Court Opinion

ID: 8917025
Source: CourtListenerOpinion
Date Created: 2022-11-27 05:29:29.545348+00
Date Added: 2024-06-11T17:09:05.120778
License: Public Domain

BARRETT, Circuit Judge,
dissenting:
I would reverse the judgment of the district court, quash the injunction and hold that the NCAA television regulations and contracts are valid and lawful. It is my view that the district court’s findings, affirmed by the majority opinion, that the NCAA television contracts, and its adjunct rules, constitute per se price fixing violations under 15 U.S.C. § 1 (1976) and monopolization violations under 15 U.S.C. § 2 (1976) are clearly erroneous. I am convinced that although there is evidence to support the trial court findings, my review of the entire evidence leads me to a firm conviction that a mistake has been committed. United States v. United States Gyp*1163sum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746 (1948).
In concluding that the NCAA television contracts constitute per se price fixing violations, the district court found, inter alia: (a) that although it is true that membership in the NCAA is voluntary in the sense that a member institution may withdraw from the NCAA at any time, still, as a practical matter, membership in the NCAA is a prerequisite for institutions wishing to sponsor a major, well-rounded athletic program; (b) NCAA membership is not voluntary for Oklahoma and Georgia, or for many other member institutions for which athletic excellence is an institutional priority; (c) college football is a business, operated by professionals and, like any business, the schools participate in intercollegiate football to maximize revenue and minimize expense “while at the same time maintaining the level of quality which makes their product attractive to the buying public”; and (d) even though Oklahoma and Georgia properly challenge the NCAA television contracts as violative of the antitrust laws causing them injury, still they “believe that NCAA has an important role in regulating such matters as the rules of play, standards of amateurism and academic eligibility.”
I.
In concluding that college football is a business operated by professionals to maximize revenue and minimize expense, the district court specifically found:
Oklahoma’s intercollegiate football program has, over the years, produced many outstanding and highly-ranked teams. Oklahoma is capable of attracting large national television audiences for its televised games. Football is the only sport sponsored by Oklahoma which actually generates revenue beyond the costs of fielding a team. The profits generated by the football team support all of the other sixteen men’s and women’s sports in which Oklahoma participates. In recent years, these programs have become more and more expensive to maintain due to increasing costs and the expansion of athletic programs for women. As a result, Oklahoma seeks to maximize its revenues from football television. Like Oklahoma, Georgia has compiled a record of outstanding success with its intercollegiate football program, and football is the major revenue producing sport for Georgia. Budgetary pressures have forced cuts in Georgia’s athletic program, including the elimination of its intercollegiate wrestling program. Georgia also seeks to maximize the revenues generated from the televising of its football games.
Board of Regents v. NCAA, 546 F.Supp. 1276, 1282 (W.D.Okl.1982).
These findings do not address the purposes and objectives of the NCAA, i.e., preserving a competitive balance in intercollegiate athletics, insuring the amateurism of college athletics and avoiding the aura of professional sports. It is my view, as set forth more fully hereinafter, that the NCAA television plan’s primary purpose is not anti-competitive. Rather, it is designed to further the purposes and objectives of the NCAA, which are to maintain intercollegiate football as an amateur sport and an adjunct of the academic endeavors of the institutions. One of the key purposes is to insure that the student athlete is fully integrated into academic endeavors. These are the “redeeming virtues” which did not impress the trial court or the majority. They are so compelling, in my opinion, that under the “rule of reason” analysis the public interest and that of the parties is served by sustaining the restraint as reasonable.
II.
The NCAA is an unincorporated, nonprofit, educational association with some 883 active members, consisting of private and public colleges and universities in the United States. The NCAA was formed in 1906 to regulate and supervise college athletics throughout the United States, and is dedicated to preserving amateurism in athletic activities among its member institutions, with the goal of maintaining those activities on an ethical plane in keeping *1164with the dignity and high purpose of education. Thus, its goals are an integral part of the academic scheme. Of the approximate 883 members, participation in intercollegiate athletics involves about 271 members in Division I, 188 members in Division II and 281 members in Division III. Approximately 143 member institutions do not engage in intercollegiate athletics.
