was not r el yi ng on amateur i sm

as a pr ocompet i t i ve j ust i f i cat i on and “mi ght be abl e to get mor e

vi ewer s and so on i f i t had semi - pr of essi onal cl ubs r at her t han

amat eur cl ubs. ” Or al Ar g. Tr . at 25, Boar d of Regent s, 468 U. S.

85. He f ur t her argued, “When t he NCAA says, we are r unni ng

pr ogr ams of amat eur f oot bal l , i t i s pr obabl y r educi ng i t s net




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pr of i t s. ” I d. ( emphasi s added) ; see al so i d. ( “The NCAA mi ght be

abl e t o i ncrease i t s i nt ake i f i t abol i shed or r educed t he

academi c st andar ds that i t s pl ayer s must meet . ”) . Pl ai nt i f f s have

al so pr esent ed ampl e evi dence her e t o show t hat t he col l ege spor t s

i ndust r y has changed subst ant i al l y i n t he t hi r t y year s si nce Boar d

of Regent s was deci ded. See general l y Banks v. NCAA, 977 F. 2d

1081, 1099 ( 7t h Ci r . 1992) ( Fl aum, J . , concur r i ng i n par t and

di ssent i ng i n par t ) ( “The NCAA cont i nues t o pur vey, even i n t hi s

case, an out moded i mage of i nt er col l egi at e spor t s t hat no l onger

j i bes wi t h r eal i t y. The t i mes have changed. ”) . Accor di ngl y, t he

Supr eme Cour t ’ s i nci dent al phr ase i n Boar d of Regent s does not

est abl i sh that t he NCAA’ s cur r ent r est r ai nt s on compensat i on ar e

pr ocompet i t i ve and wi t hout l ess rest r i ct i ve al t er nat i ves.

The hi st or i cal r ecor d t hat t he NCAA ci t es as evi dence of i t s

l ongst andi ng commi t ment t o amat eur i sm i s unper suasi ve. Thi s

r ecor d r eveal s t hat t he NCAA has r evi sed i t s r ul es gover ni ng

st udent - athl ete compensat i on numerous t i mes over t he years,

somet i mes i n si gni f i cant and cont r adi ct or y ways. Rat her t han

evi nci ng t he associ at i on’ s adher ence t o a set of cor e pr i nci pl es,

t hi s hi st or y document s how mal l eabl e t he NCAA’ s def i ni t i on of

amat eur i sm has been si nce i t s f oundi ng.

The associ at i on’ s cur r ent r ul es demonst r at e t hat , even t oday,

t he NCAA does not consi st ent l y adher e t o a si ngl e def i ni t i on of

amat eur i sm. A Di vi si on I t enni s recr ui t can pr eserve hi s amat eur

st at us even i f he accept s t en t housand dol l ar s i n pr i ze money the

year bef or e he enr ol l s i n col l ege. A Di vi si on I t r ack and f i el d

r ecr ui t , however , woul d f or f ei t hi s at hl et i c el i gi bi l i t y i f he di d

t he same. Si mi l ar l y, an FBS f oot bal l pl ayer may mai nt ai n hi s




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amat eur st at us i f he accept s a Pel l gr ant t hat br i ngs hi s t ot al

f i nanci al ai d package above t he cost of at t endance. But t he same

f oot bal l pl ayer woul d no l onger be an amat eur i f he wer e t o

decl i ne t he Pel l gr ant and, i nst ead, r ecei ve an equi val ent sum of

money f r om hi s school f or t he use of hi s name, i mage, and l i keness

dur i ng l i ve game t el ecast s. Such i nconsi st enci es ar e not

i ndi cat i ve of “cor e pr i nci pl es. ”

Nonet hel ess, some rest r i ct i ons on compensat i on may st i l l

serve a l i mi t ed pr ocompet i t i ve pur pose i f t hey ar e necessary t o

mai nt ai n t he popul ar i t y of FBS f oot bal l and Di vi si on I basket bal l .

I f t he chal l enged r est r ai nt s actual l y pl ay a subst ant i al r ol e i n

maxi mi zi ng consumer demand f or t he NCAA’ s pr oduct s - -

speci f i cal l y, FBS f oot bal l and Di vi si on I basket bal l t el ecast s,

r e- br oadcast s, t i cket sal es, and mer chandi se - - t hen t he

r est r i ct i ons woul d be pr ocompet i t i ve. See Boar d of Regent s, 468

U. S. at 120 ( r ecogni zi ng t hat “maxi mi z[ i ng] consumer demand f or

t he pr oduct ” i s a l egi t i mat e pr ocompet i t i ve j ust i f i cat i on) .

At t empt i ng t o make t hi s showi ng, t he NCAA r el i es on consumer

opi ni on sur veys, i ncl udi ng t he sur vey i t commi ssi oned f r om Dr .

Denni s speci f i cal l y f or t hi s case. As not ed above, however , t hi s

survey - - whi ch cont ai ned sever al met hodol ogi cal f l aws and di d not

ask r espondent s about t he speci f i c rest r ai nt s chal l enged i n t hi s

case - - does not pr ovi de r el i abl e evi dence t hat consumer i nt er est

i n FBS f oot bal l and Di vi si on I basket bal l depends on t he NCAA’ s

cur r ent r est r i ct i ons on st udent - at hl et e compensat i on. Fur t her ,

Pl ai nt i f f s of f er ed evi dence demonst r at i ng t hat such sur veys are

i nevi t abl y a poor t ool f or accur at el y pr edi ct i ng consumer

behavi or . Dr . Rascher hi ghl i ght ed var i ous pol l s and sur veys whi ch




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document ed wi despr ead publ i c opposi t i on t o r ul e changes t hat

ul t i mat el y l ed t o i ncr eased compensat i on f or pr of essi onal basebal l

pl ayers and Ol ympi c at hl etes even as Maj or League Basebal l and the

I OC were exper i enci ng per i ods of massi ve r evenue gr owt h. Thi s

evi dence counsel s st r ongl y agai nst gi vi ng any si gni f i cant wei ght

t o Dr . Denni s’ s sur vey r esul t s. What Dr . Denni s’ s sur vey does

suggest i s t hat t he publ i c’ s at t i t udes t owar d st udent - at hl et e

compensat i on depend heavi l y on the l evel of compensat i on t hat

st udent - at hl et es woul d r ecei ve. Thi s i s consi st ent wi t h t he

t est i mony of t he NCAA’ s own wi t nesses, i ncl udi ng Mr . Mui r and Mr .

