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JONES DAY TALKS® U.S. Supreme Court Hears Arguments in NCAA Antitrust Case

The U.S. Supreme Court has heard oral arguments in NCAA v. Alston, a case that will determine the limits the NCAA can place on types of compensation received by college student-athletes.

Jones Day's Chris Pace and Marc Weinroth discuss how the case found its way to the Supreme Court, the arguments that the NCAA and student-athletes made, and what this case could mean for the future of college athletics.

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Read the full transcript here:

Dave Dalton:

During a March 31st hearing, the National Collegiate Athletic Association or NCAA, faced questions from the US Supreme Court, as it sought to defend limits on the types of compensation received by college athletes. Now this raises a lot of questions. How did this case get to the highest court in the country? What are the core issues being argued? How does the anti-trust law apply? Does the court's eventual ruling potentially change the nature of college sports? Jones Day's Chris Pace and Marc Weinroth are here to talk about all this and more. I'm Dave Dalton. You're listening to Jones Day Talks.

Dave Dalton:

Chris Pace has tried and prevailed in more than 20 cases, and he has orally argued and prevailed in more than 25 appeals. He represents clients in commercial disputes, trade secrets and unfair competition cases, as well as money laundering and other criminal investigations and prosecutions. Prior to joining Jones Day, Chris had a diverse career that included service as an assistant US attorney for the Southern District of Florida, and as a law clerk to Supreme Court Justice, Anthony M. Kennedy.

Dave Dalton:

Marc Weinroth has significant sports law experience involving litigation, transactions and internal investigations. His recent sports related matters include representing more than a dozen universities in regard to NCAA student athlete concussion injury litigation, a federal multi-district litigation consolidating more than 500 punitive class actions. He has also defended a major university in two state court football concussion lawsuits, and represented a major university in three lawsuits involving student athlete health and safety issues. Prior to joining Jones Day, Marc served as assistant general counsel for three years at the University of Miami, where he oversaw a variety of areas, including the day-to-day athletic department legal portfolio.

Dave Dalton:

Chris, Marc, thanks for being here today.

Chris Pace:

Thanks Dave. Glad to be here.

Marc Weinroth:

Thanks, Dave.

Dave Dalton:

Actually, it's like you're back because we're talking about NCAA v. Alston, and we've talked about this on a previous podcast. Also, you've written about it for Jones Day's publications. We'll have those links available to listen to this podcast so when they're done here, they can go back and see what your comments were earlier, as this matter works its way through the court system. But Marc, let's go to you first. For listeners may be slightly new or have forgotten some of the specifics of these issues, tell us what this case is all about.

Marc Weinroth:

This is a lawsuit that was brought by college football and basketball student athletes. They were challenging NCAA rules that limited the types and amounts of compensation that they could receive. They've essentially alleged that the NCAA has fixed the price that universities can pay them for their labor playing sports and that in a free market, schools would be able to offer them a lot more compensation. The NCAA has defended against these lawsuits for decades, where there have been challenges to rules involving eligibility and involving compensation. And they have argued that those rules are designed to preserve the amateur status of college athletes and preserve amateurism. That there's this line of demarcation between college and pro sports that's very important to consumers. And that consumers like watching college sports and college sports are unique because student athletes aren't paid professional salaries. This was really an effort by the plaintiffs to try to strike down all of the rules that limited compensation.

Dave Dalton:

Marc, are these rules, are they instituted by the NCAA or do different conferences have their own rules? Or how do the student athletes know what parameters they're working under? Who decides, I guess.

Marc Weinroth:

The compensation rules at issues here, Dave are based on national NCAA rules. Now of course, universities are members of the NCAA, it's a NCAA member organization. But the reality is those rules are in an NCAA manual that has over 450 pages worth of rules.

Dave Dalton:

Let's talk about how we got here. We'll stay with Marc for a minute, but Chris, I'd like to hear from you on this too. How does a case like this end up at the highest court in the land? Where we started with some college athletes, maybe thinking the compensation system was unfair. Now, here we are at the Supreme Court of the United States. How did we get here?

