JENKINS et al v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION et al, No. 4:2014cv02758 - Document 371 (N.D. Cal. 2018)

Court Description: ORDER GRANTING IN PART AND DENYING IN PART CROSS-MOTIONS FOR SUMMARY JUDGMENT by Judge Claudia Wilken. Pretrial Conference set for 11/13/2018 at 2:30 pm. Bench Trial (10 days) set for 12/3/2018 at 8:30 am.(dtmS, COURT STAFF) (Filed on 3/28/2018)
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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 5 6 IN RE: NATIONAL COLLEGIATE ATHLETIC ASSOCIATION ATHLETIC GRANT-IN-AID CAP ANTITRUST LITIGATION 7 ORDER GRANTING IN PART AND DENYING IN PART CROSS-MOTIONS FOR SUMMARY JUDGMENT THIS DOCUMENT RELATES TO: 8 ALL ACTIONS (Dkt. Nos. 657, 704, 797, 800) United States District Court Northern District of California 9 10 Case Nos. 14-md-02541-CW 14-cv-02758-CW In this multidistrict litigation, student-athlete Plaintiffs 11 allege that Defendants National Collegiate Athletic Association 12 (NCAA) and eleven of its member conferences fixed prices for the 13 payments and benefits that the students may receive in return for 14 their elite athletic services. 15 summary judgment.1 16 motions for summary judgment are granted in part and denied in 17 part.2 Now pending are cross-motions for For the reasons set forth below, the cross- 18 BACKGROUND 19 Plaintiffs are current and former student-athletes in the 20 sports of men’s Division I Football Bowl Subdivision (FBS) 21 football and men’s and women’s Division I basketball. 22 are the NCAA and eleven conferences that participated, during the 23 relevant period, in FBS football and in men’s and women’s Defendants 24 1 25 26 27 28 The Court will rule by separate order on the pending motions to seal and to exclude proposed expert testimony. 2 In the exercise of discretion, the Court denies Defendants’ Motion for Supplemental Briefing and Plaintiffs’ Motion to File Supplemental Evidence for the Summary Judgment Record. See Civil Local Rule 7-3(d). The Court does not, at this time, rule on whether Plaintiffs’ proposed supplemental evidence will be admissible at trial. 1 Division I basketball. Plaintiffs allege that Defendants 2 violated federal antitrust law by conspiring to impose an 3 artificial ceiling on the scholarships and benefits that student- 4 athletes may receive as payment for their athletic services. 5 I. O’Bannon v. NCAA In 2009, a group of college Division I student-athletes 6 brought an antitrust class action against the NCAA to challenge 8 the association’s rules preventing men’s football and basketball 9 United States District Court Northern District of California 7 players from being paid, either by their school or by any outside 10 source, for the sale of licenses to use the student-athletes’ 11 names, images, and/or likenesses (NIL) in videogames, live game 12 telecasts, and other footage. O’Bannon v. NCAA, 7 F. Supp. 3d 13 955, 962-63 (N.D. Cal. 2014). The rules challenged by the 14 O’Bannon plaintiffs, which furthered the agreement of the NCAA 15 and its members to fix the value of student-athletes’ NIL at 16 zero, included the then-applicable maximum limit on financial 17 aid. 18 receiving “financial aid based on athletics ability” that 19 exceeded the value of a full grant-in-aid. 20 3d at 971. 21 that consists of tuition and fees, room and board, and required 22 course-related books.” 23 attendance, such as supplies and transportation, were not 24 included in the grant-in-aid limit, although they were calculated 25 in a school-specific figure called “cost of attendance.” 26 Under that limit, student-athletes were prohibited from O’Bannon, 7 F. Supp. The rules defined “grant-in-aid” as “financial aid Id. Other expenses related to school Id. The Court held a bench trial and ruled that the challenged 27 NCAA rules violated Section 1 of the Sherman Act, 15 U.S.C. § 1. 28 Id. at 963. The Court found that the evidence presented at trial 2 established that FBS football and Division I men’s basketball 2 schools compete to recruit the best high school football and 3 men’s basketball players in a relevant market for a college 4 education combined with athletics. 5 88. 6 FBS and Division I schools compete “to sell unique bundles of 7 goods and services to elite football and basketball recruits.” 8 Id. at 965, 986. 9 United States District Court Northern District of California 1 alternatively, could be understood as a monopsony, in which the 10 NCAA member schools, acting collectively, are the only buyers of 11 the athletic services and NIL licensing rights of elite student- 12 athletes. 13 7 F. Supp. 3d at 965-68, 986- In exchange for educational and athletic opportunities, the The Court found that this market, Id. at 973, 993. The Court found that the plaintiffs met their burden to show 14 that the NCAA had fixed the price of the student-athletes’ NIL 15 rights, which had significant anticompetitive effects in the 16 relevant market. 17 procompetitive justifications of the restraints, the Court found 18 that the NCAA’s challenged restrictions on student-athlete 19 compensation played “a limited role in driving consumer demand 20 for FBS football and Division I basketball-related products.” 21 Id. at 1001. 22 “might facilitate the integration of academics and athletics 23 . . . by preventing student-athletes from being cut off from the 24 broader campus community.” Id. at 971-73, 988-93. On the question of The Court also found that the challenged rules Id. at 1003. 25 The O’Bannon plaintiffs proposed three alternatives that 26 they asserted were less restrictive than the NCAA rules that they 27 challenged: (1) raising the grant-in-aid limit to allow schools 28 to award stipends, derived from specified sources of licensing 3 revenue, to student-athletes; (2) allowing schools to deposit a 2 share of licensing revenue into a trust fund for student-athletes 3 which could be paid after the student-athletes graduate or leave 4 school for other reasons; and (3) permitting student-athletes to 5 receive limited compensation for third-party endorsements 6 approved by their schools. 7 proposed less restrictive alternatives related specifically to 8 the use of revenue derived from NIL licensing and endorsements. 9 United States District Court Northern District of California 1 This Court found that the first two of these proposed 7 F. Supp. 3d at 982. Each of these 10 alternatives “would limit the anticompetitive effects of the 11 NCAA’s current restraint without impeding the NCAA’s efforts to 12 achieve its stated purposes.” 13 Court rejected the plaintiffs’ third proposed alternative. 14 at 984. 15 any rules that would prohibit its member schools and conferences 16 from offering their FBS football and men’s Division I basketball 17 recruits a limited share of the revenues generated from the use 18 of their NIL in addition to a full grant-in-aid, but permitted 19 the NCAA to implement rules capping the amount of compensation 20 that could be paid to student-athletes while they are enrolled in 21 school at the cost of attendance. 22 also prohibited the NCAA from enforcing rules to prevent member 23 schools and conferences from offering to deposit a limited share 24 of NIL licensing revenue in trust for their FBS football and 25 Division I basketball recruits, payable when they leave school or 26 their eligibility expires. 27 28 Id.; see also id. at 983-84. The Id. Accordingly, this Court enjoined the NCAA from enforcing Id. at 1007-08. The Court Id. at 1008. The Ninth Circuit largely affirmed this Court’s decision, including the finding that allowing NCAA member schools to award 4 grants-in-aid up to the student-athletes’ full cost of attendance 2 would be a substantially less restrictive alternative to the 3 existing compensation rules. 4 1079 (9th Cir. 2015). 5 relation whatsoever to the procompetitive purposes of the NCAA: 6 by the NCAA’s own standards, student-athletes remain amateurs as 7 long as any money paid to them goes to cover legitimate 8 educational expenses.” 