Intercollegiate Basketball v. Nat. Coll. Athletic, 01 Civ. 0071(MGC).

• Decision Date: 29 September 2004
• Docket Number: No. 01 Civ. 0071(MGC).,01 Civ. 0071(MGC).
• Citation: 337 F.Supp.2d 563
• Parties: METROPOLITAN INTERCOLLEGIATE BASKETBALL ASSOCIATION, Plaintiff, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION and Cedric Dempsey on behalf of National Collegiate Athletic Association, Defendants.
• Court: U.S. District Court — Southern District of New York

Page 563

337 F.Supp.2d 563

METROPOLITAN INTERCOLLEGIATE BASKETBALL ASSOCIATION, Plaintiff, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION and Cedric Dempsey on behalf of National Collegiate Athletic Association, Defendants.

No. 01 Civ. 0071(MGC).

United States District Court, S.D. New York.

September 29, 2004.

COPYRIGHT MATERIAL OMITTED

Dewey Ballantine LLP, By: Jeffrey L. Kessler, David G. Feher, Julie D. Wood, David Schepard, New York, NY, Weil, Gotshal & Manges LLP, By: Bruce S. Meyer, Renee M. Fishman, New York, NY, for Plaintiff Metropolitan Intercollegiate Basketball Association.

Miller, Canfield, Paddock & Stone, P.L.C., By: Gregory L. Curtner, Kimberly K. Kefalas, Atleen Kaur, Eric McLand, New York, NY, for Defendants National Collegiate Athletic Association and Cedric Dempsey.

OPINION

CEDARBAUM, District Judge.

The Metropolitan Intercollegiate Basketball Association ("MIBA") sues the National Collegiate Athletic Association and Cedric Dempsey, on behalf of the NCAA (collectively "NCAA"), to challenge certain NCAA rules that the MIBA argues are anticompetitive. The complaint alleges that several of the NCAA rules, which affect Division I men's college basketball, reduce competition from preseason and postseason non-NCAA sponsored tournaments and are unreasonable restraints of trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. The MIBA also claims that the NCAA uses the rules affecting postseason competition to achieve or attempt to gain monopoly power in the market for Division I men's college basketball tournaments, in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. The complaint also asserts a common law claim of tortious interference with contract. The MIBA has moved for summary judgment, on the issue of liability, on claims two and three, which challenge the rules affecting postseason play under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 & 2.¹ For the following reasons, plaintiff's motion is denied.

BACKGROUND

The NCAA is a non-profit, voluntary, unincorporated association of over 1,200 colleges, universities, playing conferences and other affiliated organizations for the regulation of intercollegiate athletics. NCAA member institutions are divided into three divisions which reflect differences in philosophy, level of athletic competition, and size and scope of the institution's athletic programs. Within each division a member institution may also be a member of a conference. Conferences are voluntary associations of colleges and universities that organize intra-conference schedules, operate end-of-season conference championship tournaments and buy and sell media time. Division I member institutions and conferences compete at the highest level of intercollegiate athletics. In the 23 sports the NCAA regulates, it conducts 89 postseason championships. This includes championships in all Division I sports with the exception of Division IA football, where a series of bowl games determines the champion or champions. At the end of every season, the NCAA hosts the NCAA Division I Men's Basketball Championship Tournament ("NCAA Tournament"). Currently, 65 teams participate in the NCAA Tournament. Thirty-one of these teams apply to the NCAA and qualify automatically for the NCAA Tournament because they win their conference's championship ("automatic qualifiers"). The other 34 teams receive invitations or "at-large" bids to compete in the championship.

The MIBA is an unincorporated association of five New York area colleges and universities: Fordham University, Manhattan College, New York University, St. John's University and Wagner College. The MIBA is an affiliated member of the NCAA and all five of the MIBA institutions are members of the NCAA. Since the late 1930's, the MIBA has conducted the Postseason National Invitational Tournament ("Postseason NIT"), which is a Division I men's basketball tournament held after the end of the NCAA's regular season. As the tournament's name suggests, teams are invited to participate in the Postseason NIT. Currently, forty teams compete in the Postseason NIT.² The Postseason NIT is the only postseason Division I men's basketball tournament other than the NCAA Tournament.

The parties have a long and somewhat tortured relationship. The Postseason NIT began in 1938 as a six-team tournament. The NCAA Tournament began the following year and eight teams participated. Until 1953, NCAA members who received an invitation to both tournaments could choose to participate in both. For instance, in 1950, City College of New York and Bradley University participated in both the NCAA Tournament and the Postseason NIT, and City College won both tournaments.

