A federal judge from the Middle District of Tennessee dismissed a class-action lawsuit in which 10 former college football and basketball players alleged that media and licensing companies, as well as several college sports conferences, were profiting from the use of their names and likenesses without their permission. In short, the court found that the same arguments that former college athletes used successfully in the Ed O’Bannon case do not apply in the instant case, where the defendants are not comparable to the NCAA, or the governing body of collegiate athletics.
The complaint, among other things, alleged that the defendants and the NCAA conspired to create “a marketplace resembling a plantation-type arrangement, where the defendants financially benefit in the collective amount of billions of dollars, while student athletes, the driving force of college sports, receive nothing more than their cost of attendance. This conspiracy has created an anticompetitive marketplace in which all the defendants commercially exploit the substantial value of each student athletes’ images.”
Specifically, they claimed seven causes of action. The first two causes, against all the defendants, allege a statutory violation of the right of publicity under Tenn. Code Ann. § 47-25-1105 (First Cause) and a violation of the right to publicity under Tennessee common law (Second Cause); the Third Cause, also against all Defendants, alleges a civil conspiracy; the Fourth Cause, again against all Defendants, alleges a violation of Section 1 of the Sherman Antitrust Act; the Fifth Cause, against only the Licensing and Network Defendants, alleges false endorsement in violation of Section 43(a) of the Lanham Act; and the Sixth Cause, against all Defendants, alleges unjust enrichment; and the Seventh Cause seeks an accounting as to all Defendants.
The defendants moved to dismiss.
The court dismissed the first two causes of action because the plaintiffs failed to state a claim under Tennessee common law as well as the Tennessee Personal Rights Protection Act.
Turning to the fourth cause of action, or Section One of the Sherman Antitrust Act, the court identified “a fundamental problem.”
“By necessarily linking their antitrust claims to the NCAA amateurism rules and attacking those rules, the plaintiffs are faced with a fundamental problem, notwithstanding that the NCAA is not a defendant in this action. Their attack runs counter to a line of cases which have addressed the amateurism rules in a variety of circumstances, including NCAA v. Board of Regents, 468 U.S. 85 (1984), decided more than thirty years ago. Board of Regents involved an antitrust challenge to an NCAA plan to limit the number of football games Division I schools were allowed to televise each season in order to “reduce, insofar as possible, the adverse effects of live television upon football game attendance.” Id. at 94.
“Applying the rule of reason (as opposed to the per se rule) for antitrust challenges, the Supreme Court found that the plan violated Section One of the Sherman Act because it constituted illegal price fixing and established unlawful horizontal market restraints. However, in arriving at its conclusion, the Supreme Court stated that ‘the role of the NCAA must be to preserve a tradition that might otherwise die.’” Id. at 120.
The Court also made a couple of salient observations:
“What the NCAA and its member institutions market in this case is competition itself — contests between competing institutions. Of course, this would be completely ineffective if there were no rules on which the competitors agreed to create and define the competition to be marketed. A myriad of rules affecting such matters as the size of the field, the number of players on a team, and the extent to which physical violence is to be encouraged or proscribed, all must be agreed upon, and all restrain the manner in which institutions compete. Moreover, the NCAA seeks to market a particular brand of football—college football. The identification of this ‘product’ with an academic tradition differentiates college football from and makes it more popular than professional sports to which it might otherwise be comparable, such as, for example, minor league baseball. In order to preserve the character and quality of the ‘product,’ athletes must not be paid, must be required to attend class, and the like. And the integrity of the “product” cannot be preserved except by mutual agreement; if an institution adopted such restrictions unilaterally, its effectiveness as a competitor on the playing field might soon be destroyed. Thus, the NCAA plays a vital role in enabling college football to preserve its character, and as a result enables a product to be marketed which might otherwise be unavailable. In performing this role, its actions widen consumer choice — not only the choices available to sports fans but also those available to athletes — and hence can be viewed as procompetitive.” Id. at 101-02.
The court also wrote:
“The NCAA plays a critical role in the maintenance of a revered tradition of amateurism in college sports. There can be no question but that it needs ample latitude to play that role, or that the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act. Id. at 119.”
