The Potential Reach of O'Bannon

Abstract

In August 2014 a Stanford University graduate made a remarkable play in college athletics. Although fans may not know her by name, this northern California woman may have profoundly and forever changed the relationship between student-athletes and their respective schools. As the deciding judge in the antitrust-based lawsuit of O’Bannon v. NCAA Judge Claudia Wilken bucked long standing legal precedent to set aside NCAA rules that limited student athlete scholarships and prohibited student-athletes from receiving compensation for the use of their names, images and likenesses. The Ninth Circuit, which decided the O’Bannon appeal, declared the case “momentous.”

The narrow issue decided by Judge Wilken was that the NCAA rules restrain price competition in violation of Section 1 of the Sherman Act. But as the Ninth Circuit noted, as great may be the import of the final ruling the mere fact that the court found the NCAA restrictions subject to antitrust review was remarkable. Indeed, for some time courts have struggled with Supreme Court precedent to decide if (i) all NCAA restraints are commercial but some restraints are carved out as almost per se procompetitive or (ii) some NCAA restraints are carved out as noncommercial and are entirely outside of antitrust review. O’Bannon adds to the current Circuit split by determining that antitrust scrutiny is appropriate and can be applied with vigor. Given the importance, and the Ninth Circuit’s affirmation, of the district court’s analyses on the central legal issues of O’Bannon, the question presented in this essay is: what is the potential reach of O’Bannon in the student athlete labor market and to the applicability of antitrust law?

Keywords: Antitrust, sports law, O'Bannon, NCAA, Board of Regents v NCAA, student-athlete, student-athlete compensation

JEL Classification: J49,K21, L40, L44