Miba v. Ncaa, 01 Civ. 0071(MGC).

• Decision Date: 13 October 2004
• Docket Number: No. 01 Civ. 0071(MGC).,01 Civ. 0071(MGC).
• Citation: 339 F.Supp.2d 545
• 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

339 F.Supp.2d 545

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.

October 13, 2004.

COPYRIGHT MATERIAL OMITTED

Dewey Ballantine LLP, New York, NY, By: Jeffrey L. Kessler, David G. Feher, Julie D. Wood, David Schepard, for Plaintiff Metropolitan Intercollegiate Basketball Association.

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

OPINION

CEDARBAUM, District Judge.

National Collegiate Athletic Association and Cedric Dempsey, on behalf of NCAA (collectively "NCAA"), have moved for summary judgment on Metropolitan Intercollegiate Basketball Association's ("MIBA") two claims which challenge NCAA rules affecting Division I men's college basketball postseason tournaments under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 & 2. MIBA's motion for summary judgment on these same two claims was denied. Metro. Intercollegiate Basketball Ass'n v. Nat'l Collegiate Athletic Ass'n, 337 F.Supp.2d 563 (S.D.N.Y.2004). For the reasons that follow, NCAA's motion is also denied. This opinion assumes familiarity with my earlier summary judgment opinion and applies the same legal standard. Unless otherwise indicated below, the material facts are the same as those set out in the prior opinion.

I. NCAA's Motion for Summary Judgment: Sherman Act § 1

Unlike MIBA, which sought summary judgment only on the Commitment to Participate Rule, NCAA seeks summary judgment on all five "Postseason Rules" which MIBA challenges in its complaint. The five Postseason Rules are: the Commitment to Participate Rule, the One Postseason Rule, the End of Playing Season Rule, the automatic qualification procedure and the bracket expansions.

A. § 1 Scrutiny

NCAA's first argument is that the Postseason Rules are not subject to § 1 scrutiny. First, NCAA argues that § 1 scrutiny is inappropriate because the rules are "noncommercial." NCAA asserts that the Postseason Rules do not regulate or restrain "trade or commerce." 15 U.S.C. § 1. Rather, the rules help to protect the connection between athletics and academics. NCAA asserts that while the rules may have an incidental effect on commerce, the regulations themselves are noncommercial in nature and thus, fall outside of the Sherman Act.

NCAA relies heavily on Smith v. NCAA, 139 F.3d 180 (3d Cir.1998), in which the Third Circuit affirmed the dismissal of a challenge to NCAA's post-baccalaureate eligibility rule, which prohibits an athlete from competing at a postgraduate institution other than the institution from which he received his undergraduate degree. Although the court noted that, "eligibility rules are not related to the NCAA's commercial or business activities," id. at 185-86, the court further explained that this was because "[r]ather than intending to provide the NCAA with a commercial advantage, the eligibility rules primarily seek to ensure fair competition in intercollegiate athletics." Id. The court made an alternative finding that even if the rule were subject to Sherman Act scrutiny it would be upheld under the rule of reason. Id. at 186-87 (noting that the rule discouraged students from foregoing participation in athletics at their undergraduate institutions in order to preserve their eligibility at the postgraduate level and prevented graduate schools from inducing such behavior).

NCAA argues that the End of Playing Season Rule protects the welfare of student athletes because it prevents coaches from forcing their teams to play and practice all year long. However, MIBA is not challenging the End of Playing Season Rule as an independent antitrust violation. Rather, that rule is only challenged in conjunction with the Commitment to Participate Rule. The only "noncommercial" justification NCAA proffers for the Commitment to Participate Rule and the bracket expansions is that they were enacted in response to the "membership's changing characteristics and the growth in the number of Division I basketball teams." NCAA Brief at 8. That explanation has little to do with whether the rule is noncommercial. Moreover, one of NCAA's procompetitive justifications for the rule is that it ensures the best teams will participate in the NCAA Tournament which makes it more attractive to broadcasters, advertisers and fans. Thus, the rule cannot be said to be noncommercial.

