O'Bannon, Jr. v. National Collegiate Athletic Association et al

Filing 184

TRIAL BRIEF by National Collegiate Athletic Association. (Pomerantz, Glenn) (Filed on 6/5/2014)

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1 GLENN D. POMERANTZ (State Bar No. 112503) glenn.pomerantz@mto.com 2 KELLY M. KLAUS (State Bar No. 161091) kelly.klaus@mto.com 3 CAROLYN HOECKER LUEDTKE (State Bar No. 207976) carolyn.luedtke@mto.com 4 ROHIT K. SINGLA (State Bar No. 213057) rohit.singla@mto.com 5 MUNGER, TOLLES & OLSON LLP 560 Mission Street 6 Twenty-Seventh Floor San Francisco, California 94105-2907 7 Telephone: (415) 512-4000 Facsimile: (415) 512-4077 8 GREGORY L. CURTNER (Pro Hac Vice) 9 gcurtner@schiffhardin.com ROBERT J. WIERENGA (State Bar No. 183687) 10 rwierenga@schiffhardin.com KIMBERLY K. KEFALAS (Pro Hac Vice) 11 kkefalas@schiffhardin.com SCHIFF HARDIN LLP 12 350 Main St., Suite 210 Ann Arbor, MI 48104 13 Telephone: (734) 222-1500 Facsimile: (734) 222-1501 14 Attorneys for Defendant 15 National Collegiate Athletic Association 16 17 UNITED STATES DISTRICT COURT 18 NORTHERN DISTRICT OF CALIFORNIA, OAKLAND DIVISION 19 20 EDWARD O’BANNON, et al. Case No. 09-CV-3329-CW 21 DEFENDANT NCAA’S TRIAL BRIEF 22 Plaintiffs, v. 23 NATIONAL COLLEGIATE ATHLETIC ASSOCIATION; ELECTRONIC ARTS, 24 INC.; and COLLEGIATE LICENSING COMPANY, 25 26 Judge: Hon. Claudia Wilken Date: June 9, 2014 Courtroom: 2, 4th Floor Defendants. 27 28 23647352.1 09-CV-3329-CW DEFENDANT NCAA’S TRIAL BRIEF 1 TABLE OF CONTENTS 2 Page 3 I. INTRODUCTION AND OUTLINE OF TRIAL BRIEF ..................................................... 1 II. THE NCAA’S RULES.......................................................................................................... 1 III. THE NCAA’S RULES CAN AND SHOULD BE SUSTAINED FROM ANTITRUST CHALLENGE WITHOUT A FULL-BLOWN RULE OF REASON INQUIRY .............................................................................................................................. 2 IV. 8 THE CHALLENGED RULES ALSO SURVIVE RULE OF REASON ANALYSIS ........................................................................................................................... 6 9 A. 4 5 6 7 APs Will Fail to Show that the Challenged Rules Produce Anticompetitive Effects in a Relevant Market ..................................................................................... 6 10 1. APs Will Fail to Prove the Existence of Either Alleged Market ................... 6 11 (a) The College Education Market for Division I/FBS Men’s Basketball and Football SAs ............................................................. 7 (b) APs Will Fail to Prove the Existence of a “Group Licensing” Market for the Use of their NIL in Game Broadcasts ....................... 7 (c) APs Will Fail to Prove the Existence of a “Group Licensing” Market for Footage or Videogames ................................................ 13 12 13 14 15 16 2. APs Will Fail to Prove Anticompetitive Effects in Any Relevant Market ......................................................................................................... 14 3. The Rules Do Not Restrain Former SAs from Licensing their NIL ........... 16 4. The Challenged Rules Are Not Commercial Activity Subject to the Sherman Act ................................................................................................ 17 17 18 19 20 B. The Challenged Rules Promote Competition in Multiple Ways ............................. 19 21 1. The Rules Increase Consumer Choice and Demand ................................... 19 22 2. The Rules Increase Output .......................................................................... 19 23 3. The Rules Maintain Competitive Balance .................................................. 20 24 4. The Rules Further the Integration of Athletics and Education .................... 21 25 V. NO LESS RESTRICTIVE ALTERNATIVE TO THE CHALLENGED RULES WOULD ACHIEVE THEIR PROCOMPETITIVE BENEFITS. ....................................... 23 26 27 28 23647352.1 -iDEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 TABLE OF AUTHORITIES 2 Page 3 FEDERAL CASES 4 Agnew v. NCAA, 683 F.3d 328 (7th Cir. 2012) ................................................................................................. 4, 5 5 Allison v. Vintage Sports Plaques, 6 136 F.3d 1443 (11th Cir. 1998) ................................................................................................. 8 7 Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051 (9th Cir. 1999) ................................................................................................. 12 8 9 Am. Ad Mgmt., Inc. v. GTE Corp., 92 F.3d 781 (9th Cir. 1996) ....................................................................................................... 7 10 Am. Motor Inns, Inc. v. Holiday Inns, Inc., 11 521 F.2d 1230 (3d Cir. 1975) .................................................................................................. 25 12 Am. Needle, Inc. v. NFL, 560 U.S. 183 (2010) ............................................................................................................ 3, 20 13 14 Apex Hosiery Co. v. Leader, 310 U.S. 469 (1940) ................................................................................................................ 18 15 Atl. Richfield Co. v. USA Petroleum Co., 16 495 U.S. 328 (1990) ................................................................................................................ 15 17 Banks v. NCAA, 977 F.2d 1081 (7th Cir. 1992) ................................................................................................... 4 18 19 Bassett v. NCAA, 528 F.3d 426 (6th Cir. 2008) ................................................................................................... 18 20 Bepco, Inc. v. Allied-Signal, Inc., 21 106 F. Supp. 2d 814 (M.D.N.C. 2000) .................................................................................... 16 22 Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1 (1979) ...................................................................................................................... 3 23 24 Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297 (3d Cir. 2007) .................................................................................................... 12 25 Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 26 509 U.S. 209 (1993) ............................................................................................................ 7, 12 27 C.B.C. Distribution & Mktg., Inc. v. Major League Baseball Advanced Media, L.P., 505 F.3d 818 (8th Cir. 2007) ..................................................................................................... 8 28 23647352.1 -iiDEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 TABLE OF AUTHORITIES (continued) 2 Page 3 Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104 (1986) ................................................................................................................ 12 4 Chicago Prof’l Sports Ltd. P’ship v. Nat’l Basketball Ass’n, 5 95 F.3d 593 (7th Cir. 1996) ............................................................................................... 14, 19 6 Cnty. of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148 (9th Cir. 2001) ........................................................................................... 21, 23 7 8 Dedication & Everlasting Love to Animals v. Humane Soc. of U.S., Inc., 50 F.3d 710 (9th Cir. 1995) ..................................................................................................... 18 9 Deutscher Tennis Bund v. ATP Tour, Inc., 10 610 F.3d 820 (3d Cir. 2010) .................................................................................................... 21 11 Eastern Food Servs., Inc. v. Pontifical Catholic Univ. Servs. Ass’n, Inc., 357 F.3d 1 (1st Cir. 2004) ....................................................................................................... 14 12 13 Ettore v. Philco Television Broad. Corp., 229 F.2d 481 (3d Cir. 1956) .................................................................................................... 10 14 Fisher v. Univ. of Texas at Austin, 15 133 S. Ct. 2411 (2013) ............................................................................................................ 22 16 FTC v. Indiana Fed’n of Dentists, 476 U.S. 447 (1986) .................................................................................................................. 6 17 18 Gaines v. NCAA, 746 F. Supp. 738 (M.D. Tenn. 1990) .................................................................................. 4, 18 19 Glen Holly Entm’t, Inc. v. Tektronix Inc., 20 343 F.3d 1000, amended, 352 F.3d 367 (9th Cir. 2003) ........................................................... 5 21 Gough v. Rossmoor Corp., 585 F.2d 381 (9th Cir. 1978) ............................................................................................... 6, 14 22 23 Grutter v. Bollinger, 539 U.S. 306 (2003) .......................................................................................................... 22, 23 24 Hairston v. Pac 10 Conference, 25 101 F.3d 1315 (9th Cir. 1996) ................................................................................................... 6 26 Helix Milling Co. v. Terminal Flour Mills Co., 523 F.2d 1317 (9th Cir. 1975) ................................................................................................... 6 27 Howard Hess Dental Labs. Inc. v. Dentsply Int’l, Inc., 28 602 F.3d 237 (3d Cir. 2010) .................................................................................................... 12 23647352.1 -iiiDEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 TABLE OF AUTHORITIES (continued) 2 Page 3 In re Hayes Microcomputer Prods., Inc. Patent Litig., No. C 84 4882 SC, 1989 WL 252349 (N.D. Cal. Mar. 22, 1989) ..................................... 10, 11 4 In re New Motor Vehicles Canadian Exp. Antitrust Litig., 5 522 F.3d 6 (1st Cir. 2008) ....................................................................................................... 12 6 Jones v. NCAA, 392 F. Supp. 295 (D. Mass. 1975) .......................................................................................... 18 7 8 Justice v. NCAA, 577 F. Supp. 356 (D. Ariz. 1983) .............................................................................................. 4 9 Klor’s, Inc. v. Broadway-Hale Stores, Inc., 10 359 U.S. 207 (1959) ................................................................................................................ 18 11 L.A.P.D. Inc. v. Gen. Elec. Corp., 132 F.3d 402 (7th Cir. 1997) ................................................................................................... 14 12 13 Law v. NCAA, 134 F.3d 1010 (10th Cir. 1998) ................................................................................................. 4 14 Los Angeles Mem’l Coliseum Comm’n v. Nat’l Football League, 15 726 F.2d 1381 (9th Cir. 1984) ................................................................................................... 6 16 LucasArts Entm’t Co. v. Humongous Entm’t Co., 870 F. Supp. 285 (N.D. Cal. 1993) ......................................................................................... 