All divisions are subject to NCAA rules governing academic standards in intercollegiate athletics in keeping with the fundamental policy of the NCAA to maintain intercollegiate athletics “as an integral part of the educational program and the athlete as an integral part of the student body.” Student-athletes must meet various academic standards in order to become and remain eligible for participation in NCAA sanctioned athletic events. These requirements are designed to insure that those who engage in college athletics are genuine students. One of the recent bylaws requires proof that the student-athlete makes proper progress toward a degree within prescribed terms to remain eligible for competition. Obviously, the success of the NCAA goal is in large measure dependent upon the good-faith approach to compliance by the member institutions.
In addition to a variety of rules designed to insure adequate academic achievement by student athletes, the NCAA has complex and detailed rules and regulations dealing with recruiting, financial aid or benefits (intended to foster participation in intercollegiate sports by genuine amateurs in the sense that the student-athlete is primarily dedicated to academic goals), and limitations on the coaching staffs. These goals are in large measure accomplished by a strong, vigilant investigative arm of the NCAA dedicated to insuring that its member institutions abide the various rules, standards and bylaws designed to maintain the competitive amateur status of intercollegiate football within the academic framework. The complexity of the NCAA bylaws, rules and interpretations evidence the association’s effort to maintain and protect academic standards applicable to amateur student athletes.
The NCAA’s committee on infractions is responsible for enforcement of the NCAA program. It receives complaints, and in reliance on its investigative staff, determines facts and violations, and fixes penalties. Charles Alan Wright, Chairman of the Infractions Committee, testified that the work of this committee is dedicated to the NCAA policy of maintaining intercollegiate athletics as an integral part of the educational program, with the athlete an integral part of the student body, thus retaining a clear line of demarcation between college athletics and professional sports. The district court gave no credence or recognition to this testimony or similar testimony of other witnesses.
III.
There are relatively few federal court decisions speaking to the issue of amateur athletics’ inclusion under the federal antitrust laws. However, professional basketball, golf and hockey have been consistently held to be within the meaning of the Sherman Act. See Annot., 18 A.L.R.Fed. 489 (1974) (citing federal court decisions applying federal antitrust laws exclusively to the “business of professional sports.”).
In Hennessey v. NCAA, 564 F.2d 1136 (5th Cir.1977), the court was presented with a challenge to the NCAA bylaws limiting the number of assistant football coaches that a member institution could employ. The contention was made that the court was without jurisdiction because there had not been demonstrated sufficient impact on interstate commerce by virtue of the rule to bring the case within § 1 of the Sherman Act. The court held otherwise on this issue but upheld the NCAA bylaws there challenged and pertinently observed:
A goal of the NCAA, one which is endowed with certain benefits to society, is to “retain a clear line of demarcation between college athletics and professional sports.” Colleges with more successful programs, both competitively and economically, were seen as taking advantage of their success by expanding their pro*1165grams, to the ultimate detriment of the whole system of intercollegiate athletics. Financial pressures upon many members, not merely to “catch up”, but to “keep up”, were beginning to threaten both the competitive, and the amateur, nature of the programs, leading quite possibly to abandonment by many. “Minor” and “minority” sports were viewed as imperiled by concentration upon the “money makers”, such as varsity football and basketball.
[The NCAA regulation in question] was, with other rules adopted at the same time, intended to be an “economy measure”. In this sense it was both in design and effect one having commercial impact. But the fundamental objective in mind was to preserve and foster competition in intercollegiate athletics — by curtailing, as it were, potentially monopolistic practices by the more powerful — and to reorient the programs into their traditional role as amateur sports operating as part of the educational processes.
Id. at 1153.
