Court Considers NCAA Bylaw Pro-Competitive, Dismisses Complaint
A federal judge from the Southern District of Indiana has granted, in part, the NCAA‘s motion to dismiss a lawsuit brought by a student athlete, who alleged that the association violated antitrust laws by forcing student athletes to sit out a year after transferring.
In granting the motion, the court found that the “challenged bylaw is directly related to eligibility (rules),” which are “presumptively procompetitive,” thus undermining the antitrust claim.
By way of background, the plaintiff, Devin Pugh, accepted a Division I grant-in-aid to play football at Weber State University, a Division I FCS1 school in 2010. Weber State’s head coach, Ron McBride, allegedly pledged to Pugh that his grant-in-aid would be renewed annually so long as he did well academically and remained eligible for NCAA competition. In December 2011, after Coach McBride retired, Weber State named a new head football coach, Jody Sears. Around the same time, Coach Sears informed Pugh that Weber State would not be renewing his grant-in-aid and that he should look into transferring to another school.
After sending highlight tapes to numerous schools, Pugh was offered full grants-in-aid at several FBS and FCS schools, according to the complaint. However, all of the grants-in-aid were contingent upon his ability to play two more years of NCAA football. Because the NCAA’s “year-in-residence” bylaw required that Pugh sit out of competition for a full season, he only had one year of competition left. As a result, Pugh applied for a “hardship waiver,” which would have allowed him to play immediately and for the two years remaining on his five-year clock. The NCAA, however, denied the request for a hardship waiver and, as a result, every grant-in-aid offer was rescinded.
In 2013, Pugh transferred to Colorado State University-Pueblo. Because Pugh transferred from a Division I school to a Division II school, he was eligible for a one-time transfer exception and did not have to sit out for a year, giving him two seasons left to play NCAA football. However, Pugh’s new grant-in-aid award was less than at Weber State, covering only tuition, but not books, housing, or any other costs.
Pugh sued on Nov. 5, 2015. alleging that the NCAA’s limitation on the mobility of college athletes is patently unlawful, preventing Pugh and other proposed class members from receiving millions of dollars in athletics-related financial assistance and other direct compensation, which they would have received if they were permitted to transfer without this limitation.
In its analysis, the court noted that the Sherman Act can apply to NCAA regulations. Agnew v. Nat’l Collegiate Athletic Ass’n, 683 F.3d 328, 341 (7th Cir. 2012). However, “most of the regulatory controls of the NCAA are justifiable means of fostering competition among amateur athletic teams and therefore procompetitive because they enhance public interest in intercollegiate activities.” Nat’l Collegiate Athletic Ass’n v. Bd. or Regents of the Univ. of Okla. (hereinafter “Bd. of Regents”), 468 U.S. 85, 117, 104 S. Ct. 2948, 82 L. Ed. 2d 70 (1984), Agnew, 683 F.3d at 341.
Thus, while the Sherman Act can apply to NCAA bylaws, “most regulations will be a justifiable means of fostering competition among amateur athletic teams and are therefore procompetitive”. Agnew, 683 F.3d at 341 (noting that challenges to “procompetitive” NCAA bylaws are properly dismissed during the motion to dismiss stage).
“Justifying the procompetitive presumption for certain NCAA regulations, the Seventh Circuit explained that: [a] certain amount of collusion in college football is permitted because it is necessary for the product to exist. Accordingly, when an NCAA bylaw is clearly meant to help maintain that ‘revered tradition of amateurism in college sports’ or the ‘preservation of the student-athlete in higher education,’ the bylaw will be presumed procompetitive, since we must give the NCAA ‘ample latitude to play that role.’ Id. (quoting Bd. of Regents, 468 U.S. at 117).”
The court noted that “because the challenged bylaw is directly related to eligibility, it is presumptively procompetitive and no further analysis under the Sherman Act is required” and “dismissal is warranted.”
Pugh’s “arguments to the contrary are unavailing, as the cases he cites in support did not involve challenges to eligibility bylaws but rather involved challenges to bylaws affecting the distribution of scholarships. See Rock v. Nat’l Collegiate Athletic Ass’n, No. 1:12-cv-1019-JMS-DKL, 2013 U.S. Dist. LEXIS 116133, 2013 WL 4479815 (S.D. Ind. Aug. 16, 2013) (evaluating a challenge to a bylaw limiting the number and distribution of Division I football scholarships); White v. Nat’l Collegiate Athletic Ass’n, No. CV 06-999-RGK (MANx), 2006 U.S. Dist. LEXIS 101366, 2006 WL 8066802 (C.D. Cal. Sept. 21, 2006) (evaluating a challenge to the NCAA’s caps on grants-in-aid); NCAA I-A Walk-On Football Players Litig., 398 F. Supp. 2d 1144, 1151 (W.D. Wisc. 2005) (evaluating a challenge to the limitations on the number of football scholarships).”
Devin Pugh v. National Collegiate Athletic Association; S.D. Ind.; Case No. 1:15-cv-01747-TWP-DKL, 2016 U.S. Dist. LEXIS 132122; 9/27/16
Attorneys of Record: (for plaintiff) Daniel J. Kurowski, HAGENS BERMAN SOBOL SHAPIRO LLP, Chicago, IL; Elizabeth A. Fegan, PRO HAC VICE, HAGENS BERMAN SOBOL SHAPIRO, LLP, Chicago, IL; Joseph N. Williams, William N. Riley, RILEY WILLIAMS & PIATT, LLC, Indianapolis, IN; Sara Willingham, PRO HAC VICE, THE PAYTNER LAW FIRM PLLC, Hillsborough, NC; Steve W. Berman, PRO HAC VICE, HAGENS BERMAN SOBOL SHAPIRO LLP, Seattle, WA; Stuart McKinley Paynter, PRO HAC VICE, The Paynter Law Firm PLLC, Washington, DC. (for defendant) Cherie Phears O’Reilly, PRO HAC VICE, SCHIFF HARDIN LLP Atlanta, Atlanta, GA; Daniel E. Pulliam, Kathy Lynn Osborn, FAEGRE BAKER DANIELS LLP (Indianapolis), Indianapolis, IN; Gregory L. Curtner, Robert James Wierenga, Suzanne L. Wahl, SCHIFF HARDIN, LLP – Michigan, Ann Arbor, MI; Jacob K. Danziger, Ann Arbor, MI.
