Extra! Extra! Read all about It!: Ivy League Scholarship Ban Faces Attack from Ivy League Ballers
Photo Source: Billy Wilson, Princeton University, Princeton, New Jersey, United States, Flickr (September 26, 2022) (CC BY-NC 2.0)
By: Eddie Murray* Posted: 04/24/2023
Just a few weeks ago, Tamenang Choh, a former Brown men’s basketball player, and Grace Kirk, a current Brown women’s basketball player, filed a federal antitrust suit against the Council of Ivy League Presidents and their eight-member schools: Princeton, Dartmouth, Yale, Columbia, Cornell, Penn, Harvard, and Brown.[1] The Plaintiffs assert this suit arises from the Defendants’ long-standing policy of banning athletic scholarships, known as the “(‘Ivy League Agreement’), in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.”[2] As relief, the Plaintiffs request class certification of “all Ivy League athletes recruited to play sport from March 7, 2019, to a future date when the” Ivy League Agreement terminates, monetary damages, and a permanent injunction enjoining Defendants from abiding by the Ivy League Agreement.[3] In total, “the class would include more than 10,000 members.”[4]
Background: Ivy League Stance and Pertinent Caselaw
The Ivy League is an athletic conference that became an official member of the NCAA in 1954.[5] Since then, the Ivy League member schools have not offered athletic scholarships.[6] In the most recent attempt to justify the ban, Ivy League Executive Director Robin Harris emphasized that prohibiting athletic scholarships allows student-athletes to be more representative of the student body.[7]
In 1994, under Brown, the Third Circuit emphasized that horizontal price-fixing was consistently prohibited when faced with all Ivy League members and MIT conspiring on financial aid and tuition packages.[8] Moreover, the Third Circuit held that per se rulings of illegality are met when the surrounding circumstances increase the probability of anticompetitive conduct so great that further examination of the challenged conduct would be unnecessary.[9] As noted by the Third Circuit, these surrounding circumstances would include price theory for maximizing profit, public service, or the entity’s financial classification.[10]
Although the Ivy League schools ultimately settled with the government by signing a consent decree to not collaborate on financial aid, MIT refused.[11] To protect need-based financial aid, the Justice Department eventually conceded and dismissed the case against MIT.[12] Soon thereafter, Congress passed, and President Clinton signed Section 568 of the Improving America’s Schools Act of 1994, which secured the Ivy League an exemption to antitrust conspiracy related to the admittance of students on a need-blind basis.[13]
Under the rules prohibiting athletic scholarships, antitrust scrutiny became increasingly suitable following the Supreme Court’s 2015 holding in O’Bannon v. NCAA.[14] More specifically, under O’Bannon, the District Court for the Northern District of California held, and the Ninth Circuit affirmed, that the NCAA’s prohibition against the full cost of attendance for athletic scholarships violated Section 1 of the Sherman Antitrust Act.[15] Shortly after the district court’s ruling, the five major Division I conferences—not including the Ivy League—began allowing their member institutions to award full cost of attendance athletic scholarships in compliance with O’Bannon’s injunction.[16] Lastly, due to a permanent injunction issued by the Ninth Circuit, the NCAA instructed its Division I schools to offer student-athletes compensation up to the full cost of attendance.[17]
In 2021, as a further measure against collegiate restrictions of student-athletes, the Supreme Court in Alston[18] prohibited NCAA limits on athletic scholarships as a violation of Section 1 of the Sherman Act.[19] As a result, a mixture of state laws and NCAA rule changes have allowed student-athletes to sell their name, image, and likeness.[20] Nevertheless, despite these adjustments, the Ivy League maintained its policy prohibiting athletic scholarships.[21]
Prediction:
The Ivy League agreement will likely be ruled as per se illegal under the long-established precedent of Section 1 of the Sherman Act.[22] Moreover, the Ivy League Agreement satisfies the criteria for application of the per se standard under Brown.[23] The Ivy League Agreement fits the Brown standard because the university defendants’ athletic operations are for-profit commercial enterprises.[24] Furthermore, the Ivy League Agreement fits the Brown standard based on the changed market realities that Alston identified as germane to its holding.[25] More specifically, when determining its antitrust analysis against the NCAA, Alston significantly factored the vast economic growth of college sports from 1984 to the present.[26] Consequently, as precedent dictates, such changes in market realities emphasize that restricting compensation for athletic services, such as the Ivy League Agreement, as per se illegal.[27]
As a defense, the University defendants may raise a statutory exemption under Section 568 of the Improving America’s Schools Act of 1994.[28] However, this defense is likely to fail because the statutory exemption expired in September 2022 and the exemption covered only agreements by universities relating to financial aid, not athletic services.[29]
[1] See Michael McCann, Ivy League Scholarship Ban Under Fire in Basketballers’ Suit, Sportico (Mar. 8, 2023, 10:26 AM), https://www.sportico.com/law/analysis/2023/ivy-league-lawsuit-athletic-scholarships-1234711788/ (reporting lawsuit against the Ivy League for its scholarship ban).