9 United States District Court Northern District of California 1 judgment and injunction insofar as they required the NCAA to O’Bannon v. NCAA, 802 F.3d 1049, It held that “the grant-in-aid cap has no Id. at 1075. However, it vacated the 10 allow its member schools to pay student-athletes limited deferred 11 compensation in a trust account. 12 found that allowing “students to receive NIL cash payments 13 untethered to their education expenses” would not promote the 14 NCAA’s procompetitive purposes as effectively as a rule 15 forbidding cash compensation, even if the payment was limited and 16 took the form of a trust fund. 17 II. 18 Id. at 1079. The circuit court Id. at 1076. This Litigation Plaintiffs initiated these actions in 2014 and 2015, 19 attacking the NCAA’s cap on their grant-in-aid itself, rather 20 than merely the association’s restrictions on sharing NIL 21 revenue. 22 Litigation transferred actions filed in other districts to this 23 Court pursuant to 28 U.S.C. § 1407 for coordinated or 24 consolidated pretrial proceedings. 25 were consolidated. 26 action is Plaintiffs’ consolidated amended complaint, filed July 27 11, 2014. 28 orders incorporating additional allegations about named The United States Judicial Panel on Multidistrict All but one of the actions The operative pleading in the consolidated The consolidated amended complaint has been amended by 5 1 Plaintiffs in subsequently-filed cases (Docket Nos. 86, 184, 2 197). 3 consolidated, but all pending motions were briefed together in 4 the consolidated action and in Jenkins.3 5 One case, Jenkins v. NCAA, No. 14-cv-02758, has not been On December 4, 2015, the Court certified three injunctive relief classes in the consolidated action, under Federal Rule of 7 Civil Procedure 23(b)(2): a Division I FBS Men’s Football Class, 8 a Division I Men’s Basketball Class, and a Division I Women’s 9 United States District Court Northern District of California 6 Basketball Class, each consisting of student-athletes who 10 received or will receive a written offer for a full grant-in-aid 11 as defined by NCAA Bylaw 15.02.5 during the pendency of this 12 action. 13 football and basketball classes; the women’s basketball class was 14 not sought in that case. 15 proceedings, all Plaintiffs committed to seek to stay either the 16 consolidated case or the Jenkins case prior to trial of the other 17 in order to avoid duplicative trials on behalf of identical 18 classes and a race to determine which judgment would be binding 19 under principles of res judicata. 20 In the Jenkins action, the Court certified the men’s As part of the class certification Defendants and the consolidated Plaintiffs reached a 21 22 23 24 25 26 27 28 3 The Jenkins Plaintiffs raise one separate issue in a footnote to Plaintiffs’ opposition to Defendants’ cross-motion for summary judgment. They request that if the Court grants Defendants’ summary judgment motion in the consolidated action, the Court not apply the ruling to the Jenkins action, but instead remand it back to the District of New Jersey, where the decisions of the Ninth Circuit and this Court in O’Bannon would not control under the doctrine of stare decisis. At the hearing on the motion, the Jenkins Plaintiffs clarified that they do not seek remand if the Court grants summary judgment only in part. See Jan. 16, 2018 Tr. at 50. Because the Court grants summary judgment in part and denies it in part, the Jenkins Plaintiffs’ request for remand prior to summary judgment is moot. 6 1 settlement of all claims for damages, and the Court granted final 2 approval of that settlement and entered a partial judgment under 3 Federal Rule of Civil Procedure 54(b) on December 6, 2017. 4 Jenkins Plaintiffs have not sought damages. 5 claims for injunctive relief remain pending. The Therefore, only 6 LEGAL STANDARD 7 Summary judgment is properly granted when no genuine and disputed issues of material fact remain, and when, viewing the 9 United States District Court Northern District of California 8 evidence most favorably to the non-moving party, the movant is 10 clearly entitled to prevail as a matter of law. 11 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); 12 Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir. 13 1987). 14 Fed. R. Civ. P. The moving party bears the burden of showing that there is 15 no material factual dispute. 16 true the opposing party’s evidence, if supported by affidavits or 17 other evidentiary material. 18 815 F.2d at 1289. 19 in favor of the party against whom summary judgment is sought. 20 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 21 587 (1986); Intel Corp. v. Hartford Accident & Indem. Co., 22 952 F.2d 1551, 1558 (9th Cir. 1991). 23 Therefore, the court must regard as Celotex, 477 U.S. at 324; Eisenberg, The court must draw all reasonable inferences Material facts which would preclude entry of summary 24 judgment are those which, under applicable substantive law, may 25 affect the outcome of the case. 26 identify which facts are material. 27 Inc., 477 U.S. 242, 248 (1986). 28 The substantive law will Anderson v. Liberty Lobby, Where the moving party does not bear the burden of proof on 7 1 an issue at trial, the moving party may discharge its burden of 2 production by either of two methods: The moving party may produce evidence negating an essential element of the nonmoving party’s case, or, after suitable discovery, the moving party may show that the nonmoving party does not have enough evidence of an essential element of its claim or defense to carry its ultimate burden of persuasion at trial. 3 4 5 6 Nissan Fire & Marine Ins. Co., Ltd., v. Fritz Cos., Inc., 7 210 F.3d 1099, 1106 (9th Cir. 2000). If the moving party discharges its burden by showing an 9 United States District Court Northern District of California 8 absence of evidence to support an essential element of a claim or 10 defense, it is not required to produce evidence showing the 11 absence of a material fact on such issues, or to support its 12 motion with evidence negating the non-moving party’s claim. 13 see also Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 885 (1990); 14 Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991). 15 If the moving party shows an absence of evidence to support the 16 non-moving party’s case, the burden then shifts to the non-moving 17 party to produce “specific evidence, through affidavits or 18 admissible discovery material, to show that the dispute exists.” 19 Bhan, 929 F.2d at 1409. 20 Id.; If the moving party discharges its burden by negating an 21 essential element of the non-moving party’s claim or defense, it 22 must produce affirmative evidence of such negation. 23 210 F.3d at 1105. 24 the burden then shifts to the non-moving party to produce 25 specific evidence to show that a dispute of material fact exists. 26 Id. 27 Nissan, If the moving party produces such evidence, If the moving party does not meet its initial burden of 28 8 1 production by either method, the non-moving party is under no 2 obligation to offer any evidence in support of its opposition. 3 Id. 4 ultimate burden of persuasion at trial. This is true even though the non-moving party bears the 5 6 Id. at 1107. DISCUSSION I. Res Judicata and Collateral Estoppel Defendants argue that all of Plaintiffs’ claims are 8 foreclosed under the doctrines of res judicata, or claim 9 United States District Court Northern District of California 7 preclusion, and collateral estoppel, or issue preclusion, by the 10 decisions of the Ninth Circuit and this Court in O’Bannon. 11 802 F.3d 1049; 7 F. Supp. 3d 955. 12 is to “relieve parties of the cost and vexation of multiple 13 lawsuits, conserve judicial resources, and, by preventing 14 inconsistent decisions, encourage reliance on adjudication.” 15 Allen v. McCurry, 449 U.S. 90, 94 (1980). 16 the elements of either res judicata or collateral estoppel is on 17 the party asserting it. 18 1042, 1050-51 (9th Cir. 2008) (collateral estoppel); Karim-Panahi 19 v. Los Angeles Police Dep’t, 839 F.2d 621, 627 n.4 (9th Cir. 20 1988) (res judicata). 21 The purpose of these doctrines The burden of proving Kendall v. Visa U.S.A., Inc., 518 F.3d Res judicata prohibits the re-litigation of any claims that 22 were raised or could have been raised in a prior action. 