I believe that the trial court disregarded the purposes and objectives of the NCAA set forth in Hennessey, supra. Instead of recognizing the NCAA goal of fostering balanced amateur competition among the respective division colleges and universities, the trial court viewed intercollegiate football competition not only as a business, but as a “pot of gold” business for those colleges and universities which have consistently recruited top athletes in keeping with their institutional priority of attaining athletic excellence. I believe that Oklahoma, Georgia and other college football powers which desire to be free from the provisions of the NCAA television rules and bylaws, and assert their “right” to contract independently for television dollars, in truth and effect insist on the best of two worlds. While solemnly proclaiming their allegiance to all other NCAA rules and regulations pertaining to intercollegiate football, they insist on invalidating the NCAA television contracts and the provisos relative to distribution of the receipts therefrom, based on the additional monetary rewards that their excellent football programs command in national television. I firmly believe that to the extent that the NCAA’s television restraints upon Oklahoma and Georgia and other member institutions with excellent football programs are anticompetitive, these restraints are fully justified under the rule of reason in that they are necessary to maintain intercollegiate football as amateur competition.
IV.
In Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 244, 62 L.Ed. 683 (1918), the Supreme Court succinctly stated the rule of reason to be: “The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.” It is my view that the district court failed to adequately focus on the procompetitive features of the NCAA television plan-contracts when considered in light of the entire NCAA design and purpose, the central objective of which is to maintain intercollegiate athletics on an amateur competitive basis.
In Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979), the basic question before the Court was whether the issuance of blanket licenses to copyrighted musical compositions at fees negotiated by American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) constituted a per se price fixing in violation of the antitrust laws. The district court dismissed the CBS complaint, concluding that the blanket license was not price fixing and a per se violation of the Sherman Act. The court of appeals reversed, holding that the blanket license issued to television networks was a form of price fixing illegal per se and also copyright misuse. The Supreme Court reversed the court of appeals and remanded for further proceedings under the “rule of reason”. Mr. Justice White delivered the opinion for the Court. Mr. Justice Stevens was the sole dissenter. The majority pertinently observed:
*1166In construing and applying the Sherman Act’s ban against contracts, conspiracies, and combinations in restraint of trade, the Court has held that certain agreements or practices are so “plainly anticompetitive”, National Society of Professional Engineers v. United States, 435 U.S. 679, 692, 98 S.Ct. 1355, 1365, 55 L.Ed.2d 637 (1978); Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 50, 97 S.Ct. 2549, 2557, 53 L.Ed.2d 568 (1977), and so often “lack .. . any redeeming virtue”, Northern Pac. R. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958), that they are conclusively presumed illegal without further examination under the rule of reason generally applied in Sherman Act cases. This per se rule is a valid and useful tool of antitrust policy and enforcement. And agreements among competitors to fix prices on their individual goods or services are among those concerted activities that the Court has held to be within the per se category. But easy labels do not always supply ready answers.
To the Court of Appeals and CBS, the blanket license involves “price fixing” in the literal sense: the composers and publishing houses have joined together into an organization that sets its price for the blanket license it sells. But this is not a question simply of determining whether two or more potential competitors have literally “fixed” a “price”.... The .. . literal approach does not alone establish that this particular practice is one of those types or that it is “plainly anticompetitive” and very likely without “redeeming value”....