14 17 18 M&H Tire Co., Inc. v. Hoosier Racing Tire Corp., 733 F.2d 973 (1st Cir. 1984) ................................................................................................... 25 19 Mahaffey v. Official Detective Stories, Inc., 20 210 F. Supp. 251 (W.D. La. 1962) ............................................................................................ 8 21 Marjorie Webster Jr. Coll., Inc. v. Middle States Ass’n of Colleges & Secondary Sch., Inc., 432 F.2d 650 (D.C. Cir. 1970) ................................................................................................ 18 22 23 Matthews v. Wozencraft, 15 F.3d 432 (5th Cir. 1994) ....................................................................................................... 8 24 McCormack v. NCAA, 25 845 F.2d 1338 (5th Cir. 1988) ............................................................................................. 4, 21 26 Menasha Corp. v. News Am. Mktg. In-Store, Inc., 354 F.3d 661 (7th Cir. 2004) ............................................................................................... 7, 14 27 Metro. Intercollegiate Basketball Ass’n v. NCAA, 28 339 F. Supp. 2d 545 (S.D.N.Y. 2004) ....................................................................................... 4 23647352.1 -ivDEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 TABLE OF AUTHORITIES (continued) 2 Page 3 Modesto Irrigation Dist. v. Pac. Gas & Elec. Co., 309 F. Supp. 2d 1156 (N.D. Cal. 2004) aff’d sub nom. Modesto Irrigation Dist. (MID) 4 v. Pac. Gas & Elec. Co., 158 F. App’x 807 (9th Cir. 2005) ................................................... 11 5 Nat’l ATM Council, Inc. v. Visa Inc., --- F. Supp. 2d ---, 2013 WL 6671660 (D.D.C. Dec. 19, 2013) .............................................. 12 6 7 Nat’l Soc. of Prof’l Eng’rs v. United States, 435 U.S. 679 (1978) .................................................................................................................. 5 8 NCAA v. Bd. of Regents of Univ. of Okla., 9 468 U.S. 85 (1984) ........................................................................................................... passim 10 Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038 (9th Cir. 2008) ......................................................................................... 6, 7, 14 11 12 NFL v. Alley, Inc., 624 F. Supp. 6 (S.D. Fla. 1983)................................................................................................. 8 13 Oltz v. St. Peter’s Cmty. Hosp., 14 861 F.2d 1440 (9th Cir. 1988) ................................................................................................... 7 15 Paladin Associates, Inc. v. Montana Power Co., 328 F.3d 1145 (9th Cir. 2003) ................................................................................................. 15 16 17 Pittsburgh Athletic Co. v. KQV Broad. Co., 24 F. Supp. 490 (W.D. Pa. 1938) .............................................................................................. 9 18 Pool Water Prods. v. Olin Corp., 258 F.3d 1024 (9th Cir. 2001) ................................................................................................... 5 19 20 Pooley v. Nat’l Hole-In-One Ass’n, 89 F. Supp. 2d 1108 (D. Ariz. 2000) ......................................................................................... 8 21 Realnetworks, Inc. v. DVD Copy Control Ass’n, Inc., 22 2010 WL 145098 (N.D. Cal. Jan. 8, 2010) ............................................................................. 12 23 Rebel Oil Co., Inc. v. Atl. Richfield Co., 51 F.3d 1421 (9th Cir. 1995) ................................................................................................... 14 24 25 Reifert v. S. Cent. Wisconsin MLS Corp., 450 F.3d 312 (7th Cir. 2006) ............................................................................................... 7, 16 26 Sharkey v. Nat’l Broad. Co., Inc., 27 93 F. Supp. 986 (S.D.N.Y. 1950) ............................................................................................ 10 28 23647352.1 -vDEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 TABLE OF AUTHORITIES (continued) 2 Page 3 Smith v. NCAA, 139 F.3d 180 (3d Cir. 1998) vacated on other grounds by, 525 U.S. 459 (1999) ................... 18 4 Somers v. Apple, Inc., 5 729 F.3d 953 (9th Cir. 2013) ............................................................................................. 11, 15 6 Sprint Nextel Corp. v. AT & T Inc., 821 F. Supp. 2d 308 (D.D.C. 2011) ........................................................................................ 12 7 8 Tanaka v. Univ. of S. Cal., 252 F.3d 1059 (9th Cir. 2001) ............................................................................................. 6, 23 9 Texaco Inc. v. Dagher, 10 547 U.S. 1 (2006) ................................................................................................................ 3, 23 11 Toffoloni v. LFP Publ’g Grp., LLC, 572 F.3d 1201 (11th Cir. 2009) ....................................................................................... 8 12 13 Toscano v. PGA Tour, Inc., 201 F. Supp. 2d 1106 (E.D. Cal. 2002) ................................................................................... 12 14 United States v. Brown Univ., 15 5 F.3d 658 (3d Cir. 1993) ............................................................................................ 21, 22, 23 16 United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) .................................................................................................. 16 17 18 United States v. Syufy Enters., 903 F.2d 659 (9th Cir. 1990) ..................................................................................................... 6 19 United States v. Visa U.S.A., Inc., 20 344 F.3d 229 (2d Cir. 2003) .................................................................................................... 14 21 Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164 (2006) .................................................................................................................. 5 22 23 Wis. Interscholastic Athletic Ass’n v. Gannett Co., Inc., 658 F.3d 614 (7th Cir. 2011) ..................................................................................................... 9 24 Zacchini v. Scripps-Howard Broad. Co., 25 433 U.S. 562 (1977) .................................................................................................................. 9 26 STATE CASES 27 Battaglieri v. Mackinac Ctr. For Pub. Policy, 680 N.W.2d 915 (Mich. Ct. App. 2004) ................................................................................... 8 28 23647352.1 -viDEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 TABLE OF AUTHORITIES (continued) 2 Page 3 J.C. v. WALA-TV, Inc., 675 So. 2d 360 (Ala. 1996) ....................................................................................................... 8 4 Jaubert v. Crowley Post-Signal, Inc., 5 375 So. 2d 1386 (La. 1979) ....................................................................................................... 8 6 Lake v. Wal-Mart Stores, Inc., 582 N.W.2d 231 (Minn. 1998) .................................................................................................. 8 7 8 Messenger v. Gruner + Jahr Printing & Publ’g, 706 N.Y.S.2d 52 (N.Y. 2000) ................................................................................................... 8 9 Montgomery v. Montgomery, 10 60 S.W.3d 524 (Ky. 2001) ........................................................................................................ 8 11 WJLA-TV v. Levin, 564 S.E.2d 383 (Va. 2002) ........................................................................................................ 8 12 13 STATUTES AND RULES 14 15 U.S.C. § 1 ................................................................................................................................. 18 15 Cal. Civ. Code §§ 3344, 3344.1 ...................................................................................................... 8 16 Fla. Stat. § 540.08(4) ....................................................................................................................... 8 17 Haw. Rev. Stat. § 482P-7(b)(2) ....................................................................................................... 8 18 19 20 765 Ill. Comp. Stat. ......................................................................................................................... 8 Ind. Code Ann. § 32-36-1-1(c) ........................................................................................................ 8 Neb. Rev. Stat. § 20-202(1)............................................................................................................. 8 21 Nev. Rev. Stat. § 597.790(2) ........................................................................................................... 8 22 23 24 25 Ohio Rev. Code Ann. § 2741.02(D)(1) ........................................................................................... 8 Okla. Stat. tit. 12, § 1449(D) ........................................................................................................... 8 42 Pa. Cons. Stat. Ann. § 8316(e)(2)(ii) .......................................................................................... 8 26 Tenn. Code Ann. § 47-25-1107(a) .................................................................................................. 8 27 Tex. Prop. Code Ann. § 26.012(a)(3) .............................................................................................. 8 28 Wash. Rev. Code. Ann. § 63.60.070(2) .......................................................................................... 8 23647352.1 -viiDEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 TABLE OF AUTHORITIES (continued) 2 Page 3 OTHER AUTHORITIES 4 11 P. Areeda & H. Hovenkamp, Antitrust Law (1991) ........................................................... 14, 19 5 11 Phillip E. Areeda, Antitrust Law (2011) ................................................................................... 25 6 Justice & Federal Trade Comm’n, Horizontal Merger Guidelines 30 (Aug. 19, 2010) ............... 25 7 Daniel A. Rascher & Andrew D. Schwarz, Neither Reasonable nor Necessary: “Amateurism” in Big-Time College Sports .............................................................................. 3 8 9 Restatement (Third) of Unfair Competition § 46, § 49 (1995) ....................................................... 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 23647352.1 -viiiDEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW Defendant National Collegiate Athletic Association (“NCAA”) believes the evidence will 1 2 show the following at trial. The NCAA reserves the right at the conclusion of the trial to present 3 formal proposed findings of fact and conclusions of law on these or other issues. 