o'bannonn motion for summary judgement nov 15 2013

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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION BY ANTITRUST PLAINTIFFS

FOR SUMMARY JUDGMENT 4:09-CV 1967 CW

Michael P. Lehmann (Cal. Bar No. 77152) Arthur N. Bailey, Jr. (Cal. Bar No. 248460) HAUSFELD LLP 44 Montgomery St., 34th Floor San Francisco, CA 94104 Telephone: (415) 633-1908 Facsimile: (415) 358-4980 Email: [email protected] [email protected] Michael D. Hausfeld (pro hac vice) Hilary K. Scherrer (Cal. Bar No. 209451) Sathya S. Gosselin (Cal. Bar No. 269171) HAUSFELD LLP 1700 K Street, NW, Suite 650 Washington, DC 20006 Telephone: (202) 540-7200 Facsimile: (202) 540-7201 Email: [email protected] [email protected] [email protected] Plaintiffs’ Interim Co-Lead Class Counsel with Principal Responsibility for the Antitrust Claims

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

IN RE NCAA STUDENT-ATHLETE NAME & LIKENESS LICENSING LITIGATION

Case No. 4:09-cv 1967 CW

This document relates to: ANTITRUST PLAINTIFFS’ ACTIONS

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION BY ANTITRUST PLAINTIFFS FOR SUMMARY JUDGMENT

Judge: Honorable Claudia Wilken Courtroom: 2, 4th Floor

Hearing: February 20, 2014 at 2:00 PM

REDACTED VERSION OF DOCUMENT SOUGHT TO BE SEALEDCase4:09-cv-01967-CW Document896-3 Filed11/15/13 Page1 of 31

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TABLE OF CONTENTS I. INTRODUCTION ............................................................................................................... 1 II. FACTUAL AND PROCEDURAL BACKGROUND ........................................................ 2

A. Evidence Of The Restraint. ................................................................................... 2 III. LEGAL STANDARD. ........................................................................................................ 5 IV. THE NCAA’S RESTRAINTS MAY BE CONDEMNED UNDER THE QUICK

LOOK RULE OF REASON ANALYSIS. .......................................................................... 6

A. A Quick Look Analysis Is Appropriate. ................................................................ 7 B. The Relevant Markets At Issue. ............................................................................ 8 C. The NCAA’s Procompetitive Justifications Fail Factually And Legally. ............. 9

1. Amateurism Is Not A Valid Justification. ................................................... 9

2. Competitive Balance Does Not Justify The Restraint. .............................. 16

3. Integration of Education and Athletics Does Not Justify the Restraint. ... 20

4. The Viability of Other Sports Does Not Justify the Restraint. .................. 22

5. Increased Output Benefits Do Not Justify the Restraint. .......................... 24

D. Less Restrictive Alternatives. .............................................................................. 25

V. CONCLUSION ................................................................................................................. 25

- i - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION BY ANTITRUST PLAINTIFFS



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- ii - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION BY ANTITRUST PLAINTIFFS


TABLE OF AUTHORITIES Page(s) CASES

Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970) .................................................................................................................. 6

Agnew v. NCAA, 683 F.3d 328 (7th Cir. 2012) ..................................................................................... 7, 8, 13, 14

Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) .............................................................................................................. 5, 6

California Dental Ass’n v. Federal Trade Comm’n, 526 U.S. 756 (1999) .................................................................................................................. 6

Federal Trade Comm’n v. Indiana Federation of Dentists, 476 U.S. 447 (1986) .......................................................................................................... 6, 7, 8

Federal Trade Comm’n v. Publishers Clearinghouse, Inc., 104 F.3d 1168 (9th Cir. 1997) ....................................................................................... 6, 15, 25

Ginzburg v. Memorial Healthcare Sys., 993 F. Supp. 998 (S.D. Tex. 1997) ........................................................................................... 6

Hart v. Electronic Arts, Inc., 717 F.3d 141 (3d Cir. 2013) .................................................................................................... 13

Home Design Servs., Inc. v. Hibiscus Homes of Fla., Inc., 2005 U.S. Dist. LEXIS 41745 (M.D. Fla. Oct. 6, 2005) ......................................................... 12

In re Air Crash Near Kirksville, 2007 U.S. Dist. LEXIS 60278 (E.D. Mo. Aug. 16, 2007) ...................................................... 12

In re NCAA I-A Walk-on Football Players Litigation, 398 F. Supp. 2d 1144 ................................................................................................................ 8

In re NCAA Student-Athlete Name & Likeness Licensing Litig., 2013 U.S. Dist. LEXIS 153730 (N.D. Cal. Oct. 25, 2013) ................................................. 6, 13

In re Wells Fargo Home Mortg. Overtime Pay Litig., 527 F. Supp. 2d 1053 (N.D. Cal. 2007) .................................................................................. 24

Ingram v. Solkatronic Chem., Inc., 2005 WL 3544244 (N.D. Okla. Dec. 28, 2005) ...................................................................... 12

Keller v. Electronic Arts, Inc., 724 F.3d 1268 (9th Cir. 2013) ................................................................................................. 13


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- iii - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION BY ANTITRUST PLAINTIFFS


Law v. NCAA, 902 F. Supp. 1394 (D. Kan. 1995) ............................................................................................ 7

Linder v. Meadow Gold Dairies, Inc., 2008 U.S. Dist. LEXIS 21901 (D. Haw. Mar. 19, 2008) ........................................................ 11

Los Angeles Memorial Coliseum Comm’n v. National Football League, 726 F.2d 1381 (9th Cir. 1984) ................................................................................................... 7

National Soc’y of Professional Engineers v. United States, 435 U.S. 679 (1978) ............................................................................................................ 7, 20

NCAA v. Board of Regents of Univ. of Okla., 468 U.S. 85 (1984) ........................................................................................................... passim

Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099 (9th Cir. 2000) ............................................................................................. 6, 25

Paladin Assocs., Inc. v. Montana Power Co., 328 F.3d 1145 (9th Cir. 2003) ................................................................................................... 7

Polygram Holding, Inc. v. Federal Trade Comm’n, 416 F.3d 29 (D.C. Cir. 2005) ...................................................................................... 6, 7, 8, 14

Rock v. NCAA, 2013 U.S. Dist. LEXIS 116133 (S.D. Ind. Aug. 16, 2013) ....................................................... 8

Tanaka v. University of S. Calif., 252 F.3d 1059 (9th Cir. 2001) ................................................................................................. 25

United States v. Topco Assocs., Inc., 405 U.S. 596 (1972) .................................................................................................................. 7

White v. NCAA, 2006 U.S. Dist. LEXIS 101366 (C.D. Cal. Sept. 20, 2006) ...................................................... 9

Wilk v. American Medical Ass’n, 895 F.2d 352 (7th Cir. 1990) ..................................................................................................... 7

OTHER AUTHORITIES

Fed.R. Civ. P. 56 ............................................................................................................................. 5

Fed. R. Evid. 1006 ........................................................................................................................ 18

Fed. R. Civ. P. 26 .......................................................................................................................... 11


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- 1 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION BY ANTITRUST PLAINTIFFS


I. INTRODUCTION

Defendant National Collegiate Athletic Association (“NCAA”) and its member

conferences and universities agree not to compensate student-athletes (“SAs”) for the commercial

use and licensing of their names, images and likenesses (“NIL”). At the same time, as Dr. James

Heckman (“Heckman”), one of the NCAA’s own experts, testified, it requires those same SAs to

authorize the NCAA and its universities or conferences to use and license their NIL. SAs have no

choice but to comply—if they fail to do so, they cannot participate in intercollegiate sports. This

practice sets the market price for the SAs’ NILs at zero and forecloses them from licensing their

NILs. Another of the NCAA’s own experts, Dr. Daniel Rubinfeld (“Rubinfeld”), admits that the

NCAA cartel profits through the challenged restraint, among others. This type of price-fixing is

the “paradigmatic example” of the type of behavior that the Sherman Act is intended to prohibit.

NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 107 (1984) (“BoR”).

The Court is requested to apply what has been termed a “quick look” Rule of Reason

analysis and issue an injunction prohibiting the NCAA and its members from precluding SAs

from sharing in the revenue generated from the commercial licensing of their NIL in connection

with Division I college football and basketball. It is important to emphasize that the Antitrust

Plaintiffs (“Plaintiffs”) are not advocating an end to the principle of amateurism, nor are they

advocating salaries for SAs. This motion is confined to a quick look with respect to the restraint

against compensation for commercial use and licensing of SAs’ NIL.

Pursuant to a quick look analysis, the NCAA must provide procompetitive justifications

for its inherently suspect restraint or face liability under Section 1 of the Sherman Act. The

NCAA and its expert Rubinfeld have offered five procompetitive justifications for its restraint:

“Expert Report of Daniel Rubinfeld Regarding Merits,” pp.

20-70 (Sept. 25, 2013) (“RR”) (attached as Exhibit 1 to the accompanying “Declaration of Hilary

Scherrer” (“SD”)). See also “Expert Rebuttal Report of Daniel L. Rubinfeld Regarding Merits,”

¶¶ 167-268 (Nov. 5, 2013) (“RRR”) (SD Exh. 2).


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Three of the purported procompetitive justifications advanced by the NCAA and

Rubinfeld are in fact not procompetitive at all. Integration of athletics and education, the viability

of intercollegiate sports other than football and men’s basketball, and increased output of

intercollegiate sports generally cannot be procompetitive because they do not increase

competition in the relevant market. The other two alleged procompetitive justifications do not

satisfy the “heavy burden” the NCAA bears of “establishing an affirmative defense which

competitively justifies” this illegal restraint. BoR, 468 U.S. at 113. The NCAA and Rubinfeld

offer no empirical evidence demonstrating that the NCAA’s rules prohibiting SAs from receiving

compensation for the commercial use of their NILs actually contribute to these asserted

justifications. Instead, it relies on apocalyptic assertions that intercollegiate sports will cease to

exist, or cease to exist in the same successful form, if member schools or conferences cannot

prohibit compensation for the use and licensing of SAs’ NILs. As noted below, Rubinfeld’s

deposition testimony undermines this argument because he conceded that less restrictive

alternatives may exist. In any event, these assertions are insufficient to survive summary

judgment, and Antitrust Plaintiffs (“Plaintiffs”) are therefore entitled to summary judgment.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Evidence Of The Restraint.

It cannot be seriously disputed that the NCAA and its member schools and conferences

have agreed not to compensate, and do not compensate, current or former SAs in the injunction

Class for the use and licensing of their NILs and have thereby foreclosed them from the market

for the licensing of their NILs. The NCAA’s President, Mark Emmert (“Emmert”), admitted this

in his deposition. Emmert Depo. at 30-31 (SD Exh. 3).1 The Bowl Championship Series

confirmed this position in a letter submitted in this litigation. SD Exh. 4 at 2-3. Kevin Lennon, the

NCAA’s Vice-President of Membership & Academic Affairs for the NCAA submitted a

declaration in this case, stating that “[a]n agreement to pay, or promise to pay, a student-athlete in

this manner would likely constitute a violation of several of the NCAA’s general amateurism and 1 Emmert stated in a Marquette University forum in September of 2013 that virtually all university presidents were of the view that SAs should not be paid in any way for their services. http://tracking.si.com/2013/09/17/mark-emmert-ncaa-paying-athletes/.


http://tracking.si.com/2013/09/17/mark-emmert-ncaa-paying-athletes/

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eligibility rules…” Dkt. No. 695-13 at ¶22. He then listed eight such rules (including the bylaws

listed above), all of which the NCAA’s member institutions are bound to obey. Id. See also Dkt.

No. 857 at 5 (NCAA brief stating that “[t]he payment that [Plaintiffs] allege the NCAA’s

amateurism rules deprive them of therefore is the direct result of Plaintiffs’ status as student-

athletes”). Likewise, Jonathan LeCrone (“LeCrone”), Commissioner of the Horizon League,

testified that mandated “payments to any individual student-athletes or group of student-athletes

just runs contrary to the fundamental purpose of our business.” LeCrone Depo. at 61 (SD Exh.

5).

The NCAA’s own experts corroborate the existence of the restraint. Heckman testified in

his deposition that “[m]y understanding on an athlete currently enrolled in a college that has him

sign a contract, is that he loses—a contract that forbids him, basically appropriates or gives the

university or the college the right to his names, likeness and image, that he forfeits the right to

that and that such contracts are common among individuals in these Division I conferences.”

Heckman Depo. at 29-30 (SD Exh. 6).

Similarly, Rubinfeld, in his textbook on microeconomics, has admitted over the last two

decades that the NCAA functions as a cartel that “restricts competition in a number of important

ways. To reduce bargaining power by student athletes, the NCAA creates and enforces rules

regarding eligibility and terms of compensation.” “Reply Report on Liability Issues of Roger G.

Noll,” p. 51 (Nov. 5, 2013) (“NRR”) (SD Exh. 7).2 In his deposition, Rubinfeld conceded that

“the NCAA does impose restraints of trade, which some would characterize as cartelization, and

the collaboration which could be characterized as cartelization is part of the reason the NCAA

and the leagues and conferences that are – make up the NCAA have been profitable as a result of

the fact that there has been this coordination.” Id. (quoting Rubinfeld Depo. at 56). The NCAA

and its members effected this cartelization with respect to the labor input of SAs through the

operation of the NCAA’s bylaws and is facilitated by the use of SA forms. In order to participate

in NCAA sports, the NCAA requires that SAs sign a number of release forms. The NCAA

2 Copies of the relevant excerpts of Rubinfeld’s textbook are attached as SD Exh. 8.


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Division I Bylaws mandate that SAs authorize the NCAA to use their NILs while at the same

time prohibiting SAs from receiving compensation (even on a deferred basis) for the commercial

use and licensing of their NILs.