Pi l son, who bot h i ndi cat ed t hat smal l er payment s t o st udent -

at hl et es woul d bot her t hem l ess t han l ar ger payment s.

Ul t i mat el y, t he evi dence pr esent ed at t r i al suggest s t hat


pr oduct s i s not dr i ven by the r est r i ct i ons on st udent - at hl et e

compensat i on but i nst ead by ot her f act or s, such as school l oyal t y

and geogr aphy. Mr . Pi l son expl ai ned t hat col l ege spor t s t end t o

be more popul ar i n pl aces where col l ege t eams ar e l ocat ed.

Si mi l ar l y, Ms. Pl onsky not ed t hat popul ar i nt er est i n col l ege

spor t s was dr i ven pr i nci pal l y by the l oyal t y of l ocal f ans and

al umni . She t est i f i ed, “I woul d vent ur e t o say t hat i f we [ UT]

of f ered a t i ddl ywi nks t eam, t hat woul d somehow be popul ar wi t h

some segment of whoever l oves our uni ver si t y. ” Tr i al Tr . 1414: 25-

1415: 2.

The Cour t t her ef or e concl udes t hat t he NCAA’ s r est r i ct i ons on

st udent - at hl et e compensat i on pl ay a l i mi t ed r ol e i n dr i vi ng


pr oduct s. Al t hough t hey mi ght j ust i f y a r est r i ct i on on l ar ge




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payment s t o st udent - at hl et es whi l e i n school , t hey do not j ust i f y

t he r i gi d pr ohi bi t i on on compensat i ng st udent - at hl et es, i n t he

pr esent or i n t he f ut ur e, wi t h any shar e of l i censi ng r evenue

gener at ed f r om t he use of t hei r names, i mages, and l i kenesses.

B. Compet i t i ve Bal ance

The NCAA asser t s t hat i t s chal l enged r ul es ar e j ust i f i ed by

t he need t o mai nt ai n t he cur r ent l evel of compet i t i ve bal ance

among i t s FBS f oot bal l and Di vi si on I basket bal l t eams i n or der t o

mai nt ai n t hei r popul ar i t y. Thi s Cour t has pr evi ousl y r ecogni zed

t hat a spor t s l eague’ s ef f or t s t o achi eve t he opt i mal compet i t i ve

bal ance among i t s t eams may ser ve a pr ocompet i t i ve pur pose i f

pr omot i ng such compet i t i ve bal ance i ncr eases demand f or t he

l eague’ s pr oduct . See Apr i l 11, 2014 Or der at 33; Amer i can

Needl e, 560 U. S. at 204 ( “We have r ecogni zed, f or exampl e, ‘ t hat

t he i nt er est i n mai nt ai ni ng a compet i t i ve bal ance’ among ‘ at hl et i c

t eams i s l egi t i mat e and i mpor t ant . ’ ” ( ci t i ng Boar d of Regent s, 468

U. S. at 117) ) . As t he Supr eme Cour t has expl ai ned, t he

“hypot hesi s t hat l egi t i mat es t he mai nt enance of compet i t i ve

bal ance as a pr ocompet i t i ve j ust i f i cat i on under t he Rul e of Reason

i s t hat equal compet i t i on wi l l maxi mi ze consumer demand f or t he

pr oduct . ” Boar d of Regent s, 468 U. S. at 119- 20.

Here, t he NCAA has not pr esent ed suf f i ci ent evi dence to show

t hat i t s r est r i ct i ons on st udent - at hl et e compensat i on act ual l y

have any ef f ect on compet i t i ve bal ance, l et al one pr oduce an

opt i mal l evel of compet i t i ve bal ance. The consensus among spor t s

economi st s who have st udi ed t he i ssue, as summari zed by Dr s. Nol l

and Rascher , i s t hat t he NCAA’ s cur r ent r est r i ct i ons on

compensat i on do not have any ef f ect on compet i t i ve bal ance.




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Al t hough Dr . Rubi nf el d di sagr eed wi t h t hi s concl usi on, he coul d

not i dent i f y another economi st who shar ed hi s vi ew and di d not

of f er any t est i mony t o rebut t he speci f i c f i ndi ngs of t he academi c

l i t er at ur e ci t ed by Dr s. Nol l and Rascher . When t he Cour t asked

hi m whet her hi s opi ni ons wer e based on any academi c l i t er at ur e,

Dr . Rubi nf el d di r ect ed t he Cour t t o t he economi c ar t i cl es ci t ed i n

hi s most r ecent r epor t on compet i t i ve bal ance. But none of t he

ar t i cl es ci t ed i n t hat r epor t f ound t hat t he NCAA’ s r est r i ct i ons

on st udent - at hl et e compensat i on pr omot e compet i t i ve bal ance. I n

f act , t he onl y ar t i cl e hi s r epor t ci t ed t hat act ual l y exami ned

compet i t i ve bal ance i n col l ege spor t s was a 2004 ar t i cl e by Kat i e

Bai r d, whi ch Dr . Nol l quot ed dur i ng hi s t est i mony. As Dr . Nol l

t est i f i ed, t hat ar t i cl e concl uded, “‘ [ L] i t t l e evi dence suppor t s

t he cl ai m t hat NCAA r egul at i ons hel p l evel t he pl ayi ng f i el d. At

best , t hey appear t o have had a ver y l i mi t ed ef f ect , and at wor st

t hey have served t o st r engt hen t he posi t i on of t he domi nant

t eams. ’ ” Tr i al Tr . 230: 18- 231: 11 ( quot i ng Bai r d ar t i cl e) . Dr .

Rubi nf el d’ s i ndependent anal ysi s of compet i t i ve bal ance was al so

unpersuasi ve because i t di d not show a causal l i nk between t he

NCAA’ s chal l enged r ul es and compet i t i ve bal ance. More

i mpor t ant l y, hi s anal ysi s di d not show t hat consumer demand f or

t he NCAA’ s pr oduct woul d decr ease i f FBS f oot bal l or Di vi si on I

basket bal l t eams wer e l ess compet i t i vel y bal anced t han t hey

cur r ent l y ar e. As f ound above, t he popul ar i t y of col l ege spor t s

i s dr i ven pr i mar i l y by f act or s such as school l oyal t y and

geogr aphy. Nei t her of t hese i s dependent on compet i t i ve bal ance.

