By Meg Lane*

Former Weber State football player Devin Pugh has filed suit against the NCAA, alleging that the NCAA’s transfer rules and scholarship limits violate antitrust law. The suit was filed in a federal court in Indianapolis Thursday and seeks to allow players to transfer freely between schools and to stop the NCAA’s placing of a cap on the number of football scholarships per school (currently at 85 for FBS schools and 63 for FCS schools). It also calls into question the NCAA’s past prohibition of multi-year athletic scholarships – since repealed – as anticompetitive, citing schools’ support of the prohibition to prove their interest in reducing price competition and lowering labor costs.

Pugh and his attorney, Steve Berman, argue that the NCAA’s transfer rules ultimately “restrain players’ ability to make the best choice for themselves, including ones based on financial considerations, academic considerations, athletics considerations, and personal circumstances.” This suit, which seeks class-action status, asks for both actual damages for student-athletes injured by NCAA rules and injunctive relief to stop the NCAA from continuing to injure student-athletes with the allegedly anticompetitive policies.

Pugh claims he was told to transfer from Weber State (an FCS school) after a new coaching staff decided not to renew his scholarship, and that despite having several transfer offers from FBS and FCS schools, the offers were all contingent upon his having two years of eligibility remaining. Pugh would only have one year of eligibility remaining after sitting out for the requisite year upon transferring, and the NCAA refused to grant him a hardship waiver that would allow him to play immediately at another school. The offers from these top schools were thus rescinded, so Pugh transferred to Colorado State-Pueblo, a Division II school where he could play without having to lose a year of eligibility. He claims that due to the smaller scholarship he received at CSU Pueblo, he incurred about double the amount of debt there than what he had at Weber State (from $3,000 to $6,000 in loans).

Current NCAA transfer rules require many Division I athletes who transfer to sit out a year before playing at their new school. NCAA Bylaw 14.5.5.1 states: “General Rule. A transfer student from a four-year institution shall not be eligible for intercollegiate competition at a member institution until the student has fulfilled a residence requirement of one full academic year (two full semesters or three full quarters) at the certifying institution.” There are exceptions to this rule, but they are extremely limited in scope – for example, if a player with at least two years of eligibility remaining is transferring from an FBS school to an FCS school, the residence requirement is waived, but players seeking to transfer from one FBS school to another generally must sit out a year. While there is also the hardship waiver option for players who transfer due to personal or family issues, its extensive application requirements and inconsistent approval process make it a rare solution.

Perhaps the crux of Pugh’s complaint is its acknowledgement that this rule does not apply to college coaches looking to move to new teams. The claim itself states: “The NCAA’s limitation on the mobility of college athletes is patently unlawful. For a striking contrast, one can simply examine the unfettered mobility of the players’ coaches. Football coaches, including assistant coaches, are free to leave a school at any time they choose to take another job in the college or professional football ranks. This ability to better their own situation has allowed coaches to reap enormous financial benefits.” Pugh’s attorney, Steve Berman, explained, “This is really unfair to kids. When coaches can change schools so freely, this is a completely arbitrary and unfair rule.”

Pugh’s claim ultimately argues that NCAA rules and scholarship limits have injured student-athletes, specifically Division I football players, by forcing them to lose opportunities to transfer or give up a year of play. Players who lose their scholarships at one school are pigeonholed into transferring to a pricey Division I school where they will not receive full grants-in-aid and must sit out a year, or to transfer to a less competitive Division II school with smaller visibility and value and play right away, as Pugh did.

The challenge to the scholarship cap is another key element of this case – Berman argues that the artificial restriction on the number of scholarships offered per school is anti-competitive, as it “ensure[s] that student-athletes in the class receive tens of millions less for their labor for member institutions than they would receive – and the member institutions would pay – in a competitive market.” Berman asserts that the Sherman Act’s command that price and supply be responsive to consumer preference is clearly violated by this restrictive rule. In challenging this rule, Berman also brings up the NCAA’s past policy of prohibiting multi-year athletic scholarships. While the prohibition no longer exists, many schools continue to offer scholarships one year at a time. Many schools (“NCAA member institutions”) were against the allowance of multi-year scholarships for fear that they would create too much competition in recruiting, as players would flock to schools offering multi-year deals. Berman asserts that the schools’ interest in stifling competition in this way is further evidence of the NCAA’s anticompetitive atmosphere despite its continuous reliance on amateurism as an explanation for its policies.

This lawsuit marks another chapter of college athletes’ fight against NCAA rules. It follows the recent Ninth Circuit Court of Appeals decision in O’Bannon v. Nat’l Collegiate Athletic Ass’n, which upheld the district court decision that NCAA amateurism rules violate antitrust laws but struck down an injunction that would have forced college athletic departments to pay athletes cash. Amateurism still reigns for now, but it has been significantly challenged through allegations of NCAA policies’ blatant violation of antitrust and there is no end in sight. Berman and his firm, Hagens Berman Sobol Shapiro LLP, currently have several pending lawsuits challenging the NCAA on issues including its concussion protocol and its method of capping the value of athletic scholarships. Included in these is Alston v. Nat’l Collegiate Athletic Ass’n, which challenges the NCAA’s compensation limits in terms of scholarship value being below cost-of-attendance and seeks class-action damages for student-athletes.

It is unclear how Pugh’s litigation will proceed, as the NCAA now has 60 days to answer the complaint. Berman remains relentless in his pursuit of the NCAA, stating, “People keep raising issues with us, and we will keep challenging the NCAA’s rules until they operate in compliance with antitrust laws.”


*Staff Writer, Villanova University Sports and Entertainment Law Society Blog; J.D. Candidate, May 2018, Villanova University School of Law.

 

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