Marc Weinroth:

I'll tell you a little bit about the district court's ruling from a couple of years ago and then Chris can take over from there with the ninth circuit and how it ended up with the Supreme Court. But there was a 10 day trial before the district court judge and she split the difference here. Originally again, the student athletes were asking for rules limiting compensation, all rules to be eliminated. And what the judge said is, "I'll give you some of those things, but not all those things." She opened the door for students to receive additional benefits that are related to their education. So things like musical instruments, computers, even some nebulous concepts, like a post eligibility internship that has potentially unlimited salary. Cash awards relating to academic performance of up to $6,000. And the logic that she used was that consumers don't really care if student athletes receive additional educational benefits related to the fact that they're students. But at the same time, she upheld the other NCAA rules that prohibit what we think of as pay for play type compensation.

Dave Dalton:

Okay, okay. Chris, how did it move from there?

Chris Pace:

Sure. Then it won as a matter of rights in the ninth circuit and had full review there, leading to a published opinion. The ninth circuit affirmed the district court, NCAA unhappy with it, sought Supreme Court review. Some folks were surprised that the Supreme Court granted review because the decision is focused on something fairly unique. The NCAA is a particular area of the economy, intercollegiate athletics, as opposed to having a broad sweep across the entire economy or the entire field of anti-trust law. But nevertheless, the justices took it. And certainly the NCAA has made the argument to the justices that they should review this because the ninth circuit ruling is going to have a significant impact and impediment to their ability to function as an overseer of intercollegiate athletics. That's led to our hearing yesterday with the Supreme Court on the merits.

Dave Dalton:

Okay. Chris, talk more about that. What are the NCAA's main grievances with what happened at the district court and then the ninth circuit? What are they hoping the justices ultimately do?

Chris Pace:

Their main argument is that essentially there should be deference afforded to the way that they're trying to preserve amateurism and the distinction between intercollegiate athletics and professional sports. And that there should be deference to the way that they do that. That courts should not be coming in and micromanaging the NCAA and looking at each individual rule saying, "This rule is okay, this supports amateurism, but this other rule doesn't," or, "This rule supports it only to a certain extent." So what they're saying is essentially rather than going through that whole exhaustive procedure, which can lead to a lot of litigation, all that courts should be doing is essentially giving a quick look at what the NCAA has done. If an NCAA rule has a reasonable relationship to their goal of protecting amateurism and the distinction between intercollegiate athletics and professional sports, that should be the beginning and the end of the inquiry.

Chris Pace:

The ninth circuit went beyond that, the district court went beyond that and applied a much more focused review on the NCAA rules, including was there a less restrictive alternative? Was there a different way of doing it? That, for the NCAA's position is, "Hey, you may be able to come up with different ways of doing these things, but it's up to us to decide the way that we want to do it. As long as we're trying to promote those legitimate pro-competitive goals of keeping a distinction between intercollegiate athletics and professional sports, we should be given some flexibility in how we go about doing that."

Dave Dalton:

Good overview. Marc, anything you'd add to what Chris just said?

Marc Weinroth:

I think what I'd add is that another area of what they're challenging is that the injunction basically went too far. That remedy that Judge Wilken imposed that set forth a number of different education related benefits, they've made this slippery slope argument, the NCAA. That if we're allowing monetary awards up to $6,000 for every student athlete, if we're allowing post eligibility internships that seem to be related to education, but what if those turn into these unlimited internships that are used for recruiting purposes to get the star high school quarterback or point guard to come to a school because they're guaranteed some amount of money after their eligibility expires?

Dave Dalton:

I see. All right back to Chris. As you would expect, the student athletes must have a very different perspective on how this is unraveling. They want to ask the Supreme Court to affirm lower court rulings, correct?

Chris Pace:

That's correct. Their position is that essentially, there's no reason that the NCAA should be entitled to that level of deference where they only get a quick look at what they've done to see if it's rational. In most anti-trust cases, what's done is there's applied the rule of reason, which is a more searching inquiry into okay, what is the reason that you did something? Is it pro-competitive and does that reason really match up with your actions? Is there a reason to think that they're inconsistent? And their position is that's exactly what occurred here. The more detailed review by the district court and the NCAA is just not happy with the results.