I n i t s post - t r i al br i ef , t he NCAA ci t es a passage f r om Boar d

of Regent s whi ch st at es t hat t he di st r i ct cour t i n t hat case f ound




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t hat t he NCAA’ s “r est r i ct i ons desi gned t o pr eserve amat eur i sm”

served t o pr omote compet i t i ve bal ance. 468 U. S. at 119 ( ci t i ng

di st r i ct cour t or der , 546 F. Supp. 1276, 1296, 1309- 10 ( W. D. Okl a.

1982) ) . That f act ual f i ndi ng i s not bi ndi ng on t hi s Cour t and,

mor e i mpor t ant l y, i s cont r ar y t o t he evi dence pr esent ed i n t hi s

case. The r ecord i n t hi s case shows that r evenues f r om FBS

f oot bal l and Di vi si on I basket bal l have gr own exponent i al l y si nce

Boar d of Regent s was deci ded and t hat , as a resul t of t hi s gr owt h,

many school s have i nvest ed mor e heavi l y i n t hei r r ecr ui t i ng

ef f or t s, at hl et i c f aci l i t i es, dor ms, coachi ng, and ot her ameni t i es

desi gned t o at t r act t he t op st udent - at hl et es. Thi s t r end, whi ch

sever al wi t nesses r ef er r ed t o as an “ar ms r ace, ” has l i kel y

negat ed what ever equal i zi ng ef f ect t he NCAA’ s r est r ai nt s on

st udent - athl ete compensat i on mi ght have once had on compet i t i ve

bal ance. These changed f act ual ci r cumst ances - - i n addi t i on t o

t he weal t h of academi c st udi es concl udi ng t hat t he r est r ai nt s on

st udent - at hl et e compensat i on do not pr omot e compet i t i ve bal ance - -

pr ecl ude t hi s Cour t f r om gi vi ng any si gni f i cant wei ght t o t he

di st r i ct cour t ’ s f actual f i ndi ngs i n Boar d of Regent s.

Accordi ngl y, t he NCAA may not r el y on compet i t i ve bal ance

her e as a j ust i f i cat i on f or t he chal l enged r est r ai nt . I t s

evi dence i s not suf f i ci ent t o show t hat i t must cr eat e a

par t i cul ar l evel of compet i t i ve bal ance among FBS f oot bal l and

Di vi si on I basket bal l t eams i n or der t o maxi mi ze consumer demand

f or i t s pr oduct . Nor i s i t suf f i ci ent t o show t hat t he chal l enged

r est r ai nt actual l y hel ps i t achi eve t he opt i mal l evel of

compet i t i ve bal ance.




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C. I nt egr at i on of Academi cs and At hl et i cs

The NCAA asser t s t hat i t s r est r i ct i ons on st udent - at hl et e

compensat i on hel p educat e st udent - at hl et es and i nt egr at e t hem i nt o

t hei r school s’ academi c communi t i es. I t ar gues that t he

i nt egr at i on of academi cs and at hl et i cs serves t o i mpr ove t he

qual i t y of educat i onal ser vi ces pr ovi ded t o st udent - at hl et es i n

t he rest r ai ned col l ege educat i on mar ket . 14 Cour t s have r ecogni zed

t hat t hi s goal - - i mpr ovi ng pr oduct qual i t y - - may be a l egi t i mat e

pr ocompet i t i ve j ust i f i cat i on. See Count y of Tuol umne v. Sonor a

Cmt y. Hosp. , 236 F. 3d 1148, 1160 ( 9t h Ci r . 2001) ( r ecogni zi ng t hat

i mpr ovi ng pr oduct qual i t y may be a l egi t i mat e pr ocompet i t i ve

j ust i f i cat i on) ; Law, 134 F. 3d at 1023 ( r ecogni zi ng t hat

“i ncr easi ng out put , cr eat i ng oper at i ng ef f i ci enci es, maki ng a new

pr oduct avai l abl e, enhanci ng servi ce or qual i t y, and wi deni ng

consumer choi ce” may be pr ocompet i t i ve j ust i f i cat i ons) .

The evi dence present ed by t he NCAA suggest s t hat i ntegr at i ng

st udent - at hl et es i nt o t he academi c communi t i es at t hei r school s

i mpr oves t he qual i t y of t he educat i onal ser vi ces t hat t hey

r ecei ve. As not ed above, sever al uni ver si t y admi ni st r at or s

t est i f i ed about t he benef i t s t hat st udent - at hl et es der i ve f r om

par t i ci pat i ng i n t hei r school s’ academi c communi t i es. Pl ai nt i f f s

conf i r med t hat t hey appr eci at ed r ecei vi ng t hese educat i onal

14 I n i t s post - t r i al br i ef , t he NCAA ar gues t hat t he i nt egr at i on of

academi cs and at hl et i cs al so i ncr eases consumer demand f or i t s ot herpr oduct - - FBS f oot bal l and Di vi si on I basket bal l games. I t pr esent edscant evi dence at t r i al t o suppor t t hi s asser t i on. I n any event , t o t heextent t hat t he NCAA cont ends t hat i t s r est r i ct i ons on st udent - at hl et ecompensat i on i ncr ease consumer demand f or FBS f oot bal l and Di vi si on Ibasket bal l games, t he Cour t addr esses t hat ar gument i n i t s di scussi on oft he NCAA’ s asser t ed pr ocompet i t i ve j ust i f i cat i on of amat eur i sm.




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benef i t s when t hey were st udent - athl etes, whi l e Dr . Heckman

t est i f i ed t hat t hese benef i t s al so car r y l ong- t er m val ue.

That sai d, t he NCAA has not shown t hat t he speci f i c

r est r ai nt s chal l enged i n t hi s case ar e necessar y t o achi eve these

benef i t s. I ndeed, st udent - at hl et es woul d r ecei ve many of t he same

educat i onal benef i t s descr i bed above r egar dl ess of whet her or not

t he NCAA permi t t ed t hemt o r ecei ve compensat i on f or t he use of

t hei r names, i mages, and l i kenesses. They woul d cont i nue t o

r ecei ve schol ar shi ps, f or i nst ance, and woul d al most cer t ai nl y

cont i nue t o r ecei ve t ut or i ng and ot her academi c suppor t servi ces.