23 Sierra Pres. Council v. Tahoe Reg’l Planning Agency, 322 F.3d 24 1064, 1077-78 (9th Cir. 2003). 25 order for res judicata to apply: (1) an identity of claims; 26 (2) a final judgment on the merits; and (3) the same parties or 27 their privies. 28 Tahoe- Three elements must be present in Id. at 1077. Collateral estoppel “prevents a party from relitigating an 9 issue decided in a previous action if four requirements are met: 2 ‘(1) there was a full and fair opportunity to litigate the issue 3 in the previous action; (2) the issue was actually litigated in 4 that action; (3) the issue was lost as a result of a final 5 judgment in that action; and (4) the person against whom 6 collateral estoppel is asserted in the present action was a party 7 or in privity with a party in the previous action.’” 8 518 F.3d at 1050 (quoting United States Internal Revenue Serv. v. 9 United States District Court Northern District of California 1 Palmer, 207 F.3d 566, 568 (9th Cir. 2000)). Kendall, 10 The application of either res judicata or collateral 11 estoppel here would require that any Plaintiff not present in 12 O’Bannon have been in privity with the parties in that case. 13 primary categories of Plaintiffs here were not part of the 14 O’Bannon class: male student-athletes who were recruited after 15 O’Bannon and female student-athletes.4 Two 16 Defendants contend that privity nonetheless exists here 17 because, in O’Bannon, the interests of nonparty student-athletes 18 were represented adequately by the plaintiffs there with the same 19 interests and the Court took special care to protect the 20 interests of future student-athletes. 21 circumstances, a nonparty may be bound by a judgment because she 22 was adequately represented by someone with the same interests who 23 was a party to the suit. 24 effect on nonparties include properly conducted class actions.” In “certain limited Representative suits with preclusive 25 4 26 27 28 The parties have not briefed whether there are any class members in this case who were not class members in O’Bannon because their NIL have not been, and will not be, included in game footage or in videogames after the conclusion of the athlete’s participation in intercollegiate athletics. See O’Bannon, 7 F. Supp. 3d at 965 (quoting class definition). 10 1 Taylor v. Sturgell, 553 U.S. 880, 894 (2008) (internal 2 alteration, citation and quotation marks omitted). 3 Court held, 4 5 6 7 8 United States District Court Northern District of California 9 The Supreme A party’s representation of a nonparty is “adequate” for preclusion purposes only if, at a minimum: (1) The interests of the nonparty and her representative are aligned, and (2) either the party understood herself to be acting in a representative capacity or the original court took care to protect the interests of the nonparty. In addition, adequate representation sometimes requires (3) notice of the original suit to the persons alleged to have been represented. Taylor, 553 U.S. at 900 (citations omitted). The Supreme Court 10 further explained that, in the federal class action context, the 11 limitations on nonparty representation “are implemented by the 12 procedural safeguards contained in Federal Rule of Civil 13 Procedure 23.” 14 the O’Bannon class under Rule 23 limits the persons who are 15 subject to the preclusive effect of the judgment. 16 then, the effect of res judicata does not extend to individuals 17 who were not part of the O’Bannon class. 18 cannot satisfy the Taylor factors for individuals who were not 19 class members in that case. 20 O’Bannon focused their analysis on the claims of class members, 21 the named plaintiffs represented only class members, and only 22 class members were on notice that they were represented. 23 Id. at 900-01. In other words, the definition of Under Taylor, Furthermore, Defendants The Court and the parties in None of the current Plaintiffs’ claims are precluded for an 24 additional reason, regardless of whether those Plaintiffs were 25 O’Bannon class members. 26 continuation of conduct under attack in a prior antitrust suit’” 27 gives rise to a new action. 28 Harry Nace Co., 890 F.2d 181, 183 (9th Cir. 1989) (quoting The general rule is that “‘the Harkins Amusement Enters., Inc. v. 11 2 P. Areeda & D. Turner, Antitrust Laws § 323c (1978)) (“Failure 2 to gain relief for one period of time does not mean that the 3 plaintiffs will necessarily fail for a different period of 4 time.”); see also Frank v. United Airlines, Inc., 216 F.3d 845, 5 851 (9th Cir. 2000) (“A claim arising after the date of an 6 earlier judgment is not barred, even if it arises out of a 7 continuing course of conduct that provided the basis for the 8 earlier claim.”). 9 United States District Court Northern District of California 1 res judicata be applied to bar claims arising from a different Only where no distinct conduct is alleged can 10 time period. 11 Antitrust Litig., 11 F.3d 1460, 1464 (9th Cir. 1993) (applying 12 res judicata where nothing new was “alleged--no new conspiracy, 13 no new kinds of monopolization, no new acts”). 14 See In re Dual-Deck Video Cassette Recorder The Court must consider the “conduct of parties since the 15 first judgment” and other factual matters in the new cause of 16 action. 17 Corp., 872 F.2d 1410, 1415 (9th Cir. 1989)). 18 that “both suits involved essentially the same course of wrongful 19 conduct” or that injunctive relief was sought in the first 20 action, especially “in view of the public interest in vigilant 21 enforcement of the antitrust laws through the instrumentality of 22 the private treble-damage action.” 23 Corp., 349 U.S. 322, 327, 329 (1955) (internal quotation marks 24 omitted). 25 Harkins, 890 F.2d at 183 (quoting California v. Chevron It is not enough Lawlor v. Nat’l Screen Serv. The NCAA Bylaws were changed after, and in part because of, 26 O’Bannon, and now permit student-athletes to receive financial 27 aid, based on athletics ability, up to their cost of attendance, 28 or more than that in the case of a Pell grant. 12 See Pls. Ex. 15 at 182 (Bylaws 15.1, 15.1.1). 2 challenge the bar on distributing NIL licensing revenue to 3 student-athletes or the former grant-in-aid limitation. 4 the challenged restraints are the current, interconnected set of 5 NCAA rules that generally limit financial aid to the cost of 6 attendance yet also fix the prices of numerous and varied 7 exceptions--additional benefits that have a financial value above 8 the cost of attendance. 9 United States District Court Northern District of California 1 (Challenged Rules and Operative Language). 10 In this case, Plaintiffs do not Rather, See Pls. Opp. to Defs. MSJ, App’x A Some of these rules regulate payment for additional benefits 11 that do appear to be tethered to education, such as the rule 12 limiting the availability of academic tutoring. 13 at 102 (Bylaw, prohibiting tutoring to assist in 14 initial eligibility, transfer eligibility, or waiver requests). 15 The rules also restrict schools’ ability to reimburse student- 16 athletes for computers, science equipment, musical instruments 17 and other items not currently included in the cost of attendance 18 calculation but nonetheless related to the pursuit of various 19 academic studies. 20 Plaintiffs also challenge various additional restrictions on 21 benefits related to educational expenses, such as providing 22 guaranteed post-eligibility scholarships. 23 Currently, schools may provide guaranteed post-eligibility 24 scholarships for undergraduate or graduate study and tutoring 25 costs only at their own institution, but not at other 26 institutions. 27 28 See Defs. Ex. 1 See NCAA (Kevin C. Lennon) Depo. at 212:11-19. Id. at 195:5-199:17. Id. Defendants also allow, but fix the amount of, benefits that a school may provide that are incidental to athletic 13 participation, such as travel expenses and prizes. 2 58:20-59:16 (“There are items that schools can provide outside of 3 educational expenses, which, again, are tethered to cost of 4 attendance, that I would kind of capture as incidental to 5 participation.”). 