NEEDREPLACE
| Decision Date | 08 August 2014 |
| Docket Number | No. C 09–3329 CW,C 09–3329 CW |
| Citation | 7 F.Supp.3d 955 |
| Parties | Edward O'Bannon, et al., Plaintiffs, v. National Collegiate Athletic Association; Electronic Arts Inc.; and Collegiate Licensing Company, Defendants. |
| Court | New York District Court |
OPINION TEXT STARTS HERE
Ordered accordingly.
Christopher L. Lebsock, Arthur Nash Bailey, Jr., Bruce J. Wecker, Michael Paul Lehmann, Hausfeld LLP, Allan Steyer, Donald Scott Macrae, Gabriel Dash Zeldin, Steyer Lowenthal Boodrookas Alvarez Smith LLP, Brendan Patrick Glackin, Lin Yee Chan, Eric B. Fastiff, Kelly M. Dermody, Leiff Cabraser Heimann & Bernstein LLP, Bruce L. Simon, Bruce Lee Simon, Thomas Kay Boardman, Pearson Simon, Warshaw and Penny, LLP, Daniel Simon Mason, Attorney at Law, Derek G. Howard, Minami Tamaki LLP, Jessica L. Grant, Coblentz Patch Duffy & Bass LLP, Jiangxiao Athena Hou, Zelle Hofmann Voelbel & Mason LLP, Joseph R. Saveri, Joseph Saveri Law Firm, Inc., Kimberly Ann Kralowec, The Kralowec Law Group, Joshua P. Davis, University Of San Francisco School of Law, Rosemary M. Rivas, Finkelstein Thompson LLP, San Francisco, CA, Jon T. King, Hagens Berman Sobol Shapiro LLP, Berkeley, CA, Amanda Heather Kent, Robert William Finnerty, Thomas V. Girardi, Girardi & Keese, Los Angeles, CA, Bonny E. Sweeney, Robbins Geller Rudman & Dowd LLP, San Diego, CA, Brian L. Schwalb, Seth Rosenthal, Venable LLP, Catherine Rosato Reilly, Melissa Helen Maxman, Cozen O'Connor, Daniel Cohen, Jonathan W. Cuneo, Cuneo Gilbert and Laduca, LLP, Hilary Kathleen Scherrer, Megan E. Jones, Michael D. Hausfeld, Sathya S. Gosselin, Swathi Bojedla, Hilary K. Scherrer, Hausfeld LLP, Jack Simms, Tanya S. Chutkan, William A. Isaacson, Boies Schiller and Flexner LLP, Washington, DC, Christopher Theo Hellums, Pittman Dutton and Hellums, P.C., Birmingham, AL, Dianne M. Nast, Nastlaw LLC, Ellen Meriwether, Cafferty Faucher LLP, Eugene A. Spector, Jay S. Cohen, Jeffrey J. Corrigan, Jeffrey Lawrence Spector, William G. Caldes, Spector, Roseman, Kodroff & Willis, P.C., Joel Cary Meredith, Meredith & Associates, Steven J. Greenfogel, Lite Depalma Greenburg, LLC, Eric L. Cramer, Berger & Montague, P.C., Bryan L. Clobes, Cafferty Clobes Meriwether & Sprengel LLP, Philadelphia, PA, Douglas A. Millen, Robert J. Wozniak, Freed Kanner London & Millen, LLC, Bannockburn, IL, Edgar Dean Gankendorff, New Orleans, New Orleans, LA, Jay L. Himes, Morissa R. Falk, Labaton Sucharow LLP, Ronald J. Aranoff, Bernstein Liebhard LLP., Lee Albert, Glancy Binkow & Goldberg LLP, New York, NY, Mitchell J. Rapp, Shawn D. Stuckey, Zelle Hofmann Voelbel & Mason LLP, Renae Diane Steiner, Vincent J. Esades, Heins Mills & Olson, P.L.C., Minneapolis, MN, Robert G. Eisler, Grant & Eisenhofer P.A., Wilmington, DE, Stanley M. Chesley, Waite Schneider Bayless & Chesley, Wilbert Benjamin Markovits, Terence Richard Coates, Markovits, Stock & Demarco, LLC, Cincinnati, OH, Leonard W Aragon, Robert B. Carey, Hagens Berman Sobol Shapiro LLP, Phoenix, AZ, Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Seattle, WA, Garrett D. Blanchfield, Jr., Reinhardt Wendorf & Blanchfield, St. Paul, MN, Joe Sibley, Kiwi Alejandro Danao Camara, Camara & Sibley LLP, Houston, TX, Kendall S. Zylstra, Stephen E. Connolly, Faruqi & Faruqi, LLP, Jenkintown, PA, for Plaintiffs.
