Between talks of changing the BCS playoff structure, student athletes trading jerseys for tattoos (see Three Point Shot, infra), and convicted sex offenders scaring away star recruits, the harsh glare of the national spotlight seems to almost always be on the National Collegiate Athletic Association ("NCAA"), its member institutions and its top student-athletes. In 2011, far away from the national glare, some lesser known, ex-Division I football players had their day in court against the NCAA regarding certain alleged antitrust violations, but were sacked on their first play from scrimmage.
In March 2011, former Rice University defensive back Joseph Agnew and North Carolina A&T kicker Patrick Courtney filed a federal antitrust action against the NCAA alleging that the NCAA violated Section 1 of the Sherman Act by prohibiting its member institutions from awarding multiyear scholarships to student athletes, and by imposing an artificial cap on the number of scholarships that each Division I team could offer.
In their complaint, Agnew and Courtney alleged that they were recruited out of high school for their football prowess by a number of Division I schools, eventually accepting full football scholarships to play at their respective universities. However, because of the NCAA bylaws, they were only guaranteed one free year of education, room and board. Both Agnew and Courtney suffered football-related injuries and, as a result, their respective universities did not renew their athletic scholarships to cover all four years of school.
Agnew and Courtney argued that, in a competitive market free of the NCAA restrictions, they would not have incurred any tuition expenses because they would have received multiyear scholarships that covered the entire cost of their bachelor's degrees even if they were injured. Further, they argued that the NCAA's scholarship limits forced student athletes who do not have their scholarships renewed to pay a lot more than they would have in a competitive market.
The NCAA's primary response at the district court level was that the plaintiffs had failed to identify a relevant market. This, of course, is necessary to plead a successful Sherman Act claim. Calling a quick audible, the plaintiffs urged the court to use a "quick-look" approach to analyze the anti-competitive effects on the market, which, they argued, allowed them to avoid identifying such a relevant market.
The district court sided with the NCAA and dismissed the case with prejudice, holding that the NCAA's proscription of multi-year scholarships and its restriction on the number of scholarships a school can award did not violate the Sherman Act.
Plaintiffs threw the red flag and challenged the district court's call in the Seventh Circuit. However, the Seventh Circuit affirmed the district court's decision to dismiss the amended complaint. Though the court of appeals disagreed with the district court that the plaintiffs could not have alleged a relevant cognizable market, it agreed that, in this case, the plaintiffs had not sufficiently identified a relevant cognizable market in their complaint. In doing so, the appeals court focused on the removal of two items in the plaintiffs' amended complaint which were in their original complaint: a heading entitled "Relevant Market," and a sentence stating that a bachelor's degree from an accredited university was a distinct product market. The Seventh Circuit interpreted the plaintiffs' omissions to be a strategic maneuver and also to reflect a belief -- albeit an erroneous one -- that they did not need to identify a relevant market. The appeals court also agreed with the district court's analysis that since a bachelor's degree is not earned upon payment, and a student only pays for the opportunity to earn a bachelor's degree, the complaint failed to identify a product market for bachelor's degrees.
Interestingly, in February 2012, while the Agnew-Courtney case was still pending, the NCAA adopted a regulation that will now permit member institutions to award multiyear scholarships. This new regulation was not favored by all NCAA schools and survived an override motion by only two votes. The recruiting advantage that multi-year scholarships might provide apparently troubles some member schools.
Still, the attorney for Agnew and Courtney, Steve Berman, like Herm Edwards, apparently, "plays to win the game." In his version of a postgame press conference, Berman stated that "[although] [t]he court rejected most of the NCAA's arguments, [it provided] us a road map on how to plead this case, and we intend to do so with a new plaintiff."
True to his word, Berman filed another antitrust lawsuit against the NCAA on July 25, 2012, on behalf of former college quarterback John Rock. Let the games begin!
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