6 rules at issue in this case were provided to student-athletes at 7 the time of the O’Bannon trial, but neither this Court nor the 8 Court of Appeals addressed them in that case and their scope has 9 United States District Court Northern District of California 1 See id. at expanded since that time. Some of the additional benefits limited by the For example, student-athletes could 10 previously receive meals incidental to participation in 11 athletics, see O’Bannon Ex. 2340-233 (then-applicable Bylaws), 12 but may now receive unlimited meals and snacks, see Pls. Ex. 15 13 at 183 (Bylaw regarding meals incidental to 14 participation); Mishkin Reply Decl. Ex. 1 at 207 (Bylaw 15 16.5.2(d), (e) regarding meals and snacks). 16 O’Bannon testified that the Student Assistance Fund (SAF)5 could 17 then be used to purchase a “special insurance policy” or 18 “catastrophic injury insurance,” 19 2152:7-17, but student-athletes now may borrow against future 20 earnings to purchase loss-of-value insurance, Pls. Ex. 15 at 58 21 (Bylaw 22 performance bonuses from international organizations related to 23 Olympic participation. 24, adopted January 17, 2015 and effective August 1, Witnesses in O’Bannon Tr. 2147:14-23, Student-athletes now may receive athletic See Pls. Ex. 15 at 57 (Bylaw 25 26 27 28 5 The SAF is a fund that the NCAA provides to member schools to distribute to student-athletes for a variety of uses, some of which are in addition to full cost-of-attendance financial aid. See NCAA (Lennon) Depo. at 152:19-153:19; Pls. Ex. 24 at NCAAGIA03316052 (reporting on SAF uses). 14 1 2015). There has been an increase in permissible reimbursement 2 for family travel expenses, which permits schools to pay limited 3 expenses of a student-athlete’s spouse and children to attend 4 games, although still not those of parents or siblings. 5 DuBuis Smith Depo. at 51:24-57:18; see also NCAA (Lennon) Depo. 6 at 71:7-73:2, 186:1-16 (discussing Bylaw; Mishkin Reply 7 Decl. Ex. 1 at 303 (Bylaw 18.7.5). Eugene Because Plaintiffs raise new antitrust challenges to 9 United States District Court Northern District of California 8 conduct, in a different time period, relating to rules that are 10 not the same as those challenged in O’Bannon, res judicata and 11 collateral estoppel do not preclude the claims even of those 12 Plaintiffs who were O’Bannon class members. 13 II. Section 1 of the Sherman Act The Court next turns to the remaining issues in the parties’ 14 15 cross-motions. Plaintiffs move for summary judgment of their 16 claims under Section 1 of the Sherman Act. 17 order to establish a Section 1 claim, Plaintiffs must 18 demonstrate: “(1) that there was a contract, combination, or 19 conspiracy; (2) that the agreement unreasonably restrained trade 20 under either a per se rule of illegality or a rule of reason 21 analysis; and (3) that the restraint affected interstate 22 commerce.” 23 (9th Cir. 2001) (internal quotation marks omitted). 24 existence of a contract, combination or conspiracy that affects 25 interstate commerce is undisputed in this case. 26 are subject to antitrust scrutiny under the Sherman Act and must 27 be tested using a rule-of-reason analysis. 28 1079. 15 U.S.C. § 1. In Tanaka v. Univ. of S. California, 252 F.3d 1059, 1062 The NCAA regulations O’Bannon, 802 F.3d at Under that analysis, Plaintiffs bear the initial burden of 15 1 showing that the challenged restraints produce significant 2 anticompetitive effects within a relevant market. 3 meet this burden, Defendants must come forward with evidence of 4 the restraints’ procompetitive effects. 5 show that any legitimate objectives can be achieved in a 6 substantially less restrictive manner. 7 If Plaintiffs Plaintiffs must then Tanaka, 252 F.3d at 1063. Plaintiffs contend that the undisputed evidence supports their claim that the challenged restraints cause anticompetitive 9 United States District Court Northern District of California 8 effects in the relevant market, and that Defendants cannot meet 10 their burden to prove that the restraints have procompetitive 11 benefits. 12 this basis, obviating the need to reach the question of whether 13 there are any less restrictive alternatives to any legitimate 14 objectives. 15 existence of less restrictive alternatives. They request that the Court grant summary judgment on Plaintiffs do not seek summary judgment on the 16 Defendants cross-move for summary judgment on the basis that 17 the decisions of this Court and the Ninth Circuit in O’Bannon bar 18 all of Plaintiffs’ claims, under the doctrine of stare decisis. 19 “If a court must decide an issue governed by a prior opinion that 20 constitutes binding authority, the later court is bound to reach 21 the same result, even if it considers the rule unwise or 22 incorrect. 23 overruled by a body competent to do so.” 24 266 F.3d 1155, 1170 (9th Cir. 2001). 25 “there are neither new factual circumstances nor a new legal 26 landscape.” 27 550 F.3d 778, 786 (9th Cir. 2008). 28 the same legal consequence from the same “detailed set of facts.” Binding authority must be followed unless and until Hart v. Massanari, Stare decisis applies when Ore. Natural Desert Ass’n v. U.S. Forest Serv., 16 A court is required to reach In re Osborne, 76 F.3d 306, 309 (9th Cir. 1996). 2 there may be factual differences between the current case and the 3 earlier one, the court must determine whether those differences 4 are material to the application of the rule or allow the 5 precedent to be distinguished on a principled basis.” 6 266 F.3d at 1172; see also Miranda v. Selig, 860 F.3d 1237, 1242 7 (9th Cir. 2017) (stare decisis required where circumstances of 8 new case are not “separate and distinct in a meaningful way for 9 United States District Court Northern District of California 1 “Insofar as the purposes of the Sherman Act”). Hart, The doctrine encompasses 10 issues actually decided in a prior case even if those issues were 11 not, in a technical sense, necessary, but only if they were 12 germane to the eventual resolution of the case and expressly 13 resolved after reasoned consideration. 14 Power Admin., 698 F.3d 774, 804 n.4 (9th Cir. 2012); Barapind v. 15 Enomoto, 400 F.3d 744, 751 (9th Cir. 2005) (en banc). 16 Alcoa, Inc. v. Bonneville In the area of antitrust law, however, another interest 17 competes with the doctrine of stare decisis. That is an interest 18 “in recognizing and adapting to changed circumstances and the 19 lessons of accumulated experience.” 20 522 U.S. 3, 20 (1997). 21 circumstances and new wisdom.” 22 Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 731-32 (1988)). 23 rule of reason requires an evaluation of each challenged 24 restraint in light of the special circumstances involved. 25 the analysis will differ from case to case is the essence of the 26 rule.” 27 Cir. 1988) (citation omitted). State Oil Co. v. Khan, Rule-of-reason analysis “evolves with new Id. at 21 (quoting Bus. Elecs. “The That Oltz v. St. Peter’s Cmty. Hosp., 861 F.2d 1440, 1449 (9th 28 17 1 2 3 4 5 6 7 8 United States District Court Northern District of California 9 10 11 12 13 14 15 16 17 18 19 20 A. Anticompetitive Effects in the Relevant Market 1. Market Definition In a rule-of-reason analysis, the Court must first define the relevant market within which the challenged restraint may produce significant anticompetitive effects. Both sides here request that the Court adopt the market definition applied in O’Bannon, which was not challenged in the appeal of that case. 802 F.3d at 1070. Plaintiffs argue that the evidence supports the same education or labor market for student-athletes in FBS football and Division I basketball. Defendants contend that stare decisis controls the outcome of this case, including the market definition.6 Defendants also agreed at the January 21, 2018 hearing that the market definition, as well as other rulings in O’Bannon, would apply equally to the women’s basketball Plaintiffs in this action. Tr. at 7-8. In the absence of any material factual dispute, the Court will grant both parties’ summary judgment motions on the issue of market definition and adopt the market definition from O’Bannon, the market for a college education combined with athletics or alternatively the market for the student-athletes’ athletic services. 