The NCAA bylaws (relevant portions of which are excerpted as SD Exh. 10) are explicit

that an SA will lose eligibility if he accepts compensation for use of his or her NIL: “[a]fter

becoming a student-athlete, an individual shall not be eligible for participation in intercollegiate

athletics if the individual: (a) Accepts any remuneration for or permits the use of his or her name

or picture to advertise, recommend or promote directly the sale or use of a commercial product or

service of any kind; or (b) Receives remuneration for endorsing a commercial product or service

through the individual’s use of such product or service.” Bylaw 12.5.2.1. Payments to SAs are

limited to the “grant-in-aid” amount of financial aid. Bylaw 12.5. The NCAA’s “Student-Athlete

Statement” implements this bylaw by requiring that the SA affirm that he or she meets the NCAA

regulations for SAs regarding “eligibility, recruitment, financial aid, amateur status previous

positive-drug tests administered by any other athletics organization and involvement in organized

gambling activities.” Bylaw 14.1.3.1 See SD Exh. 10. See also Article 3.2.4.6 of the NCAA

Constitution (requiring SAs to sign the “Student-Athlete Statement” annually in order to

participate in Division I competition).3

At the same time that the SA is barred from receiving compensation for commercial use

and licensing of his NILs at any time, the NCAA requires that the SA give the NCAA a license to

use those NILs in perpetuity. For example, Bylaw 12.5.1.1.1 (“Promotions Involving NCAA

Championships, Events, Activities or Programs”) states that “[t]he NCAA may use the name or

picture of an enrolled student-athlete to generally promote NCAA championships or other NCAA 3 Bylaw 14.1.3.1 (“Content and Purpose”) reinforces the requirement that SAs allow the NCAA to make use of their NILs as a condition of participating in NCAA competition: “[P]rior to participation in intercollegiate competition each academic year, a student-athlete shall sign a statement in a form prescribed by the Legislative Council in which the student athlete submits information related to eligibility, recruitment, financial aid, amateur status, previous positive drug tests administered by any other athletics organization and involvement in organized gambling activities related to intercollegiate or professional athletics competition under the Association’s governing legislation. Failure to complete and sign the statement shall result in the student-athlete’s ineligibility for participation in all intercollegiate competition.” (emphases added) (SD Exh. 10)


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events, activities or programs.” See Dkt. No. 832 at ¶362; Bylaw 12.5.1.1.1. Part IV of the

Student Athlete Statement enforces Bylaw 12.5.1.1.1 specifically: “[y]ou authorize the NCAA [or

a third party acting on behalf of the NCAA (e.g., host institution, conference, local organizing

committee)] to use your name or picture to generally promote NCAA championships or other

NCAA events, activities or programs.” Id.4

SAs are also required to authorize the use and licensing of their NILs for the purposes of

“Institutional, Charitable, Education or Nonprofit Promotions”; they are barred from receiving

compensation in connection with this license as well. Bylaw 12.5.1.1 states that “[a] member

institution … a member conference … may use a student-athlete’s name, picture or appearance to

support its charitable or educational activities or to support activities considered incidental to the

student-athlete’s participation in intercollegiate athletics.” (SD Exh. 10)

The NCAA’s rules therefore require that SAs allow the NCAA and its member

conferences and universities to use their NILs for commercial purposes while at the same time

prohibiting the SA from profiting from that commercial use. The NCAA employs a number of

measures to ensure that its rules are followed. For example, the bylaws require that the member

institutions comply with the NCAA rules and require that the institutions certify that they have

complied with the NCAA rules. See, e.g., Bylaw 3.2.1.2, 14.1.3, 18.4.2.1, 22.2.1.2. (SD Exh. 10)

The NCAA also has the ability to engage in a group boycott of any college, SA, or licensee who

deviates from the NCAA rules fixing prices, thereby ensuring compliance with this unlawful

agreement.

III. LEGAL STANDARD.

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). A fact issue is “material” only if it could affect the outcome of the suit under the

governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact issue is 4 The bylaws give any party other than the SA the rights to “sell and distribute an institutional highlight film or videotape or an institutional or conference media guide that contains the names and pictures of enrolled student-athletes,” subject to a number of conditions, none of which include compensation to the SA. Bylaw 12.5.1.7 (SD Exh. 10).


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genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving

party. Id. The party moving for summary judgment has the burden to show initially the absence

of a genuine issue concerning any material fact. See Adickes v. S.H. Kress & Co., 398 U.S. 144,

159 (1970). Once the moving party has met its initial burden, the burden shifts to the nonmoving

party to produce sufficient evidence to create a genuine issue of material fact. Nissan Fire &

Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1103 (9th Cir. 2000) (“Nissan Fire”). “A

conclusory, self-serving affidavit, lacking detailed facts and any supporting evidence, is

insufficient to create a genuine issue of material fact.” Fed. Trade Comm’n v. Publishers

Clearing House, Inc., 104 F.3d 1168, 1171 (9th Cir. 1997) (“PCI”).

IV. THE NCAA’S RESTRAINTS MAY BE CONDEMNED UNDER THE QUICK LOOK RULE OF REASON ANALYSIS.

This Court has clearly stated that it will examine the alleged restraints under the Rule of

Reason. In re NCAA Student-Athlete Name & Likeness Licensing Litig., No. C 09-1967 CW,

2013 U.S. Dist. LEXIS 153730, at *20 n.2 (N.D. Cal. Oct. 25, 2013) (“NCAA”).

Where the anticompetitive effects of the challenged restraint are obvious, but it does not

qualify for per se condemnation, the United States Supreme Court allows courts to dispense with

a full market Rule of Reason analysis in favor of an abbreviated quick look.5

Under the quick look analysis, the market effects are obvious, and the defendant is

required to put forth procompetitive justifications for the challenged restraint. BoR, 468 U.S. at

113 (defendant bears “a heavy burden of establishing an affirmative defense which competitively

justifies this apparent deviation from the operations of a free market.”). A procompetitive effect

5 California Dental Ass’n v. Fed. Trade Comm’n, 526 U.S. 756, 770 (1999) (quick look is appropriate where an “observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and markets.”); Fed. Trade Comm’n v. Indiana Fed’n of Dentists, 476 U.S. 447, 459 (1986) (“IFD”) (holding that an “elaborate industry analysis” was not required to assess the anticompetitive character of the agreement); BoR, 468 U.S. at 109-110 (a full Rule of Reason analysis, requiring a showing of actual harm to the relevant market, is unnecessary where there is a “restraint on price and output”); Polygram Holding, Inc. v. Fed. Trade Comm’n, 416 F.3d 29, 35-37 (D.C. Cir. 2005) (“Polygram”) (upholding quick look condemnation where restraint was “inherently suspect” and no procompetitive justifications were presented); Ginzburg v. Mem. Healthcare Sys., 993 F. Supp. 998, 1026 (S.D. Tex. 1997) (inquiry into defendants’ market power unnecessary where anticompetitive effects are readily apparent).


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cannot simply increase profits, spread wealth to others, or achieve some laudable social purpose.6

To truly be procompetitive, a justification must promote or sustain competition in the market

harmed by the restraint.7

Failure to prove a valid procompetitive justification concludes the inquiry; the restraint

violates the Sherman Act. Id.; Agnew v. NCAA, 683 F.3d 328, 336 (7th Cir. 2012) (“Agnew”)

(under the quick look analysis, “if no legitimate justifications for facially anticompetitive

behavior (such as price-fixing) are found, no market power analysis is necessary and the court

‘condemns the practice without ado.’”) (quoting Chicago Prof’l Sports Ltd. P’ship v. Nat’l

Basketball Ass’n, 961 F.2d 667, 673 (7th Cir. 1992)).