Chris Pace:

That the district court made fact findings that were in some cases favorable to the NCAA, some cases unfavorable to the NCAA. Follow those fact findings to the natural conclusion that it led her to in terms of the injunction that she issued and that that was the correct approach to go forward. That the NCAA isn't entitled to some special deference as soon as they say, "We're protecting amateurism," or, "We're just protecting the distinction between inner collegiate athletics and professional sports," that automatically courts have to say, "Oh, okay, well, that's the end of it. Go forth and do whatever you want."

Dave Dalton:

Sure, sure. Marc, you have a similar perspective on what the student athletes are thinking, hoping for?

Marc Weinroth:

Definitely. I'd add that I think one of their more practical arguments that they made was that the injunction doesn't require schools to provide these benefits. Rather, even conferences at a conference level can engage in rulemaking that prohibits these education benefits from being offered to student athletes. That was actually one of the things Justice Sotomayor keyed in on and asked about. And the response from the NCAA council was, "Well, it really starts then to look like a prisoner's dilemma, where we need a national agreement. Otherwise, you're going to have the haves providing these benefits and the have nots unable to provide those benefits."

Dave Dalton:

Mm-hmm (affirmative). You both listened to the oral arguments. I was able to read newspaper accounts and that's about all. I think we potentially get into trouble here. But I'm wondering, based on the questioning and the way the justices talk to representatives of both sides, were you able to read anything as how any of the judges might be leaning? First to Chris, pull anything from the questions, their tone, anything you might be able to handicap this with a little bit?

Chris Pace:

I think that's always a difficult thing to do. I'm a former Supreme Court clerk myself. I've had a lot of experience with Supreme Court arguments and the justices come in and they want to ask engaging questions, but that's really not a great indicator of how they're going to rule. I think it's very difficult. Somebody says, "Oh, this justice or that justice asked a really tough question to the NCAA council." That's not a very good indicator that the justice is necessarily going to rule against the NCAA. In the current format that they're doing Supreme Court arguments, it's made it even more so that it's hard to predict because the chief justice almost puts each justice on the spot. Says, "Hey, ask a few questions here." So they're almost required to ask questions of the advocates.

Chris Pace:

I would say that what was clear from a number of the questions, is that the justices are definitely struggling with the issue. They understand both sides. There's some, I don't know if I want to use the word sympathy, but there's certainly an understanding of the NCAA's position that they're just trying to protect amateurism and that this can become a slippery slope once you start micromanaging how their rules operate. I think there was also, again, whether you want to call it sympathy or at least understanding of the student athletes side, that there is massive amounts of money being made here based on their actions. And yet the only people who are not profiting from it are them. It was a very lively debate. I would expect this is going to be one of the last opinions we get this term because the justices are going to take some time to write this opinion.

Dave Dalton:

Interesting. Sometimes, and again, I'm an amateur court watcher, you guys are professional court watchers. Sort of, I guess, I don't know. But you guys understand these nuances better than I do. But sometimes you can get close based on ideology, where are these justices on the political spectrum? How have they ruled on other things, who appointed them, where'd they come from? What was their track record like here on the bench and in lower courts as they were coming up? But from what I read today, it seems like it's even. R or D, whoever appointed you, I think I saw some questions that led me to believe they're scattered on this one right now. Is that true?

Chris Pace:

Yeah. There's two issues that come out of that. I mean, one is that it's a unique case and whenever you get to unique cases, it's harder to peg justices because you can't look at prior writings and say, "This justice has written a lot of different cases on a certain aspect of criminal procedure. I have an idea where this justice's ideology is." Here it's a little bit more unique. The second thing is that some of the newer justices don't have a whole lot of existing opinions on anti-trust matters. So it's a little bit harder in that context too. You don't have this wealth of opinions you can look at and say, "When they were court of appeals judges, here's how they ruled on all these anti-trust issues." Remember, we've got three fairly new justices on the court right now.