Glenn Douglas Pomerantz, Luis Li, Munger Tolles and Olson LLP, Los Angeles, CA, Robert James Wierenga, Gregory L. Curtner, Kimberly K. Kefalas, Suzanne Wahl, Schiff Hardin LLP, Atleen Kaur, Miller Canfield Paddock and Stone PLC, Ann Arbor, MI, Carolyn Hoecker Luedtke, Jeslyn A. Miller, Justin Paul Raphael, Kelly Max Klaus, Munger Tolles & Olson LLP, David P. Borovsky, Glen Robert Olson, Long & Levit LLP, Jason Alex Geller, Meckler Bulger Tilson Marick & Pearson LLP, Rohit K. Singla, Thane Rehn, Munger, Tolles and Olson, San Francisco, CA, Amber Melia Trincado, King & Spalding LLP, Robert James Slaughter, Matan Shacham, Robert Adam Lauridsen, Robert Addy Van Nest, Steven A. Hirsch, Keker & Van Nest, LLP, San Francisco, CA, Gennaro August Filice, Filice Brown Eassa & McLeod LLP, Oakland, CA, Cindy Dawn Hanson, Kilpatrick Stockton LLP, Atlanta, GA, Constance K. Robinson, Peter M. Boyle, Svetlana S. Gans, Kilpatrick Stockton LLP, Washington, DC, for Defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Competition takes many forms. Although this case raises questions about athletic competition on the football field and the basketball court, it is principally about the rules governing competition in a different arena—namely, the marketplace.
Plaintiffs are a group of current and former college student-athletes. They brought this antitrust class action against the National Collegiate Athletic Association (NCAA) in 2009 to challenge the association's rules restricting compensation for elite men's football and basketball players. In particular, Plaintiffs seek to challenge the set of rules that bar student-athletes from receiving a share of the revenue that the NCAA and its member schools earn from the sale of licenses to use the student-athletes' names, images, and likenesses in videogames, live game telecasts, and other footage. Plaintiffs contend that these rules violate the Sherman Antitrust Act. The NCAA denies this charge and asserts that its restrictions on student-athlete compensation are necessary to uphold its educational mission and to protect the popularity of collegiate sports.
A non-jury trial on Plaintiffs' claims was held between June 9, 2014 and June 27, 2014. After considering all of the testimony, documentary evidence, and arguments of counsel presented during and after trial, the Court finds that the challenged NCAA rules unreasonably restrain trade in the market for certain educational and athletic opportunities offered by NCAA Division I schools. The procompetitive justifications that the NCAA offers do not justify this restraint and could be achieved through less restrictive means. The Court makes the following findings of fact and conclusions of law, and will enter as a remedy a permanent injunction prohibiting certain overly restrictive restraints.
The NCAA was founded in 1905 by the presidents of sixty-two colleges and universities in order to create a uniform set of rules to regulate intercollegiate football. Docket No. 189, Stip. Undisputed Facts, at ¶ 6. Today, the association has roughly eleven hundred member schools and regulates intercollegiate athletic competitions in roughly two dozen sports. According to its current constitution, the association seeks to “initiate, stimulate and improve intercollegiate athletics programs for student-athletes and to promote and develop educational leadership, physical fitness, athletics excellence and athletics participation as a recreational pursuit.” Ex. 2340, 2013–14 NCAA Division I Manual, at 15.1
To achieve these goals, the NCAA issues and enforces rules governing athletic competitions among its member schools. Id. at 4. These rules are outlined in the association's constitution and bylaws and cover a broad range of subjects. Among other things, the rules establish academic eligibility requirements for student-athletes, set forth guidelines and restrictions for recruiting high school athletes, and impose limits on the number and size of athletic scholarships that each school may provide. Id. at 3–5.
Since 1973, the NCAA's member schools have been organized into three divisions—Divisions I, II, and III—based on the number and quality of opportunities that they provide to participate in intercollegiate athletics. Stip. Undisputed Facts ¶ 27. Division I schools provide the greatest number and highest quality of opportunities to participate in intercollegiate athletics because they sponsor more sports teams and provide more financial aid to student-athletes than schools in Divisions II and III.2 To qualify for membership in Division I, a school must sponsor a minimum of fourteen varsity sports teams, including football, and distribute a baseline amount of financial aid to its student-athletes. Trial Tr. 2043:13–:25 (Delany); Ex. 2340 at 365, 367. Roughly three-hundred and fifty of the NCAA's eleven hundred schools currently compete in Division I. Trial Tr. 1743:23 (Emmert).
Division I itself further is divided, for the purposes of football competition, into two subdivisions: the Football Bowl Subdivision (FBS) and the Football Championship Subdivision (FCS).3 Trial Tr. 2144:9–:11 (Petr); Ex. 2340 at 364–67. FBS schools are allowed to offer up to eighty-five full scholarships to members of their football teams. In contrast, FCS schools are permitted to offer only a smaller number of full scholarships to members of their teams. Stip. Undisputed Facts ¶ 28. Because FBS schools are able to offer more football scholarships than FCS schools, the level of football competition within FBS is generally higher than within FCS. Currently, about one hundred and twenty schools compete in FBS. Id. ¶ 45.
In addition to the two football subdivisions, Division I schools are also organized into a number of conferences, which essentially function as smaller leagues within the NCAA. The conferences—most of which contain between eight and fifteen schools—typically have their own membership requirements. Most conferences also organize conference-specific games and events featuring their member schools, including regular season football games, regular season basketball games, and post-season basketball tournaments. Although the conferences are considered members of the NCAA and must comply with its constitution and bylaws, they operate independently for the most part and have the authority to generate their own revenue and set their own rules, provided those rules are consistent with NCAA policy. Ex. 2340 at 22.
The rules governing participation and competition in Division I are enacted by an eighteen-member body known as the Division I...
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