A. A Quick Look Analysis Is Appropriate.

The quick look analysis is applicable here because the anticompetitive effects of the

NCAA’s horizontal restraint on the relevant market are obvious: by prohibiting compensation to

SAs for the commercial use of their NILs while allowing the NCAA to use those NILs

commercially, the NCAA fixed the price paid to SAs for their commercial use of their NILs at

zero. The NILs contribute value to the products they are used in. These products would be less

valuable (or, indeed, have no value at all) if the NILs were not used. The NCAA’s policy

therefore artificially fixes the price of the NILs at zero, whereas the actual value in the

6 See Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 692 (1978) (“NSPE”) (“the purpose of the analysis is to form a judgment about the competitive significance of the restraint; it is not to decide whether a policy favoring competition is in the public interest, or in the interest of the members of an industry.”). See also IFD, 476 U.S. at 463 (quality-of-care justification not an adequate procompetitive justification); Polygram, 416 F.3d at 38 (increasing profits not a procompetitive justification); Wilk v. American Med. Ass’n, 895 F.2d 352, 361 (7th Cir. 1990) (rejecting procompetitive justification because “[i]t is not enough to carry the day to argue that competition should be eliminated in the name of public safety”). 7 United States v. Topco Assocs., Inc., 405 U.S. 596, 610 (1972) (“Topco”) (competition “cannot be foreclosed with respect to one sector of the economy because certain private citizens or groups believe that such foreclosure might promote greater competition in a more important sector of the economy”); Paladin Assocs., Inc. v. Montana Power Co., 328 F.3d 1145, 1157 n.11 (9th Cir. 2003) (“Paladin”) (noting, based on Topco, that procompetitive effects in one marketplace cannot justify anticompetitive effects in a separate marketplace); Los Angeles Mem. Coliseum Comm’n v. Nat’l Football League, 726 F.2d 1381, 1392 (9th Cir. 1984), cert. denied, 469 U.S. 990 (1984) (“[T]he relevant market provides the basis on which to balance competitive harms and benefits of the restraint at issue.”); Law v. NCAA, 902 F. Supp. 1394, 1406 (D. Kan. 1995), aff’d, 134 F.3d 1010 (10th Cir. 1998) (“Law”) (“[P]rocompetitive justifications for price-fixing must apply to the same market in which the restraint is found, not to some other market.”).


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marketplace would exceed zero. Indeed, if this were not the case, the NCAA’s rules, and its

defense in this case, would be unnecessary, because no college would compensate an SA for

something of no value. Because “[r]estrictions on price and output are the paradigmatic examples

of restraints of trade that the Sherman Act was intended to prohibit” (BoR, 468 U.S. at 107-8), the

quick look analysis applies. See Polygram, 416 F.3d at 37 (applying quick look analysis to an

agreement between joint venturers to contain price and limit advertising). The NCAA therefore

bears the burden of putting forth facts demonstrating how the claimed restraint enhances

competition in the affected market to such a degree that it outweighs the clear anticompetitive

harm. IFD, 476 U.S. at 459 (requiring defendants to present “some countervailing

procompetitive virtue” for the challenged restraint). It has failed to do so, and summary judgment

is appropriate. See BoR, 468 U.S. at 113; Agnew, 683 F.3d at 336.

B. The Relevant Markets At Issue.

The restrained markets are: (1) the SA Division I college education market in the United

States and (2) the market for the acquisition of group licensing rights for the use of SAs’ NIL in

the broadcasts or rebroadcasts of Division I basketball and football games and in videogames

featuring Division I basketball and football in the United States. “Expert Report on Liability of

Roger G. Noll,” pp. 18-73 (Sept. 25, 2013) (“NR”) (SD Exh. 12).8 A labor market of NCAA SAs

has been held to be cognizable under the antitrust laws. Agnew, 683 F.3d at 346. And treating

the acquisition of group licensing rights for Division I basketball and football games as a market

distinct from Division II and Division III is entirely justifiable.9 8 As Plaintiffs’ expert, Dr. Roger Noll (“Noll”) points out, some of the members of the injunction Class also have NIL rights in individual products, such as jerseys or bobbleheads. Id. at 84-85. Noll’s discussion of the relevant market is challenged by Dr. Lauren Stiroh (“Stiroh”), a defense expert, but her testimony is entitled to lo little weight. As reflected in the two depositions taken of her, Stiroh is not a sports economist; has no real expertise in NIL rights; has not examined the economic literature identifying the NCAA as a cartel; didn’t know who Emmert, former NCAA President Myles Brand (“Brand”), and Walter Byers (“Byers”), Executive Director of the NCAA from 1951 to 1987, were; had made no study of how colleges compete for SAs; has made no independent analysis of the restraint created by the NCAA rules in any market identified by Noll. First Stiroh Depo. at 12, 61-63, 71-72, 85-86, 99-102, 125-26, 150-51, 162-63, 175-76, 197-98; Second Stiroh Depo. at 8, 25, 43, 45-46, 51-52, 63, 65-66 (SD Exhs. 13 & 14). 9 See In re NCAA I-A Walk-on Football Players Litig., 398 F. Supp. 2d 1144. 1150 (W.D. Wash. 2005) (plaintiff adequately alleged a relevant labor input market for Division I college football); Rock v. NCAA, No. 1:12-cv-1019-JMS-DKL, 2013 U.S. Dist. LEXIS 116133, at *28-29 (S.D.

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C. The NCAA’s Procompetitive Justifications Fail Factually And Legally.

In defense of its restraints, the NCAA puts forth five procompetitive justifications cited

above. However, it cannot show either that (a) its supposed justifications have anything to do

with increasing, competition in the restrained market or (b) its restraint on compensation for the

use and licensing of SAs’ NIL in fact supports these supposed justifications. The Court should

therefore find that the procompetitive justifications advanced by the NCAA are insufficient as a

matter of law, and grant summary judgment in Plaintiffs’ favor.

1. Amateurism Is Not A Valid Justification.

Amateurism Does Not Justify The Restraint. The first purported procompetitive

justification for the NCAA’s horizontal restraints presented by the NCAA is amateurism.

Rubinfeld asserts (without any empirical support) that

RR ¶ 40.

Rubinfeld’s report produces no evidence, much less evidence sufficient to survive

summary judgment, that amateurism promotes competition in the restrained markets; indeed

“amateurism” appears by definition to refer to restraining competition for SAs.

This point is confirmed by what the NCAA’s own executives have said. As Byers stated

in a book that he authored, and as he confirmed in a deposition in this case, “[w]hereas the NCAA

defends its policies in the name of amateurism and level playing fields, they actually are a device

to divert the money elsewhere.” SD Exh. 15. Indeed, as noted below, the NCAA is a completely

commercialized body. An October 2010 e-mail from Wallace Renfro (“Renfro”), then-Senior

Advisor to the NCAA’s President, to Emmert stated: Footnote continued from previous page Ind. Aug. 16, 2013) (determining that plaintiff pled adequately a relevant market of Division I college football); White v. NCAA, Case No. 2:06-cv-999-VBF-MAN (C.D. Cal. Sept. 20, 2006) (slip op.) (denying the NCAA's motion to dismiss plaintiffs' amended complaint pleading relevant market of Division I-A football, concluding that it was "legally sufficient" and alleged a relevant product market "on its face").


