The NCAA has been hit with yet another antitrust lawsuit in accordance with Section 1 of the Sherman Antitrust Act.  In Agnew v. NCAA, the Plaintiff, Joseph Agnew, attacks 1) the prohibition on multi-year athletics-based scholarships (Plaintiff’s petition calls scholarships discounts) and 2) caps on the athletics-based scholarships that can be awarded by member institutions.  Recently, the NCAA has been hit with a rash of antitrust litigation relating to athletics-based scholarships.  It appears this line of lawsuits is attempting to piggyback on the substantial settlement provided in White v. NCAA and the United States Justice Department’s announcement that it was investigating the NCAA to determine whether the NCAA’s prohibition on multi-year scholarships was a violation of antitrust laws.

According to Plaintiff’s petition, Joseph Agnew was a heavily recruited football student-athlete from Southlake Carroll High School in Southlake, Texas.  He garnered both athletic and academic success and received all-state honors following his senior season.  Mr. Agnew was recruited by eight (8) Division I institutions and ultimately selected Rice University.  In 2006, Mr. Agnew matriculated at Rice University and played in all thirteen (13) games as a true freshman.  During his sophomore season, his playing time was significantly reduced following a coaching change.  Problems continued for Mr. Agnew thereafter when he was required to have ankle and shoulder surgery and also experienced severe migraine headaches.  Prior to Mr. Agnew’s junior season, he was informed that he would no longer be associated with the Rice University football team and his scholarship would not be renewed.  Accordingly, Mr. Agnew filed an appeal to the non-renewal of his scholarship and ultimately was awarded a scholarship for his junior year.  However, he was not awarded a scholarship for his senior year and, therefore, was required to pay for the cost of tuition and other fees associated with attending Rice University.

In this litigation, Plaintiff has filed a class action suit seeking to set forth a class as follows:

Any individual who, while enrolled in an NCAA member institution, (i) received an athletics-based Grant-In-Aid (“GIA”) from an NCAA member institution for at least one year, (ii) had their GIA reduced or not renewed and (iii) subsequently paid tuition at a college, university or other institution of higher learning.

Plaintiff and possibly the class, if certified, argue that the above-referenced restrictions placed on athletics-based scholarships constitute a blatant price-fixing agreement between the member institutions NCAA (i.e., horizontal price-fixing).  Additionally, Plaintiff claims these restrictions are not necessary to protect the amateur status of the NCAA, but are a disguised plan to reduce costs and to deter competition.  But for such practice, Plaintiff argues NCAA would be forced to offer multi-year athletics-based scholarships to student-athletes and would be forced to dramatically increase the overall supply of scholarships.

Plaintiff’s argue the relevant market in this antitrust litigation is a bachelor’s degree from accredited colleges and/or universities in the United States.  Such a market, according to the Plaintiff, does not have a reasonable substitute because a vast majority of salaried positions in the United States require the applicant to possess a bachelor’s degree from an accredited college or university.  Plaintiff further claims that regulations pertaining to scholarships place student-athletes who are injured at a disadvantage and can easily be set aside because they are no longer able to compete.

For any questions, feel free to contact Christian Dennie at cdennie@bgsfirm.com.