Seventh Circuit: NCAA does not violate antitrust law

By Michael P. Tremoglie | Jun 20, 2012


CHICAGO (Legal Newsline) - The United States Court of Appeals for the Seventh Circuit ruled Monday that rules by the National Collegiate Athletic Association concerning athletic scholarships do not violate the Sherman Antitrust Act.

Two Division I college football players claimed they were anti-competitive. Joseph Agnew, who played football for Rice in 2006, and Patrick Courtney, who played for North Carolina A&T in 2009, both received one-year scholarships.

Both suffered career-ending football injuries during their college tenures. Because the injuries prevented them from playing football, their scholarships were not renewed.

Agnew and Courtney sued, claiming that the cap imposed by the NCAA on the number of scholarships given per team and the prohibition of multi-year scholarships prevented them from obtaining scholarships that covered the entire cost of their college education.

The plaintiffs alleged that the rules have "an anticompetitive effect on the market for student-athletes, and therefore violate... the Sherman Act."

The NCAA filed a motion to dismiss and a federal district court granted that motion. The plaintiffs appealed the dismissal to the Seventh Circuit.

The argument proffered by the plaintiffs was that NCAA member schools compete intensely over the premier student-athletes in the country.

Were it not for the two bylaws -- the one-year scholarship limit, which prohibits NCAA member schools from offering student-athletes multi-year scholarships, and the cap on the number of athletic scholarships a school can offer for each team in a given year -- schools would offer multi-year scholarships to stay competitive in the market for elite athletes, the plaintiffs said.

The plaintiffs claimed that multi-year scholarships used to be the norm. The current ban on multi-year scholarships compels student-athletes who do not have their scholarships renewed to pay more for their under-graduate education, they alleged.

They maintained that the limit on the number of athletic scholarships a school can offer reduces the total number of athletic scholarships offered, thus preventing some students from obtaining a bargained for education

Seventh Circuit Judge Joel Flaum wrote, "While we depart from some of the district court's reasoning, we ultimately conclude that plaintiffs' complaint did not sufficiently identify a commercial market-an obvious necessity for Sherman Act violations-and thus we affirm the district court's dismissal of plaintiffs' suit."

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