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There is a general sense that intercollegiate athletics is as thoroughly commercialized as professional sports. Some believe that athletics departments study how to emulate the pros on marketing their sports (primarily football and basketball), and sometimes lead the way. And the public would generally agreed [sic] that has all taken place at the expense of the student-athlete whose participation is exploited to make another buck for a bigger stadium, the coaches, the administrators or for other teams who can’t pay their own way. It is a fairness issue, and along with the notion that athletes are students is the great hypocrisy of intercollegiate athletics.

SD Exh. 16. In the same document, Renfro noted that the NCAA’s “cradle-to-grave approach to

amateurism” is based on outdated romantic notions not found in the NCAA constitution and

bylaws. Id. See “Expert Report of Ellen Staurowsky, Ed.D,” pp. 25-26 (Sept. 25, 2013) (“SR”)

(SD Exh. 17)

Amateurism Is Not Fundamental To College Sports. Rubinfeld claims to justify

amateurism by pointing to

However, Rubinfeld cannot muster any persuasive evidence demonstrating that college

10 is ironic in light of the fact that former UoM President James Duderstadt has been quoted as saying “"[i]n a sense, the NCAA's objective is to preserve the brand so that it provides revenue primarily for a small number of people who get very, very rich on the exploitation of young students who really lose opportunities for their futures." SD Exh. 18.


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athletics are popular because of the NCAA’s definition of amateurism, or that their popularity

would decrease were SAs paid for commercial use of their NILs. In support of his premise that

But the mere fact that quality might not be the driving factor of the NCAA’s success does

not mean that amateurism or failure to compensate SAs for the licensing of their NIL is the reason

for that success. For example, one obvious reason that UoM’s football team sells more tickets

than the Detroit Lions is that the UoM graduates thousands of students every year, many of whom

enter adulthood with an inherent interest in UoM sports. Rubinfeld has done nothing to show that

the Big House would fall silent if fans knew that the SAs providing the entertainment were

receiving something more than a subsistence allowance .

One of Plaintiffs’ rebuttal experts

demonstrated that these surveys are entitled to no weight. “Expert Report of Hal Poret” (Nov. 5,

2013) (SD Exh. 19). In October of this year, after initial merits reports were filed the NCAA

commissioned a new consumer survey, which was presented in a “rebuttal” report (“Dennis

Report”) submitted by a new expert (J. Michael Dennis) filed on November 5, 2013.

. RRR ¶¶173-78. Plaintiffs hereby move to strike

the Dennis Report (and the portions of Rubinfeld’s rebuttal report that rely on it) on the ground

that it is not true rebuttal and should have been presented as part of the first round of expert

reports so that Plaintiffs would have a had a fair opportunity to respond to it.11 11 Rule 26(a)(2)(C) of the Federal Rules of Civil Procedure providing that expert reply reports should be limited to testimony that is “intended solely to contradict or rebut evidence on the same



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While Plaintiiffs had no opportunity to commission a response to the Dennis Report, Hal

Poret (“Poret”), their expert on consumer surveys and a Senior Vice-President at ORC

International, a market research firm, was asked about it by defense counsel at his deposition on

November 12, 2013. He had several criticisms.

Id. at 15. See id. at 60-61, 82-86, 122-24, 142-78. Thus, even if the Dennis Report (and the Footnote continued from previous page subject matter identified by another party.” Courts do not hesitate to strike rebuttal reports containing new material that could and should have been presented earlier. See, e.g., Linder v. Meadow Gold Dairies, Inc., Civ. No. 06-00394, 2008 U.S. Dist. LEXIS 21901, at *35-36 (D. Haw. Mar. 19, 2008) (striking expert’s rebuttal report where report was based on an exploration that the expert could have done “prior to his original expert disclosure deadline”) (citing Daly v. FESCO Agencies NA Inc., 108 F. App’x. 476, 479 (9th Cir. 2004)); In re Air Crash Near Kirksville, No. 4:05CV191, 2007 U.S. Dist. LEXIS 60278, at *12-13 (E.D. Mo. Aug. 16, 2007) (striking rebuttal report where rebuttal report did not “explain, repel, counteract, or disprove evidence of the adverse party”); Home Design Servs., Inc. v. Hibiscus Homes of Fla., Inc., 6:03-cv-1860-Orl-19KRS, 2005 U.S. Dist. LEXIS 41745, at *15-16 (M.D. Fla. Oct. 6, 2005) (excluding from evidence portions of expert rebuttal report that could not “reasonably be classified as rebuttal evidence, as they . . . should have been disclosed” by the deadline for the expert’s original report); Ingram v. Solkatronic Chem., Inc., No. 04-CV-0287, 2005 WL 3544244, at *17-19 (N.D. Okla. Dec. 28, 2005) (striking expert’s rebuttal report because opposing party’s inability to evaluate and provide formal opinions would place it at a significant disadvantage).


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survey discussed in it) are not excluded, they should be accorded no weight whatsoever in

deciding the present motion.

Moreover, Rubinfeld acknowledges that the NCAA, especially Division I football and

men’s basketball, is already highly commercialized and generates significant revenues for

schools, coaches, and athletic directors—but not players. See Rubinfeld Deposition at 101 (SD

Exh. 21) (“I do think myself that as I said earlier the amateur intercollegiate athletics are

commercial in the sense [that] they generate substantial revenue through broadcasts”). See also

id. at 171. Courts agree. Agnew, 683 F.3d at 340-41 (“[D]espite the nonprofit status of NCAA

member schools, the transactions those schools make with premier athletes—full scholarships in

exchange for athletic services—are not noncommercial, since schools can make millions of

dollars as a result of these transactions.”). See NCAA, 2013 U.S. Dist. LEXIS 153730, at *23

n.6. 12 12 There can be no serious dispute that the NCAA and its members make commercial use of SAs’ NILs. Neal Pilson, one of the NCAA’s own experts, state in his report that the popularity of NCAA college sports

“Rebuttal Report of Neil H. Pilson,” p. 35 (Nov. 5, 2013) (SD Exh. 22). Likewise, in his

2006 State of the Association speech, former NCAA President Brand stated that “[c]ommercial activity, meaning, for example, the sale of broadcast rights and logo licensing, is not only acceptable, but mandated by the [NCAA’s] business plan….” SD Exh. 23 at 5. He went on to note that “the conduct of intercollegiate athletics” “includes carrying out commercial activity. For example, on behalf of its members, the NCAA negotiates and manages broadcast media contracts for its postseason championships. The NCAA has an obligation, derived from its members, to maximize the revenue from these contracts and to manage them following the best business practices.” Id. at 5. The lucrative commercial nature of commercial broadcasting of Division I games is reflected in the summary of contractual deals found at http://espn.go.com/blog/playbook/dollars/post/_/id/3163/a-comparison-conference-television-deals.

SD Exh. 24 at 1. The courts also recognize that SAs’ NIL is exploited by

the NCAA and its co-conspirators for commercial purposes. See Keller v. Electronic Arts, Inc., 724 F.3d 1268, 1276 n.7 (9th Cir. 2013) (“[i]f EA [Electronic Arts, Inc.] did not think there was value in having an avatar designed to mimic each individual player, it would not go to the lengths it does to achieve realism in this regard”); Hart v. Electronic Arts, Inc., 717 F.3d 141, 148-49 (3d Cir. 2013) (concession for purposes of appeal that EA misappropriated plaintiff’s identity in its NCAA-licensed videogame “for commercial exploitation”).