As l ong as t he NCAA cont i nued t o moni t or school s’ academi c

pr ogr ess r at es and r equi r e t hat st udent - at hl et es meet cer t ai n

academi c benchmarks - - a requi r ement t hat i s not chal l enged

her e - - t he school s’ i ncent i ves t o suppor t t hei r st udent - at hl et es

academi cal l y woul d r emai n unchanged. Si mi l ar l y, t he st udent -

at hl et es’ own i ncent i ves t o per f or m wel l academi cal l y woul d r emai n

t he same, par t i cul ar l y i f t hey wer e r equi r ed t o meet t hese

academi c r equi r ement s as a condi t i on of r ecei vi ng compensat i on f or

t he use of t hei r names, i mages, and l i kenesses. Such a

r equi r ement mi ght even st r engt hen st udent - at hl et es’ i ncent i ves t o

f ocus on school wor k.

As f ound above, t he onl y way i n whi ch t he chal l enged r ul es

mi ght f aci l i t at e t he i nt egr at i on of academi cs and at hl et i cs i s by

pr event i ng st udent - at hl et es f r om bei ng cut of f f r om t he br oader

campus communi t y. Li mi t ed r est r i ct i ons on st udent - at hl et e

compensat i on may hel p school s achi eve t hi s narr ow pr ocompet i t i ve

goal . As wi t h t he NCAA’ s amat eur i sm j ust i f i cat i on, however , t he

NCAA may not use t hi s goal t o j ust i f y i t s sweepi ng pr ohi bi t i on on




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any st udent - at hl et e compensat i on, pai d now or i n t he f ut ur e, f r om

l i censi ng r evenue gener at ed f r om t he use of st udent - at hl et es’

names, i mages, and l i kenesses.

D. I ncr eased Out put

The NCAA ar gues t hat t he chal l enged r est r ai nt i ncr eases t he

out put of i t s pr oduct . Cour t s have r ecogni zed t hat i ncr eased

out put may be a l egi t i mat e pr ocompet i t i ve j ust i f i cat i on. See

Boar d of Regent s, 468 U. S. at 114; Law, 134 F. 3d at 1023.

Her e, t he NCAA ar gues t hat i t s r est r i ct i ons on st udent -

at hl et e compensat i on i ncr ease the number of oppor t uni t i es f or

school s and st udent - at hl et es t o par t i ci pat e i n Di vi si on I spor t s,

whi ch ul t i mat el y i ncr eases t he number of FBS f oot bal l and Di vi si on

I basket bal l games pl ayed. I t cl ai ms t hat i t s r ul es i ncrease t hi s

out put i n t wo ways: f i r st , by at t r act i ng school s wi t h a

“phi l osophi cal commi t ment t o amateur i sm” t o compete i n Di vi si on I

and, second, by enabl i ng school s t hat ot her wi se coul d not af f or d

t o compete i n Di vi si on I t o do so. Docket No. 279, NCAA Post -

Tr i al Br i ef , at 24. Nei t her of t hese ar gument s i s per suasi ve.

The NCAA has not present ed suf f i ci ent evi dence t o show t hat a

si gni f i cant number of school s choose t o compet e i n Di vi si on I

because of a “phi l osophi cal commi t ment t o amateur i sm. ” As noted

i n t he f i ndi ngs of f act , some Di vi si on I conf er ences have r ecent l y

sought gr eat er aut onomy f r om t he NCAA speci f i cal l y so t hat t hey

coul d enact t hei r own r ul es, i ncl udi ng new schol ar shi p r ul es.

These ef f or t s suggest t hat many cur r ent Di vi si on I school s ar e

commi t t ed nei t her t o t he NCAA’ s cur r ent r est r i ct i ons on st udent -

at hl et e compensat i on nor t o t he i dea t hat al l Di vi si on I school s

must award schol arshi ps of t he same val ue.




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Si mi l ar l y, t he NCAA’ s argument t hat t he cur r ent r ul es enabl e

some school s t o par t i ci pat e i n Di vi si on I t hat ot her wi se coul d not

af f or d t o do so i s unsuppor t ed by t he r ecor d. Nei t her t he NCAA

nor i t s member conf er ences r equi r e hi gh- r evenue school s t o

subsi di ze t he FBS f oot bal l or Di vi si on I basket bal l t eams at

l ower - r evenue school s. Thus, t o t he extent t hat school s achi eve

any cost savi ngs by not payi ng t hei r st udent - at hl et es, t her e i s no

evi dence t hat t hose cost savi ngs ar e bei ng used t o f und addi t i onal

t eams or schol ar shi ps. I n any event , Pl ai nt i f f s ar e not seeki ng

an i nj unct i on r equi r i ng school s t o pr ovi de compensat i on t o thei r

st udent - at hl et es - - t hey ar e seeki ng an i nj unct i on t o per mi t

school s t o do so. School s t hat cannot af f or d t o r e- al l ocat e any

por t i on of t hei r at hl et i c budget f or t hi s pur pose woul d not be

f or ced t o do so. Ther e i s t hus no r eason t o bel i eve t hat any

school s’ at hl et i c pr ogr ams woul d be dr i ven t o f i nanci al r ui n or

woul d l eave Di vi si on I i f ot her school s wer e per mi t t ed t o pay

t hei r st udent - at hl et es. The hi gh coaches’ sal ar i es and r api dl y

i ncr easi ng spendi ng on t r ai ni ng f aci l i t i es at many school s suggest

t hat t hese school s woul d, i n f act , be abl e t o af f or d t o of f er

t hei r st udent - at hl et es a l i mi t ed shar e of t he l i censi ng r evenue

gener at ed f r om t hei r use of t he st udent - at hl et es’ own names,

i mages, and l i kenesses. Accordi ngl y, t he NCAA may not r el y on

i ncreased out put as a j ust i f i cat i on f or t he chal l enged r est r ai nt

her e.

I V. Less Rest r i cti ve Al t er nat i ves

As out l i ned above, t he NCAA has pr oduced suf f i ci ent evi dence

t o suppor t an i nf er ence t hat some ci r cumscr i bed r est r i ct i ons on

st udent - at hl et e compensat i on may yi el d pr ocompet i t i ve benef i t s.