4 I. INTRODUCTION AND OUTLINE OF TRIAL BRIEF 5 The Antitrust Plaintiffs (“APs”) have alleged a restraint of trade that consists of certain of 6 the NCAA’s amateurism rules. Section II of this brief identifies the rules at issue and briefly 7 explains why the NCAA’s member colleges and institutions have adopted them. Section III 8 explains that, because these rules help to preserve the amateur character of college sports, this 9 Court should uphold them without a full-blown rule of reason analysis. Section IV explains why, 10 even if this Court holds that a full rule of reason analysis is necessary, the rules also should be 11 upheld for at least three reasons: (1) APs cannot prove that the rules cause anticompetitive harm 12 in any market; (2) any anticompetitive harm does not substantially outweigh the rules’ significant 13 and well-recognized procompetitive benefits; and (3) APs cannot prove that these benefits could 14 be achieved—or that NCAA sports would still be amateur—under a less restrictive alternative. 15 II. THE NCAA’S RULES 16 Colleges created the NCAA to help enforce rules that protect the amateur and academic 17 values they have chosen for intercollegiate sports: “[The] basic purpose of this Association is to 18 maintain intercollegiate athletics as an integral part of the educational program and the athlete as 19 an integral part of the student body and, by so doing, retain a clear line of demarcation between 20 intercollegiate athletics and professional sports.” TX 2340-15. 21 To that end, coordinating themselves through the NCAA, colleges and universities have 22 agreed on several “basic principles” for intercollegiate athletics, including two that are directly 23 relevant here: (1) “Student-athletes [“SAs”] shall be amateurs in an intercollegiate sport, and their 24 participation should be motivated primarily by education and by the physical, mental and social 25 benefits to be derived,” and (2) SAs must be students whose athletic “activities are conducted as 26 an integral part of the [SA’s] educational experience.” TX 2340-17, -18. 27 The NCAA’s member institutions have adopted a number of rules to further these 28 principles. According to APs, their claims are directed at only one aspect of these rules: the rules 23647352.1 -1DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 that prohibit SAs from being paid for the commercial use of their name, image or likeness 2 (“NIL”). See Dkt. No. 999 at 1:18-19 (claims “confined” to “restraint against compensation for 3 commercial use and licensing of SAs’ NIL”). Indeed, APs have made clear that they are not 4 challenging the NCAA’s rules against SAs being paid in other ways. See, e.g., Dkt. No. 172 at 5 13:25 (“Yet that scenario—commonly known as “pay-for-play”—is not at issue in this 6 litigation.”); Keller v. NCAA, Dkt. No. 999 at 1:17-18 (APs are “not advocating salaries for SAs”). 7 Rather, APs have claimed that they are challenging the rules to the extent that they prohibit group 8 licenses of supposed rights of publicity in SAs’ NIL. See, e.g., Dkt. No. 651 at 11:16-20, Dkt. No. 9 819 at 3:17-4:3, 17:7-24, 23:4-24:23 (class certification); Dkt. No. 999 at 8:13-16, Tr. of Hr’g, 10 Feb. 20, 2014, at 7:8-16 (summary judgment); Dkt. No. 1071 at 7:26-8:6 (pre-trial statement). 11 Under NCAA rules, an SA is ineligible to participate in intercollegiate athletics if he or she 12 “[a]ccepts any remuneration for or permits the use of his or her name or picture to advertise, 13 recommend or promote directly the sale or use of a commercial product or service of any kind.” 14 Bylaw 12.5.2.1 (TX 2340-85). According to APs, it is an unlawful restraint of trade to prohibit 15 SAs from being paid for group licenses of supposed rights to use their NIL in (1) live broadcasts 16 of football and men’s basketball games, (2) rebroadcasts or other uses of footage of those 17 broadcasts, and (3) college football and men’s basketball-themed videogames. The NCAA will 18 address these allegations at trial as follows. 19 III. THE NCAA’S RULES CAN AND SHOULD BE SUSTAINED FROM ANTITRUST CHALLENGE WITHOUT A FULL-BLOWN RULE OF REASON INQUIRY 20 The Court has held that the challenged rules must be judged under the rule of reason rather 21 than per se analysis. Dkt. 1025, at 7:14-17. We discuss the evidence in light of the traditional rule 22 of reason analysis in Part IV, below. Under controlling law, however, the evidence suffices for the 23 NCAA’s rules to be sustained without the need for the entirety of that analysis. 24 The NCAA is a joint venture. The Supreme Court has called the NCAA and other sports 25 26 27 organizations the “leading example[s]” of “activities [that] can only be carried out jointly” because sports require “rules on which the competitors agreed to create and define the competition to be marketed.” NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 101 (1984) (quotations 28 23647352.1 -2DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 omitted).1 APs’ expert, Dr. Rascher, agrees that the NCAA is “appropriately described as a joint 2 venture that has, like other joint ventures, certain aspects that must be agreed upon.” Daniel A. 3 Rascher & Andrew D. Schwarz, Neither Reasonable nor Necessary: “Amateurism” in Big-Time 4 College Sports, Antitrust (Spring 2000). The Supreme Court has held that, where an alleged restraint involves “the core activity of 5 6 the joint venture itself,” there is no need to analyze whether the restraint is reasonably necessary to 7 achieve procompetitive benefits. Texaco Inc. v. Dagher, 547 U.S. 1, 7-8 (2006). Rather, an 8 agreement of this kind is “likely to survive the Rule of Reason” and can be upheld without 9 “detailed analysis” in the “twinkling of an eye.” Am. Needle, Inc. v. NFL, 560 U.S. 183, 203 10 (2010) (citations and internal quotation marks omitted). See also Broad. Music, Inc. v. Columbia 11 Broad. Sys., Inc., 441 U.S. 1, 23 (1979) (“Joint ventures and other cooperative arrangements are 12 . . . not usually unlawful, at least not as price-fixing schemes, where the agreement on price is 13 necessary to market the product at all.”). APs are incorrect that the standard is whether eliminating the rules would “extinguish 14 15 college sports altogether.” Dkt. No. 172 at 25. As the Supreme Court has made clear, a measure 16 that creates the unique “character” of a product “enables a product to be marketed which might 17 otherwise be unavailable.” Bd. of Regents, 468 U.S. at 102; see also Broad. Music, Inc., 441 U.S. 18 at 23-23 (upholding “blanket license” that created a “different product” with “unique 19 characteristics”). If the members’ agreement defines the joint venture’s product, then eliminating 20 the agreement would change the product from the one the venture intended to produce. Accordingly, rather than conduct a “detailed analysis” of the effect of NCAA rules on 21 22 competition, courts have first asked whether the rules at issue define the NCAA’s members’ 23 product of intercollegiate athletics. The courts are uniform on the controlling legal standard in this 24 context: “when an NCAA bylaw is clearly meant to help maintain the ‘revered tradition of 25 1 This reasoning was essential to the Court’s holding that the NCAA’s television plan was not unlawful per se: “Thus, despite the fact that this case involves restraints on the ability of member 27 institutions to compete in terms of price and output, a fair evaluation of their competitive character requires consideration of the NCAA’s justifications for the restraints.” Id. at 103. 28 26 23647352.1 -3DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 amateurism in college sports’ or the ‘preservation of the student-athlete in higher education,’ the 2 bylaw will be presumed procompetitive, since we must give the NCAA ‘ample latitude to play 3 that role.’” Agnew v. NCAA, 683 F.3d 328, 342-43 (7th Cir. 2012) (quoting Bd. of Regents, 468 4 U.S. at 120).2 “[T]he first—and possibly only—question to be answered when NCAA bylaws are 5 challenged is whether the NCAA regulations at issue” fit this description. Id. at 342; see also id. 6 at 343 n.7 (“One should not mistake the analysis we discuss here as requiring proof of the 7 procompetitive nature of the NCAA’s ‘no payment’ rules on a case-by-case basis. This analysis 8 involves a determination of whether a rule is, on its face, supportive of the ‘no payment’ and 9 ‘student-athlete’ models, not whether ‘no payment’ rules are themselves procompetitive—under 10 Board of Regents, they clearly are.”). The NCAA’s witnesses will explain that the rules at issue here—the rules prohibiting 11 12 payments to SAs for their NIL—are designed to maintain the NCAA’s core product of amateur 13 athletics. These and other rules are promulgated by an entire Amateurism Cabinet, which is 14 comprised of college administrators and educators and guided by the principle that “student 15 participation in intercollegiate athletics is an avocation, and student-athletes should be protected 16 from exploitation by professional and commercial enterprises.” TX 3152-1. Undisputed objective evidence will show that “the definitions of amateurism that have 17 18 been adopted by other organizations”—the standard that APs say must be used to assess the 19 NCAA’s defense—uniformly support the NCAA’s position. Dkt. No. 896-5 (Noll Merits Report) 20 at 134. Both parties’ experts have surveyed amateur sports. None of them has found a single 21 amateur sport in which an amateur athlete can be—or has been—paid a portion of licensing 22 revenues earned from the broadcast of a game in which he appears. No amateur athlete in any 23 sport has been paid for a “group license” for supposed rights to show his image in a live broadcast 24 of his sport. SAs are asking the Court for a license to be the first self-described “amateur” athletes 25 2 Accord Law v. NCAA, 134 F.3d 1010, 1022 n.14 (10th Cir. 1998); Banks v. NCAA, 977 F.2d 26 1081, 1089-90 (7th Cir. 1992); McCormack v. NCAA, 845 F.2d 1338, 1344-45 (5th Cir. 1988); Metro. Intercollegiate Basketball Ass’n v. NCAA, 339 F. Supp. 2d 545, 550 (S.D.N.Y. 2004); 27 Gaines v. NCAA, 746 F. Supp. 738, 743–45 (M.D. Tenn. 1990); Justice v. NCAA, 577 F. Supp. 356, 383 (D. Ariz. 1983). 28 23647352.1 -4DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 in history that would be able to seek such payments. This is clear evidence that the challenged 2 rules against payments for SAs’ NIL are “meant to help maintain the revered tradition of 3 amateurism in college sports” and “the preservation of the student-athlete in higher education.” 4 Agnew, 683 F.3d at 342 (internal quotation marks omitted). And it suffices to dispense with APs’ 5 claims that SAs are not amateurs to begin with or that NCAA rule changes permitting greater 6 educational support for SAs preclude NCAA sports from being amateur. Dkt. No. 172 at 12. APs’ “evidence,” in contrast, will be purported “expert” opinions of Roger Noll and Ellen 7 8 Staurowsky that the NCAA’s collegiate model should be transformed to the type of “amateur” 9 model they have advocated for in their writings and that APs advocate in this case. The law does 10 not allow this result. The law is that “the NCAA plays a vital role in enabling college football to preserve its 11 12 character, and as a result enables a product to be marketed which might otherwise be unavailable. 