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Indeed, while SAs might be amateurs, their coaches are anything but. SR at 15-20

(describing huge increases in what coaches and athletic directors are paid). The salaries of college

football and men’s basketball coaches have grown exponentially in the past 20 years. NR at 108-

09. For example, between the 1985-86 and the 2009-10 football seasons, the average salaries for

head coaches at 44 Bowl Championship Series (“BCS”) schools rose from $273,300 to

$2,054,7000 (in 2009-10 dollars). Id. at 108. According to public information gathered by USA

Today, the top salary for a Division I head coach in the 2012 football season was $5.3 million

(Nick Saban of the University of Alabama), and there were 13 coaches paid at least $3 million a

year and 42 coaches paid at least $2 million a year.13 The numbers for men’s basketball coaches

whose teams participated in the 2013 March Madness tournament were similar: Duke

Uninversity’s head coach Mike Krzyzewski topped the chart at $7.3 million a year, and 15

coaches were paid at least $2 million and 36 coaches paid at least $1 million.14 Rubinfeld asserts

that

. RR ¶ 53. It is highly unlikely that

interest in NCAA sports would decrease were SAs compensated after graduation for the use of

their NILs, when dramatic increases in coaching salaries have not diminished demand.

Finally, to the extent the “success” of college football is tied to the NCAA’s profitability,

that is not a sufficient procompetitive justification to outweigh the substantial anticompetitive

effects of the price-fixing scheme. See Polygram, 416 F.3d at 38 (“[A] restraint cannot be

justified solely on the ground that it increases the profitability of the enterprise that introduces the

new product, regardless whether that enterprise is a joint venture or a solo undertaking.”).

Because no evidence has been offered, the Court should conclude, as a matter of law, that

amateurism is not a valid procompetitive justification for the NCAA’s price-fixing scheme. BoR,

468 U.S. at 113; Agnew, 683 F.3d at 336.

Amateurism Requires No Prohibition On Compensating SAs For Use And Licensing

13Available at http://www.usatoday.com/story/sports/ncaaf/2012/11/19/ncaa-college-football-head-coaches-salary-database/1715543/. 14Available at http://www.usatoday.com/sports/college/salaries/ncaab/coach/.


http://www.usatoday.com/story/sports/ncaaf/2012/11/19/ncaa-college-football-head-coaches-salary-database/1715543/

http://www.usatoday.com/story/sports/ncaaf/2012/11/19/ncaa-college-football-head-coaches-salary-database/1715543/

http://www.usatoday.com/sports/college/salaries/ncaab/coach/

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Of NIL. Moreover, Rubinfeld’s report does not demonstrate that the current restrictions on

payments to SAs are necessary to support the principle of amateurism. The mere fact that the

NCAA’s definition of amateurism prohibits payments to SAs does not mean that paying SAs

would necessarily turn them into something other than amateurs.

Mere conclusory statements in affidavits are

insufficient to survive summary judgment. PCI, 104 F.3d at 1171. The same is true for the

NCAA Task Force Final Report on Commercial Activity in Division I Intercollegiate Athletics

(“Final Report”)

.

As Noll explains in his report, amateurism and payment to SAs are far from incompatible.

The definition of amateurism in the NCAA has evolved over time but has not affected the

popularity of collegiate sports. See NR at 117-20, 124-26.15 For example, when college football

was first developed, colleges and conferences adopted different definitions of amateurism. Id. at

121-24 (covering the development of eligibility rules, payments to student-athletes, and financial

aid programs at various conferences, including the Southeastern Conference, the Big Ten, and the

Ivy League). In fact, “the NCAA’s current definition of an amateur athlete was invented after,

not before, the business model for college sports became a success.” Id. at 126. The NCAA’s

definition of amateurism, which prohibits payment to SAs, is therefore not inherently tied to the 15 For more on this point, see “Expert Report of Taylor Branch,” at 4-18 (Nov. 7, 2013) (SD Exh. 25); SR at 3-52. See also NRR at 19-21.


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success of college sports, .16 This is consistent with the experience of other

amateur sporting organizations: relaxing the amateur definitions for the International Amateur

Athletic Foundation (the governing body for track and field), the International Olympic

Committee (the Olympics), USA Cycling (cycling), and the International Ski Federation (skiing)

did not affect the success of those sports; in fact, in some instances, such as in the case of the

Olympics, the competitions have become more popular. Id. at 129-32.

Not only does Rubinfeld’s report fail to present sufficient evidence that would allow a

reasonable juror to find that amateurism is a valid procompetitive justification, but it also does not

demonstrate that the principles of amateurism are incompatible with compensating Division I

football and men’s basketball players for the commercial use of their NILs. The Court should

grant summary judgment in Plaintiffs’ favor and reject the NCAA’s purported procompetitive

justification of amateurism.

2. Competitive Balance Does Not Justify The Restraint.

The NCAA’s second purported procompetitive justification, competitive balance, does not

justify the challenged restraints because there is no evidence the NCAA is competitively balanced

or that the NCAA’s scholarship rules contribute to competitive balance. See NRR at 35-53.

The NCAA Does Not Have Competitive Balance. First, the goal of “competitive

balance” cannot be a procompetitive justification because the NCAA is not actually competitively

balanced. While Rubinfeld claims that “

Id. ¶ 95. See also id. ¶¶ 64-66. Of course, the success of

“Cinderella” teams or the number of upsets in the March Madness tournament has to do with the

16 Noll’s report also reveals that violations of the NCAA’s rules regarding payment to SAs have not had a negative impact on the success of college sports. On the contrary, viewer ratings from two college football games played after the imposition of NCAA sanctions on football players participating in the games revealed the football game drew larger audiences than usual. See NR at 127-29.


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nature of the sport of basketball itself and the single-elimination format of the tournament—it

does not demonstrate competitive balance among the teams.

Id. ¶ 95 (emphasis

added). Indeed, the very concept of a “Cinderella” illustrates how surprising it is when a small

school manages to make inroads in a tournament always dominated by the same traditional

powerhouses. In a truly competitively balanced league, every team would have approximately

the same chance of advancing deep into the tournament (over a sufficiently long time horizon)

and the concept of a Cinderella in the tournament would not exist. NR at 139-40.

Noll’s report, in contrast, relies on a variety of sources to conclude that there is very little

competitive balance in the NCAA. NCAA officials agree that the NCAA is not and has never

been competitively balanced. Id. at 137 (citing NCAA officials, including NCAA President

Emmert, referring to the “haves” and the “have-nots” among the NCAA teams, commenting that

“[s]ome universities have huge competitive advantages [because] of history and culture and

decisions that the university made over decades that are in some ways insurmountable”).

Similarly, Renfro told former NCAA President Brand in a February 2009 e-mail “that

competitive advantage or disadvantage doesn’t appear to have any rational connection to the

principle of amateurism.” See SD Exh. 11. Byers, in testimony given in White v. NCAA, Civ.

No. 06-0999 RGK (MANx) (C.D. Cal.), which he reaffirmed in this case, stated that “competitive

balance” is “an art form that a person likes to use but has no relevance particularly. Competitive

balance is an elastic term that can be stretched in any direction you want to justify a present

circumstance. In this case, what the NCAA is trying to defend.” SD Exh. 26.

