By Robert J. Romano, JD, LLM; St. John’s University; Senior Writer
On March 7, 2023, Tamenang Choh, a former Brown University basketball player, together with current player Grace Kirk, filed a one count complaint in the United States District Court for the District of Connecticut claiming that Ivy League colleges and universities are violating the Sherman Act by not providing athletic scholarships to their Division 1 student-athletes.[1] As expected, on May 15, 2023, the eight Ivy League universities, together with the League itself, filed its Motion to Dismiss any and all claims put forth by the two named plaintiffs arguing this simple proposition – it was their choice to attend an Ivy, they could have elected to attend any other elite non-Ivy League institution that would have offered them a student-athlete scholarship.[2] This may be an interesting position, but is it a sound legal theory when defending against antitrust allegations? Let’s explore.
Section 1 of the Sherman Act prohibits any “contract, combination, or conspiracy, in restraint of trade or commerce among the several States.”[3] Since, as per the League’s Motion to Dismiss, the eight universities freely acknowledge that they collectively entered into agreement regarding the issue of student-athlete scholarships, the first element to proving an antitrust violation – ‘a contact, combination or conspiracy’ – is therefore presumably uncontested.
In fact, since 1954, as stated in the original Ivy League Agreement – “The members of the Group reaffirm their prohibition of athletic scholarships. Athletes shall be admitted as students and shall be awarded financial aid only on the basis of economic need.”[4] This same position has been reasserted by the League on several occasions, first in 1977, again in 1979, and finally in 2017, when they collectively declared that “The principle of need as the basis for financial aid for student-athletes is a cornerstone of Ivy belief,”[5] and “all Ivy League institutions follow the common policy that any financial aid for student-athletes will be awarded and renewed on the sole basis of economic need with no differentiation in amount or kind based on athletic ability or participation.”[6]
Regarding the second element of an antitrust claim, ‘among the several states’, is without question that the Ivy League has been conducting business across state borders for over 150 years. Ever since the first intercollegiate sporting event, a rowing regatta between the Yale and Harvard rowing teams on Lake Winnipesaukee in New Hampshire, Ivy League schools have been crisscrossing the northeast to compete against one another in not only rowing, but baseball, football, and a host of other sports as well. In addition, the colleges and universities that make up the Ivy League are nationally (if not globally) recognized, marketing themselves throughout the fifty states and beyond to lure and entice the best and the brightest to be a part of their prestigious campuses.
As for the ‘in restraint of trade or commerce’ element, this is where it gets interesting. The two student-athletes who initiated the litigation claim that as the commercialization of the Ivy League has become more substantial and lucrative over the past decades, the various restrictions imposed by the NCAA and its member intuitions, which the Ivy League is a part of, regarding college athletes’ compensation have been determined to be unfair and anticompetitive to those same athletes. The complaint references how the federal court rulings in both the O’Bannon and Altson cases were critical of the NCAA’s century long argument that compensation restrictions are necessary to separate amateurs from professionals, stating, “Businesses like the NCAA cannot avoid the consequences of price-fixing labor by incorporating price-fixed labor into the definition of the product”,continuing that “nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate . . . The NCAA is not above the law.[7]
The Ivy League counters, arguing that “common sense and precedent confirm that a single athletic conference in the NCAA is not an antitrust market,”[8] and cites the district court’s ruling in Alston that permitted individual conference-level compensation rules for student-athletes as determinative regarding this issue. The defendant’s comment that the “Plaintiffs’ anticompetitive claims are conclusory and speculative allegations of direct anticompetitive effects cannot save their claim,”[9] before continuing with the position that “The only direct effect they [the plaintiffs] allege is that the Ivy League does not offer athletic scholarships and that this allegation is facially insufficient because it does not suggest market-wide harm (or any harm) to competition. Other schools in other conferences – including many academically selective schools that compete in Division I – offer athletic scholarships and the undergraduate athletic experience that comes along with those priorities. Student-athletes who prefer that option are free to choose it.”[10] The defendants sum up their argument by stating that the plaintiffs’ claims should fail because “their alleged injuries are too speculative to satisfy the bedrock requirement of demonstrating antitrust injury-in-fact” and that they “allege no facts showing that these Plaintiffs would have received any athletic scholarship at all from any Defendant, much less the full athletic scholarships they claim they would have received.”[11]
What is interesting with the Defendant’s current position is that in 1991, the Department of Justice sued the eight Ivy League schools and MIT alleging the defendants “participated in a financial aid conspiracy called ‘overlap,” where the schools colluded to establish a fixed money figure that financial-aid candidate families paid to attend those universities.[12] In essence, “The defendants conspired to eliminate cost competition as a factor in choosing a college. The choice of whether to consider price when picking a school belongs to parents and students, not the college or university.”[13] The eight members of the Ivy League subsequently signed a consent decree wherein it was stipulated that in the future they would not collude with each other regarding financial aid matters. As a result, the Ivy schools relied on an (limited) antitrust exemption that allowed them to decline merit awards to prospective candidates, including athletes looking to compete at the Division I level.
This exemption, however, as agreed upon expired in September 2022, and the Ivy League colleges and universities are now subject to and can be found liable under federal antitrust laws. This expired exemption could end up being a key argument for the plaintiffs in this matter since with no exemption, statute, or judicial decision to protect them, the Ivy League, even with its collective $170 billion in financial endowments, cannot be considered ‘above the law’.
[1] Case 3:23-cv-00305 Document filed 03/07/2023.
[2] Case 3:23-cv-00305 Document filed 05/15/2023.
[3] 15 U.S.C Section 1.
[4] Ivy Manual at p. 39 (quoting the 1954 Ivey League Agreement).
[5] Id. at p. 5.
[6] Id. at p. 149.
[7] NCAA vs. Alston, 141 S. CT 2141 at p. 2169, (2021).
[8] Case 3:23-cv-00305 Document filed 05/15/2023.
[9] Id.
[10] Id.
[11] Id.
[12] https://paw.princeton.edu/article/two-athletes-brown-sue-end-ivy-league-scholarship-ban
[13] Id.