13 In performing this role, its actions widen consumer choice—not only the choices available to 14 sports fans but also those available to athletes—and hence can be viewed as procompetitive.” Bd. 15 of Regents, 468 U.S. at 102. The antitrust laws do not require the NCAA’s members to take this 16 choice off the market by substituting APs’ model of college sports for their own. See Glen Holly 17 Entm’t, Inc. v. Tektronix Inc., 343 F.3d 1000, 1014, amended, 352 F.3d 367 (9th Cir. 2003) 18 (antitrust “laws protect customers from harm directly related to the unlawful removal of a 19 competitive product from the market”). Rather, “[t]he NCAA plays a critical role in the 20 maintenance of a revered tradition of amateurism in college sports. There can be no question but 21 that it needs ample latitude to play that role.” Bd. of Regents, 468 U.S. at 120 (emphasis added). The antitrust laws permit the NCAA’s members to define their own product and protect 22 23 consumers’ freedom to choose that product over others.3 APs cannot win by arguing that the 24 3 See, e.g., Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 180 (2006) (“Interbrand competition, our opinions affirm, is the primary concern of antitrust law.”) (internal 26 quotation marks omitted); Pool Water Prods. v. Olin Corp., 258 F.3d 1024, 1034 (9th Cir. 2001) (“It is well established that the antitrust laws are only intended to preserve competition for the 27 benefit of consumers.”) (internal quotation marks and citation omitted); Nat’l Soc. of Prof’l Eng’rs v. United States, 435 U.S. 679, 695 (1978) (“The assumption that competition is the best method 28 of allocating resources in a free market recognizes that all elements of a bargain . . . are favorably 25 23647352.1 -5DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 NCAA should change its product—which millions of Americans enjoy. APs are not “entitled to 2 pre-empt the working of the market by deciding for itself that its customers do not need that which 3 they demand.” FTC v. Indiana Fed’n of Dentists, 476 U.S. 447, 462 (1986); see also United 4 States v. Syufy Enters., 903 F.2d 659, 668 (9th Cir. 1990) (“While the successful competitor 5 should not be raised above the law, neither should he be held down by law.”). 6 IV. THE CHALLENGED RULES ALSO SURVIVE RULE OF REASON ANALYSIS 7 No full rule of reason analysis is necessary. But even it were, APs cannot prevail. APs 8 have the “initial burden of showing that the restraint produces ‘significant anticompetitive effects’ 9 within a ‘relevant market.’” Tanaka v. Univ. of S. Cal., 252 F.3d 1059, 1063 (9th Cir. 2001) 10 (citing Hairston v. Pac 10 Conference, 101 F.3d 1315, 1319 (9th Cir. 1996)). Only if APs make 11 that showing (which they cannot do), does the NCAA have the burden to show that its rules have 12 procompetitive benefits. Id. APs must then show that these procompetitive benefits “‘can be 13 achieved in a substantially less restrictive manner.’” Id. Even if proven, this alternative is merely 14 “a factor in determining the reasonableness” of the rules. Los Angeles Mem’l Coliseum Comm’n 15 v. Nat’l Football League, 726 F.2d 1381, 1396 (9th Cir. 1984). APs’ ultimate burden is to prove 16 that the rules cause anticompetitive effects that substantially outweigh their procompetitive 17 benefits. Antitrust Law Developments (Seventh) at 62. 18 A. APs Will Fail to Show that the Challenged Rules Produce Anticompetitive Effects in a Relevant Market 19 1. 20 21 22 APs Will Fail to Prove the Existence of Either Alleged Market APs must first show “that ‘a relevant market’ exists.” Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038, 1044 (9th Cir. 2008). This “is an absolutely essential element of a rule of reason case.” Los Angeles Mem’l Coliseum Comm’n, 726 F.2d at 1391; see also Gough v. 23 Rossmoor Corp., 585 F.2d 381, 389 (9th Cir. 1978). 24 25 26 affected by the free opportunity to select among alternative offers.”); Helix Milling Co. v. 27 Terminal Flour Mills Co., 523 F.2d 1317, 1320 (9th Cir. 1975) (“A major purpose of s 1 of the Sherman Act is to foster competition and to protect the ability of competitors to enter markets.”). 28 23647352.1 -6DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 (a) 2 3 4 5 6 The College Education Market for Division I/FBS Men’s Basketball and Football SAs APs first allege there is an “education” market for SAs who play men’s basketball and football. At times, APs have contended that SAs are “buyers” of educational services from colleges and universities. Yet APs admit that this alleged market is not a “market for the education of college athletes” at all but rather a market “in which Division I colleges and universities compete to recruit” SAs to “to play football or basketball.” Id. at 19 (emphasis 7 added); id. at 9 (same). In other words, in this alleged market, SAs are supposedly selling their 8 athletic talents to colleges and universities. 9 At trial, the NCAA’s experts will explain that APs’ experts have not conducted the proper 10 quantitative analysis of either of these alleged markets, which is required. See, e.g., Reifert v. S. 11 12 13 14 15 16 17 Cent. Wisconsin MLS Corp., 450 F.3d 312, 318 (7th Cir. 2006) (“Actual data and a reasonable analysis are necessary to demonstrate that a product or service is a good substitute for another.”). Cf. Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 242 (1993) (“Expert testimony is useful as a guide to interpreting market facts, but it is not a substitute for them.”). 4 They will further explain that APs’ experts have improperly defined the market in terms of SAs’ preferences. See Newcal Indus., Inc., 513 F.3d at 1045 (“The consumers do not define the boundaries of the market; the products or producers do.”).5 18 (b) 19 APs Will Fail to Prove the Existence of a “Group Licensing” Market for the Use of their NIL in Game Broadcasts 20 21 4 As set forth in the NCAA’s motion for reconsideration of this Court’s summary judgment order, 22 any “education” market extends to prospective students other than football and men’s basketball SAs. See Dkt. No. 1033 at 4-9. The NCAA’s experts should be permitted to offer testimony to 23 this effect on what is a quintessential issue of fact to be decided on a full record at trial. See Am. Ad Mgmt., Inc. v. GTE Corp., 92 F.3d 781, 790 (9th Cir. 1996); Oltz v. St. Peter’s Cmty. Hosp., 24 861 F.2d 1440, 1446 (9th Cir. 1988). 5 Judge Easterbrook has explained well why consumer preference for a particular version of a product cannot define the produce market: “Suppose that a well-conducted survey shows that 26 vanilla is people’s favorite flavor of ice cream, and by a large margin. It would not follow that vanilla ice cream is a separate market, because if its price rises any other ice cream producer could 27 make more vanilla and less chocolate or pistachio.” Menasha Corp. v. News Am. Mktg. In-Store, Inc., 354 F.3d 661, 665 (7th Cir. 2004). 28 25 23647352.1 -7DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 (i) 2 3 There is No “Group License” Market for NIL Rights in Broadcasts, Because There Are No Such Rights The summary judgment order holds that “to establish the existence of a ‘group licensing’ market, [APs] must show that, absent the NCAA’s restraint on [SA] pay, [SAs] would have 4 cognizable rights of publicity in the use of their [NIL] in live game broadcasts and archival game 5 footage.” Dkt. 1025 at 15:11-16. APs cannot make this showing. 6 No statute or court decision in any state has ever recognized a right-of-publicity claim by a 7 participant in a sporting event against a broadcaster for the use of his NIL in a live broadcast of the 8 game. There is simply no legal authority whatsoever for such a claim. To the contrary, numerous 9 10 11 12 state right-of-publicity statutes, including California’s, expressly preclude right-of-publicity claims for the use of one’s NIL in the broadcast of a sporting event.6 And numerous cases have so held under state common law.7 Thus, there is no reason why any broadcaster would purchase any group license for the use of SAs’ NIL, and APs cannot establish a “group licensing” market. 13 APs will also claim, as they have before, that the existence of exclusive broadcast contracts 14 15 shows that there could be a group license market for the rights to use SAs’ NILs. That is wrong. The law has long recognized that a team, “by reason of its creation of the game, its control of the 16 park, and its restriction of the dissemination of news therefrom, has a property right in such news, 17 18 6 22 7 Cal. Civ. Code §§ 3344, 3344.1; Fla. Stat. § 540.08(4); Haw. Rev. Stat. § 482P-7(b)(2); 765 Ill. Comp. Stat. 1075/35(b)(2); Ind. Code Ann. § 32-36-1-1(c); Neb. Rev. Stat. § 20-202(1); Nev. Rev. 19 Stat. § 597.790(2); Ohio Rev. Code Ann. § 2741.02(D)(1); Okla. Stat. tit. 12, § 1449(D); 42 Pa. Cons. Stat. Ann. § 8316(e)(2)(ii); Tenn. Code Ann. § 47-25-1107(a); Tex. Prop. Code Ann. § 20 26.012(a)(3); Wash. Rev. Code. Ann. § 63.60.070(2); see also NFL v. Alley, Inc., 624 F. Supp. 6, 9-10 (S.D. Fla. 1983) (live broadcasts of Miami Dolphins football games were matters of 21 “legitimate public interest” under the Florida’s right of publicity statute, Fla. Stat. § 540.08(4)). 23 24 25 26 27 Toffoloni v. LFP Publ’g Grp., LLC, 572 F.3d 1201, 1208 (11th Cir. 2009) (Georgia); C.B.C. Distribution & Mktg., Inc. v. Major League Baseball Advanced Media, L.P., 505 F.3d 818, 823-24 (8th Cir. 2007) (Missouri); Allison v. Vintage Sports Plaques, 136 F.3d 1443, 1446 (11th Cir. 1998) (Alabama); Matthews v. Wozencraft, 15 F.3d 432, 439 (5th Cir. 1994) (Texas); Pooley v. Nat’l Hole-In-One Ass’n, 89 F. Supp. 2d 1108, 1113 (D. Ariz. 2000); Mahaffey v. Official Detective Stories, Inc., 210 F. Supp. 251, 253 (W.D. La. 1962); WJLA-TV v. Levin, 564 S.E.2d 383, 394-95 (Va. 2002); Montgomery v. Montgomery, 60 S.W.3d 524, 529 (Ky. 2001); Messenger v. Gruner + Jahr Printing & Publ’g, 706 N.Y.S.2d 52, 54-55 (N.Y. 2000); Lake v. Wal-Mart Stores, Inc., 582 N.W.2d 231, 235-36 (Minn. 1998); J.C. v. WALA-TV, Inc., 675 So. 2d 360, 362 (Ala. 1996); Jaubert v. Crowley Post-Signal, Inc., 375 So. 2d 1386, 1388-90 (La. 1979); Battaglieri v. Mackinac Ctr. For Pub. Policy, 680 N.W.2d 915, 919 (Mich. Ct. App. 2004); see also Restatement (Third) of Unfair Competition § 46, § 49 (1995). 28 23647352.1 -8DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 and the right to control the use thereof for a reasonable time following the games.” Pittsburgh 2 Athletic Co. v. KQV Broad. Co., 24 F. Supp. 490, 492 (W.D. Pa. 1938); see also Wis. 3 Interscholastic Athletic Ass’n v. Gannett Co., Inc., 658 F.3d 614, 624 (7th Cir. 2011) (Zacchini v. 4 Scripps-Howard Broad. Co., 433 U.S. 562 (1977) “makes clear that the producer of entertainment 5 is entitled to charge a fee in exchange for consent to broadcast”) (emphasis added); id. at 628 6 (noting that “the producer of the entertainment—the NFL, FIFA, or the NCAA—normally signs a 7 lucrative contract for exclusive, or semi-exclusive, broadcast rights for the performance”) 8 (emphasis added).8 None of these cases held that a participant in a sporting event has a right to be 9 compensated because his image appears in a broadcast of the event. 