Consequently, as we recognized in United States v. Topco Associates, Inc., 405 U.S. 596, 607-608, 92 S.Ct. 1126, 1133-34, 31 L.Ed.2d 515 (1972), “[i]t is only after considerable experience with certain business relationships that courts classify them as per se violations... . ” See White Motor Co. v. United States, 372 U.S. 253, 263, 83 S.Ct. 696, 702, 9 L.Ed.2d 738 (1963). We have never examined a practice like this one before
More generally, in characterizing this conduct under the per se rule, our inquiry must focus on whether the effect and, here because it tends to show effect, see United States v. United States Gypsum Co., 438 U.S. 422, 436 n. 13, 98 S.Ct. 2864, 2873 n. 13, 57 L.Ed.2d 854 (1978), the purpose of the practice are to threaten the proper operation of our predominantly free-market economy — that is, whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output and in what portion of the market, or instead one designed to “increase economic efficiency and render markets more, rather than less, competitive.” Id., at 441 n. 16, 98 S.Ct. at 2875 n. 16, see National Society of Professional Engineers v. United States, 435 U.S., at 688, 98 S.Ct. at 1363; Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S., at 50 n. 16, 97 S.Ct. at 2557 n. 16; Northern Pac. R. Co. v. United States, 356 U.S., at 4, 78 S.Ct. at 517.
Broadcast Music, Inc., supra 441 U.S. at 7-10, 19-20, 99 S.Ct. at 1556-57, 1562-63. (Footnotes omitted, emphasis supplied).
I recognize that if the rule of reason does not apply to the instant case, the NCAA television contracts may, by virtue of Arizona v. Maricopa County Medical Society, 457 U.S. 332, 102 S.Ct. 2466, 73 L.Ed.2d 48 (1982), constitute per se illegal price fixing. This would result because the “maximum” sum is “fixed” by virtue of the contracts which are binding on the NCAA member schools. Maricopa holds that the per se rule applies when there exists “a price restraint that tends' to provide the same economic rewards to all practitioners [colleges] regardless of their skill, their experience, their training, or their willingness to employ innovative and difficult procedures in individual cases.” Id. at 2475. Per se violations of § 1 of the Sherman Act are agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore *1167illegal. White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963); Northern Pacific Railway Co. v. United States, 356 U.S. 1, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958).
My research indicates that all of the reported cases wherein the per se rule has been applied have involved true competitive business enterprises operating in the interstate market where the goal is exclusively that of seeking a profit from the product or service offered to the public. See Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979); National Society of Professional Engineers v. United States, 435 U.S. 679, 98 S.Ct. 1355, 55 L.Ed.2d 637 (1978); United States v. Topco Associates, Inc., 405 U.S. 596, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972). Restraints on competition or on the course of trade in merchandising products moving in interstate commerce are not violative of the Sherman Act unless the restraint is shown to affect market prices or otherwise deprive purchasers and consumers of the advantages to which they are entitled from free competition in the market place. Apex Hosiery Co. v. Leader, 310 U.S. 469, 60 S.Ct. 982, 84 L.Ed. 1311 (1940).
Maricopa, supra, National Society of Professional Engineers, supra, and Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), involved prohibitive price restraints, even though those restraints were enmeshed with overall programs designed to accommodate needs of people who would benefit therefrom. At the core, however, was the fact that in each case the professionally skilled participants were seeking profits from their services. Thus, their activities constituted business enterprises in a pure competitive sense. I do not view the NCAA television contracts as falling in that category, because they are not designed to render the greatest profit for a business purpose.

V.

If the narrow focus in this case be placed, as I believe the trial court placed it, on the competition for television proceeds from contracts that are exclusively entered into by the NCAA and binding on its member schools, and contracts which may be entered into individually by the established intercollegiate football powers, I have little doubt that the total monetary benefits derived by the football powers would far exceed those received by them via the NCAA contracts. On that measure, then, the NCAA television contracts do constitute an anticompetitive restraint when compared with the potential dollars which the major football powers may command in the so-called “open market”.