In fact, since 1950, only 13 schools have accounted for 50 percent of appearances in

Final Four games. NR at 139. The University of Alabama alone has won three of the last four

national championships. Far from suggesting competitive balance, this means that there are very

few “top” teams that have dominated the tournament for over 60 years. The same is true for

football. See id. at 140. As Noll explains, “[a] few colleges dominate college football and

basketball by persistently fielding strong teams.” Id. at 141, Exhs. 15A and 15B (summarizing


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season outcomes of Division I men’s basketball and football over a 20 year period). See also

WASHINGTON000908-913 at -911 (SD Exh. 27) (“the data would indicate that there is already

significant disparity in competition, with teams from the six FBS AQ conferences dominating

competition on the field”).

The NCAA has even abandoned as a goal the notion of competitive balance. In fact,

although he buries this point in a footnote,

“Commitment to fair

competition” means only that the competitions are fair, not that the teams are equally matched or

that the competition is “balanced.”

Economists are in widespread agreement that competitive balance no longer exists within

the NCAA. Attached as SD Exh. 28 is a summary submitted pursuant to Fed. R. Evid. 1006 of

writings of economists demonstrating that the alleged procompetitive justification of competitive

balance is a complete fallacy.

Competitive Balance Is Not Aided By The Restraint. As with amateurism, the

NCAA also presents no facts demonstrating that its rules proscribing compensation to SAs for use

of their NILs contribute to any competitive balance that might exist in the NCAA.

Nothing in Rubinfeld’s report shows that the NCAA’s limitations lead to competitive

balance.


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Id. ¶ 100.17

What this testimony ignores (and Rubinfeld must admit) is that high-revenue teams

already have a significant recruiting advantage. Id. ¶ 97. It is this recruiting advantage that

results in unbalanced competition. The NCAA’s scholarship limitations do little to ensure teams

are equally matched when there already exists “an unfettered market for coaches, unregulated

spending on recruiting and training student-athletes, and freedom of choice of schools by student-

athletes.” NR at 138. The highest-revenue teams—the Alabamas and USCs in football, or the

Dukes and UCLAs in basketball—already “hire the best coaches, build the best facilities, spend

the most on training, and so attract the best student athletes.” Id. Indeed, Emmert acknowledges

that “[s]ome universities have huge competitive advantages [because] of history and culture and

decisions that the university made over decades that are in some ways insurmountable”—these

advantages far outweigh any speculative procompetitive benefit of the NCAA’s limitations on use

of a player’s NILs. Id. at 137.

Finally, the NCAA has not presented any evidence that, absent the grant-in-aid

restrictions, disparity in team quality would decrease so much that demand and revenues would

significantly drop, thereby outweighing the current anticompetitive effects of the NCAA’s

limitations on SAs.18 Without this evidence, the NCAA cannot look to the purported

procompetitive justification of competitive balance to support its anticompetitive restraint. The

NCAA has failed to put forth sufficient evidence that competitive balance is a procompetitive

justification for its grant-in-aid rules.

17 Rubinfeld also argues

Indeed, Rubinfeld acknowledges that he did not do any surveys on competitive balance, including statistical surveys. SD Exh. 21 (Rubinfeld Depo. at 97-98). 18 On the contrary, Noll suggests that allowing schools to compensate SAs might improve competitive balance, because if teams were able to pay different amounts for different athletes, a school with less revenue might be willing to pay more for a single better athlete than higher-revenue schools would for multiple top athletes. NR at 138.


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3. Integration of Education and Athletics Does Not Justify the Restraint.

. RR ¶103. This

integration has nothing to do with increasing competition, and so is not “procompetitive.” Even if

it did increase competition, the NCAA fails to present any evidence that limiting compensation to

SAs for use and licensing of NILs results in greater integration of education and athletics, or that

the benefits of this integration outweigh the anticompetitive effects of the NCAA’s rules.

Integration Is Not A Procompetitive Justification. A procompetitive justification must

be just that—procompetitive. NSPE, 435 U.S. at 688 (a rule of reason analysis “focuses directly

on the challenged restraint’s impact on competitive conditions”). As noted above, procompetitive

justifications must advance competition in the same market in which the restraint is found, not

some other market.

While Rubinfeld’s report

it does not explain how this integration helps either SAs or consumers.

The same is true of the testimony of several Plaintiffs in this action agreeing that

they obtained value in combining athletic participation with education; that value comes from the

fact that schools provide an avenue for both athletics and scholarship, which is unaffected by the

NCAA’s NIL licensing rules. Id. ¶ 107. The opportunity19 to receive an education at the same 19 Most schools, of course, do not graduate all of their student athletes. E.g., “California Posts Worst Graduation Rate In All of College Football” http://www.nfl.com/news/story/0ap2000000268912/article/california-posts-worst-graduation-rate-in-all-of-college-football (Oct. 24, 2013) (“Just 44 percent of players from the freshmen classes of 2003-06 graduated under the NCAA's Graduation Success Rate (GSR), a figure that drops to 39 percent using the Federal Graduation Rate (FGR).”). So many student athletes enter adult life without even this benefit for their work. In addition, as Plaintiffs’ expert, Dr. Ellen Staurowsky, notes, Division I football and basketball players lead a very insulated life in which athletics assumes a predominant role over education. SR at 25-38.


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time they can compete at a high level may be a positive attribute of NCAA sports, but not one

that is procompetitive or tied in any way to limitations on licensing payments to SAs.

The Restraint Does Not Encourage Integration. The NCAA also fails to present

evidence of how its refusal to compensate SAs for use of their NILs encourages the integration of

education and athletics.

The NCAA

cannot expect the Court to be able to properly assess the procompetitive effect, if any, that the

rules prohibiting NIL licensing have on the integration of athletics and education without actually

providing such evidence. Moreover, the NCAA’s reliance on the certain organizations

have expressed over commercialization of collegiate athletics does not tend to show that payment

of SAs for use of their NILs would undermine what it means to be an SA. Id. ¶ 114.

all reflect the theory that commercialization of athletics

undermines the integration of athletics and education, without providing any evidence that

reducing the NCAA’s prohibitions on NIL licensing would even contribute to this

commercialization. See id. ¶¶115-19. See SD Exhs. 9, 29-32 (copies of reports with damaging

concessions highlighted).

. See id. ¶¶ 121-23. But

empirical evidence suggests that is not the case: the NR explains that the cap on payments to

student athletes for use of their NILs results only in increased coaching salaries and money spent

on athletic facilities, both anticompetitive effects of the NCAA’s rules. NR at 108-09 (coaching

salaries), 111-13 (facilities). See SR at 3-52 (discussing both). As discussed above, Division I

football and men’s basketball is already a high-revenue, commercialized venture, and head


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coaches are compensated accordingly. There is no evidence to suggest that compensating SAs for

the use of their NILs would destroy the integration of athletics and education. SAs will still have

to enroll in school, go to class, and meet minimum academic requirements (among other things).

The Court should reject this alleged procompetitive benefit as a matter of law.

