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States’ Antitrust Action Against the NCAA Expands With Addition Of the Justice Department and More States

Posted on: January 21, 2024

By Christina Stylianou & Gregg E. Clifton

The NCAA’s Busy Start of Year: Updates From This Week

No stranger to antitrust lawsuits, the NCAA closed out 2023 with a temporary restraining order (TRO) from the Northern District of West Virginia enjoining it from enforcing its Transfer Eligibility Rule against student-athletes seeking to transfer schools for a second time. Before the District Court had an opportunity to rule on the plaintiff states’ application for a longer-term preliminary injunction providing the same relief, the NCAA voluntarily agreed to convert the 14-day TRO into a preliminary injunction shortly after receiving the first decision. (See our prior article for The Official Review detailing these December 2023 developments here).

As the case now progresses into the new year, a further development has already emerged, as the United States Department of Justice announced the filing of an Amended Complaint in the action that would add the Justice Department and three more states, Minnesota, Mississippi, and Virginia, as well as the District of Columbia to the current list of plaintiffs. (The original plaintiff states included Ohio, Colorado, Illinois, New York, North Carolina, Tennessee, and West Virginia.) The Amended Complaint alleges that the NCAA’s Transfer Eligibility rule unreasonably restrains competition in the markets for athletic services in men’s and women’s Division I sports, particularly in basketball and football. It also alleges that the restriction on multi-time transfers limits college athletes’ bargaining power and harms their educational and athletic experiences.

The addition of these new parties is significant in that it signals potential increased involvement by the federal government, and the Justice Department in particular, in NCAA antitrust litigation. Interestingly, the Amended Complaint was filed on the same day the House Energy and Commerce Committee held a legislative hearing to discuss the draft federal name, image, and likeness (NIL) legislation proposed by Congressman and Committee Chair Gus Bilirakis (R-FL), the FAIR College Sports Act. Relief from the federal government in the form of federal legislation on matters of payment and benefits to student-athletes has become a key mission for the NCAA over the last year. Until such legislative relief arrives, if it ever does, it will be interesting to see what position and how much of a stance the Justice Department takes against the NCAA in this litigation (and potentially in others) as it moves forward.

NCAA Is Dealt Another Blow As the Ninth Circuit Denies Petition to Appeal Class Certification in House

In a new development in the House case, the Ninth Circuit has declined to hear an appeal of U.S. District Court Judge Claudia Wilken’s decision late this past year, which certified a class of plaintiffs that could invite recovery potentially upwards of $4 billion for student-athletes’ lost media revenue. Perhaps concerned that the decision could severely impact the NCAA’s existence and potentially reshape college athletics and the industry surrounding it, the NCAA petitioned the Ninth Circuit for a rarely successful interlocutory appeal, arguing that “denial of th[e] petition would be the death knell of the litigation,” as the NCAA would be pressured to settle to avoid the risk of facing the exorbitant damage figure. Judges Kim McLane Wardlaw and Jacqueline Hong-Ngoc Nguyen, nevertheless, denied the request.

The litigation will continue in the Northern District of California, with trial scheduled to proceed in 2025. The NCAA could still seek appeal of a final judgment on the matter following trial. For more information on Judge Wilken’s late 2023 decisions, please see our prior article for The Official Review here.

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