10 SAs do not have that right because they do not create college football or basketball games 11 or control the stadiums where they are played. Their colleges and universities—either among 12 themselves, or, in the case of the Division I Men’s Basketball Championship, through the 13 NCAA—do. Take, for example, the Cal-Stanford football game, which has been played 116 times 14 since 1892. Cal and Stanford have scheduled this game long before any of the SAs who will play 15 in it have enrolled at either school. Cal and Stanford decide who can play in the game, march in 16 the band, be part of the cheerleading squad, and buy tickets to enter the stadium. Cal and Stanford 17 funded the training and equipment for the football teams, built the stadium where the game will be 18 played and contracted for security to control access to it. As such, as a very practical matter, Cal 19 and Stanford have the power to keep every network out other than ABC and charge ABC for the 20 privilege. See Pittsburgh Athletic Co., 24 F. Supp. at 492. 21 The SAs do not. They are only in the stadium at all because their colleges and universities 22 have agreed to let them play, just as they have agreed to let the band march, the cheerleaders 23 cheer, and the fans with tickets sit in the stands. SAs cannot own the right to broadcast their 24 25 8 That was the basis of Zacchini’s claim against the network: he created and owned his act. His “professional property” had been appropriated. 433 U.S. at 569. Ohio state law’s protection of 27 Zacchini’s property “provide[d] an economic incentive for him to make the investment required to produce a performance of interest to the public.” Id. at 576 (emphasis added). 28 26 23647352.1 -9DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 games when they need the same permission that broadcasters do to be in the stadium at all.9 2 Rather, SAs are part of the game. That is why their images are part of the broadcast—not because 3 any supposed rights of publicity in those images have been transferred to the broadcaster. Indeed, 4 APs have no evidence that any such rights are being transferred. Instead, the evidence will show 5 that what is being transferred is the event owner’s right to broadcast the event. To be sure, the 6 event consists of players—and a band, cheerleaders and fans—whose images will appear when the 7 event is broadcast. But that says nothing about whether the players have enforceable rights of 8 publicity to control this appearance of their image in the same way that they can control 9 commercial uses. No court has ever recognized such rights. APs also argue that the use of broadcast revenues to fund professional players’ contracts 10 11 shows that their purported NIL rights could be licensed on a group basis. The evidence will show 12 that APs are wrong. Professional athletes are paid shares of broadcast revenue as payment for 13 their labor; they do not license their NIL for use in broadcasts of their games. Indeed, both 14 parties’ experts agree that this revenue share is paid in the form of salaries for playing in the 15 game—which APs have expressly said they are not seeking—and not for the use of players’ 16 images in the broadcast of the game. 17 In sum, the rights that SAs claim to have been restrained from licensing do not exist. In 18 that case, APs’ claims fail because an antitrust plaintiff cannot prove antitrust injury from a 19 supposed restriction on licensing intellectual property rights that do not exist. See In re Hayes 20 Microcomputer Prods., Inc. Patent Litig., No. C 84 4882 SC, 1989 WL 252349 (N.D. Cal. Mar. 21 22, 1989) (“a plaintiff does not allege an antitrust injury by claiming damages stemming from an 22 23 24 25 26 27 9 Indeed, only where individual athletes act as co-entrepreneurs with promoters or other persons who organize a sporting event do they share in ownership of rights to broadcast the event. See Ettore v. Philco Television Broad. Corp., 229 F.2d 481, 487 (3d Cir. 1956) (“Where a professional performer is involved, there seems to be a recognition of a kind of property right in the performer to the product of his services. The theory may be summed up as follows: The performer, as a means of livelihood, contracts for his services with an entrepreneur.”). Boxing is a classic example: the fighters have ownership rights in the events because each bout is a unique and discrete event, created and organized separately by the fighters themselves. See id.; see also Sharkey v. Nat’l Broad. Co., Inc., 93 F. Supp. 986 (S.D.N.Y. 1950). That is not the case in college football and basketball games. 28 23647352.1 -10DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 inability to license, what was later determined to be, an invalid patent”); see also Modesto 2 Irrigation Dist. v. Pac. Gas & Elec. Co., 309 F. Supp. 2d 1156, 1169-70 (N.D. Cal. 2004) aff’d 3 sub nom. Modesto Irrigation Dist.(MID) v. Pac. Gas & Elec. Co., 158 F. App’x 807 (9th Cir. 4 2005) (antitrust plaintiff “cannot prove it sustained cognizable antitrust injury” if it does not 5 possess the “legal right” to engage in the business allegedly restrained). Indeed, there is simply no 6 authority for the proposition that an antitrust plaintiff can prevail on a claim alleging a restraint on 7 a market for property that the law does not recognize. In order to show that there is a market to 8 use SAs’ NIL in live broadcasts, APs must show that the law recognizes a property right in such 9 use. No legal authority does so. Accordingly, APs’ claims fail as a matter of law.10 10 (ii) APs’ Argument that the Existence of the Right Does Not Matter for Antitrust Purposes is Wrong 11 In its order declining to certify the summary judgment decision for interlocutory appeal, 12 the Court suggested that “some broadcasters might have sought to purchase such group licenses, 13 regardless of whether the First Amendment (or any other law) actually protects them from right14 of-publicity liability, simply as a precaution to avoid potential liability in the face of uncertain 15 legal precedents.” Dkt. 1091 at 3:26-4:2. Even setting aside that the legal precedents are clear, 16 not uncertain, this is incorrect as a matter of law: to prove a market for licensing their NIL for live 17 broadcasts, APs must show that the law gives them a property right to control the appearance of 18 their images in broadcasts. Modesto Irrigation Dist. v. Pac. Gas & Elec. Co., 309 F. Supp. 2d at 19 1169-70; In re Hayes Microcomputer Prods., Inc. Patent Litig., 1989 WL 252349. 20 Nevertheless, APs cannot obtain an injunction on this alternative basis, either. APs can 21 only obtain an injunction to prevent “threatened antitrust injury.” Somers v. Apple, Inc., 729 F.3d 22 10 In its motion for summary judgment and for certification for interlocutory appeal of the Court’s order resolving that motion, the NCAA explained that APs’ claims fail because the First 24 Amendment precludes right-of-publicity claims for the use of one’s image in the live broadcast of a sporting event. See Dkt. No. 926 at 3-6; Dkt. No. 978 at 1-6; Dkt. No. 1032; Dkt. No. 1056. 25 This remains the NCAA’s position, but in light of the Court’s rulings, the NCAA will not repeat it other than to note that APs will be unable to carry their burden of demonstrating that the speech at 26 issue promotes a commercial transaction and/or that an identifiable and sufficiently important state interest justifies the burden that their theory of recovery would impose on that speech. 27 23 28 23647352.1 -11DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 953, 967 (9th Cir. 2013); see also Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 112 (1986). 2 This threatened injury cannot be speculative. See, e.g., Howard Hess Dental Labs. Inc. v. 3 Dentsply Int’l, Inc., 602 F.3d 237, 251 (3d Cir. 2010) (“In a nutshell, the various examples of 4 alleged injury the Plaintiffs have brought to our attention are purely speculative and thus are 5 insufficient to justify an award of injunctive relief.”). 6 APs must also prove antitrust standing. See Cargill, Inc., 479 U.S. at 112. Antitrust injury 7 is only one factor in standing; another is “the speculative measure of the harm.” Am. Ad Mgmt., 8 Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051, 1054 (9th Cir. 1999) (quotation marks omitted). APs 9 cannot obtain an injunction to remedy purely speculative antitrust injury. See In re New Motor 10 Vehicles Canadian Exp. Antitrust Litig., 522 F.3d 6, 14-15 (1st Cir. 2008) (affirming dismissal of 11 antitrust claim for injunctive relief to remedy “speculative” harm); Sprint Nextel Corp. v. AT & T 12 Inc., 821 F. Supp. 2d 308, 317 (D.D.C. 2011) (antitrust laws do “not authorize suits by those 13 whose allegations of threatened injury amount to little more than conjecture”) (dismissing claim 14 for injunctive relief); Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 321 (3d Cir. 2007) (“The 15 prospective harm to competition must not, however, be speculative.”). Cf. Brooke Grp. Ltd., 509 16 U.S. at 230-32 (rejecting theory of antitrust injury that “depends upon a complex chain of cause 17 and effect”). 18 Courts reject theories of antitrust injury that are “based on an attenuated, speculative chain 19 of events” and that “rel[y] on numerous independent actors.” Nat’l ATM Council, Inc. v. Visa Inc., 20 No. 1:11-CV-01803 (ABJ), --- F. Supp. 2d ---, 2013 WL 6671660, at *6-7 (D.D.C. Dec. 19, 2013) 21 (dismissing theory that without “access fee rules, ATM operators would offer consumers 22 differentiated access fees at the point of transaction, consumers would then demand multi-bug PIN 23 cards from their banks, their banks would provide these cards, and the market for network services 24 would become more competitive”); see also Toscano v. PGA Tour, Inc., 201 F. Supp. 2d 1106, 25 1117-18 (E.D. Cal. 2002) (dismissing antitrust claims that “depend on a multitude of speculative 26 intervening events” including new “formation of competing senior professional golf tours in the 27 absence of the media rights and conflicting events rules”). Cf. Realnetworks, Inc. v. DVD Copy 28 Control Ass’n, Inc., No. C 08-4548 MHP, 2010 WL 145098, at *5 (N.D. Cal. Jan. 8, 2010) (“Any 23647352.1 -12DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 assertion by Real that the Studios’ refusal to license the copying of DVDs caused an antitrust 2 injury apart . . . is contradicted by Real’s assertions that it believed no license was necessary.”). 3 APs’ theory that broadcasters would have licensed, or will license, NIL rights in broadcasts 4 in the absence of any legal authority recognizing such rights is exactly the type of attenuated, 5 speculative theory of antitrust injury that the law does not allow. The evidence will show that 6 broadcasters have never purchased group licenses of SAs’ NIL rights from colleges, universities, 7 conferences and/or the NCAA and that no NIL rights of any SAs are being transferred to networks 8 when the NCAA, conferences or colleges license broadcast rights. This is why broadcasters 9 negotiating licenses to televise team sporting events—and their experienced counsel—never even 10 mention whether the teams or leagues who own the rights to broadcast these events have obtained 11 these supposedly essential NIL rights from the players. And that is why the licenses themselves 12 do not grant these rights to the broadcasters. See, e.g., TX 2102, 2110, 2118, 2117, 2119, 2147, 13 2151, 2226, 3028, 3029. 