[2] See Complaint at 1, Choh et al. v. Brown University et al., Docket No. 3:23-cv-00305 (D. Conn. Mar 07, 2023) (noting the Plaintiff’s basis for the suit).
[3] See McCann, supra note 1 (noting the relief sought by the Plaintiffs).
[4] See id. (detailing the potential class size if approved by the court).
[5] See Genevieve Carlton, A History of The Ivy League, BestColleges (Mar. 21, 2023), https://www.bestcolleges.com/blog/history-of-ivy-league/ (reporting the history of the NCAA).
[6] See Paton D. Roberts and Sophia C. Scott, Ivy League Faces Federal Class Action Lawsuit Over Athletic Scholarships Policy, The Harvard Crimson (Mar. 24, 2023), https://www.thecrimson.com/article/2023/3/24/ivy-league-lawsuit/ (quoting Ivy League Executive Director Robin Harris, “The Ivy League athletics model is built upon the foundational principle that student-athletes should be representative of the wider student body, including the opportunity to receive need-based financial aid”).
[7] See NCSA College Recruiting, What You Need to Know About Ivy League Athletic Scholarships, NCSA COLLEGE RECRUTING, https://www.ncsasports.org/blog/what-need-know-ivy-league-athletic-scholarship#:~:text=With%20the%20focus%20on%20competition,%2Drounded%2C%20high%20quality%20education. (last visited Apr. 1, 2023) (“With the focus on competition for its own sake, Ivy Leagues still do not offer athletic scholarships. The Ivy League schools thought offering scholarships based on academic ability might detract from their primary goal, which was (and still is) providing a well-rounded, high quality education.”).
[8] See U.S. v. Brown Univ., 5 F.3d 658, 670 (3d Cir. 1993) (“Horizontal price-fixing, where competitors at the same market level agree to fix or control the prices they will charge for their respective goods or services, is among the activities that the Supreme Court has consistently held to be illegal per se.”)
[9] See id. (quoting Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 289, 105 S.Ct. 2613, 2617, 86 L.Ed.2d 202 (1985)) (“The per se approach permits categorical judgments with respect to certain business practices that have proved to be predominantly anticompetitive.”).
[10] See id. at 671 (citing Ariz. v. Maricopa County Medical Soc., 457 U.S. 332, 349 (1981)) (“the Court explained that ‘the price-fixing agreements in this case . . . are not premised on public service or ethical norms.’”).
[11] See Kristina Chen, MIT Charged, Along With Other Universities, in Federal Lawsuit For Illegally Limiting Student Financial Aid Awards, The Tech (Jan. 12, 2022), https://thetech.com/2022/01/12/mit-568-antitrust-lawsuit (describing the impetus for litigation against MIT).
[12] See Settlement allows cooperation on awarding financial aid, MIT NEWS (Jan. 5, 1994), https://news.mit.edu/1994/settlement-0105 (reporting the Justice Department’s result of litigation against MIT).
