Ivy League Tells Federal Judge to Dismiss Athletic Scholarship Antitrust Case

Jun 16, 2023

Ryan Rodenberg*

In a six-page motion filed on May 15, 2023, the Ivy League Council of Presidents—along with Brown, Columbia, Cornell, Dartmouth, Harvard, Penn, Princeton, and Yale—moved to dismiss an antitrust lawsuit for “failure to state a claim” (p. 1).  The Ivy League’s motion was accompanied by a lengthy legal memorandum refuting claims made two months earlier in a proposed class action complaint alleging a “price-fixing agreement…not to provide athletic scholarships” (p. 1).  The initial complaint was filed by two basketball players at Brown, one a current college athlete and one formerly on the team. 

Co-written by a phalanx of lawyers, the Ivy League’s 45-page memo makes four key arguments.  First, the Ivy League claims that the plaintiffs failed to allege a per se antitrust violation under the Sherman Act.  Here, the Ivy League repeatedly cites precedent supporting the conclusion that plaintiffs’ claim must be evaluated under the rule of reason.  Most prominent among the precedent cited is the Supreme Court’s NCAA v. Alston decision two years ago, a case that analyzed the NCAA’s restraints under the rule of reason at every stage of the litigation.  According to the Ivy League, NCAA v. Alston also suggested that courts should avoid imposing per se liability when evaluating novel claims.  

Second, the Ivy League posits that the plaintiffs have “failed to state a claim under the rule of reason” as a matter of law (p. 17).  The Ivy League memo highlights two purported defects with the plaintiffs’ complaint on this front.  Initially, the Ivy League states that the plaintiffs failed to identify any “properly defined market” (p. 18).  Further, the memo claims that the plaintiffs “have not plausibly alleged market-wide direct anticompetitive effects…” (p. 28).  On this front, the memo expands on the argument that the eight colleges in the Ivy League do not collectively result in a plausible product market.

Third, the Ivy League argues that the plaintiffs failed to allege the requisite antitrust injury-in-fact, a “bedrock requirement of an antitrust case” (p. 30).  According to the Ivy League, neither plaintiff put forth any evidence to support the proposition that Brown “would choose to offer athletic scholarships” (p 31).  Fourth, the Ivy League looks to the Sherman Act’s four-year statute of limitations as a time bar for one of the plaintiffs who started college in 2017.  As such, the Ivy League posits that “[h]is claim, if any, accrued when he matriculated.”

The on-going dispute in the United States District Court for the District of Connecticut was initiated shortly after Congress allowed an Ivy League-friendly antitrust exemption to expire.  Commonly known as the ‘568 Exemption’ stemming from its placement in Section 568 of the Improving Schools Act of 1994, the antitrust carve-out protected certain college financial aid determinations.  Indeed, two sitting U.S. Senators—Marco Rubio (R-Florida) and Mike Lee (R-Utah)—wrote a letter to the Department of Justice claiming that “the 568 Exemption has allowed elite private, non-profit universities…[to] collude…to create a uniform system of distributing financial aid to students” (p. 1).  Although not mentioning the specter of Ivy League athletic scholarships specifically, the two senators urged the DOJ to “promptly investigate whether any academic institutions have violated the antitrust laws in their coordination of financial aid awards—whether before or after expiration of the 568 Exemption—and help restore competition in higher education” (p. 2).       

Beyond the quartet of formal legal arguments, the Ivy League memo also provides a revealing history lesson on sports and academia.  The memo flags how all eight Ivy League colleges entered into a 1945 agreement “with the purpose of maintaining the values of [football] in the service of higher education” (p. 6).  Nine years later, a sub-entity called the ‘Ivy Group’ was formed and reached a consensus that those who play college sports in the conference “shall truly be representative of the student body and not composed of a group of specially recruited athletes” (p. 7).  Such sentiments persist today, according to the Ivy League’s new legal memorandum. 

A ruling on the Ivy League’s motion to dismiss is likely in late 2023.

* Ryan Rodenberg is a professor at Florida State University with a scholarly focus on sports law analytics.

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