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Fi r st , i t pr esent ed evi dence suggest i ng t hat pr event i ng school s

f r om payi ng FBS f oot bal l and Di vi si on I basket bal l pl ayer s l ar ge

sums of money whi l e t hey ar e enr ol l ed i n school may ser ve to

i ncr ease consumer demand f or i t s pr oduct . Second, i t pr esent ed

evi dence suggest i ng t hat t hi s r est r i ct i on may f aci l i t at e i t s

member school s’ ef f or t s t o i nt egr at e st udent - at hl et es i nt o t he

academi c communi t i es on t hei r campuses, t hereby i mpr ovi ng the

qual i t y of educat i onal ser vi ces t hey of f er . Thus, because t he

NCAA has met i t s bur den under t he r ul e of r eason t o t hat extent ,

t he bur den shi f t s back t o Pl ai nt i f f s t o show t hat t hese

pr ocompet i t i ve goal s can be achi eved i n “‘ ot her and bet t er

ways’ ” - - t hat i s , t hr ough “‘ l ess restr i ct i ve al t er nat i ves. ’ ”

Bhan v. NME Hospi t al s, I nc. , 929 F. 2d 1404, 1410 n. 4 ( 9t h Ci r .

1991) ( ci t at i ons omi t t ed) .

“As par t of t hei r bur den t o show t he exi st ence of l ess

r est r i cti ve al t er nat i ves, [ ] pl ai nt i f f s must al so show t hat ‘ an

al t er nat i ve i s substant i al l y l ess restr i ct i ve and i s vi r t ual l y as

ef f ect i ve i n ser vi ng t he l egi t i mat e obj ect i ve wi t hout

si gni f i cant l y i ncr eased cost . ’ ” Count y of Tuol omne, 236 F. 3d at

1159 ( ci t at i ons omi t t ed; emphasi s i n or i gi nal ) . I n addi t i on, any

l ess r est r i ct i ve al t er nat i ves “shoul d ei t her be based on act ual

exper i ence i n anal ogous si t uat i ons el sewher e or el se be f ai r l y

obvi ous. ” Phi l l i p E. Ar eeda & Her ber t Hovenkamp, Ant i t r ust Law

¶ 1913b ( 3d ed. 2006) . A def endant may show t hat a pr of f ered l ess

r est r i ct i ve al t er nat i ve i s not f easi bl e wi t h “evi dence t hat t he

pr of f er ed al t er nat i ve has been t r i ed but f ai l ed, t hat i t i s

equal l y or mor e r est r i ct i ve, or ot her wi se unl awf ul . ” I d.




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A cour t need not addr ess t he avai l abi l i t y of l ess r est r i ct i ve

al t er nat i ves f or achi evi ng a pur por t ed pr ocompet i t i ve goal “when

t he def endant f ai l s t o meet i t s own obl i gat i on under t he rul e of

r eason bur den- shi f t i ng pr ocedur e. ” I d. ; see al so Law, 134 F. 3d at

1024 n. 16 ( “Because we hol d t hat t he NCAA di d not est abl i sh

evi dence of suf f i ci ent pr ocompet i t i ve benef i t s, we need not

addr ess quest i on of whet her t he pl ai nt i f f s wer e abl e t o show t hat

comparabl e pr ocompet i t i ve benef i t s coul d be achi eved t hr ough

vi abl e, l ess ant i compet i t i ve means. ”) . Thus, i n t he pr esent case,

t he Cour t does not consi der whet her Pl ai nt i f f s’ pr oposed l ess

r est r i ct i ve al t er nat i ves woul d pr omot e compet i t i ve bal ance or

i ncr ease out put because t he NCAA f ai l ed t o meet i t s bur den wi t h

r espect t o t hese st at ed pr ocompet i t i ve j ust i f i cat i ons.15

Rat her ,

t he Cour t ’ s i nqui r y f ocuses onl y on whet her Pl ai nt i f f s have

i dent i f i ed any l ess rest r i ct i ve al t er nat i ves f or bot h pr eser vi ng

t he popul ar i t y of t he NCAA’ s product by pr omot i ng i t s curr ent

15 The Cour t not es, however , t hat t he NCAA coul d easi l y adopt

sever al l ess r est r i cti ve r ul es i f i t wi shed t o i ncrease compet i t i vebal ance or out put . Wi t h r espect t o compet i t i ve bal ance, f or i nst ance,t he NCAA coul d adopt a more equal r evenue di st r i but i on f ormul a. Asnot ed above, i t s cur r ent f or mul a pr i mar i l y r ewar ds t he school s t hatal r eady have t he l ar gest at hl et i c budget s. Thi s uneven di st r i but i on ofr evenues r uns count er t o the associ at i on’ s st at ed goal of pr omot i ngcompet i t i ve bal ance. See, e. g. , Sal vi no, 542 F. 3d at 333 ( not i ng t hat“di spr opor t i onat e di st r i but i on of l i censi ng i ncome woul d f ost er a

compet i t i ve i mbal ance” among Maj or League Basebal l t eams) ; Smi t h v. ProFoot bal l , I nc. , 593 F. 2d 1173, 1188 ( D. C. Ci r . 1978) ( “The l eastr est r i cti ve al t er nat i ve of al l , of cour se, woul d be f or t he NFL t oel i mi nat e t he dr af t ent i r el y and empl oy revenue- shar i ng t o equal i ze t het eams’ f i nanci al r esour ces [ as] a met hod of pr eservi ng ‘ compet i t i vebal ance’ ni cel y i n har mony wi t h t he l eague’ s sel f - pr ocl ai med ‘ j oi nt -vent ur e’ st at us. ”) . As f or t he NCAA’ s st at ed goal of i ncreasi ng out put ,t he NCAA al r eady has t he power t o achi eve t hi s goal i n a much moredi r ect way: by amendi ng i t s cur r ent r equi r ement s f or ent r y i nt o Di vi si onI or i ncreasi ng t he number of at hl et i c schol ar shi ps Di vi si on I school sar e per mi t t ed t o of f er .




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under st andi ng of amat eur i sm and i mpr ovi ng t he qual i t y of

educat i onal oppor t uni t i es f or st udent - at hl et es by i nt egr at i ng

academi cs and at hl et i cs.