[13] See Christofer Robles, Athletic Scholarships Are Not The Solution. An Activity Stipend is., The Daily Princetonian (Apr. 7, 2023, 12:39 AM), https://www.dailyprincetonian.com/article/2023/04/princeton-athletic-scholarships-extra-curricular-stipend-compensation-contribution-improving-americas-schools-act (noting that the Ivy League antitrust exemption resulted from litigation).
[14] See O’Bannon v. N.C.A.A., 802 F.3d 1049, 1053 (9th Cir. 2015) (holding that the NCAA’s amateurism rules are not exempt from antitrust scrutiny and must be analyzed under the Rule of Reason test).
[15] See id. at 1076 (“The district court's determination that the existing compensation rules violate Section 1 of the Sherman Act was correct and its injunction requiring the NCAA to permit schools to provide compensation up to the full cost of attendance was proper.”).
[16] See John Wolohan, What Does Autonomy For The “Power 5” Mean For The NCAA?, LawInSport (Feb. 2015), https://www.lawinsport.com/topics/item/what-does-autonomy-for-the-power-5-mean-for-the-ncaa (noting the response by Division I conferences given the O’Bannon case).
[17] See Scholarships, NCAA https://www.ncaa.org/sports/2014/10/6/scholarships.aspx (last visited Apr. 14, 2023) (“Division I schools may provide student-athletes with multiyear scholarships.”); see also Alston v. NCAA (In re Nat’l Collegiate Athletic Ass’n Athletic Grant-In-Aid Cap Antitrust Litig.), 958 F.3d 1239, 1244 (9th Cir. 2020) (“We further conclude that the record supports the factual findings underlying the injunction and that the district court’s antitrust analysis is faithful to our decision in O’Bannon v. NCAA . . . .”).
[18] NCAA v. Alston, 141 S. Ct. 2141, 210 L. Ed. 2d 314 (2021).
[19] See id. (noting the holding in this case, which derived from a rule of reason analysis that weighed the procompetitive effects of athletic scholarship limits against its restraints).
[20] See Dan Murphy, Everything You Need to Know About The NCAA’s NIL Debate, ESPN (Sept. 1, 2021), https://www.espn.com/college-sports/story/_/id/31086019/everything-need-know-ncaa-nil-debate (highlighting the impact of the Alston decision).
[21] For further discussion of the Ivy League policy prohibiting athletic scholarships, see supra notes 5–7 and accompanying text.
[22] For further discussion of antitrust violations under Section 1 of the Sherman Act, see supra notes 14, 19 and accompanying text.
[23] See U.S. v. Brown Univ., 5 F.3d 658, 672 (3d Cir. 1993) (declining to apply the per se standard to the “Ivy Overlap” agreement because of defendant MIT’s alleged pure altruistic motive and alleged absence of a revenue-maximizing purpose).
[24] See id. (noting the standard that applies to the current situation).
[25] See Alston, 141 S. Ct. at 2158 (2021) (“Our confidence on this score is fortified by still another factor. Whether an antitrust violation exists necessarily depends on a careful analysis of market realities.”).
[26] See id. (“When it comes to college sports, there can be little doubt that the market realities have changed significantly since 1984. Since then, the NCAA has dramatically increased the amounts and kinds of benefits schools may provide to student-athletes. For example, it has allowed the conferences flexibility to set new and higher limits on athletic scholarships.”).
[27] See id. at 2169 (Kavanaugh, J., concurring) (emphasizing the per se illegality of the NCAA’s restriction against compensation for student-athletes).
[28] See Need-Based Educational Act of 2001, Pub. L. No. 107-72, 647 Stat. 648 (“2 or more institutions of higher education at which all students admitted are admitted on a need-blind basis, to agree or attempt to agree . . . to award such students financial aid only on the basis of demonstrated financial need for such aid.”).
[29] See id. (demonstrating student-athletes are not included in the antitrust exception by referencing two reasons, the expiration date of statute and lack applicability towards athletic services).