21 2. 22 23 24 The Challenged Restraints and Significant Anticompetitive Effects The next element of the rule-of-reason analysis is whether the challenged restraints produce significant anticompetitive 25 26 27 28 6 Defendants’ expert Dr. Kenneth G. Elzinga posits that the market should be viewed more broadly as a multi-sided one for the educational services of colleges and universities, but Defendants, having taken the position that O’Bannon is controlling, do not rely on this theory. 18 effects within the relevant market. 2 undisputed evidence that greater compensation and benefits would 3 be offered in the recruitment of student-athletes absent the 4 challenged rules, meeting their burden for summary adjudication 5 on this question. 6 binding on this point under the doctrine of stare decisis. 7 802 F.3d at 1070-72; 7 F. Supp. 3d at 971-73, 988-93. 8 not meaningfully disputed Plaintiffs’ showing that the challenged 9 United States District Court Northern District of California 1 Plaintiffs have produced restraints produce significant anticompetitive effects within the Defendants’ position is that O’Bannon is See They have 10 relevant market. Because Plaintiffs have met their burden and 11 Defendants have not created a factual dispute, the Court will 12 grant the parties’ cross-motions for summary adjudication of this 13 element and find that the challenged restraints produce 14 significant anticompetitive effects in the relevant market. 15 B. 16 The next factor is whether Defendants have come forward with Procompetitive Benefits of the Restraints 17 evidence of procompetitive effects of the challenged restraints. 18 Defendants claim that O’Bannon established as a matter of law 19 that the NCAA’s rules serve the procompetitive purposes of 20 “integrating academics with athletics, and ‘preserving the 21 popularity of the NCAA’s product by promoting its current 22 understanding of amateurism.’” 23 Supp. 3d at 1005). 24 case contains ample evidence of these procompetitive 25 justifications as well as of other possible procompetitive 26 justifications not found in O’Bannon. 27 O’Bannon does not require the Court to uphold Defendants’ 28 procompetitive justifications in this case because Plaintiffs 802 F.3d at 1073 (quoting 7 F. They further argue that the record in this 19 Plaintiffs respond that 1 have developed a record of factual circumstances that have 2 changed after the close of the record in O’Bannon. 3 Plaintiffs first point to the change caused by O’Bannon: student-athletes now may receive scholarships above the former 5 grant-in-aid limit, up to the cost of attendance. 6 however, does not distinguish the present case from O’Bannon 7 because it was the very issue adjudicated in that case. 8 change that was made was required and approved by the Court. 9 United States District Court Northern District of California 4 802 F.3d at 1075-76. 10 This change, The Next, Plaintiffs identify the NCAA rule changes discussed 11 above, which have generally increased but continue to fix various 12 benefits related to athletic participation that a member school 13 may provide for its student-athletes or permit them to receive 14 from outside sources. 15 new concessions by Defendants that benefits and gifts that are 16 related to athletic participation but are above the cost of 17 attendance are connected neither to education nor to their 18 understanding of amateurism. 19 Bowlsby, II) Depo. at 162:10-14 (not sure how valuable gifts 20 could be tethered to education); Michael Slive Depo. at 218:4-10 21 (gift card “not really” connected to educational experience); 22 NCAA (Lennon) Depo. at 23 related to amateurism). 24 Defendants permit student-athletes to be paid money that does not 25 go “to cover legitimate educational expenses,” they are not 26 amateurs. 27 a number of expenses that they contend are tethered to education 28 but are still disallowed. See Section I above. They also identify See, e.g., Big 12 (Robert A. 119:20-122:22, 287:6-19 (gifts not Plaintiffs contend that because O’Bannon, 802 F.3d at 1075. Plaintiffs also identify See Pls. MSJ, App’x B (citing NCAA 20 1 2 (Lennon) Depo. at 195:5-215:14); see also Section I above. While the restraints challenged in this case overlap with those in O’Bannon, the specific rules at issue are not the same. 4 Challenges to the NCAA’s rules must be assessed on a case-by-case 5 basis under the rule of reason, and O’Bannon’s holding that there 6 were procompetitive justifications for the rules challenged in 7 that case would not necessarily require the Court to find that 8 different rules, challenged in this case, also have the same 9 United States District Court Northern District of California 3 procompetitive effects. 802 F.3d at 1063 (citing NCAA v. Bd. of 10 Regents of the Univ. of Okla., 468 U.S. 85 (1984)) (“we are not 11 bound by Board of Regents to conclude that every NCAA rule that 12 somehow relates to amateurism is automatically valid”). 13 Court rejects Defendants’ contention that merely because all of 14 the then-existing NCAA Bylaws were part of the record in 15 O’Bannon, the Court necessarily adjudicated in Defendants’ favor 16 all possible challenges to any of those rules. 17 O’Bannon will be very relevant in assessing whether the rules in 18 this case have procompetitive effects. 19 rules in O’Bannon, the validity of the specific rules challenged 20 in this case “must be proved, not presumed.” 21 The The reasoning of However, like the NIL Id. at 1064. Plaintiffs further contend that Defendants have failed to 22 provide material evidence that their current rules create 23 procompetitive effects. 24 should enter summary judgment against Defendants without 25 balancing the competitive effects of the restraints or reaching 26 the question of less restrictive alternatives. 27 Defendants have presented sufficient evidence in support of the 28 two procompetitive effects found in O’Bannon to create a factual Therefore, Plaintiffs argue, the Court 21 However, issue for trial. 2 which led Defendants’ expert Dr. Bruce Isaacson to conclude that 3 fans are drawn to college football and basketball in part due to 4 their perception of amateurism. 5 Isaacson Rep. ¶¶ 151 & Table 7, 155. 6 defects in Defendants’ survey evidence, including the fact that 7 it reflects consumers’ stated preferences rather than how 8 consumers would actually behave if the NCAA’s restrictions on 9 United States District Court Northern District of California 1 This includes a survey of consumer preferences, student-athlete compensation were modified or lifted. See Isaacson Depo. at 48:4-17; Plaintiffs identify various However, 10 the weight of Dr. Isaacson’s testimony is a question for trial 11 rather than summary judgment. 12 Defendants also present evidence that paying student- 13 athletes would detract from the integration of academics and 14 athletics in the campus community. 15 T. Heckman testified that paying student-athletes would likely 16 lead them to dedicate even more effort and possibly more time to 17 their sports, potentially diverting them “away from actually 18 being students and towards just being athletes.” 19 at 315:5-316:18. 20 For example, Professor James Heckman Depo. Accordingly, the Court will deny the parties’ cross-motions 21 for summary adjudication of the question of whether the 22 challenged NCAA rules serve Defendants’ asserted procompetitive 23 purposes of integrating academics with athletics and preserving 24 the popularity of the NCAA’s product by promoting its current 25 understanding of amateurism. 26 Supp. 3d at 1005). 27 28 See 802 F.3d at 1073 (quoting 7 F. Plaintiffs also move for summary judgment that Defendants have abandoned seven additional procompetitive justifications 22 1 that they identified in response to an interrogatory. 2 Ex. 8 (NCAA Amended Responses to Pls. Second Set of 3 Interrogatories) at 9-14. 