A federal appellate court has upheld a ruling barring the National Collegiate Athletic Association from capping education-related benefits to Division I women's and men's basketball players and football schools in the Football Bowl Subdivision.

The U.S. Court of Appeals for the Ninth Circuit on Monday upheld a March 2019 injunction from U.S. District Judge Claudia Wilken of the Northern District of California, who found that NCAA caps on education-related benefits such as computers, science equipment, postgraduate scholarships, and aid to study abroad violated federal antitrust laws. The Ninth Circuit panel held that Wilken had reasonably found—based on demand analyses, survey evidence, and NCAA testimony during a bench trial last year—that caps on noncash, education-related benefits had no demand-preserving effect and, therefore, no pro-competitive justification needed to sway the case in the organization's favor under the so-called rule of reason analysis.

"In our view, the district court struck the right balance in crafting a remedy that both prevents anticompetitive harm to Student-Athletes while serving the procompetitive purpose of preserving the popularity of college sports," wrote Ninth Circuit Chief Judge Sidney Thomas, who was joined in the opinion by Judge Ronald Gould.

Judge Milan Smith Jr. joined the panel decision in full but wrote a concurrence arguing that the court's current jurisprudence on the rule of reason didn't allow the court to address the underlying issue of whether college athletes should be compensated for their work on the field or court.

"The treatment of Student-Athletes is not the result of free-market competition," Smith wrote. "To the contrary, it is the result of a cartel of buyers acting in concert to artificially depress the price that sellers could otherwise receive for their services. Our antitrust laws were originally meant to prohibit exactly this sort of distortion."

In a statement, Donald Remy, NCAA chief legal officer, said that the organization had hoped for a different conclusion and continued to believe that Wilken's decision below is inconsistent with the applicable Supreme Court and Ninth Circuit law. "We will continue to review the opinion and determine our next steps," he said.

Plaintiffs' counsel in the case, Hagens Berman Sobol Shapiro's Steve Berman and Winston & Strawn's Jeffrey Kessler, both praised the ruling.

"We are pleased with the decision, which as the NCAA's president admitted, will allow conferences to compete for athletes by offering more educational benefits, which after all is supposedly the NCAA's mission," Berman said in an email.

Kessler, meanwhile, said the decision "completely affirms everything that the judge found: That the restrictions are unlawful and there will be substantial and significant improved benefits for the Division I basketball players and the FBS football players."

 

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