14 As such, there is no evidence that broadcasters who purchased these licenses actually 15 exchange value for the SAs’ supposed NIL rights. APs will point to a few license agreements that 16 refer to the use of SAs’ NIL in live broadcasts as evidence that such NIL rights actually exist and 17 are transferred. But APs will have no evidence that any broadcaster believed that such a transfer 18 of rights was occurring or necessary. And APs will have no evidence—none—that any portion of 19 a license fee was paid for the supposed “right,” or that any such provision affected the value of 20 any license in any way. The record evidence, in fact, will show the opposite. 21 (c) APs Will Fail to Prove the Existence of a “Group Licensing” Market for Footage or Videogames 22 APs will not prove group licensing markets for footage or videogames, either. With 23 respect to footage, there can be no market for group licenses of SAs’ NIL for promotional 24 purposes because state right-of-publicity laws do not recognize a cause of action for non25 commercial uses which are also, as this Court has recognized, protected by the First Amendment. 26 See Dkt. No. 1025 at 25-26. As to commercial uses, as explained in Part IV.A.3 below, NCAA 27 rules prohibit licensing footage of current SAs for commercial purposes, so there is no market for 28 23647352.1 -13DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 any rights that APs claim to have in such footage. With respect to EA’s videogames, there is no market for group licenses to use SAs’ NIL 2 3 because the games did not use SAs’ real names or faces and/or were a transformative use protected 4 by the First Amendment. As such, there were no rights to license. And because the NCAA and its 5 member institutions will not license the trademarks EA needs to make games with SAs’ real 6 names and faces, there is no market for group licenses of SAs’ NIL for those games, either. 7 2. 8 APs Will Fail to Prove Anticompetitive Effects in Any Relevant Market APs will not prove—as they must—any substantial anticompetitive effects in any market 9 in which the NCAA has market power. See Newcal Indus., Inc., 513 F.3d at 1044 (antitrust 10 plaintiff must prove market power in rule of reason case); Gough, 585 F.2d at 390 (same).11 APs 11 will not present any evidence that the rules have reduced output for consumers, “which is a sound 12 general measure of anti-competitive effect,” 11 P. Areeda & H. Hovenkamp, Antitrust Law § 13 1503(b), at 394 (1991). Indeed, “[t]he core question in antitrust is output. Unless a contract 14 reduces output in some market, to the detriment of consumers, there is no antitrust problem.” 15 Chicago Prof’l Sports Ltd. P’ship v. Nat’l Basketball Ass’n, 95 F.3d 593, 597 (7th Cir. 1996).12 16 The evidence will reveal all four of Dr. Noll’s theories of anticompetitive effects as flawed. 17 18 11 See also Eastern Food Servs., Inc. v. Pontifical Catholic Univ. Servs. Ass’n, Inc., 357 F.3d 1, 5 19 (1st Cir. 2004) (“Virtually always, anticompetitive effects under the rule of reason require that the arrangement or action in question create or enhance market power.”); United States v. Visa U.S.A., 20 Inc., 344 F.3d 229, 238 (2d Cir. 2003) (plaintiff “must demonstrate that the defendant conspirators have ‘market power’ in a particular market”); L.A.P.D. Inc. v. Gen. Elec. Corp., 132 F.3d 402, 405 21 (7th Cir. 1997) (“proof of market power is essential; without it, any case under the Rule of Reason collapses”). 22 12 See also Menasha Corp. v. News Am. Mktg. In-Store, Inc., 354 F.3d 661, 663 (7th Cir. 2004) 23 (stating that “lower output and the associated welfare losses” are what “matter under the federal antitrust laws”); L.A.P.D. Inc., 132 F.3d at 404 (“Antitrust law is designed to protect consumers 24 from the higher prices—and society from the reduction in allocative efficiency—that occurs when firms with market power curtail output.”); Rebel Oil Co., Inc. v. Atl. Richfield Co., 51 F.3d 1421, 25 1433-1434 & n.4 (9th Cir. 1995) (“When a firm with market power cuts output to increase prices, price exceeds marginal cost. This causes a loss to society of all that additional output which the 26 firm could produce by lowering its price to marginal cost.”); LucasArts Entm’t Co. v. Humongous Entm’t Co., 870 F. Supp. 285, 289 (N.D. Cal. 1993) (“Limitations imposed by the antitrust laws 27 are thought to improve consumer welfare because they force firms to increase output from monopolistic to competitive levels.”). 28 23647352.1 -14DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 First, Dr. Noll contends that but for the NCAA’s rules, SAs would be paid cash for the use 2 of their NIL, which they are not paid today. That is not an “injury of the type the antitrust laws 3 were intended to prevent and that flows from that which makes defendants’ acts unlawful.” Atl. 4 Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990) (quotation marks omitted). APs 5 have no evidence of any reduction in output or choice—or any increase in price—for colleges, 6 universities or fans. Quite the opposite. As a result of continued extraordinary demand for NCAA 7 sports and the advent of new television technologies, there are more live broadcasts and 8 rebroadcasts of college football and basketball than ever before. “Where the defendant’s conduct 9 harms the plaintiff without adversely affecting competition generally, there is no antitrust injury.” 10 Paladin Associates, Inc. v. Montana Power Co., 328 F.3d 1145, 1158 (9th Cir. 2003). 11 Second, Dr. Noll contends that instead of paying SAs in cash for the use of their NIL, 12 colleges and universities have supposedly spent the money on coaches, facilities and other 13 benefits, which he says is an inefficient way to recruit. However, amenities designed to benefit 14 SAs make no sense as a measure of anticompetitive harm. See Somers, 729 F.3d at 963 (“There 15 can be no antitrust injury if the plaintiff stands to gain from the alleged unlawful conduct.”) 16 (quotation marks omitted). The Court will hear testimony about the benefits that SAs have 17 received from their coaches. Regardless, the NCAA’s experts will explain that there is no 18 evidence that increased spending on coaching salaries would have been paid to SAs instead. And 19 university administrators will testify that most major facilities projects are funded by debt or 20 donations which could not be raised to finance cash payments to SAs. 21 Third, Dr. Noll claims that some SAs have declined scholarships or left college early 22 because they could not obtain additional compensation to pay for the indirect costs of college not 23 covered by their scholarships. However, Dr. Noll’s method for proving this effect is pure 24 speculation. If Dr. Noll cannot find any information about why an SA with scholarship offers did 25 not appear or stopped appearing on a college football or basketball roster, he simply assumes that 26 the explanation is that college was too expensive. This reliance upon assertion rather than analysis 27 confirms APs’ dearth of evidence that the NCAA’s rules have limited output. 28 23647352.1 -15DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 Fourth, the only products whose output Dr. Noll claims have been reduced are college- 2 themed videogames with SAs’ real names and faces.13 As to these products, however, Dr. Noll 3 has not provided any economic analysis to determine whether the market is for college sports 4 videogames, sports videogames, or all videogames. See, e.g., Reifert, 450 F.3d at 318. The 5 answer matters, because EA’s college-themed videogames are only a fraction of the videogame 6 market. Since APs will not prove that the relevant market is equally limited, they will not be able 7 to prove market power or significant anticompetitive effects. See, e.g., United States v. Microsoft 8 Corp., 253 F.3d 34, 70 (D.C. Cir. 2001) (noting, in exclusive dealing case, foreclosure of “roughly 9 40% or 50% share usually required in order to establish a § 1 violation”); Bepco, Inc. v. Allied10 Signal, Inc., 106 F. Supp. 2d 814, 828 (M.D.N.C. 2000) (foreclosure of 18.5% or 21.5% of 11 relevant market “fall[s] far short of any value presumed to be substantial”). 12 3. 13 The Rules Do Not Restrain Former SAs from Licensing their NIL APs contend that the NCAA has restrained both current and former SAs from entering into 14 group licenses for the use of their NIL. As to former SAs, the alleged restraint can only apply to 15 licenses for the use of SAs’ NIL in rebroadcasts or other non-live uses of game footage because, 16 by definition, live broadcasts involve only current SAs. There is no restraint on former SAs. 17 NCAA bylaws have no force against SAs who are no longer eligible to participate in 18 NCAA sports. APs will have no evidence to the contrary on this point. Instead, APs will point to 19 an eligibility form that they contend SAs are required to sign in order to participate in NCAA 20 sports. APs’ theory appears to be that NCAA rules require them to sign a form giving up their 21 NIL rights after college in order to play during college and these rights “have already been sold” 22 when SAs graduate. Dkt. No. 172 at 6. 23 No evidence at trial will support this theory. The evidence will show that the only use the 24 NCAA makes of SA NILs is to “generally promote NCAA championships or other NCAA events, 25 activities or programs.” TX 2240-4. That is all. As relevant here, that applies only to promoting 26 27 13 APs argue that the “NCAA would still sell jerseys tethered to actual players,” but do not allege a market for any group licenses of NIL for jerseys. Dkt. No. 172 at 20. 28 23647352.1 -16DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 one event—the Division I Men’s Basketball Championship. Otherwise, the NCAA has not 2 obtained, does not own and does not license the right to use the NIL of any SAs. The NCAA 3 owns the copyrights to footage of the Championship and licenses that footage to third-parties for 4 other purposes but it does not purport to license the use of SAs’ NILs for those purposes. 5 Former SAs have full ownership of their NILs and are free to take legal action against 6 unauthorized uses. Named APs will testify that they have licensed their NIL after college and that 7 the NCAA did nothing to try and stop them. Further, the NCAA’s experts will explain that the 8 licensing agencies’ files contain records of hundreds of licenses for former SAs. APs cannot and 9 will not explain how to reconcile this testimony and evidence with their claim that the NCAA 10 forced them to give up and then sold their NIL rights, leaving them nothing to license. To the contrary, the NCAA warns third-parties at every turn that they need former SAs’ 11 12 consent to use their NIL. This is an explicit term of the NCAA’s licenses for its copyrighted 13 footage, see TX 3053-2, and the NCAA’s licensing guidelines for its Corporate Champions and 14 for broadcast networks such as CBS and ESPN.14 The NCAA repeatedly informs other third15 parties of the same restriction.15 APs will fail to prove that the NCAA restrains former SAs. 16 4. 