4 developed no record to support any of them. 5 See Defs. Plaintiffs contend that Defendants Defendants first respond to this argument by contending that Plaintiffs’ summary judgment motion inadequately demonstrates an 7 absence of evidence on these procompetitive justifications, and 8 should be denied due to Plaintiffs’ failure to meet their burden 9 United States District Court Northern District of California 6 as the moving party. However, “the Celotex ‘showing’ can be made 10 by ‘pointing out through argument’” the “‘absence of evidence to 11 support plaintiff’s claim.’” 12 1076 (9th Cir. 2001) (quoting Fairbank v. Wunderman Cato Johnson, 13 212 F.3d 528, 532 (9th Cir. 2000)). 14 Plaintiffs’ argument that Defendants have not developed evidence 15 to support additional procompetitive justifications, identified 16 in their interrogatory responses, is sufficient to shift the 17 burden to Defendants to produce “specific evidence, through 18 affidavits or admissible discovery material, to show that the 19 dispute exists.” 20 asserted procompetitive justifications, Defendants have not 21 attempted to meet this burden at all, only quoting their 22 interrogatory response identifying those justifications in a 23 footnote but producing no evidence to support them.7 Devereaux v. Abbey, 263 F.3d 1070, Although not lengthy, Bhan, 929 F.2d at 1409. For six of their See Defs. 24 7 25 26 27 28 Except to the extent that they are included in the interrogatory response, Defendants do not request that the Court reconsider the procompetitive justifications of increased output and competitive balance rejected in O’Bannon. See 7 F. Supp. 3d at 978-79, 981-82. The O’Bannon defendants did not substantively defend the rejected procompetitive justifications on appeal, 802 F.3d at 1072, and Defendants here do not proffer any evidence to support them. 23 1 Opp. to Pls. MSJ at 50 n.27. 2 summary judgment on these six procompetitive justifications. 3 Defendants do attempt to meet their burden on one 4 procompetitive justification, specifically, their contention 5 that: 6 7 8 United States District Court Northern District of California 9 10 11 Accordingly, the Court will grant The challenged rules serve the procompetitive goals of expanding output in the college education market and improving the quality of the collegiate experience for student-athletes, other students, and alumni by maintaining the unique heritage and traditions of college athletics and preserving amateurism as a foundational principle, thereby distinguishing amateur college athletics from professional sports, allowing the former to exist as a distinct form of athletic rivalry and as an essential component of a comprehensive college education. 12 Defs. Ex. 8 (NCAA Amended Responses to Pls. Second Set of 13 Interrogatories) at 11. 14 coincide with the justification relating to expanding output that 15 the Court rejected in O’Bannon. 16 argued that the NCAA’s rules enable it to increase the number of 17 opportunities available for participation in FBS football and 18 Division I basketball, increasing the number of games that can be 19 played. 20 justification seems largely to overlap with Defendants’ two 21 remaining O’Bannon justifications of integrating academics with 22 athletics (“improving the quality of the collegiate experience 23 for student-athletes”) and preserving the popularity of college 24 sports (“distinguishing amateur college athletics from 25 professional sports”). 26 Pls. Second Set of Interrogatories) at 11. 27 28 This proffered justification does not 7 F. Supp. 3d at 981. In that case, the defendants Rather, this purportedly new Defs. Ex. 8 (NCAA Amended Responses to In advancing this purportedly new and separate procompetitive justification, Defendants rely solely on the 24 testimony of two expert witnesses, their expert Dr. Elzinga and 2 Plaintiffs’ expert Dr. Edward P. Lazear. 3 focuses on issues relating to the relevant market. 4 at 4-10. 5 the relevant market is properly viewed as a multi-sided market 6 for higher education, colleges must price participation in 7 activities, including athletics, to provide an “optimal balance” 8 for different constituents. 9 United States District Court Northern District of California 1 32-33. Dr. Elzinga’s report Elzinga Rep. In that context, he explains his theory that, because Id. at 35; see also id. at 9, 27-29, Defendants contend that this view is supported by Dr. 10 Lazear’s testimony that the demand in the relevant college 11 education market is derived from “some higher-level market, which 12 might include alums, it might include viewers, it might include 13 other students,” who are direct participants in the market. 14 Lazear Depo. at 217:19-218:24. 15 these experts’ testimony, taking it as true and drawing all 16 reasonable inferences in favor of Defendants, however, it does 17 not constitute evidence of a new or different procompetitive 18 justification. 19 impact of the challenged restraints on output or examine data 20 that might support any such opinion. 21 30:18. 22 opinions as supporting a procompetitive justification he did not 23 directly consider is insufficient to raise a genuine issue of 24 material fact, and the Court will grant summary judgment on this 25 proposed procompetitive justification as well. Assuming the admissibility of Dr. Elzinga did not purport to opine on the Elzinga Depo. at 29:14- Defendants’ attempt to characterize Dr. Elzinga’s 26 C. 27 The final step in the rule-of-reason analysis is whether 28 Less Restrictive Alternatives Plaintiffs can “make a strong evidentiary showing” that any 25 legitimate objectives can be achieved in a substantially less 2 restrictive manner. 3 not move for summary judgment on this issue, but seek to prove at 4 trial their contention that the NCAA’s rules are “patently and 5 inexplicably stricter than is necessary to accomplish” the NCAA’s 6 procompetitive objectives. 7 Defendants, on the other hand, move for summary judgment that all 8 less restrictive alternatives proposed in this case are 9 United States District Court Northern District of California 1 foreclosed by O’Bannon. O’Bannon, 802 F.3d at 1074. Plaintiffs do O’Bannon, 802 F.3d at 1075. The Court finds that because Plaintiffs 10 challenge different rules and propose different alternatives from 11 those considered in O’Bannon, the Court is not precluded from 12 considering this factor. 13 To be viable, an alternative “must be ‘virtually as 14 effective’ in serving the procompetitive purposes of the NCAA’s 15 current rules, and ‘without significantly increased cost.’” 16 at 1074 (quoting Cnty. Of Tuolumne v. Sonora Cmty. Hosp., 17 236 F.3d 1148, 1159 (9th Cir. 2001)). 18 restrictive alternatives “should either be based on actual 19 experience in analogous situations elsewhere or else be fairly 20 obvious.” 21 ¶ 1913b (3d ed. 2006). 22 Court will afford the NCAA “ample latitude” to superintend 23 college athletics. 24 Regents, 468 U.S. at 120). 25 to make marginal adjustments to broadly reasonable market 26 restraints.” 27 28 Id. In addition, any less Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law In considering Plaintiffs’ showing, the O’Bannon, 802 F.3d at 1074 (quoting Bd. of The Court will not “use antitrust law Id. at 1075. As discussed, Plaintiffs in this case do not challenge restrictions on distribution of licensing revenue derived from 26 NILs, as was the case in O’Bannon. 2 rules relating to the benefits that schools may offer student- 3 athletes to compete for their recruitment. 4 alternatives that they propose in this case are different from 5 those reviewed in O’Bannon. 6 “say that the NCAA’s amateurism rules are procompetitive, as 7 Board of Regents did, is not to say that they are automatically 8 lawful; a restraint that serves a procompetitive purpose can 9 United States District Court Northern District of California 1 still be invalid under the Rule of Reason if a substantially less 10 restrictive rule would further the same objectives equally well.” 11 O’Bannon, 802 F.3d at 1063-64 (citing Bd. of Regents, 468 U.S. at 12 101 n.23); see also id. at 1063 (“we are not bound by Board of 13 Regents to conclude that every NCAA rule that somehow relates to 14 amateurism is automatically valid”). 