NCAA Dodges Claim for Multiyear Scholarships

     CHICAGO (CN) – Two men who lost college scholarships after career-ending injuries cannot advance antitrust claims against the National Collegiate Athletic Association, the 7th Circuit ruled.
     The former football players claimed that NCAA regulations had prevented them from receiving multiyear scholarships, causing them to lose the awards following injuries.
     Joseph Agnew enrolled at Rice University in 2006, receiving tuition, room and board free of charge. As per NCAA rules, his scholarship had to be renewed on a yearly basis. After Agnew injured himself sophomore year, his scholarship was not renewed. An appeal resulted in a single-year extension, but Agnew had to pay the full price to attend his senior year.
     Patrick Courtney was injured during training camp while en route to North Carolina A&T. His scholarship was not renewed, forcing him to transfer schools and pay tuition out of pocket.
     The pair filed suit in 2010, challenging two NCAA provisions that cap the number of athletic scholarships schools may award and prevent multiyear scholarship awards. These regulations hurt competition for student athletes among universities, the complaint alleged.
     U.S. District Judge Jane Magnus-Stinson in Indianapolis ultimately dismissed the case, saying that the NCAA deserved regulatory deference because of its extensive authority to help maintain the “revered tradition of amateurism in college sports” and preserve “the student-athlete in higher education.”
     She also found that the complaint failed to allege a relevant market that might heave felt anticompetitive effects from the NCAA rules.
     The 7th Circuit affirmed Monday, though on slightly different reasoning.
     Because federal antitrust law applies only to commercial transactions, the three-judge panel said the plaintiffs would have to show that the regulations infringed on an economic market.
     “It is undeniable that a market of some sort is at play in this case,” Judge Joel Flaum wrote for the court. “A transaction clearly occurs between a student-athlete and a university: the student-athlete users his athletic abilities on behalf of the university in exchange for an athletic and academic education, room, and board.”
     But the panel said the athletes’ claim still failed because bachelor’s degrees do not constitute a distinct product market.
     “Bachelor’s degrees are issued to literally thousands of people, only a small portion of which are scholarship athletes, and an even smaller portion of which are athletes whose scholarships were not renewed,” Flaum wrote. “The anticompetitive impact of an NCAA bylaw would therefore likely be very minimal.”
     The decision also notes that “degrees are not automatically received or guaranteed upon payment of tuition. As many unhappy undergraduates can attest, payment of tuition does not ensure the receipt of a degree.”
     Since the decision implies that Agnew and Courtney could have based their claims on athletic labor, plaintiff attorney Steve Berman announced his intention to refile the case under this theory.

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