As set f or t h i n t he f i ndi ngs of f act, Pl ai nt i f f s have

i dent i f i ed t wo l egi t i mat e l ess r est r i cti ve al t er nat i ves f or

achi evi ng t hese goal s. Fi r st , t he NCAA coul d per mi t FBS f oot bal l

and Di vi si on I basket bal l school s t o awar d st i pends t o st udent -

at hl et es up t o t he f ul l cost of at t endance, as t hat t er m i s

def i ned i n t he NCAA’ s byl aws, t o make up f or any shor t f al l i n i t s

gr ant s- i n- ai d. Second, t he NCAA coul d per mi t i t s school s t o hol d

i n t r ust l i mi t ed and equal shar es of i t s l i censi ng r evenue t o be

di st r i but ed t o i t s st udent - at hl et es af t er t hey l eave col l ege or

t hei r el i gi bi l i t y expi r es. The NCAA coul d al so pr ohi bi t school s

f r om f undi ng t he st i pends or payment s hel d i n t r ust wi t h anythi ng

ot her t han r evenue gener at ed f r om t he use of t he st udent - at hl et es’

own names, i mages, and l i kenesses. Per mi t t i ng school s t o award

t hese st i pends and def err ed payment s woul d i ncr ease pr i ce

compet i t i on among FBS f oot bal l and Di vi si on I basket bal l school s

i n t he col l ege educat i on mar ket ( or , al t er nat i vel y, i n t he mar ket

f or r ecrui t s’ at hl et i c ser vi ces and l i censi ng r i ght s) wi t hout

under mi ni ng t he NCAA’ s st at ed pr ocompet i t i ve obj ect i ves.

The NCAA not es t hat Dr . Nol l di d not di scuss a syst em of

hol di ng payment s i n t r ust f or st udent - at hl et es i n hi s exper t

r epor t s or dur i ng hi s t est i mony. However , t hi s does not bar

Pl ai nt i f f s f r om pr oposi ng such a syst em as a l ess rest r i cti ve

al t er nat i ve her e. As not ed above, cour t s may consi der any l ess

r est r i ct i ve al t er nat i ves t hat ar e “based on act ual exper i ence i n

anal ogous si t uat i ons el sewher e” or ot her wi se “f ai r l y obvi ous. ”




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Ar eeda & Hovenkamp, Ant i t r ust Law ¶ 1913b. Pl ai nt i f f s’ pr oposal

f or hol di ng payment s i n t r ust f al l s squar el y wi t hi n t hi s cat egor y.

One of Pl ai nt i f f s’ exper t s, Dr . Rascher , di scussed t he creat i on of

a t r ust i n hi s openi ng r epor t , whi ch was di scl osed t o t he NCAA

more t han ei ght mont hs bef ore t r i al . See Sept . 2013 Rascher

Report ¶¶ 80, 86. Al t hough t he Cour t does not r el y on t he cont ent

of Dr . Rascher ’ s r epor t her e, i t not es t hat t he r epor t pr ovi ded

t he NCAA wi t h ampl e not i ce of t hi s pr oposal .16

Pl ai nt i f f s ’ counsel

16 The Cour t al so notes t hat , over t he past t wo decades, numerous

comment at or s have suggest ed t hat t he NCAA coul d hol d payment s i n t r ustf or i t s st udent - at hl et es wi t hout vi ol at i ng gener al l y accept edunder st andi ngs of amat eur i sm used by ot her spor t s or gani zat i ons. See,e. g. , Sean Hanl on & Ray Yasser , “‘ J . J . Mor r i son’ and Hi s Ri ght ofPubl i ci t y Lawsui t Agai nst t he NCAA, ” 15 Vi l l . Spor t s & Ent . L. J . 241,294 ( 2008) ( “Sear chi ng f or a sol ut i on t o t he pr obl em posed by thi sComment , comment ators have suggest ed a ‘ have- your - cake- and- eat - i t - t oo’appr oach wher eby a t r ust woul d be cr eat ed, al l owi ng st udent - at hl etes t heabi l i t y t o pr eser ve t hei r amat eur st at us whi l e t hei r at hl et i cel i gi bi l i t y r emai ns. The money gener at ed t hr ough t he use of t hecommer ci al val ue of t hei r i dent i t y woul d be pl aced i n a t r ust unt i l t heexpi r at i on of t hei r at hl et i c el i gi bi l i t y. ”) ; Kr i st i ne Muel l er , “NoCont r ol over Thei r Ri ght s of Publ i ci t y: Col l ege At hl et es Lef t Si t t i ngt he Bench, ” 2 DePaul J . Sport s L. & Cont emp. Probs. 70, 87- 88 (2004)( “One suggest i on put f or t h i s t o creat e a t r ust f or t he at hl et es, whi chwoul d become avai l abl e t o t hem upon gr aduat i on. . . . [ Thi s pr oposal ]al l ows t he at hl et es t o r eap t he f i nanci al benef i t s of t hei r l abor s,whi l e mai nt ai ni ng t he f ocus on amat eur at hl et i cs. ”) ; Vl adi mi r P. Bel o,“The Shi r t s Of f Thei r Backs: Col l eges Get t i ng Away wi t h Vi ol at i ng t heRi ght of Publ i ci t y, ” 19 Hast i ngs Comm. & Ent . L. J . 133, 155 ( 1996)( “Shoul d t he NCAA hol d st eadf ast l y to i t s not i ons of amat eur i sm andr esi st payment t o t he at hl et es, t he t r ust f und al t er nat i ve coul d be af ai r and r easonabl e compr omi se. Fi r st of al l , i t coul d be l i mi t ed t ocer t ai n merchandi si ng moni es, such as t hose associ ated wi t h sel l i ng game

j er seys or any ot her r evenue f r om mar ket i ng a st udent - at hl et e’ s name and

l i keness. ”) ; St ephen M. Schot t , “Gi ve ThemWhat They Deserve:Compensat i ng the St udent - At hl et e f or Par t i ci pat i on i n I nt er col l egi at eAt hl et i cs, ” 3 Spor t s Law. J . 25, 45 ( 1996) ( “Revenue f r om t el evi si onr i ght s, t i cket s sal es, and donat i ons f r om boost er s coul d be used t oest abl i sh t hese t r ust f unds. Over al l , some t ype of t r ust f und maypr ovi de t he best al t ernat i ve way of compensat i ng t he st udent - athl et e andpr eservi ng t he educat i onal obj ect i ves of t he NCAA. ”) ; Kennet h L.Shr opshi r e, “Legi sl at i on f or t he Gl or y of Spor t : Amat eur i sm andCompensat i on, ” 1 Seton Hal l J . Spor t L. 7, 27 ( 1991) ( “Fr om an NCAAest abl i shed t r ust f und t he st udent at hl et e coul d r ecei ve a st udent l i f est i pend. ”) .




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al so r ai sed t he i ssue r epeat edl y dur i ng t r i al and sever al of t he

NCAA’ s key wi t nesses - - i ncl udi ng Dr . Emmer t , Mr . Pi l son, and Dr .