Here, of course, the plaintiffs were subject to the NCAA’s eligibility rules, and in Smith v. NCAA, 139 F.3d 180, 189 (3rd Cir. 1998), the Third Circuit observed that the Supreme Court in Board of Regents ‘did not comment directly on whether the Sherman Act’ would apply to those rules. Nevertheless, after noting that no court of appeals had expressly addressed the issue but numerous lower courts had, the Third Circuit “agreed with those court that the eligibility rules are not related to the NCAA’s commercial or business activities,” and, as a consequence, held that ‘the Sherman Act does not apply to the NCAA’s promulgation of eligibility requirements’” Id. At 185-86.
“Smith is not controlling and, as the plaintiffs argue, the language in Board of Regents about amateurism and players not being paid may well be dicta. Still, that language cannot be blithely Ignored. To the contrary, Board of Regents has recently been read to mean that most NCAA regulations will be ‘a justifiable means of fostering competition among amateur athletic teams, and are therefore procompetitive.’ Agnew v. NCAA, 683 F.3d 328, 341 (7th Cir. 2012) (quoting Bd. Of Regents, 468 U.S. at 117). It also has been read as giving courts ‘a license to find certain NCAA bylaws that ‘fit into the same mold’ as those discussed in Board of Regents to be procompetitive ‘in the twinkling of an eye,’ — that is, at the motion-to-dismiss stage.’ Id. (quoting Bd. of Regents, 468 U.S. at 110 n.39). “Accordingly, when an NCAA bylaw is clearly meant to help maintain the ‘revered tradition of amateurism in college sports’ or the ‘preservation of the student-athlete in higher education,’ the bylaw will be presumed procompetitive, since [a court] must give the NCAA ‘ample latitude to play that role.’” Id. at 342-34 (quoting Bd. of Regents, 468 U.S. at 120).
Like Smith, Agnew is not controlling, but the Sixth Circuit, too, has addressed whether an NCAA eligibility rule should be deemed commercial for purposes of an antitrust challenge. In Bassett v. NCAA, 528 F.3d 426 (6th Cir. 2008), a former college coach brought a complaint which alleged, among other things, that the NCAA’s enforcement of its recruiting and improper inducement rules violated the Sherman Act. Finding no violation, the Sixth Circuit noted that, for the Sherman Act to apply, the challenged action must be commercial in nature, and that cases like Smith draw the distinction between rules which provide a commercial advantage and those that seek to ensure fair competition in college sports.
The “appropriate inquiry is ‘whether the rule itself is commercial, not whether the entity promulgating the rule is commercial.’” Id. at 433 (quoting Worldwide Basketball & Sport Tours, Inc. v. NCAA, 388 F.3d 955, 958 (6th Cir. 2004)). Finding that the complaint lacked “the critical commercial activity component required to permit application of the Sherman Act,” the court affirmed dismissal, writing:
“Similarly to the eligibility rules in Smith, NCAA’s rules on recruiting student athletes, specifically those rules prohibiting improper inducements and academic fraud, are all explicitly non-commercial. In fact, those rules are anti-commercial and designed to promote and ensure competitiveness amongst NCAA member schools. Violation of the applicable NCAA rules gives the violator a decided competitive advantage in recruiting and retaining highly prized student athletes. It also violates the spirit of amateur athletics by providing remuneration to athletes in exchange for their commitments to play for the violator’s football program. . . . Id. at 433; see also, Gaines v. NCAA, 746 F. Supp. 738, 744 (M.D. Tenn. 1990) (‘The overriding purpose of the eligibility rules . . . is not to provide the NCAA with commercial advantage, but rather the opposite extreme — to prevent commercializing influences from destroying the unique ‘product’ of NCAA college football’).
“The same conclusion must be reached here. Right or wrong, under NCAA rules, other than the requirement that an athlete be a student, there can be no more basic eligibility rule for amateurism than that the athlete not be paid for playing his or her sport.”
The court dismissed the third, fifth, sixth, and seventh causes of action with much less fanfare.
Marshall et al. v. ESPN et al.; M.D. Tenn.; No. 3:14-01945; 6/4/15
