NCAA Asks Ninth Circuit to Adhere to Seventh Circuit Ruling
On June 29, 2018, in a letter, lawyers representing the NCAA asked the Ninth Circuit to adhere to the Seventh Circuit’ recent decision and not revive a proposed wage-and-hour class action lawsuit brought by former NCAA football player, Lamar Dawson. The lawyer’s asked the Ninth Circuit to adhere to the June 25, 2018 Seventh Circuit ruling that upheld the NCAA’s controversial “year-in-residence rule.” The rule mandates that if a student athlete transfers from a division one institution to another division one institution, they are not eligible for competition at their new school until they meet a residence requirement of a full school year at the new school.
As we have previously reported, the rule was originally challenged, and was later challenged at the Seventh Circuit, when former college punter Peter Deppe sued the NCAA in March 2016, as a class action antitrust claim. Deppe argued that the rule was anti-competitive, but the court disagreed, and dismissed the suit 2016, because the rule promoted competition among college programs. On appeal, Deppe primarily argued that the ruling gave the NCAA “carte blanche” to violate antitrust laws. However, the Seventh Circuit believed that the rule was easily characterized as an eligibility rule and thus was found to be entitled to a procompetitive presumption. Further, the court feared that without the rule, college athletes could effectively be “traded” and switch schools from year to year, which would possibly threaten the amateur character of intercollegiate athletics.
The June 29, 2018 letter urged the Ninth Circuit to abide by the Seventh Circuit ruling. Specifically, lawyers representing the NCAA argued that the Seventh Circuit’s ruling supports the “argument that [NCAA athletes] are not employees” under the terms of the Fair Labor Standards Act (FLSA) “because amateurism — a system in which compensation is explicitly prohibited — defines the economic reality of their activity. Given this economic reality, student-athletes cannot plausibly claim to have been motivated by an expectation of compensation.” As we have previously reported, Dawson began a class-action lawsuit in September 2016, alleging the NCAA and Pac-12 violated California law and the by not paying student-athletes minimum wage or overtime.