Rubi nf el d - - wer e speci f i cal l y gi ven an oppor t uni t y t o r espond t o

t he i dea. None of t hese wi t nesses pr ovi ded a per suasi ve

expl anat i on as t o why t he NCAA coul d not i mpl ement a t r ust payment

syst em l i ke t he one Pl ai nt i f f s pr opose. The Cour t t her ef or e

concl udes t hat a nar r owl y t ai l or ed t r ust payment syst em - - whi ch

woul d al l ow school s t o of f er t hei r FBS f oot bal l and Di vi si on I

basket bal l r ecr ui t s a l i mi t ed and equal shar e of t he l i censi ng

r evenue generated f r omt he use of t hei r names, i mages, and

l i kenesses - - const i t ut es a l ess r est r i ct i ve means of achi evi ng

t he NCAA’ s st at ed pr ocompet i t i ve goal s.

V. Summar y of Li abi l i t y Det er mi nat i ons

For t he reasons set f or t h above, t he Cour t concl udes t hat t he

NCAA’ s chal l enged r ul es unr easonabl y rest r ai n t r ade i n vi ol at i on

of § 1 of t he Sher man Act . Speci f i cal l y, t he associ at i on’ s r ul es

pr ohi bi t i ng st udent - at hl et es f r om r ecei vi ng any compensat i on f or

t he use of t hei r names, i mages, and l i kenesses rest r ai ns pr i ce

compet i t i on among FBS f oot bal l and Di vi si on I basket bal l school s

as suppl i er s of t he uni que combi nat i on of educat i onal and at hl et i c

oppor t uni t i es t hat el i t e f oot bal l and basket bal l r ecrui t s seek.

Al t er nat i vel y, t he r ul es r est r ai n t r ade i n t he mar ket wher e t hese

school s compet e t o acqui r e r ecr ui t s’ at hl et i c ser vi ces and

l i cens i ng r i ght s .

The chal l enged r ul es do not promot e compet i t i ve bal ance among

FBS f oot bal l and Di vi si on I basket bal l t eams, l et al one pr oduce a

l evel of compet i t i ve bal ance necessary t o sust ai n exi st i ng

consumer demand f or t he NCAA’ s FBS f oot bal l and Di vi si on I




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basket bal l - r el at ed pr oduct s. Nor do t he r ul es ser ve t o i ncr ease

t he NCAA’ s out put of Di vi si on I school s, st udent - at hl et es, or

f oot bal l and basket bal l games. Al t hough t he r ul es do yi el d some

l i mi t ed pr ocompet i t i ve benef i t s by mar gi nal l y i ncr easi ng consumer

demand f or t he NCAA’ s pr oduct and i mpr ovi ng t he educat i onal

ser vi ces pr ovi ded t o st udent - at hl et es, Pl ai nt i f f s have i dent i f i ed

l ess rest r i ct i ve ways of achi evi ng t hese benef i t s.

I n par t i cul ar , Pl ai nt i f f s have shown t hat t he NCAA coul d

per mi t FBS f oot bal l and Di vi si on I basket bal l school s t o use t he

l i censi ng r evenue gener at ed f r om t he use of t hei r st udent -

at hl et es’ names, i mages, and l i kenesses t o f und st i pends cover i ng

t he cost of at t endance f or t hose st udent - at hl et es. I t coul d al so

per mi t school s t o hol d l i mi t ed and equal shar es of t hat l i censi ng

r evenue i n t r ust f or t he st udent - at hl et es unt i l t hey l eave school .

Nei t her of t hese pr act i ces woul d undermi ne consumer demand f or t he

NCAA’ s product s nor hi nder i t s member school s’ ef f or t s t o educat e

st udent - at hl et es.

VI . Remedy

“The sever al di st r i ct cour t s of t he Uni t ed St at es ar e

i nvest ed wi t h j ur i sdi ct i on t o pr event and r est r ai n vi ol at i ons” of

§ 1 of t he Sherman Act . 15 U. S. C. § 4. Al t hough t he NCAA asser t s

t hat Pl ai nt i f f s must make a showi ng of i r r epar abl e har m i n or der

t o obt ai n per manent i nj unct i ve r el i ef her e, i t f ai l ed t o ci t e any

aut hor i t y hol di ng t hat such a showi ng i s r equi r ed i n an act i on

br ought under t he Sherman Act . The Sherman Act i t sel f gi ves

di str i ct cour t s t he aut hor i t y t o enj oi n vi ol at i ons of i t s

pr ovi si ons and does not i mpose any addi t i onal r equi r ement s on

pl ai nt i f f s who successf ul l y est abl i sh t he exi st ence of an




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unr easonabl e r est r ai nt of t r ade. Accor di ngl y, t hi s Cour t wi l l

ent er an i nj unct i on t o remove any unr easonabl e el ement s of t he

r est r ai nt f ound i n t hi s case. 17

Consi st ent wi t h t he l ess r est r i ct i ve al t er nat i ves f ound, t he

Cour t wi l l enj oi n t he NCAA f r om enf or ci ng any rul es or byl aws t hat

woul d pr ohi bi t i t s member school s and conf er ences f r om of f er i ng

t hei r FBS f oot bal l or Di vi si on I basket bal l r ecrui t s a l i mi t ed

shar e of t he r evenues gener at ed f r omt he use of t hei r names,

i mages, and l i kenesses i n addi t i on t o a f ul l gr ant - i n- ai d. The

i nj unct i on wi l l not pr ecl ude t he NCAA f r om i mpl ement i ng r ul es

cappi ng t he amount of compensat i on t hat may be pai d t o st udent -

at hl et es whi l e t hey ar e enr ol l ed i n school ; however , t he NCAA wi l l

not be per mi t t ed t o set t hi s cap bel ow t he cost of at t endance, as

t he t er m i s def i ned i n i t s cur r ent byl aws.

