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Federal Judge Mulls Over NCAA Student-Athlete Pay Restrictions

A federal judge in Oakland gave no indication Tuesday whether she will loosen or even abolish longstanding National Collegiate Athletic Association restrictions on pay for student athletes, even as she stated the restrictions violate federal antitrust law.

OAKLAND, Calif. (CN) - A federal judge in Oakland gave no indication Tuesday whether she will loosen or even abolish longstanding National Collegiate Athletic Association restrictions on pay for student-athletes, even as she stated the restrictions violate federal antitrust law.

The violation will figure prominently in U.S. District Judge Claudia Wilken's decision capping a September bench trial over class action claims by Division I football and basketball players accusing the NCAA and its conferences of funneling maximum profits to themselves while the students were left scrambling to pay for food and rent.

Wilken presented the question at the heart of her inquiry in a hearing Tuesday - how should she weigh the anti-competitive and pro-competitive effects of the NCAA's pay restrictions to determine their impact on competition when "these two concepts aren't particularly monetized" in this case?

"It seems one should balance the anti-competitive conduct against the pro-competitive justification just to see if it's meaningful," Wilken said. "In other words, if you had an egregious anti-competitive violation against a tiny pro-competitive justification, does this pro-competitive justification justify the violation?"

The seemingly arcane legal question will dictate the terms of any injunction Wilken issues loosening or eliminating the rules - or if she issues an injunction at all.

The case stretches back to 2014, when former Clemson University football player Martin Jenkins sued the NCAA and its conferences for anti-competitive conduct and an injunction eliminating caps on compensation for student-athletes.

Now encompassing 53,000 class members, the plaintiffs reason the individual conferences will step in under an injunction to enact their own pay restrictions to preserve amateurism in college sports, which is valued by many fans and believed to be a significant revenue driver.

But the NCAA predicts wealthier schools in this scenario will begin offering potential team members “millions of dollars” to play for them, essentially turning them into professional athletes and hurting revenues as fans turned off by professional-grade student salaries stop buying tickets to games and television networks pay conferences less money to broadcast them.

In September, Wilken heard three weeks of testimony, including testimony from three former student-athletes who are plaintiffs in the case. A former West Virginia University football player testified his scholarship only covered 10 months of rent and that he was routinely hungry because he couldn't afford to buy food. A University of California at Berkeley basketball player said she skipped classes because she was too hungry to concentrate for lack of food.

On cross-examination, it emerged that both students had misspent their scholarship money.

Returning to court for closing arguments Tuesday, the plaintiffs asked Wilken to make her decision using a four-step balancing test, a request the NCAA vehemently opposed.

Pushing instead for a three-step test, the league's attorneys argued that adding a fourth step will gift the plaintiffs a second chance to win an injunction if they fail to show earlier in the test either that the pay limits aren't "reasonably" necessary for achieving the NCAA's pro-competitive goals of preserving amateurism and integrating student-athletes into campus life, or that the goals can be achieved in a "less restrictive" way through an injunction.

They contend the plaintiffs will fail because all three of their proposed injunction schemes will "destroy the identified pro-competitive benefits" by permitting "unlimited pay-for-play."

The NCAA's goals "should be able to be replicated with less restrictive means," league attorney Beth Wilkinson, of Wilkinson Walsh & Eskovitz, said Tuesday. "The reason they can't do that is because there is no less restrictive alternative that would be just as effective."

Hitting back, class attorney Steve Berman scoffed at the idea that capping student-athlete compensation to the cost of attendance helps integrate players into the university community.

"This whole notion of integration is a myth; there is no integration," said Berman, who is with Hagens Berman Sobol Shapiro. "The NCAA knows the time demands on these kids is so great, they're spending 40 to 50 hours a week just on sports, then they spend another 40 on school, so they have no time to be integrated."

He added, "If they cared about integration, for example, they could pass national rules that kids have to live in dorms, but they don't."

Also representing the class, Winston & Strawn attorney Jeffrey Kessler disputed the contention that the NCAA's conferences won't impose their own pay restrictions under an injunction.

"I do believe they can be trusted to do the right thing," he said.

Wilkinson attacked this argument on rebuttal, telling the judge, “You’re not going to say that in your order, ‘The conferences must have rules.’ They can do whatever they want.”

She also addressed Wilken's question about whether student-athletes are more likely to succeed in school if they have "more money in their pocket." Though she didn't directly answer the question, Wilkinson said athletes have been getting extra money in the form of academic and graduation-incentive payments since the NCAA began relaxing pay restrictions in the wake of the Ninth Circuit's 2015 ruling in a similar case, O'Bannon v. NCAA.

"They are getting some more" money, Wilkinson said. "Isn't that what Alternative 2 is?"

She added: "There has been no impact on consumer demand,” referring to the additional compensation. "Why would you get in the middle of that?"

Wilken concluded the hearing after listening to about three hours of arguments, remarking she still “had questions.” She said she will issue a ruling at a later date.

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