Secondly, NCAA argues that the Postseason Rules fall into the category of rules sanctioned by the Supreme Court in NCAA v. Board of Regents, 468 U.S. 85, 101, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984), such as those which determine the size of the field, the number of players on a team and those which regulate physical violence. NCAA points out that all sports leagues structure their postseason championships, and require their member teams to participate in the final championship games, if selected. NCAA argues that it is reasonable as a matter of law for a league to require its member institutions to share the responsibility of enhancing their joint product by requiring that all selected teams participate in the league's final championship game, especially since the member institutions benefit from consumer interest in the championship. Even assuming that NCAA is a sports league and that the above statements have merit, MIBA is not challenging only the Commitment to Participate Rule. MIBA argues that the combination of the Commitment to Participate Rule and the One Postseason Tournament Rule make it impossible for them to host a postseason tournament in which invitees of the NCAA Tournament participate. In combination, the rules do not simply require teams to participate in the NCAA Tournament if invited. They also prevent teams from competing in both tournaments. Therefore, the challenged rules and expansions are not so obviously reasonable as to fall into the group of restrictions sanctioned by Board of Regents.

As explained in the prior opinion, MIBA has adequately shown an agreement among the 1,200 institutions which are NCAA members. Metro. Intercollegiate Basketball Ass'n, 337 F.Supp.2d 563, 569, 2004 WL 2202582, at *6. MIBA has also shown that NCAA should not be treated as a single entity under a Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984), analysis. Id. Thus, NCAA's third argument to avoid § 1 scrutiny is without merit.

B. Rule of Reason

It has already been determined that the Commitment to Participate Rule must be examined under a full rule of reason analysis. Metro. Intercollegiate Basketball Ass'n, 337 F.Supp.2d at 571, 2004 WL 2202582, at *9 (declining to apply a per se rule or quick look analysis). Because the challenged rules are subject to § 1 scrutiny, it is necessary to examine the Commitment to Participate Rule, as well as the other four Postseason Rules, under the rule of reason.

1. Relevant Markets

In order to meet its initial burden under the rule of reason, MIBA must be able to show an actual adverse effect on competition as a whole in the relevant market. In order to determine whether the Postseason Rules have a substantially adverse effect on competition, the relevant market must be defined. For antitrust purposes the relevant market comprises products that consumers view as "reasonably interchangeable" with the product which the defendant sells. See, e.g., United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395, 76 S.Ct. 994, 100 L.Ed. 1264 (1956); Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). The definition of the relevant market is an issue of fact for trial. See, e.g., Jennings Oil Co. v. Mobil Oil Corp., 539 F.Supp. 1349, 1352 (S.D.N.Y.1982).

MIBA alleges that the relevant market is Division I men's college basketball, which includes submarkets of the business of operating Division I men's college basketball tournaments and the business of operating postseason tournaments in particular. The Postseason NIT is currently the only postseason Division I men's basketball event other than the NCAA Tournament. MIBA's expert, Professor Noll, has provided a compelling argument that the relevant market is Division I men's college basketball postseason tournaments.

NCAA argues that this is not the relevant market because the two tournaments cannot be considered "interchangeable" or "similar." According to NCAA, its tournament is the culmination of the Division I men's basketball season and is held annually to determine one champion. In contrast, it argues that the Postseason NIT is an invitational tournament which provides playing opportunities for teams not selected for the NCAA Tournament and is geared toward drawing local audiences to Madison Square Garden, as opposed to the nation-wide attraction of the NCAA Tournament. NCAA's expert, Professor Willig, has concluded that the NCAA Tournament belongs in a market defined as "marquee sports programming," along with professional sporting events such as the National Hockey League's Stanley Cup, baseball's World Series, football's Super Bowl, the National Basketball Association's Tournament, golf's Masters Tournament and the Olympic Games.

MIBA and NCAA are marketing reasonably interchangeable products in that each of their tournaments features competition between Division I men's college basketball teams after the conclusion of the regular season and these games are played around the country and are nationally televised. Although NCAA tries to place itself in the market of "marquee sporting events," MIBA has produced sufficient evidence to show that college basketball is a very different product from professional basketball or other professional championships and...