The i nj unct i on wi l l al so prohi bi t t he NCAA f r om enf or ci ng any

r ul es t o pr event i t s member school s and conf er ences f r om of f er i ng

t o deposi t a l i mi t ed shar e of l i censi ng r evenue i n t r ust f or t hei r

FBS f oot bal l and Di vi si on I basket bal l r ecr ui t s, payabl e when t hey

l eave school or t hei r el i gi bi l i t y expi r es. Al t hough t he

i nj unct i on wi l l per mi t t he NCAA t o set a cap on t he amount of

money t hat may be hel d i n t r ust , i t wi l l pr ohi bi t t he NCAA f r om

set t i ng a cap of l ess t han f i ve t housand dol l ar s ( i n 2014 dol l ar s)

f or ever y year t hat t he st udent - at hl et e r emai ns academi cal l y

17 I n a f oot not e t o i t s post - t r i al br i ef , t he NCAA ar gues f or t he

f i r st t i me t hat “a number of st at es have made i t i l l egal t o of f er[ st udent - at hl et es] compensat i on beyond a schol ar shi p or gr ant - i n- ai d t oent i ce t hem t o at t end a par t i cul ar school . ” NCAA Post - Tr i al Br i ef at35. However , al l of t he st at ut es i t ci t es f or suppor t expr essl y exemptcol l eges and uni ver si t i es or di st i ngui sh bet ween t he pr ohi bi t ed payment sand schol ar shi ps, f i nanci al ai d, and ot her gr ant s.




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el i gi bl e t o compet e. The NCAA’ s wi t nesses st at ed t hat t hei r

concerns about st udent - athl ete compensat i on woul d be mi ni mi zed or

negated i f compensat i on was capped at a f ew t housand dol l ars per

year . Thi s i s al so comparabl e t o t he amount of money t hat t he

NCAA per mi t s st udent - at hl et es t o r ecei ve i f t hey qual i f y f or a

Pel l gr ant and t he amount t hat t enni s pl ayer s may r ecei ve pr i or t o

enr ol l ment . None of t he ot her evi dence pr esent ed at t r i al

suggest s t hat t he NCAA’ s l egi t i mat e pr ocompet i t i ve goal s wi l l be

under mi ned by al l owi ng such a modest payment . School s may of f er

l ower amount s of def er r ed compensat i on i f t hey choose but may not

unl awf ul l y conspi r e wi t h each anot her i n set t i ng t hese amount s.

To ensure t hat t he NCAA may achi eve i t s goal of i ntegr at i ng

academi cs and at hl et i cs, t he i nj unct i on wi l l not pr ecl ude t he NCAA

f r om enf or ci ng i t s exi st i ng r ul es - - or enact i ng new r ul es - - t o

pr event st udent - at hl et es f r om usi ng t he money hel d i n t r ust f or

t hei r benef i t t o obt ai n ot her f i nanci al benef i t s whi l e t hey ar e

st i l l i n school . Fur t her mor e, consi stent wi t h Pl ai nt i f f s ’

r epr esent at i on t hat t hey ar e onl y seeki ng t o enj oi n r est r i ct i ons

on t he shar i ng of gr oup l i censi ng r evenue, t he NCAA may enact and

enf or ce r ul es ensur i ng t hat no school may of f er a r ecr ui t a

gr eat er shar e of l i censi ng r evenue t han i t of f er s any ot her

r ecr ui t i n t he same cl ass on t he same t eam. The amount of

compensat i on school s deci de t o pl ace i n t r ust may var y f r om year

t o year . Not hi ng i n t he i nj unct i on wi l l pr ecl ude t he NCAA f r om

cont i nui ng t o enf or ce al l of i t s ot her exi st i ng r ul es whi ch ar e

desi gned t o achi eve i t s l egi t i mat e pr ocompet i t i ve goal s. Thi s

i ncl udes i t s r ul es pr ohi bi t i ng st udent - at hl et es f r om endor si ng

commer ci al pr oduct s, set t i ng academi c el i gi bi l i t y r equi r ement s,




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pr ohi bi t i ng school s f r om creat i ng at hl et e- onl y dor ms, and set t i ng

l i mi t s on pr act i ce hour s. Nor shal l anyt hi ng i n t hi s i nj unct i on

pr ecl ude t he NCAA f r om enf or ci ng i t s cur r ent r ul es l i mi t i ng t he

t ot al number of f oot bal l and basket bal l schol ar shi ps each school

may award, whi ch ar e not chal l enged here.

The i nj unct i on wi l l not be st ayed pendi ng any appeal of t hi s

or der but wi l l not t ake ef f ect unt i l t he st ar t of next FBS

f oot bal l and Di vi si on I basket bal l r ecrui t i ng cycl e.

CONCLUSI ON

Col l ege spor t s gener at e a t r emendous amount of i nt er est , as

wel l as revenue and cont r over sy. I nt er est ed par t i es have st r ong

and conf l i ct i ng opi ni ons about t he best pol i ci es t o appl y i n

r egul at i ng t hese spor t s. Bef or e t he Cour t i n t hi s case i s onl y

whet her t he NCAA vi ol at es ant i t r ust l aw by agr eei ng wi t h i t s

member school s t o rest r ai n t hei r abi l i t y t o compensat e Di vi si on I

men’ s basket bal l and FBS f oot bal l pl ayers any more t han t he

cur r ent associ at i on r ul es al l ow. For t he r easons set f or t h above,

t he Cour t f i nds t hat t hi s rest r ai nt does vi ol at e ant i t r ust l aw.

To t he ext ent ot her cr i t i ci sms have been l evel ed agai nst t he

NCAA and col l ege pol i ci es and pr act i ces, t hose ar e not r ai sed and

cannot be r emedi ed based on t he ant i t r ust causes of act i on i n t hi s

l awsui t . I t i s l i kel y t hat t he chal l enged r est r ai nt s, as wel l as

ot her per cei ved i nequi t i es i n col l ege at hl et i cs and hi gher

educat i on gener al l y, coul d be bet t er addr essed as a pol i cy mat t er

by r ef or ms ot her t han t hose avai l abl e as a r emedy f or t he

ant i t r ust vi ol at i on f ound her e. Such r ef or ms and r emedi es coul d

be under t aken by t he NCAA, i t s member school s and conf erences, or

Congr ess. Be t hat as i t may, t he Cour t wi l l ent er an i nj unct i on,




U n i t e


F o r t h e N o


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i n a separ at e or der , t o cur e t he speci f i c vi ol at i ons f ound i n t hi s

case.

The cl er k shal l ent er j udgment i n f avor of t he Pl ai nt i f f

cl ass. Pl ai nt i f f s shal l r ecover t hei r cost s f r om t he NCAA. The

par t i es shal l not f i l e any post - t r i al mot i ons based on ar gument s

t hat have al r eady been made.

I T I S SO ORDERED.

Dated: August 8, 2014 CLAUDI A WI LKENUni t ed St at es Di st r i ct J udge


Documents

Landmark ruling in O'Bannon v. NCAA