15 Rather, they challenge NCAA The less restrictive As the Ninth Circuit explained, to The first less restrictive alternative that Plaintiffs 16 propose is allowing the Division I conferences, rather than the 17 NCAA, to set the rules regulating education and athletic 18 participation expenses that the member institutions may provide. 19 Plaintiffs argue that this alternative would be substantially 20 less restrictive because it would allow conferences to compete to 21 implement rules that attract student-athletes while still 22 maintaining the popularity of college sports and balancing the 23 integration of academics and athletics. 24 of the conferences has market power and, thus, their rule-making 25 would not be subject to an antitrust challenge.8 They contend that none 26 8 27 28 Defendants argue that Plaintiffs’ proposed less restrictive alternative of conference autonomy is inconsistent with Plaintiffs’ challenge to conference-specific rules. See Pls. MSJ, App’x A (listing challenged rules). However, Plaintiffs 27 1 Plaintiffs contend that their proposed conference-autonomy system is based on actual experience in a closely analogous 3 context. 4 during the first half of the 20th Century, when each conference 5 had its own compensation rules.” 6 support their argument that such autonomy is viable as a less 7 restrictive alternative to NCAA regulations, Plaintiffs have 8 identified new NCAA Bylaws, adopted on August 7, 2014 (after the 9 United States District Court Northern District of California 2 O’Bannon trial), that grant the Power Five Conferences autonomy It could “operate like the college athletic system Roger Noll Rep. at 30. To 10 to adopt or amend rules on a variety of topics. See Defs. Ex. 1 11 at 27-28 (Bylaw 12 Power Five Conferences to legislate, for example, regarding “a 13 student-athlete’s individual limit on athletically related 14 financial aid, terms and conditions of awarding institutional 15 financial aid, and the eligibility of former student-athletes to 16 receive undergraduate financial aid”; pre-enrollment expenses and 17 support; student-athletes securing loans to purchase loss-of- 18 value and disability insurance; and awards, benefits and expenses 19 for student-athletes and their family and friends. 20 Daniel A. Rascher Rep. at 12-13 & n.21, 172-182 (discussing 21 proposed less restrictive alternatives). 22 exceptions for the Power Five Conferences constitutes evidence 23 sufficient to raise a factual question that allowing relevant 24 areas of autonomy for all Division I conferences would be a less 25 restrictive alternative to current NCAA rules. The Bylaws now grant autonomy to the Id.; see also The existence of these 26 27 28 challenge only the portions of the conference rules that require compliance with challenged NCAA rules. See Pls. Reply, App’x A (listing challenged language of each rule). 28 Defendants argue that this proposal was considered and 1 rejected in O’Bannon. 3 support their contention. 4 witnesses, Dr. Noll, testified briefly in O’Bannon about the 5 alternative of allowing the individual conferences to set the 6 rules. 7 was discussion of whether an injunction should allow conference- 8 level decision-making on the topics of the challenged NCAA 9 United States District Court Northern District of California 2 The record in O’Bannon, however, does not restraints. One of the plaintiffs’ expert O’Bannon Tr. at 445:11-451:5. Id. at 3382:19-3383:2. In closing argument, there Ultimately, however, the 10 plaintiffs proposed to the Court only the three less restrictive 11 alternatives, listed above, that were addressed in the Court’s 12 August 8, 2014 Findings of Fact and Conclusions of Law. 13 O’Bannon Plaintiffs’ Opening Post-Trial Brief at 25 (No. 09-cv- 14 03329-CW, Dkt. No. 275); O’Bannon Plaintiffs’ Post-Trial Reply 15 Brief at 14-15 (No. 09-cv-03329-CW, Dkt. No. 281). 16 plaintiffs proposed language for an injunction, asking the Court 17 to enjoin the member institutions and conferences along with the 18 NCAA. 19 Relief (No. 09-cv-03329-CW, Dkt. No. 193-1); O’Bannon Plaintiffs’ 20 Alternative Proposed Form of Injunction (No. 09-cv-03329-CW, Dkt. 21 No. 252). 22 the NCAA’s member schools and conferences as well as the NCAA 23 itself. 24 No. 292). 25 restrictive alternative of conference autonomy. 26 established in that case, or any other, precludes the Court from 27 considering conference autonomy as a less restrictive alternative 28 in this case. See The O’Bannon O’Bannon Plaintiffs’ Proposed Order Granting Injunctive The permanent injunction entered by the Court enjoined O’Bannon Permanent Injunction (No. 09-cv-03329-CW, Dkt. In O’Bannon, this Court did not rule on the less No rule of law “A hypothetical that is unnecessary in any sense 29 1 to the resolution of the case, and is determined only tentatively 2 . . . does not make precedential law.” 3 n.4; see also Osborne, 76 F.3d at 309 (“the doctrine of stare 4 decisis concerns the holdings of previous cases, not the 5 rationales”). 6 as the question of conference autonomy in O’Bannon, is not 7 binding under the doctrine of stare decisis. United States District Court Northern District of California A hypothetical that is not determined at all, such Plaintiffs propose a second less restrictive alternative, 8 9 Alcoa, 698 F.3d at 804 requesting that the Court enjoin all national rules that prohibit 10 or limit any payments or non-cash benefits that are tethered to 11 educational expenses, or any payments or benefits that are 12 incidental to athletic participation. 13 177. 14 some payments and benefits in these two categories above the cost 15 of attendance, it would be virtually as effective in serving the 16 NCAA’s procompetitive purposes to require the NCAA to allow all 17 benefits in either category. 18 alternative could be applied with or without conference autonomy 19 because abolishing the NCAA restraints would be a less 20 restrictive alternative to the current system regardless of 21 whether conference rules were permitted as a replacement. 22 See Rascher Rep. at 173- Their position is that because Defendants already permit Plaintiffs contend that this In support of this contention, Plaintiffs first identify 23 evidence that Defendants already allow schools to offer some 24 benefits above the cost of attendance that are related to 25 athletic participation but not tethered to education. 26 Noll Rep. at 17-18 (discussing categories of benefits); NCAA 27 (Lennon) Depo. at 58:20-59:16 (same). 28 pay the expenses for an athlete’s spouse and children to attend a 30 See, e.g., For example, schools can 1 playoff game, because such expenses are incidental to athletic 2 participation, but not the expenses of parents, grandparents, or 3 siblings. 4 86:17-87:13 (schools may reimburse students’ national 5 championship, Olympic trials and national team tryout costs). 6 NCAA (Lennon) Depo. at 186:1-16; see also id. at Plaintiffs contend that Defendants have conceded that the payment of currently-allowed benefits above the cost of 8 attendance but tethered to education or incidental to athletic 9 United States District Court Northern District of California 7 participation does not undermine their procompetitive purposes. 10 The NCAA’s Rule 30(b)(6) witness Kevin C. Lennon testified 11 extensively on this topic. 12 incidental to athletic participation can be paid for athletes 13 without offending collegiate model); 71:23-73:2 (NCAA 14 membership’s decision to pay expenses incidental to athletic 15 participation does not violate principle of amateurism); 85:5-23 16 (per diem during trips does not violate principle of amateurism); 17 93:4-10 (“If the--the benefit provided is permitted within the 18 legislation as either related to educational expenses or--or 19 incidental to participation, then it would be not considered pay, 20 and it would be permitted to be received.”); 186:1-16 (schools’ 21 payment of costs for athlete’s spouse and children to attend 22 playoff game does not implicate principle of amateurism); 287:6- 23 19 (NCAA membership is comfortable with “two buckets” of 24 expenses, those tethered to education and those incidental to 25 athletics participation). 