Nevertheless, I conclude that the NCAA restraints are completely defensible under the rule of reason. The restraints upon Oklahoma and Georgia and other colleges and universities with excellent football programs insure that they confine those programs within the principles of amateurism so that intercollegiate athletics supplement, rather than inhibit, academic achievement. As thus measured, the restraint is not unreasonable in its effect on competition; its procompetitive effect clearly outweighs the anticompetitive effect. See Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977). Furthermore, there is no showing that the NCAA restraints laid upon Oklahoma and Georgia have injured the consumer public, i.e., those who view intercollegiate athletic events on television. Thus, the “fall back” position taken by the district court — that antitrust regulation applies when, as here, an association wields exclusive control over television contracts involving the conduct of intercollegiate football — must fail. The district court erroneously focused on the inhibition placed upon Oklahoma and Georgia and those NCAA member institutions similarly situated who likely could command far greater individual (institution-wise) monetary return for television rights to their football games if permitted to contract independent of the NCAA.
In addition to the amateurism goals promoted by the NCAA, the NCAA’s television contract restraints do, on balance, promote competition and enhance viewership at in*1168tercollegiate football contests. The NCAA television plan and its television contracts enhance overall viewership when one considers “output” — as entertainment — in the sense urged by the NCAA: those who view the games in the stadiums and those who view the games on television. If viewers are the “consumers”, as certainly they must be for antitrust purposes, overall viewership for all games between all participating NCAA members engaging in football, whether Division I, II or III, is increased, rather than reduced by virtue of the NCAA television plan. Critically, live viewership at games is protected by virtue of the plan.
I note that there is a sharp dispute whether NCAA sets or dictates the television “package” with the networks. In Maricopa, supra, the Supreme Court applied the per se rule to the medical society’s practice of setting maximum prices doctor members could claim in full payment for health services provided to policyholders of specified insurance plans. There was no dispute in Maricopa that the maximum price restraint tends to provide the same economic rewards to all medical practitioners, regardless of their dedication, skill or experience. There is no basis for comparing the medical practitioners in Maricopa with the NCAA member institutions. It is significant that the Maricopa majority observed that the “rule of reason” exception set forth in Continental T. V., Inc., v. GTE Sylvania Inc., supra, is the preferred method of determining whether a particular practice is in violation of the antitrust laws.
VI.
It is my conclusion that the rule of reason militates in favor of the NCAA. Its television contracts allow for near equal per-game payments to member universities. I agree with NCAA’s contention that, in the context of the Association’s goals and purposes, this is no more “price fixing” than that involved in a law partnership’s division of profits. The NCAA provisions on the division of television proceeds simply allocate those revenues among member institutions. This distribution does not affect television output. It does, however, foster competition among its members in keeping with its goal to assure amateurism in intercollegiate athletics and to maintain the primary status of the athlete as a student.
The NCAA distribution is aimed to assure a minimum of competitive balance on the playing fields. The NCAA is, then, a form of joint venture, and its television plan and contracts are an integral, all-important aspect of its purposes and goals. As such, the television contracts do not have the “pernicious effect on competition and lack of any redeeming virtue” stated in Northern Pacific Railway Co. v. United States, supra 356 U.S. at 5, 78 S.Ct. at 518.
The “Fundamental Policy” stated in the NCAA constitution, i.e., that of maintaining intercollegiate athletics as an integral part of the educational program, cannot be considered a profit-oriented goal. I conclude that the district court erred by subjugating the NCAA’s educational goals (and, incidentally, those which Oklahoma and Georgia insist must be maintained in any event) to the purely competitive commercialism of “every school for itself” approach to television contract bargaining. The statement of “Purposes” for NCAA television contracts for the years 1982-1985, in sum, reveals the district court’s error in refusing to recognize that under the rule of reason, the NCAA television contracts under challenge do not violate the federal antitrust laws:
The purposes of this Plan shall be to reduce, insofar as possible, the adverse effects of live television ... upon football game attendance and, in turn, upon the athletic and related educational programs dependent upon the proceeds therefrom; to spread football television participation among as many colleges as practicable; to reflect properly the image of universities as educational institutions; to promote college football through the use of television, to advance the overall interests of intercollegiate athletics, and to provide college football television to the public to the extent compatible with these other objectives.
Plaintiff’s Exhibit “LT”.
I would reverse the judgment of the district court.