Judge's ruling stands: NCAA can't limit college athletes' benefits that are tied to education

A three-judge panel of the 9th U.S. Circuit Court of Appeals on Monday unanimously upheld a district judge’s ruling that the NCAA cannot limit education-related benefits that college athletes can receive.

In March 2019, U.S. District Judge Claudia Wilken ruled that the NCAA had violated antitrust law and could not “limit compensation or benefits related to education” for athletes playing Division I men’s or women’s basketball or Bowl Subdivision football.

Among the items Wilken said those athletes may receive were scholarships to complete undergraduate or graduate degrees at any school. The judge also appeared to open the possibility of athletes being able to receive cash or cash-equivalent awards based on academics or graduation, albeit under some constraints.

However, the appellate panel of Sidney R. Thomas, Ronald M. Gould and Milan D. Smith Jr. declined to broaden the ruling, leaving intact the NCAA’s limits on compensation not connected to education.

The plaintiffs had sought to have Wilken’s ruling expanded to strike down those limits as well.

Nevertheless, Monday's ruling has the potential to further complicate the finances of college athletics departments, which are facing significant losses of revenue due to the coronavirus pandemic.

The plaintiffs' lead attorneys both expressed delight with Monday's ruling.

"It's a great decision for us," said Steve Berman, whose firm initially represented the primary named plaintiff in the case, former West Virginia football player Shawne Alston. "It opens the door for more challenges."

The NCAA Board of Governors has approved, in concept, a significant loosening in the association's rules concerning athletes' ability to make money from the use of their name, image and likeness. But all of the specifics of that have not yet been determined, and Berman said "there might be the day when we challenge the rules again."

Asked whether that comment might harden the NCAA's resolve to get help from Congress in shielding it from future legal action, Berman said: "Given the billions of dollars the NCAA makes, I don't think they'll have a sympathetic ear in Congress."

Jeff Kessler said: "It's a great victory for the players. ... This is a very strong decision for actions going forward."

NCAA chief legal officer Donald Remy issued a statement expressing the association's disappointment with the ruling, but he did not immediately address an appeal to the Supreme Court.

“We hoped for a different legal conclusion by the Ninth Circuit," Remy said. "We argued and believe the lower court’s ruling is inconsistent with both Supreme Court precedent and the Ninth Circuit’s own decision in the O’Bannon case. We will continue to review the opinion and determine our next steps.”

In the O'Bannon case, an antitrust action of behalf of former basketball player Ed O'Bannon also handled at the district level by Wilken, the 9th Circuit ruled by a 2-1 vote that the NCAA had violated antitrust law. However, it rejected Wilken’s plan to let schools and conferences deposit money in trust for football and men's basketball players that would have served as consideration for the use of their names, images and likenesses and become become payable when they left school or their eligibility expired. 

The 9th Circuit panel in that case included Thomas, who provided the dissent, and two other judges who were not assigned to the Alston appeal.

Antitrust law "requires that the NCAA permit its schools to provide up to the cost of attendance to their student athletes. It does not require more," the 9th Circuit's opinion in the O'Bannon case said.

While either side may appeal Monday's ruling to the Supreme Court, the decision sets up a circumstance under which the NCAA's member schools would have very limited authority to set association-wide limits on the education-related benefits athletes will be able to receive.

Conferences would be allowed to set their own limits as long they do so independently from other conferences.

According to the injunction that was allowed to stand Monday, the NCAA would have no ability to limit benefits including "scholarships to complete undergraduate or graduate degrees at any school." So a school would be allowed to tell an athlete that it would be willing to cover the athlete's cost of going to graduate school at another institution.

The NCAA also would have no ability to limit the provision of equipment like computers or benefits including study-abroad programs, paid post-eligibility internships or tutoring. 

The NCAA would be would allowed to set an association-wide cap on "academic or graduation awards or incentives" provided in cash or cash-equivalent. However, that cap would not be allowed to be less than the value connected to the NCAA's annual limit on the awards athletes can receive for participating in sports -- items like gifts for playing in a bowl game, winning a conference championship, earning a varsity letter.

The appellate court, using figures from Wilken's ruling, placed the "current aggregate limit" at $5,600 a year. But that figure could be subject to interpretation and continued legal maneuvering.

In short, this appears to mean that schools would be allowed -- but not required -- to offer athletes cash incentives for academic performance. And if the NCAA member schools chose to put an association-wide maximum on those benefits, the maximum would have to be at least $5,600 a year.

Wilken "struck the struck the right balance in crafting a remedy that both prevents" antitrust harm to the athletes while "preserving the popularity of college sports," wrote the panel.

The NCAA had argued that if athletes are allowed to receive compensation beyond a scholarship that covers the cost of attending college, fans will view college athletes as being not much different than pros and thus will become less interested in college sports.

The appellate panel rejected that contention, saying "no evidence in the record substantiates the NCAA’s concerns that certain benefits permissible under (Wilken's ruing), if uncapped, will become vehicles for payments that are virtually indistinguishable from a professional’s salary."