26 their survey expert Hal Poret that there would be no negative 27 impact on consumer demand for college football and basketball if 28 various forms of additional benefits were provided to student- Id. at 63:21-64:1 (expenses Plaintiffs also cite the conclusion of 31 1 athletes. Poret Rep. at 19-21. Defendants respond that Plaintiffs’ suggestion cannot be 2 squared with O’Bannon’s holding that limiting payments to 4 Plaintiffs’ legitimate costs to attend school is consistent with 5 antitrust law. 6 amateurs as long as any money paid to them goes to cover 7 legitimate educational expenses.”). 8 Circuit concluded, “The Rule of Reason requires that the NCAA 9 United States District Court Northern District of California 3 permit its schools to provide up to the cost of attendance to See 802 F.3d at 1075 (“student-athletes remain In O’Bannon, the Ninth 10 their student-athletes. 11 1079. 12 limits the less restrictive alternatives that the Court may 13 consider in this case to the relief that was provided in 14 O’Bannon. 15 alternatives are no more than new arguments in support of the 16 same challenge already adjudicated in O’Bannon. 17 district court case, they argue that stare decisis “would be 18 largely meaningless if a lower court could change an appellate 19 court’s interpretation of the law based only on a new argument.” 20 Rambus Inc. v. Hynix Semiconductor Inc., 569 F. Supp. 2d 946, 972 21 (N.D. Cal. 2008). 22 It does not require more.” 802 F.3d at Defendants’ position is that this means that stare decisis They argue that Plaintiffs’ proposed less restrictive Relying on a In Rambus, however, the district court held that the 23 doctrine of stare decisis bound it to follow the Federal 24 Circuit’s previous construction of the same term at issue, 25 “integrated circuit device.” 26 v. Infineon Techs. AG, 318 F.3d 1081, 1089–95 (Fed. Cir. 2003). 27 The question for the court to decide was the same; only the 28 arguments in support of the issue had changed. Id. at 963, 972 (citing Rambus Inc. 32 Here, in 1 contrast, the Court is presented with the new and unresolved 2 issue of whether Plaintiffs have identified different less 3 restrictive alternatives to all of the NCAA’s rules that prohibit 4 schools from competing to recruit student-athletes with offers of 5 cash or various benefits tethered to educational expenses or 6 incidental to athletic participation, including rules that have 7 changed after O’Bannon. 8 United States District Court Northern District of California 9 As the Ninth Circuit explained in O’Bannon, “NCAA regulations are subject to antitrust scrutiny and must be tested 10 in the crucible of the Rule of Reason.” Id. at 1079. A ruling 11 on less restrictive alternatives to certain NCAA rules in one 12 case does not bar consideration of different less restrictive 13 alternatives to a different, if overlapping, set of rules 14 challenged in a different case. 15 Board of Regents that the NCAA’s purpose of marketing “a 16 particular band of football--college football” could be a 17 procompetitive justification for rules designed to preserve the 18 “character and quality” of this product, including compensation 19 limitations. 20 that the rules challenged in O’Bannon were exempt from antitrust 21 scrutiny, because “a restraint that serves a procompetitive 22 purpose can still be invalid under the Rule of Reason if a 23 substantially less restrictive rule would further the same 24 objectives equally well.” 25 also Nat’l Basketball Ass’n v. SDC Basketball Club, Inc., 26 815 F.2d 562, 564, 567-68 (9th Cir. 1987) (prior decisions on 27 similar franchise relocation rule in football context did not bar 28 fact-specific rule-of-reason analysis in subsequent challenge in The Supreme Court suggested in 468 U.S. at 101-02. This did not mean, however, O’Bannon, 802 F.3d at 1063-64; see 33 1 basketball context). Likewise, here, the NCAA’s revised rules 2 and Plaintiffs’ proposed less restrictive alternatives to those 3 rules are “separate and distinct in a meaningful way for the 4 purposes of the Sherman Act” from those presented in O’Bannon. 5 Miranda, 860 F.3d at 1242. To be clear, if Defendants prevail in demonstrating the same 6 procompetitive justifications that the Court found in O’Bannon, 8 the NCAA will still be able to prohibit its member schools from 9 United States District Court Northern District of California 7 paying their student-athletes cash sums unrelated to educational 10 expenses or athletic participation. 11 79. 12 proposed less restrictive alternative by which Plaintiffs seek 13 payment untethered to one of these two categories. 14 O’Bannon, 802 F.3d at 1078- Under such circumstances, the Court will not consider any Plaintiffs have proffered evidence supporting two possible 15 less restrictive alternatives not previously presented for 16 decision or ruled upon, raising a genuine issue of material fact 17 as to whether they can meet their evidentiary burden to show that 18 such alternatives would be virtually as effective as the 19 challenged restraints in advancing Defendants’ procompetitive 20 objectives. 21 this factor. 22 less restrictive alternatives are foreclosed by O’Bannon. 23 Accordingly, the Court will deny summary judgment on the question 24 of less restrictive alternatives. 25 They do not seek summary judgment in their favor on Defendants have failed to show that these proposed CONCLUSION 26 For the reasons set forth above, Plaintiffs’ motion for 27 summary judgment (Docket No. 657 in Case No. 14-md-02541 and 28 Docket No. 301 in Case No. 14-cv-02758) is GRANTED IN PART AND 34 1 DENIED IN PART. 2 (Docket No. 704 in Case No. 14-md-02541 and Docket No. 327 in 3 Case No. 14-cv-02758) is GRANTED IN PART AND DENIED IN PART. 1. 4 Defendants’ cross-motion for summary judgment The Court holds that neither res judicata nor 5 collateral estoppel bars Plaintiffs’ claims, and denies 6 Defendants’ summary judgment motion on this point. 2. 7 The Court grants both parties’ summary judgment motions to find that Plaintiffs have met their initial burden of showing 9 United States District Court Northern District of California 8 that Defendants’ challenged restraints are agreements that 10 produce significant anticompetitive effects, affecting interstate 11 commerce, within the same relevant market as that in O’Bannon. 3. 12 The Court denies Defendants’ summary judgment motion, 13 under the doctrine of stare decisis, to hold that the same two 14 procompetitive benefits of Defendants’ restraints found in 15 O’Bannon apply in this case as a matter of law. 16 Plaintiffs’ motion for summary adjudication that the 17 procompetitive justifications found in O’Bannon do not apply, but 18 grants Plaintiffs’ motion for summary judgment regarding 19 Defendants’ other proffered procompetitive justifications. 4. 20 The Court denies The Court denies Defendants’ motion for summary 21 judgment that O’Bannon precludes consideration of the two less 22 restrictive alternatives that Plaintiffs propose in this case. 23 The Court DENIES Defendants’ Motion for Supplemental 24 Briefing (Docket No. 797) and Plaintiffs’ Motion to File 25 Supplemental Evidence for the Summary Judgment Record (Docket No. 26 800). 27 supplemental evidence will be admissible at trial. 28 The Court does not rule on whether Plaintiffs’ proposed A final pretrial conference will be held at 2:30 p.m. on 35 Tuesday, November 13, 2018 and a bench trial of no longer than 2 ten days will commence at 8:30 a.m. on Monday, December 3, 2018. 3 The parties shall comply with the Court’s standing order for 4 pretrial preparation. 5 in writing, with cross-examination and re-direct to take place in 6 Court. 7 that which is essential, attempt to reach stipulations regarding 8 potentially cumulative evidence and focus their cases only on the 9 United States District Court Northern District of California 1 issues remaining for trial. 10 IT IS SO ORDERED. Direct expert testimony shall be presented The parties shall limit percipient witness testimony to 11 12 Dated: March 28, 2018 CLAUDIA WILKEN United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 36