By Christian Dennie
The NCAA successfully defended the Agnew multi-year scholarship litigation by obtaining a motion to dismiss with prejudice. The NCAA alleged that Plaintiffs had three deficiencies in their pleadings before the Court: 1) failure to plead a relevant market; 2) failure to allege facts sufficient to show that the NCAA’s alleged wrongdoing has injured competition as a whole in the relevant market; and 3) failure to allege facts connecting the NCAA rules at issue to their alleged injury. Ultimately, the Court concluded that Plaintiffs failed to assert a relevant product market.
Plaintiffs argued that their pleadings before the Court properly alleged two product markets: “the market for the sale of bachelor’s degrees and the labor market for the purchase of student athlete services.” The Court did not find either argument persuasive. As it relates to the labor market argument, the Court relied on Seventh Circuit precedent, Banks v. NCAA, by dismissing Plaintiffs arguments that a labor market for student-athlete services was a viable product market. Plaintiffs point to allegations in their pleadings that would support a finding of a relevant market by showing “NCAA member institutions compete with each other to attract and enroll highly skilled athletes to their institutions for obtaining bachelor’s degrees” and “[s]tudents with athletic ability often are given athletics-based discounts, i.e., ‘grants-in-aid’ or ‘athletic scholarships,’ that may sometimes equal the yearly cost of a bachelor’s degree.” The Court concluded, based on Banks v. NCAA, even if the Court accepts the Plaintiffs’ pleadings that set forth a labor market, such market fails as a matter of law in the amateur college sports context.
Plaintiffs next argued that a market for bachelor’s degrees is a relevant market. Specifically, the Plaintiffs point to their allegations that “[b]achleor’s degrees from accredited colleges and/or universities constitute a distinct product market” and “[t]he vast majority of salaried positions in the United States require the applicant to possess a bachelor’s degree. No reasonable substitute exists for a bachelor’s degree from an accredited college or university. Accredited colleges and universities compete for customers, i.e., students on a variety of dimensions including but not limited to price, reputation, job placement, and course offerings. A hypothetical entity that had a monopoly on bachelor’s degrees would be able to raise the price of bachelor’s degrees significantly for a non-transitory period of time without losing customers.” In turn, the NCAA argued that Plaintiff’s market for the sale of bachelor’s degrees fails because colleges and universities do not simply sell degrees to anyone willing to pay tuition. The Court agreed with the NCAA and stated “the ‘market’ for bachelor’s degrees is implausible as a matter of law because people cannot simply purchase bachelor’s degrees at Division I colleges and universities.”
Plaintiffs requested an opportunity to amend their pleadings, but the Court declined such request because Plaintiffs “have already had multiple attempts to cure deficiencies in their pleadings” and Plaintiff could not “cure deficiencies in their pleadings…even if given the opportunity to do so.” As a result, the Court dismissed the case with prejudice.
With the continued and expansive commercialization of intercollegiate athletics, it can be argued that intercollegiate athletics has changed substantially since Banks v. NCAA and student-athletes should be considered athletes before students. However, the court, here, reinforced the NCAA’s continued argument that student-athletes cannot be placed into a labor market because they do not provide labor. The continued emphasis on precedent appears to indicate that courts are reluctant or unwilling to review the current state of intercollegiate athletics and student-athlete welfare issues. Nonetheless, the NCAA has taken the reins to improve the state of intercollegiate athletics and is attempting to address some of the concerns set forth by student-athletes and student-athlete advocates. As it pertains to multi-year scholarships, the membership’s vote in February will determine whether continued effort is necessary push for multi-year aid. Moving forward, the NCAA’s likely adoption of legislation that provides for multi-year scholarships makes future litigation of this kind unnecessary and unlikely.
For any questions, feel free to contact Christian Dennie at cdennie@bgsfirm.com.
