By Madison White & Jeff Birren, Senior Writer
Todd McNair’s lawsuit against the NCAA has been extensively reported in the pages of Sports Litigation Alert, with eight separate articles appearing since December 29, 2012. The most recent article occurred on May 25, 2018 after the NCAA won a jury verdict on McNair’s defamation claim. Virtually all-contemporaneous media accounts created the impression that McNair was finished and the NCAA crowed with victory. That might have been too soon.
By way of abbreviated background, the NCAA sought to punish USC for rule violations by Heisman Trophy winner Reggie Bush. Bush became involved with a prospective agent, later felon, who provided him with benefits that violated NCAA rules. Although Bush changed agents and the felon went to jail, it was not enough for the NCAA. To stick a spear into USC, their rules required that someone at USC had knowledge of the violations. Running backs coach Todd McNair was the chosen one. The NCAA repeatedly interviewed the felon who denied that McNair knew what he had been up to. Years later, the felon changed his story and told the NCAA staff-member that McNair “must have” known about the benefits that he had bestowed on Bush. That was all the NCAA needed to punish USC and effectively drive McNair from college coaching. Out of work and out of prospects, McNair sued the NCAA on June 3, 2011 for destroying his ability to work in his chosen profession.
The case went to the jury in April 2018 on McNair’s defamation claim. He lost and the NCAA victory was given widespread media coverage. However, one claim remained for the court; specifically McNair’s declaratory relief claim that the NCAA actions violated California Business and Professions Code Section 16600 (“BPC”). It states:
“Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
The court’s ruling would be based on post-trial briefs and the evidence presented at trial. McNair filed his “Brief in Support of Declaratory Relief Cause of Action” on June 29, 2018. The NCAA responded by filing its Opposition Brief and 101-page Declaration of (outside counsel) Kosta Stojilkovich on July 30, 2018. McNair submitted a Reply Brief on August 13, 2018.
The court issued its tentative ruling on August 24, 2018. It gave the parties the option “to file objections, requests for findings on issues not yet covered by the court and requests for clarifications” (McNair v. NCAA, Tentative Decision & Proposed Statement of Decision, (“Proposed Tentative”, Los Angeles Superior Court Case No. BC462891, (August 24, 2018) at 1). The parties had fifteen days to do so. If neither party filed objections by September 14, 2018 then the tentative ruling would have become the final ruling of the court.
The NCAA waited until the very last day, and filed a twenty-eight page “Objections to Tentative Decision & Proposed Statement of Decision” and a 134-page Stojilkovich declaration on September 14, 2018. The filing also included a Declaration from Pac-12 Commissioner Larry Scott.
The court issued its final ruling on October 9, 2018 reaffirming the tentative ruling. It served the parties electronically on that date. The court overruled the NCAA’s evidentiary objections, finding that the evidence at trial did support the findings of the court, that McNair was not relieved of his burden of proof but had in fact proved the issue to the proper legal standard, and that several other so-called evidentiary objections were merely a re-argument of legal issues previously decided by the court.
It directed McNair to file a proposed judgment that included both the declaratory cause of action and the jury verdict in the defamatory cause of action. It gave the NCAA ten days to file objections to the form of the judgment.
The Ruling On The Declaratory Relief Claim
A declaratory relief cause of action consists of a two-step analysis. The first step looks at if the controversy is sufficiently ripe, while the second step determines if the controversy is necessary and proper under California Code of Civil Procedure (CCP) Section 1060 and 1061. Both steps need to be satisfied for the declaratory relief cause of action. In this decision, the NCAA argued that McNair’s claim was neither a justiciable actual controversy, nor necessary and proper. BPC Section 16600 did not to apply to McNair.
The court first looked at whether McNair’s claim pursuant to CCP Section 1060 presented a claim sufficiently ripe to present an actual controversy. In addition to the two-step analysis for declaratory relief, to determine if a controversy is sufficiently ripe the court used the two-prong analysis from Pacific Legal Foundation v. California Coastal Com. 33 Cal.3d 158 (1982) which looks at “(1) whether the dispute is sufficiently concrete to make declaratory relief appropriate; and (2) whether the withholding of judicial consideration will result in a hardship to the parties” ( Farm Sanctuary, lnc. v. Department of Food & Agriculture 63 Cal.App.4th 495, 502 (1998)).
Under the first prong, the court will not speculate or evaluate an inquiry based on a hypothetical situation; there needs to be a concrete dispute. McNair’s claim was a concrete dispute because there was a question regarding the legality of the Show-Cause Order and the effect to McNair’s career due to the restrictive provision. The second prong of the analysis establishes that “there must be an imminent and significant hardship” to the parties (Id. at 3). The court found there would be a significant hardship to McNair if there was no judicial consideration because the matter impacted his current reputation. This hardship was impacting his ability to reestablish his coaching career or even his ability to be involved at any collegiate institution. Therefore, McNair’s controversy satisfied the requirements for a sufficiently ripe case.
Under CCP §1061, the court may refuse the right to exercise power if the claim is not necessary and proper under all the circumstances. In its analysis, the court focused on public policy and California’s development of Section 16600. California decided to abandon the common law approach to benefit open competition and therefore, champion the idea “that every citizen shall retain the right to pursue any lawful employment and enterprise of their choice” (Metro Traffic Control. lnc. v. Shadow Traffic Network, 22 Cal. App. 4th 853, 859 (1994)). The court went on to describe the impact of hiring McNair for other NCAA-member schools and the lack of competitive business due to the restrictive Show-Cause Order, which hindered both McNair’s ability to pursue an enterprise of his choice and other member schools from hiring an established coach.