However, the MIBA argues that beginning in the mid-1940's, the NCAA was looking to "curb" competition from the Postseason NIT. The MIBA argues that several statements by NCAA officials found in NCAA meeting minutes from the 1940's, 50's and 60's, support its theory that the NCAA adopted the challenged rules and expanded its Tournament in order to disadvantage the Postseason NIT. The NCAA disputes the MIBA's interpretation of these statements and argues that the MIBA's attempt to link these unrelated statements to rules and expansions instituted years, and sometimes decades, after the statements were made should not be credited. The NCAA adds that the statements show nothing other than that the NCAA wanted the teams it selected to participate in its Tournament. For the purposes of this motion it is unnecessary to determine the significance of these statements. Only the undisputed chronology relevant to the challenged rules need be examined.

In 1953, the NCAA adopted a rule which prohibited NCAA member institutions from participating in more than one postseason tournament (the "One Postseason Tournament Rule"). In addition, the NCAA's Tournament field was expanded to 16 teams in 1951, and to 22 teams in 1953. In 1961, the NCAA adopted a new regulation which stated that all NCAA member institution teams who received invitations were "expected" to participate in NCAA championship tournaments (the "Expected Participation Rule"). Despite this rule, in 1961, Dayton University, and in 1962, Loyola University (Chicago), Mississippi State, University of Houston, Dayton and St. John's University, declined invitations to participate in the NCAA Tournament and instead participated in the Postseason NIT. In 1970, Marquette University, which was one of the top men's basketball teams that year, declined to participate in the NCAA Tournament in favor of competing in the Postseason NIT.

In 1975, the NCAA changed its rule that only one team from each conference was eligible to be selected for the NCAA Tournament. The change allowed second-place teams in conferences whose first-place team had automatically qualified for the Tournament to be considered for "at large" invitations to the NCAA Tournament. Thirty-two teams participated in the 1975 NCAA Tournament. The field was expanded to 40 teams in 1979 and again to 48 teams in 1980. Also in 1980, the restriction as to the number of teams invited from any one conference was eliminated altogether. The MIBA asserts that these expansions were made to keep additional teams from competing in the Postseason NIT. The NCAA disputes this and maintains that the decision was made in response to the addition of 26 Division I men's basketball teams between 1975 and 1980 and increased consumer demand for Division I men's basketball beginning in the 1970's.

In 1981, the NCAA was considering an expansion to a 64-team bracket. The MIBA wrote to the NCAA and expressed its concern over such a change and noted that if it were implemented, the size of the bracket would severely injure the Postseason NIT and likely destroy the MIBA's postseason tournament. Although no expansions were made that year, the NCAA expanded its Tournament to 52 teams in 1982, 53 teams in 1984 and eventually to 64 teams in 1985. The NCAA disputes that any of the expansions were motivated by anything other than legitimate business reasons, such as increasing consumer demand, an increase in the number of Division I men's basketball teams and playing conferences, and the increasing success of the NCAA Tournament.

The NCAA's Executive Committee revised the Expected Participation Rule in 1981. First effective during the 1982-83 season, this new version required an invited team to participate in the NCAA championship of its sport or in no postseason competition whatsoever (the "Commitment to Participate Rule"). This ended any uncertainty about a team's obligation to participate in the NCAA championship if invited. The Commitment to Participate Rule has been in effect for every NCAA Tournament since 1982, with the exception of the 1991 Tournament. In May of 1990, the Commitment to Participate Rule was eliminated from the NCAA Division I Manual and, due to some timing issues with the Manual's publication dates, a revised version was not replaced until August of 1991. Thus, the rule was next in effect for the 1992 NCAA Tournament.

The Commitment to Participate Rule was revised in 1991, 1999 and 2000, but the essence of the rule remained unchanged. All NCAA rules are republished in a new manual each year and every NCAA member institution must annually attest that it is in compliance with all of these rules. If a member institution does not comply with these rules, it risks fines and playing sanctions. A witness for the NCAA agreed that a failure to comply with the Commitment to Participate Rule might be considered a "major" violation. However, the NCAA maintains that this deposition testimony is immaterial since no team has ever asked to be relieved of its obligation under the rule or deliberately flouted the rule.

In 2000, the NCAA's Division I Management Council appointed an "antitrust subcommittee" to review the NCAA's rules for potential antitrust problems. The subcommittee made a recommendation that...