4. The Viability of Other Sports Does Not Justify the Restraint.

This justification also fails as a matter of law because it is not actually procompetitive

and because there is no evidence that the NCAA’s prohibitions on NIL licensing actually increase

the output of other intercollegiate sports.

Viability Is Not A Procompetitive Justification. The viability of other intercollegiate

sports is not procompetitive benefit.

. Like the integration of education and athletics, this purported procompetitive

benefit does not benefit the relevant market—here, Division I football and men’s basketball. It is

simply a wealth transfer from the victims of the restraint to other aspects of the colleges’ athletic

programs.

For example, the Supreme Court in BoR held that a restraint could not decrease output of

televised games in an effort to increase output of attendance at live football games. 468 U.S. at

116-17. In that case, attendance at live football games may have increased as a result of the

restraint, but it did not increase output in the market for televised games, which was the relevant

market. Id. (“[B]y seeking to insulate live ticket sales from the full spectrum of competition

because of its assumption that the product itself is insufficiently attractive to consumers,

petitioner forwards a justification that is inconsistent with the basic policy of the Sherman Act.”).

The same is true here: the NCAA cannot look to an alleged increase in viability of other

intercollegiate sports as a procompetitive justification for its failure to pay its Division I football

and men’s basketball players because it does not increase competition or demand in the restrained

markets.


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The Restraint Does Not Support Viability. Even if the viability of other intercollegiate

sports were a procompetitive benefit, the NCAA has failed to show that these sports would

disappear or be diminished if the NCAA were to compensate SAs for use of their NILs.

The NCAA has no control over where the colleges receiving the funds choose to spend

their money, and there is no guarantee that that money is spent on increasing the number of sports

or SAs.

Finally, while some NCAA programs appear to encourage revenue cross-subsidization

(for example, Division I schools must sponsor a minimum of 14 sports), the NCAA has presented

no evidence showing that modifying its rules to allow certain SAs to be compensated for the use

of their NILs would have a negative effect on the amount of money provided those schools, or

that it would cause those schools to decrease output of intercollegiate athletics. Id. ¶ 133.

. This is plainly insufficient to create a genuine issue of material fact.

The NCAA submits no evidence showing how much it expects its revenues to decrease if it

changes its licensing rules, or what effect a decrease in revenue would have, if any, on member

schools’ ability to promote other intercollegiate sports. Without it, this alleged procompetitive


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justification must be rejected.

5. Increased Output Benefits Do Not Justify the Restraint.

The NCAA’s final purported procompetitive justification fails for the same reason the

justification of the viability of other intercollegiate sports fails—there is no evidence that

revenue-sharing programs actually increase output, or that the output increase would occur in the

relevant input market for Division I football and men’s basketball.

Increased Output Is Not A Procompetitve Justification.

As with the NCAA’s fourth procompetitive

justification, this argument relies on the premise that the NCAA funds are being spent by member

schools in a way that increases output. However, the NCAA has no way of ensuring that

happens.

it is nevertheless not procompetitive because it does not benefit Division I football and

men’s basketball players. This is another version of the “trickle down economics” elsewhere

advanced by Rubinfeld; he often assumes that the profitability and success of NCAA schools

somehow obliquely benefits Division I football and men’s basketball players, when courts have

frequently rejected such rationales.

The Restraint Does Not Increase Output.

This is clearly insufficient 20

. In re Wells Fargo Home Mortg. Overtime Pay Litig., 527

F. Supp. 2d 1053, 1061 (N.D. Cal. 2007) (scrutinizing carefully declarations from Defendants’ employees that appeared “litigation-driven”). In addition, the deposition testimony of John Welty,



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to establish a genuine issue of material fact.

. Id. ¶ 144.21 Indeed, lacking any such

evidence, one is justified in concluding that this doubtful proposition is false.

D. Less Restrictive Alternatives.

Since the NCAA has not discharged its burden in coming up with any procompetitive

justifications, the Court need not reach the question of whether there are less restrictive

alternatives to the challenged restraint. Tanaka v. Univ. of S. Calif., 252 F.3d 1059, 1063 (9th Cir.

2001). However, there clearly are. Rubinfeld testified that he thought there might be some, but

said his “charge” was not to advise the NCAA on this point. Rubinfeld Depo. at 113-14 (SD Exh.

21). The point to remember here is that under Bylaw 12.02.7, “pay” is defined as “the receipt of

funds, awards or benefits not permitted by the governing legislation of the Association for

participation in athletics.” (SD Exh. 10) Thus, the NCAA defines what is or is not forbidden

“pay” and it retains the full power to exclude from that definition compensation for the use and

licensing of SAs’ NILs or to permit receipt of such compensation after eligibility expires.

V. CONCLUSION

For all of the foregoing reasons, Plaintiffs’ motion should be granted.

Footnote continued from previous page former President of Fresno State, on whether his university would leave Division I if SAs were compensated for use of their NIL was highly equivocal. See “Supplemental Brief of Antitrust Plaintiffs In Support of Motion for Class Certification,” pp. 4-5 (Dkt. No. 799). 21 See PCI, 104 F.3d at 1171 (conclusory, self-serving affidavits lacking facts do not create a genuine issue of material fact). Without actual evidence of how much the NCAA’s revenue would decrease and how that would affect member schools, the NCAA cannot survive summary judgment. Nissan Fire, 210 F.3d at 1103 (nonmoving party must present evidence establishing a genuine issue of material fact to avoid summary judgment).


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Dated: November 15, 2013 Respectfully submitted,

By: /s/ Michael P. Lehmann

Michael P. Lehmann (Cal. Bar No. 77152) Arthur N. Bailey, Jr. (Cal. Bar No. 248460) HAUSFELD LLP 44 Montgomery St., 34th Floor San Francisco, CA 94104 Telephone: (415) 633-1908 Facsimile: (415) 358-4980 E-mail: [email protected] [email protected]

Michael D. Hausfeld (pro hac vice) Hilary K. Scherrer (Cal. Bar No. 209451) Sathya S. Gosselin (Cal. Bar. No. 269171) HAUSFELD LLP 1700 K Street, NW, Suite 650 Washington, DC 20006 Telephone: (202) 540-7200 Facsimile: (202) 540-7201 E-mail:[email protected] [email protected] [email protected] Plaintiffs’ Interim Co-Lead Class Counsel with Principal Responsibility for the Antitrust Claims

Renae Steiner Vincent J. Esades HEINS MILLS & OLSON, P.L.C. 310 Clifton Avenue Minneapolis, MN 55403 Telephone: (612) 338-4605 Facsimile: (612) 338-4692 Email: [email protected] [email protected]

Steven J. Greenfogel LITE DEPALMA GREENBERG, LLC 1521 Locust Street, 7th Floor Philadelphia, PA 19102 Telephone: (973) 877-3819 Email: [email protected]


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Eric B. Fastiff (Cal. Bar No. 182260) Brendan P. Glackin (Cal. Bar No. 199643) Katherine C. Lubin (Cal. Bar No. 259826) LIEFF CABRASER HEIMANN & BERNSTEIN, LLP 275 Battery Street, 29th Floor San Francisco, CA 94111-3339 Telephone: (415) 956-1000 Facsimile: (415) 956-1008 Email: [email protected] [email protected] [email protected] Additional Plaintiffs’ Counsel on the Brief


o'bannonn motion for summary judgement nov 15 2013

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