Regarding the issue whether declaratory relief was necessary and proper under all circumstances, the court concluded that a declaratory relief action could resolve the controversy between McNair and the NCAA and even prevent future litigation.
The third question the court discussed was whether BPC Section 16600 applied to McNair. The court looked at the statutory intent of the legislature for the purpose in creating the code section. The words the legislature used created the intent behind the statute, which allowed the court to examine “every word, phrase and sentence in pursuance of the legislative purpose” (McNair v. NCAA, Final Statement of Decision, Los Angeles Superior Court Case No. BC462891, (October 9, 2018) at 5). The NCAA argued Section 16600 did not apply to McNair because the statute should be read in the context of a restrictive employment provision, relating to only the parties at issue, thus McNair would not be a party within this narrow approach.
However, the word “anyone” is used within Section 16600. If the legislature intended for a narrow approach by using the word “parties”, the legislature could have done so. The court went on to describe Section 16600 as being unambiguous since the purpose behind the code section is “to protect the important legal rights of persons to engage in business and occupations of their choosing” (Id.at 6). The public policy mentioned above gives more reason to believe that the legislature wanted to remove any impediments that would hinder a person’s ability to practice his or her profession. There is an aspect of choice in the statute, which the Show-Cause Order takes away from institutional staff members. Thus, the statute should be read broadly.
The NCAA attempted to argue that Section 16600 did not apply to McNair because of a lack of precedent. No previous cases had addressed a person other than those within the contracted parties, such as an employee and employer. However, the court returned to the clear purpose behind the statute finding that “absence of any authority does not imply that §16600 cannot be given effect” (Id. at 6). The NCAA continued its attempt to show that the statute did not apply to McNair by comparing the NCAA Bylaws to the regulation of unlicensed practice of law and medicine, along with collective bargaining agreements. This argument failed as such entities are regulated by state and federal legislature whereas the NCAA is a private actor.
The court also looked to determine if Section 16600 applied to NCAA member contracts, and returned to the analysis of legislative intent. The court reasoned that the intent of Section 16600 is “to promote open competition and employee mobility”, and when applied to institutional staff members of NCAA institutions, the contractual restrictions in the NCAA Bylaws were within the scope of the statute. When looking at the policy behind Section 16600, it gave further evidence to the idea that the Show-Cause Order was even more restrictive than a single non-compete agreement between an employee and employer because it encompassed other NCAA member schools as opposed to one employer. In McNair’s situation, the depth of the Show-Cause Order provision kept him out of every NCAA institution in the country due to the risk of sanctions that could negatively impact their athletic programs by hiring him. The Show-Cause Order prevented McNair from pursuing his career within the collegiate sports industry and most importantly, the NCAA Bylaws restricted his ability to purse a lawful profession.
The court concluded that declaratory relief was proper for McNair and the Show-Cause Order provision found in the NCAA Bylaws constituted an unlawful restraint in pursuing a lawful profession, and thus was void in California.
The Future
One consequence of the ruling is that McNair became the prevailing party. If he prevails on appeal, it will undoubtedly save him tens of thousands of dollars in costs that he would otherwise have to pay to the NCAA.
Another supposed potential effect is that the NCAA might drop California schools from its membership. This was the warning contained in Pac-12 Commissioner Larry Scott’s declaration. He stated:
“If California law prevents institutions in that state from honoring such commitments, it is hard to see how the Pac-12’s Member Universities in California could continue to meet the requirements of NCAA membership. Thus, the Court’s tentative ruling would place at risk the competitive and scholarship opportunities that flow from NCAA participation for the Pac-12’s California Member Universities.”
All well and good, perhaps, but the court deemed Mr. Scott’s declaration inadmissible as it would have been speculative at best and not material to any issue in the declaratory relief cause of action.
Mr. Scott’s Henny Penny routine must have felt good at the time, but it is not convincing. This is hardly the first time that a court has told the NCAA that it must obey the law nor will it be the last time. Moreover, California is the largest state in the nation, and for an enterprise that depends on television revenue it is close to inconceivable that it would turn their backs on that market, along with the country’s second and sixth largest metropolitan markets. Furthermore, taking such a stand might lead to other major conferences realizing that it is time to leave such an antiquated organization.
This is, after all, a thriving economic enterprise. According to a recent article by USA Today, the tenth most highly paid head coach in college football, Scott Frost, makes $5,000,000 a year; not exactly an underpayment for a coach that began the year with a record of 0-6. Furthermore, fifteen college football assistant coaches make at least $1,000,000 a year (USA Today, “Annual Colleges Salary Survey,” 10-3-18). For all but the actual athletes there is simply too much money being made by the participants to cut loose the nation’s largest state because they were told that, like every other business in the country, the NCAA has to obey the law.
Ms. White is a SCALE student at Southwestern University School of Law in Los Angeles and competed in NCAA-swimming while an undergrad at UCLA.
Birren is the former general counsel of the Oakland Raiders and is an adjunct professor of law at Southwestern University School of Law.
