Tuesday, June 17, 2008

Former NCAA Coach’s Exclusion Not Subject to Antitrust Scrutiny

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

The National Collegiate Athletic Association (NCAA), the Southeastern Conference, and the University of Kentucky’s athletic department did not engage in an unlawful group boycott by allegedly acting to prevent a former assistant football coach at the University of Kentucky from coaching at any of the NCAA’s member schools, the U.S. Court of Appeals in Cincinnati has held. The antitrust claim was not commercial in nature and did not allege a cognizable antitrust injury.

A federal district court’s dismissal of the former coach’s antitrust claim (2005-1 Trade Cases ¶74,822), fraud claims, and breach of contract claims was affirmed.

Appearance Before Committee on Infractions

The alleged conspiracy purportedly culminated in an order issued by the NCAA, which required the former assistant coach and any NCAA member institution seeking to hire him to appear before an NCAA committee on infractions. The committee would consider whether the member institution should be subject to NCAA bylaw procedures limiting the coach’s athletically-related duties at the new institution for a designated period.

This order was issued in connection with sanctions that the NCAA imposed against the university, stemming from the school’s—more specifically, the former assistant coach’s—violation of NCAA rules governing recruiting, improper inducements, and academic fraud.

Commercial Activity

Because the NCAA’s rules were intended to further its noncommercial objectives by “primarily seek[ing] to ensure fair competition in intercollegiate athletics,” they were not commercial in nature, the appellate court decided. The former coach’s extensive depiction in the complaint of the NCAA as a commercial entity was immaterial, the court explained. The appropriate inquiry was whether the NCAA rules themselves—and the organization’s enforcement of those rules—were commercial in nature. Because the rules and corresponding sanctions were not commercial, the enforcement of those rules could not be commercial. Therefore, the NCAA’s actions were not subject to scrutiny under the Sherman Act.

Antitrust Injury

Even if the defendants’ alleged illegal activity had been commercial in nature, the former coach still failed to state a claim because he failed to plead an antitrust injury, the appellate court stated. The complaint contained no allegations of the effect of the NCAA’s enforcement of its non-commercial rules on the coaching market. It merely stated that the NCAA’s actions resulted in the unfair investigation and sanction of coaches denied due process. The former coach’s alleged injury stemmed from the denial of his due process rights and a conspiracy depriving him of an opportunity to defend himself against “rules violations that led to the ban.” He did not allege that the ban resulted from some anticompetitive purpose, the court noted.

An alleged “denial of due process,” causing the coach to unjustly punished, could not amount to an antitrust injury, in the court’s view. At best, proof of that conduct would have shown only injury to the coach himself, not to competition in any market.

The decision is Bassett v. NCAA (2008-1 Trade Cases ¶76,180), decided and filed June 9, 2008.

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