NCAA and Class Action and Lawsuits and Antitrust and College Sports and Law and Sports Business

Antitrust lawsuit threatens 'essence' of NCAA

March 12, 2011

Former Rice University football player Joseph Agnew has filed an antitrust lawsuit against the NCAA, arguing that one-year limits on athletic scholarships is a “blatant price-fixing agreement” between the NCAA and its member schools.

The case this month was moved from U.S. District Court in Northern California, where it was filed in October, to the Southern District of Indiana division in Indianapolis, home of the NCAA.

Milton Thompson mug Thompson

In a 17-page legal complaint, Agnew claims NCAA member schools have “conspired to maintain the price of bachelor’s degrees for NCAA student-athletes at artificially high levels” by refusing to offer multi-year discounts and limiting the number of scholarships a college can offer to athletes.

“By unlawfully agreeing not to offer multi-year athletics-based discounts, the NCAA and its member institutions have ensured that student-athletes who are injured or who simply do not meet the school’s expectations can be cut from a team and their scholarships terminated,” Agnew claims in his lawsuit.

Agnew’s attorneys are arguing essentially that Agnew was so highly recruited coming out of high school that if schools had to compete for his services in an open market he would have gotten a guaranteed four-year scholarship with a no-cut clause.

Agnew is seeking class action status for his lawsuit so all other student-athletes who have had their scholarship reduced or revoked can benefit. Legal experts said if Agnew is successful, the result would be quite expensive for the NCAA and its members.

The suit is not seeking a specified amount of money, but seeks “triple the damages” for Agnew and all other student-athletes harmed in a similar manner.

NCAA officials did not return calls seeking comment on the case.

“It should be noted that the award of athletic scholarships on a one-year, renewable basis is the more typical approach taken within higher education for talent-based and academic scholarships in general,” NCAA spokesman Bob Williams wrote in an e-mail to USA Today.

In its legal response to the lawsuit, the NCAA states, “The NCAA does not agree that a bachelor’s degree can be described as a ‘product’ for antitrust purposes, and denies that the NCAA’s financial aid rules constitute an agreement to fix the price of any product.”

If Agnew is successful in his lawsuit, it would “fundamentally change the NCAA,” said Gary Roberts, dean of the Indiana University School of Law at Indianapolis.

“This lawsuit challenges the very essence of what the NCAA does,” Roberts said. “Every single rule the NCAA has standardizes behavior among its members. So if this is successful, almost any of its rules and regulations could be challenged.”

The lawsuit says Agnew lost his scholarship after he underwent ankle and shoulder surgeries before his junior year in 2008.

According to Rice records, Agnew played in all 13 games his freshman year. Before Agnew’s sophomore year, Rice Coach Todd Graham left. Agnew’s playing time decreased under new coach David Bailiff.

Rice spokesman B.J. Almond said the school “follows the standard NCAA practice on awarding athletic scholarships on a year-to-year basis.”

Rice officials confirmed that Agnew’s scholarship was not renewed after his sophomore season, but they noted the scholarship was renewed for Agnew’s junior year after he appealed to school officials. Agnew was not offered a scholarship for his senior year.

Since 1973, the NCAA has banned colleges from offering scholarships for longer than one academic year. Scholarships are usually renewed annually, but schools can decide to terminate the scholarship for almost any reason, including athletic performance.

Milt Thompson, an attorney and owner of an Indianapolis-based sports marketing firm, thinks the NCAA has a good chance to defend itself against Agnew’s claims.

“I don’t see anything illegal about having a series of one-year contracts for your room and board,” said Thompson, who does not represent the NCAA. “I would feel confident defending this from the NCAA’s standpoint.”

But there might be a complication, Roberts said.

“While I don’t think it’s likely that a court is going to be willing to issue an opinion that the NCAA’s standardized rules amount to antitrust, the criticism could be if the student’s scholarship was terminated due to no fault of his own,” Roberts said.

Agnew’s attorneys did not return calls to IBJ seeking comment, but told ESPN that the former Rice player was cut from the team and did not have his scholarship renewed due to injuries incurred playing football.

“Here’s a kid who as a high school recruit had multiple scholarship offers,” Agnew’s attorney, Rob Carey, told ESPN. “Then he gets injured, and he’s no longer wanted. If schools had to compete to sign him coming out of high school, he would have had a four-year scholarship.”•

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