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Plaintiffs fail to prove NCAA violated Sherman Act

June 18, 2012

The 7th Circuit Court of Appeals affirmed a District Court in dismissing a lawsuit two former college athletes brought against the National Collegiate Athletic Association.

The men, Joseph Agnew and Patrick Courtney, both received one-year scholarships to play football at NCAA schools, with the caveat that the scholarships must be renewed annually. When injuries they sustained prevented them from playing, their schools chose to not renew their scholarships.

In Joseph Agnew v. NCAA, No. 11-3066, the men claimed that the NCAA policies capping the number of scholarships per school and prohibiting multi-year scholarships had an anticompetitive effect on the market for student athletes and therefore violate the Sherman Act. The NCAA filed a motion to dismiss, and finding the plaintiffs did not sufficiently identify a commercial market, the District Court dismissed the suit.

The NCAA argued that the plaintiffs did not identify any market, including a bachelor’s degree or labor market, in which its bylaws restrained trade. And the 7th Circuit panel found that the difference between a market for educational services and a market for a bachelor’s degree was of vital importance in the case, holding that a student is owed educational instruction upon payment of tuition, but whether that instruction leads to a degree is up to the student.

The 7th Circuit held that it is undeniable that a market of some sort exists in the relationship of student athletes and the university issuing scholarships based on athletic performance. But the plaintiffs presented no discussion about a relevant market for student athlete labor, even after having an opportunity to amend their complaint. The appellate panel affirmed the District Court’s finding that without identifying a cognizable market, the men failed to prove the NCAA’s policies violate the Sherman Act.

 

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