Dave Dalton:

Right, right. You brought up anti-trust, but let's swing to Marc for a second. Marc, talk about some of the core issues the justices appear to be interested in based on what you heard during the arguments. Where might they be honing in?

Marc Weinroth:

I think there were two general themes that really emerged from the lines of questions. There were multiple areas of inquiry by the justices. But I'd say the first was when they were directing questions to the NCAA, there was a healthy dose of skepticism, should I say, about this alleged pro-competitive benefit. That consumers really watch college sports because players aren't paid. And there were a lot of concerns expressed by justices about these unfair economic results as a result of that. Justice Thomas talked about how coaches' salaries have ballooned, Justice Kavanaugh had a quote that said the anti-trust laws should not be a cover for exploitation of student athletes. And remember we're recording this right around the time of the Final Four, where the NCAA makes around $1 billion dollars annually just in their television media rights deals.

Dave Dalton:

Right, right.

Marc Weinroth:

So we saw those concerns in a number of questions. The other theme, and this really bore out when the questions were directed at counsel for the student athletes was, is this going to result in endless line drawing where we're going to have courts being a superintendent for NCAA rules? It seemed like there was at least a little bit of sympathy for the fact that the NCAA's under this constant barrage of litigation and that every time a group of plaintiffs believes they're entitled to some additional incremental benefit, there's an anti-trust lawsuit.

Marc Weinroth:

There were questions along the lines of, "Well, is $6,000 enough for these academic incentive awards? Why isn't there going to be a group of plaintiffs a couple of years from now, that's going to seek $10,000?" So you had Chief Justice Roberts, he compared this all to a game of Jenga. He said, "If you pull one log out and then another, everything's fine. But ultimately it all comes crashing down if they keep chipping away at these NCAA rules." And Justice Sotomayor asked, "How do we know that we're not destroying the game as it exists?" Those types of concerns were also born out in the questions.

Dave Dalton:

Those are very human concerns. I love the Jenga reference by the way, but we're talking about tradition here. I know that sounds a little corny or quaint even, but it would be a game changer. Although, I think we've used that pun before in talking about these issues. It could be a whole different world. Chris, in some of the notes you guys sent over to me when we were preparing for this, you mentioned the US solicitor general arguing in support of the student athletes. Two things. Well, three things. First of all, does that happen very often? Number two, is that significant? And what exactly did she argue?

Chris Pace:

It happens fairly regularly, particularly if it's an interpretation of a federal law, that the Supreme Court will ask the solicitor general to come in and provide the US government's view. So it's not unusual for the solicitor general. Every term, the solicitor general appears in these cases that deal with federal, even when the US government isn't a party, when there are cases dealing with the interpretation of federal statute. Some people have overblown the significance of the solicitor general participating. She did a fabulous job. I believe it was her first argument as the acting solicitor general and she did come down on the side of affirming, so therefore supporting, the student athletes. But it was clear that the solicitor general was not there to try to be an advocate for the student athletes. But more to be an advocate for the fact that the approach taken by the courts below was the right approach. Was that this rule of reason, more detailed scrutiny was appropriate and that the reality here is somewhat, the NCAA's complaining about is that they've lost on some of the facts.

Chris Pace:

The judge makes a ruling, the judge applies the law to the facts. Was it a question that the judge applied the wrong law or is the question the judge applied the wrong facts? Because if it's the latter, for the most part, that's not something that Supreme Court gets involved in. Their job isn't to try to tell district courts, "Oh, you should have believed this witness versus another witness." If they applied the right law, generally speaking, the Supreme Court is going to defer to the factual rulings that are made by district judges on cases before them.

Dave Dalton:

Sure. Okay, okay. Marc, there's been this other issue buzzing around while the Supreme Court's been hearing this. Media is giving a lot of attention to the name, image and likeness legislation that's been running around both at the state and federal level. What relationship do these name, image and likeness rights have to this case? Is this totally divorced from what the Supreme Court's talking about now or is this related?