17 18 The Challenged Rules Are Not Commercial Activity Subject to the Sherman Act Evidence that the NCAA does not license SAs’ NIL for commercial advantage will also establish that the NCAA’s rules are “not designed to generate profits in a commercial activity but 19 20 14 See TX 3190-28 (“Photographic, video or other graphic individual images of [SAs] (even if 21 only [SA] body parts; e.g., hands or feet) may be used for commercial purposes only after the [SA] has completed his or athletics eligibility and upon receipt of consent from the individual 22 pictured.”) (emphasis added); TX 3009-0042, -43 (“In all instances, it will be the responsibility of the advertiser to obtain prior written consent of any individuals appearing in an advertisement or 23 promotion.”) (emphasis in original); TX 332-5 (licensing guidelines for ESPN stating that rights “to use the images of individuals have to be obtained from . . . those persons”); TX 3017-9. 24 15 See, e.g., TX-0293-1 (Kraft Foods) (“Please note the NCAA does [not] own the likeness to the 25 individuals featured on the footage and does not have the ability to give the individual’s consent.”); TX 0308-1 (Cingular) (“Cingular will need to clear all the likenesses of the athletes 26 that appear in the footage if they are using as a commercial or promotional application. I cannot guarantee that the individuals will not charge a fee for the use of their likeness.”); TX 3176-1 27 (DirecTV); TX 0336-1 (Nike); TX 303, 304, 313, 719, 3045, 3054, 3059, 3068, 3092, 3094, 3109, 3113, 3128, 3135, 3136, 3137, 3138, 3154, 3673, 3716. 28 23647352.1 -17DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 to preserve amateurism by assuring that the recruitment of student athletes does not become a 2 commercial activity.” Gaines v. NCAA, 746 F. Supp. 738, 743-44 (M.D. Tenn. 1990). As such, 3 they are “anti-commercial and designed to promote and ensure competitiveness amongst NCAA 4 member schools.” Bassett v. NCAA, 528 F.3d 426, 433 (6th Cir. 2008) (emphasis in original). That is why several courts have held that the NCAA’s amateurism rules are not 5 6 commercial activity subject to the Sherman Act. See id. (“NCAA’s rules on recruiting student 7 athletes, specifically those rules prohibiting improper inducements and academic fraud, are all 8 explicitly non-commercial.”); Smith v. NCAA, 139 F.3d 180, 185-86 (3d Cir. 1998) vacated on 9 other grounds by, 525 U.S. 459 (1999) (holding that “the Sherman Act does not apply to the 10 NCAA’s promulgation of eligibility requirements” because “[r]ather than intending to provide the 11 NCAA with a commercial advantage, the eligibility rules primarily seek to ensure fair competition 12 in intercollegiate athletics”) (internal citations and quotation marks omitted).16 13 These decisions are consistent with Supreme Court and Ninth Circuit precedent that while 14 “the Sherman Act expressly requires a showing of restraint ‘of trade or commerce among the 15 several States,” “[n]ot every aspect of life in the United States is to be reduced to such a single16 minded vision of the ubiquity of commerce.” Dedication & Everlasting Love to Animals v. 17 Humane Soc. of U.S., Inc., 50 F.3d 710, 712-714 (9th Cir. 1995) (emphasis added) (quoting 15 18 U.S.C. § 1). See also Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 214 (1959) (The 19 Sherman “Act is aimed primarily at combinations having commercial objectives and is applied 20 only to a very limited extent to organizations . . . which normally have other objectives.”) (citing 21 Apex Hosiery Co. v. Leader, 310 U.S. 469, 493 (1940)). 22 23 24 16 See also Gaines, 746 F. Supp. at 743-44; Jones v. NCAA, 392 F. Supp. 295, 303-04 (D. Mass. 1975) (upholding eligibility rules precluding SA compensation where plaintiff had “not shown 26 how the action of the N.C.A.A. in setting eligibility guidelines ha[d] any nexus to commercial or business activities in which the defendant might engage”). Cf. Marjorie Webster Jr. Coll., Inc. v. 27 Middle States Ass’n of Colleges & Secondary Sch., Inc., 432 F.2d 650, 654-55 (D.C. Cir. 1970) (college accreditation policies were not commercial activity subject to Sherman Act). 28 25 23647352.1 -18DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 B. 2 3 The Challenged Rules Promote Competition in Multiple Ways 1. The Rules Increase Consumer Choice and Demand As set forth above, the evidence will show that the NCAA’s amateurism rules define 4 NCAA sports as a unique product and thereby “widen consumer choice” for both fans and 5 athletes. Bd. of Regents, 468 U.S. at 102. Providing this additional choice is sufficient to sustain 6 the NCAA’s rules regardless of whether doing so increases demand. At a minimum, however, this 7 is also a procompetitive benefit relevant to a full rule of reason analysis. 8 The evidence will also show that, in addition to increasing consumer choice, the collegiate 9 model does increase consumer demand for college sports. The NCAA has the only statistical 10 evidence in the record on this question—a survey by an unchallenged expert, Dr. Michael Dennis, 11 which shows that interest in watching and attending college football and basketball games would 12 significantly decline if SAs received payments in the amounts that APs’ experts predict they 13 would without the NCAA’s rules. Importantly, the survey shows that interest would decline 14 among the most intense and the most casual fans alike, which corroborates other surveys and the 15 opinions of the NCAA’s experts. 16 APs do not have any statistical evidence to support their conjecture that fan interest would 17 not decline if SAs were paid as APs propose. They merely assert that it is “obvious” that “some of 18 what drives fan interest” is attributable to other factors. Dkt. No. 972 at 14 (emphasis added). 19 That proves nothing. APs rely on anecdotal examples about viewership for isolated games 20 involving SAs penalized for accepting improper payments, but make no effort to disaggregate 21 other factors that have nothing to do with the payments, including the public’s appetite for 22 “scandals.” APs also rely on the fact that some sports have remained popular after they were 23 professionalized, but ignore that these sports did not have to compete with already existing 24 professional leagues as college sports would if SAs were paid for appearing in televised games. 25 26 2. The Rules Increase Output “The core question in antitrust is output.” Chicago Prof’l Sports Ltd., 95 F.3d at 597. 27 Indeed, “a market can be said to become increasingly competitive when its output increases.” 11 28 P. Areeda & H. Hovenkamp, Antitrust Law, § 1901(a), at 225. The entire logic of a sports league 23647352.1 -19DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 and why it “can only be carried out jointly,” Bd. of Regents, 468 U.S. at 101, is that it increases 2 output of competition by making it possible to organize games. Indeed, the NCAA joint venture 3 has increased output substantially. Since all of the 350 member colleges and universities in 4 Division I agree on the rules that are consistent with their values, all of them can play each other. 5 This provides for more permutations of possible games and potential matchups between diverse 6 schools, which increases consumer choice and demand. The evidence will be undisputed that one 7 key driver of March Madness’s enormous popularity is the fact that 350 schools are eligible for 8 the tournament and the games are often never-before-seen matchups. 9 The NCAA will show at trial that, in a world where colleges and universities can pay SAs 10 cash for their supposed NIL rights, the number of permutations will fall. If some colleges and 11 universities decide to pay their SAs for group licenses for their NILs, other colleges and 12 universities will have no interest in having their students play against SAs at these schools. Some 13 will have no interest even in being part of an organization that allows these SAs to play. Other 14 colleges and universities will leave Division I because they simply lack the resources to compete 15 in cash bidding for recruits. The result will be a smaller league—fewer possible games and fewer 16 potential matchups between different schools. In short, less competition. 17 18 3. The Rules Maintain Competitive Balance “Numerous courts, including the Supreme Court, have recognized that promoting 19 competitive balance among sports teams serves a ‘legitimate’ procompetitive purpose and may 20 justify the imposition by sports leagues of certain restraints on competition.” Dkt. No. 1025 at 33 21 (citing Am. Needle, 560 U.S. at 204). The courts have recognized promoting competitive balance 22 as procompetitive in itself and have not required evidence of any effect of balance on demand. 23 Nevertheless, the evidence also will show that competitive balance is important to demand: 24 if competition is too lop-sided, games are less interesting to watch, but they are also less 25 interesting to watch if competition is so balanced that there are no dynasties and no underdogs. 26 The ideal is some modest level of imbalance: enough to create storylines, but not so much as to 27 create snoozers. The NCAA will present evidence showing that college football and men’s 28 basketball are at least as balanced—or about as properly imbalanced—as the NFL and the NBA. 23647352.1 -20DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 However, the real issue is not whether college sports are properly balanced but what 2 factors explain success in college sports and whether eliminating the NCAA’s rules would change 3 those factors in ways that are inappropriate for educational institutions. 4 According to APs’ experts, money is the determining factor in success in all sports. 5 Indeed, they have elevated this theory to the “Invariance Principle” which supposedly holds that, 6 no matter what the rules of a sports league are, the teams with the most money will always be the 7 best. Thus, APs’ experts claim that changing the NCAA’s rules will have no effect whatsoever. 8 This is wrong. The NCAA’s experts will present empirical analyses showing that revenue 9 and spending are not strongly correlated with success and that, instead, non-monetary factors play 10 a large role. The NCAA’s experts will also present analyses showing that, in APs’ but-for world 11 where colleges can use broadcast revenues to pay SAs for their NIL, many recruits will have 12 significant—in many cases, six-figure—incentives to attend schools with more revenue. In those 13 circumstances, it is basic economics that allowing cash payments for NIL for the first time will tilt 14 the distribution of talent and success towards colleges and universities with more cash to spend. 15 However, the evidence will also show that because students choose where to go to college, 16 the NCAA’s member institutions will not be able to use professional teams’ methods—such as 17 drafts and trades—to preserve balance in a market for cash offers for NIL. Recruits in Oakland 18 cannot be drafted by Stanford and SAs at Berkeley cannot be traded to UCLA. 19 20 4. The Rules Further the Integration of Athletics and Education The NCAA will show that the rules at issue improve the quality of the education that SAs 21 receive—which is a classic procompetitive benefit. See Cnty. of Tuolumne v. Sonora Cmty. Hosp., 22 236 F.3d 1148, 1160 (9th Cir. 2001) (“any anticompetitive harm is offset by the procompetitive 23 effects of SCH’s effort to maintain the quality of patient care that it provides.”); see also 24 Deutscher Tennis Bund v. ATP Tour, Inc., 610 F.3d 820, 833 (3d Cir. 2010) (sport “rules and 25 regulations can be procompetitive where they enhance the ‘character and quality of the 26 ’product’’”) (quoting Bd. of Regents, 468 U.S. at 112); United States v. Brown Univ., 5 F.3d 658, 27 674 (3d Cir. 1993) (colleges’ agreement was procompetitive if it “improved the quality of the 28 educational program”); McCormack v. NCAA, 845 F.2d 1338, 1345 (5th Cir. 1988) (“The goal of 23647352.1 -21DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 the NCAA is to integrate athletics with academics.”). Thus, APs are simply wrong that the 2 educational nature of NCAA rules cannot be procompetitive. Indeed, the procompetitive benefits 3 of improving education justify restraints on competition that might otherwise violate the antitrust 4 laws. See Brown Univ., 5 F.3d at 678 (“It may be that institutions of higher education require that 5 a particular practice, which could properly be viewed as a violation of the Sherman Act in another 6 context, be treated differently.”) (internal quotation marks omitted). 