Marc Weinroth:

This case does not directly involve name, image and likeness rights. And there's a bit of confusion because the same judge, Judge Wilken, previously presided over the O'Bannon lawsuit several years ago, and that did involve name, image and likeness rights. So the district court's decision here didn't deal with that. The issues on appeal are really limited to these education related benefits. But at the same time, judges don't live in a vacuum. And I think it'd be foolish to assume that these name, image and likeness rights issues don't play any role in how they might perceive these issues. Especially where we saw a number of justices who expressed concern about this huge economic disparity between how much money the NCAA makes. Compared to the reality that student athletes today aren't even allowed to earn money from third parties through endorsement deals, or private training sessions, or running camps, or all the number of things that they're currently fighting for through legislative efforts. Not just in state legislatures, but also trying to get federal legislation passed as well.

Dave Dalton:

Sure. And just the fact that name, image and likeness is such a big deal, it shows you how big college sports have become over the last couple of decades. Let's wrap up with this and we've covered a lot of ground in a short period of time. This has been great. I think we'll probably revisit this matter maybe later this summer after the court rules. But let's talk about that. Chris, you can't predict an outcome, but talk about the possible range of outcomes and maybe the likely impact of all this. Where do you think we might end up?

Chris Pace:

I would say maybe the highest level, I would say that anyone who thinks that this is going to resolve the NCAA's litigation with student athletes is kidding themselves. There's going to be continued litigation, no matter how the Supreme Court rules. Certainly if it upholds the ninth circuit and the district court's ruling, that's going to open the door for more litigation. But I think even if they generally side with the NCAA, these issues of challenges by student athletes are not going to be going anywhere. I also would expect that whatever Supreme Court ruling comes down, folks are going to be trying to apply it to other areas like the name image and likeness issues relating to that. The litigation is going to continue. There's a definite reality that this litigation is going to continue because the injunction before the district court judge, the district court is continuing to monitor, even that.

Chris Pace:

I'm not trying to downplay the significance of the Supreme Court decision because whatever they decide is going to affect and drive the course of the litigation between the NCAA and the student athletes for years to come. I think if there isn't a flat out affirmance here, you're going to see a lot more student athlete litigation. If they side with the NCAA, there'll still be litigation, but the NCAA will definitely have a strong defense in those cases. So everyone's rightly focused on the significance of the Supreme Court decision, but anyone who thinks that this is going to cap the disputes between student athletes and the NCAA are kidding themselves.

Dave Dalton:

So we're just getting started. Marc, should the NCAA be worried? Could this be a threat to the NCAA? Is this threatening business as usual, as they know it potentially?

Marc Weinroth:

They're definitely concerned. But remember, they're the party that appealed the ninth circuit's ruling. They won before the ninth circuit and before the district court on the issue of whether these other pay for play type rules were permissible. What's on appeal right now are these education related benefits. Look, that's not to say that the logic or the rationale that the Supreme Court adopts in reaching its decision, couldn't lay the groundwork for future challenges like Chris just referenced. But I would just caution everyone when this decision comes out, if it is in favor of the student athletes, it's very unlikely to signal the demise of the NCAA.

Dave Dalton:

Good enough. We'll leave it right there. The case is NCAA v. Alston. Supreme court arguments, March 31st, 2021-- Likely a decision, Chris says probably later in the term, but likely this summer. I would assume one of the last ones they bring about. I'm sure we'll round up again, once that happens and talk about how this might affect amateur athletics, the NCAA, student athletes, et cetera. But Chris, Marc, thanks for being here today. Great program and we'll talk again soon.

Chris Pace:

Great. Thanks, Dave. Talk to you soon.

Marc Weinroth:

Thanks, Dave.

Dave Dalton:

Thanks Marc, thanks Chris. Take care.

Dave Dalton:

You can find contact information and complete bios for Chris Pace and Marc Weinroth at jonesday.com. And while you're there, be sure to visit our insights page where you'll find commentaries, white papers, more podcasts, videos, blogs, newsletters, and other interesting content. Subscribe to Jones Day Talks at Apple Podcasts and other podcast platforms. As always, we thank you for listening. I'm Dave Dalton. We'll talk to you next time.

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