7 The evidence will show that the NCAA’s rules improve SAs’ educational experience in 8 two ways. First, by ensuring that SAs’ involvement in intercollegiate athletics is as students 9 rather than as professionals, the rules focus SAs on spending their time doing what students do 10 rather trying to make as much money as possible, which is what professionals do. The NCAA will 11 present hard evidence—data—that football and men’s basketball SAs, do, in fact get an education, 12 including statistical analyses showing that these SAs graduate and achieve success at equal or 13 higher rates than other young people with similar backgrounds. 14 Further, numerous college and university administrators will testify based on their many 15 decades of experience in higher education that permitting SAs to participate in a bidding war 16 would undermine their ability to be effective students. No less than in other areas of the law, this 17 testimony about how to advance an institution’s educational mission must be assessed in 18 accordance with “our tradition of giving a degree of deference to a university’s academic 19 decisions, within constitutionally prescribed limits.” Grutter v. Bollinger, 539 U.S. 306, 328 20 (2003) (“Our scrutiny of the interest asserted by the Law School is no less strict for taking into 21 account complex educational judgments in an area that lies primarily within the expertise of the 22 university.”); see also Fisher v. Univ. of Texas at Austin, 133 S. Ct. 2411, 2419 (2013) (affirming 23 “deference to the University’s conclusion, based on its experience and expertise, that a diverse 24 student body would serve its educational goals”) (internal quotations omitted). 25 APs will only point to anecdotal allegations that some SAs at some schools have not been 26 focused on or have not received a college education. These isolated examples fail to prove that the 27 rules fail for the majority of SAs who want an education. And, importantly, the anecdotes do not 28 show that eliminating the rules would improve education for any SA at any school. 23647352.1 -22DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 Second, the rules make it possible for colleges and universities to support broad-based 2 athletics programs that bring to campus hundreds of SAs in dozens of other sports who might 3 otherwise not be able to attend college. These SAs enhance the diversity of the student body with 4 whom football and men’s basketball SAs can interact, which improves their college experience. 5 See Brown Univ., 5 F.3d at 674 (district court erred by rejecting procompetitive justification that 6 by “promoting socio-economic diversity at member institutions,” policies “improved the quality of 7 the education offered by the schools and therefore enhanced the consumer appeal”). Cf. Grutter, 8 539 U.S. at 328 (deferring to school’s “educational judgment that such diversity is essential to its 9 educational mission” and noting that the “assessment that diversity will, in fact, yield educational 10 benefits is substantiated” by numerous studies). Further, the opportunity to attend games in other 11 sports and support the SAs who play in them improves the campus community for all students, 12 including football and men’s basketball SAs. Indeed, APs admit it is “obvious” that athletics 13 create an “enduring connection between the university and its students, alumni, and area 14 residents.” Dkt. No. 172 at 14. University presidents and administrators will explain that APs are 15 wrong that their injunction “would not disrupt that connection in any way.” Id. 16 V. 17 18 19 20 21 22 NO LESS RESTRICTIVE ALTERNATIVE TO THE CHALLENGED RULES WOULD ACHIEVE THEIR PROCOMPETITIVE BENEFITS. As explained above, there is no need to analyze whether the rules’ “legitimate objectives can be achieved in a substantially less restrictive manner.” Tanaka, 252 F.3d at 1063. This inquiry has “no application here, where the challenged business practice involves the core activity of the joint venture itself.” Dagher, 547 U.S. at 7. Nevertheless, under a full rule of reason inquiry, APs must “show that ‘an alternative is substantially less restrictive and is virtually as effective in serving the legitimate objective without significantly increased cost.’” Cnty. of 23 Tuolumne, 236 F.3d at 1159 (emphasis in original) (internal quotation marks omitted). 24 APs agree that the governing legal standard means that any proposal for paying SAs must 25 26 be consistent with amateurism: “The issue is not whether college sports should remain amateur, but whether the NCAA’s definition of an amateur and its rules to enforce that definition are 27 reasonably necessary to retain the amateur status of college sports and the popularity of college 28 23647352.1 -23DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 athletics that, according to defendants’ experts, flow from its amateur status.” Dkt. No. 896-4 2 (Noll Reply Report) at 4. As this Court has ordered, “Plaintiffs represented at the hearing that 3 they will not proffer any less restrictive alternatives at trial that their experts did not discuss in 4 their reports.” Dkt. No. 166 at 11. In his reports, Dr. Noll analyzed two very specific methods “to 5 address whether the objectives that are served by a reasonable definition of amateurism could be 6 achieved by a less restrictive rule.” Dkt. No. 896-5 (Noll Merits Report) at 134. Neither avails 7 APs. 8 First, Dr. Noll proposes to “rely on the definitions of amateurism that have been adopted 9 by other organizations.” Id. He opines that “[t]he policies in other amateur sports identify less 10 restrictive alternatives that the NCAA could have adopted.” Id. In other words, APs recognize 11 that other amateur sports organizations provide objective evidence of whether the NCAA’s rules— 12 and NCAA sports—are amateur. The problem is that, as explained above, none of them allows or 13 provides the payments for group licenses that APs claim would be consistent with amateurism. 14 Second, Dr. Noll proposes that “[r]evenues from licensing the bundle of the intellectual 15 property of a college and the NILs of its team members would be divided between a college and 16 its team members in accordance with common practices in other markets, and then the team share 17 would be divided among team members in equal shares, again in accordance with common market 18 practices.” Dkt. No. 896-5 at 134. The “common market practices” for distributing licensing 19 revenue that Dr. Noll has examined are “practices in professional sports.” Id. at 88-89. 20 There are two problems with this professional “yardstick” approach. Most obviously, any 21 proposed alternative for paying SAs that is drawn from professional sports is not an alternative 22 way to preserve amateurism in college sports. It is a proposal to eliminate amateurism. Calling 23 APs amateurs while paying them as professionals is a label, not a less restrictive alternative. 24 Dr. Noll’s equal-sharing model also has no grounding in fact. Equal sharing of broadcast 25 revenue does not happen in sports. Indeed, the evidence will show that there are no group licenses 26 at all for the use of NFL or NBA players’ NIL in live broadcasts, let alone any sport where the 27 athletes were paid equally for such a license for the use of supposed NIL rights. 28 Absent any evidence that any sport—amateur or professional—has ever implemented 23647352.1 -24DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 group licenses for the use of athletes’ NIL in live broadcasts with equal revenue sharing, APs’ 2 suggested regime is not a less restrictive alternative for what the NCAA’s rules could be but rather 3 a proposal for what the NCAA’s rules should be. But 4 plaintiffs cannot be permitted to offer possible less restrictive alternatives whose efficacy is mainly a matter of speculation. A skilled lawyer would have little difficulty imagining possible less restrictive alternatives to most joint arrangements. Proffered less restrictive alternatives should either be based on actual experience in analogous situations elsewhere or else be fairly obvious. Tending to defeat such an offering would be the defendant’s evidence that the proffered alternative has been tried but failed, that it is equally or more restrictive, or otherwise unlawful. 5 6 7 8 9 11 Phillip E. Areeda, Antitrust Law ¶ 1913b, at 375-76 (2011) (emphasis added). Were it 10 otherwise, “the imaginations of lawyers” would be guaranteed to “conjure up some method of 11 achieving the business purpose in question that would result in a somewhat lesser restriction of 12 trade[,]” and “courts would be placed in the position of second-guessing business judgments as to 13 what arrangements would or would not provide ‘adequate’ protection for legitimate commercial 14 interests.” Am. Motor Inns, Inc. v. Holiday Inns, Inc., 521 F.2d 1230, 1249-50 (3d Cir. 1975).17 In short, APs’ proposed alternatives are blueprints for the NCAA to produce a different 15 16 kind of sports, which deprives the NCAA’s members of “‘ample latitude’ to adopt rules preserving 17 ‘the revered tradition of amateurism in college sports.’” Dkt. No. 876 at 15 (quoting Bd. of 18 Regents, 468 U.S. at 120). APs’ claims accordingly fail. 19 20 21 22 23 24 25 17 See also M&H Tire Co., Inc. v. Hoosier Racing Tire Corp., 733 F.2d 973, 987 (1st Cir. 1984) 26 (rejecting “less restrictive alternatives” that “are more hypothetical than practical”). Cf. Dep’t of Justice & Federal Trade Comm’n, Horizontal Merger Guidelines 30 (Aug. 19, 2010) (“Only 27 alternatives that are practical in the business situation faced by the merging firms are considered in making this determination.”). 28 23647352.1 -25DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW 1 DATED: June 5, 2014 Respectfully submitted, 2 MUNGER, TOLLES & OLSON LLP 3 4 By: 5 /s/ Glenn D. Pomerantz Glenn D. Pomerantz 6 Attorneys for Defendant National Collegiate Athletic Association 7 8 9 10 11 12 CERTIFICATE OF SERVICE I hereby certify that on June 5, 2014, I electronically filed the foregoing document with the Clerk of the Court using the CM/ECF system which will send notification to the e-mail addresses registered. 13 By: 14 15 /s/ Glenn D. Pomerantz MUNGER, TOLLES & OLSON LLP Attorneys for NCAA 16 17 18 19 20 21 22 23 24 25 26 27 28 23647352.1 -26DEFENDANT’S MOTIONS IN LIMINE 09-CV-3329-CW

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