The opinion of the court was delivered by: MIRIAM CEDARBAUM, Senior District Judge
National Collegiate Athletic Association and Cedric Dempsey, on
behalf of NCAA (collectively "NCAA"), have moved for summary
judgment on Metropolitan Intercollegiate Basketball Association's
("MIBA") two claims which challenge NCAA rules affecting Division
I men's college basketball postseason tournaments under Sections
1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 & 2. MIBA's motion for
summary judgment on these same two claims was denied. Metro.
Intercollegiate Basketball Ass'n v. Nat'l Collegiate Athletic
Ass'n, No. 01 Civ. 0071, ___ F. Supp. 2d ___, 2004 WL 2202582
(S.D.N.Y. Sept. 29, 2004). For the reasons that follow, NCAA's
motion is also denied. This opinion assumes familiarity with my
earlier summary judgment opinion and applies the same legal
standard. Unless otherwise indicated below, the material facts
are the same as those set out in the prior opinion.
I. NCAA's Motion for Summary Judgment: Sherman Act § 1
Unlike MIBA, which sought summary judgment only on the
Commitment to Participate Rule, NCAA seeks summary judgment on
all five "Postseason Rules" which MIBA challenges in its
complaint. The five Postseason Rules are: the Commitment to
Participate Rule, the One Postseason Rule, the End of Playing
Season Rule, the automatic qualification procedure and the
bracket expansions. A. § 1 Scrutiny
NCAA's first argument is that the Postseason Rules are not
subject to § 1 scrutiny. First, NCAA argues that § 1 scrutiny is
inappropriate because the rules are "noncommercial." NCAA asserts
that the Postseason Rules do not regulate or restrain "trade or
commerce." 15 U.S.C. § 1. Rather, the rules help to protect the
connection between athletics and academics. NCAA asserts that
while the rules may have an incidental effect on commerce, the
regulations themselves are noncommercial in nature and thus, fall
outside of the Sherman Act.
NCAA relies heavily on Smith v. NCAA, 139 F.3d 180 (3d Cir.
1998), in which the Third Circuit affirmed the dismissal of a
challenge to NCAA's post-baccalaureate eligibility rule, which
prohibits an athlete from competing at a postgraduate institution
other than the institution from which he received his
undergraduate degree. Although the court noted that, "eligibility
rules are not related to the NCAA's commercial or business
activities," id. at 185-86, the court further explained that
this was because "[r]ather than intending to provide the NCAA
with a commercial advantage, the eligibility rules primarily seek
to ensure fair competition in intercollegiate athletics." Id.
The court made an alternative finding that even if the rule were
subject to Sherman Act scrutiny it would be upheld under the rule
of reason. Id. at 186-87 (noting that the rule discouraged students from foregoing participation in athletics at their
undergraduate institutions in order to preserve their eligibility
at the postgraduate level and prevented graduate schools from
inducing such behavior).
NCAA argues that the End of Playing Season Rule protects the
welfare of student athletes because it prevents coaches from
forcing their teams to play and practice all year long. However,
MIBA is not challenging the End of Playing Season Rule as an
independent antitrust violation. Rather, that rule is only
challenged in conjunction with the Commitment to Participate
Rule. The only "noncommercial" justification NCAA proffers for
the Commitment to Participate Rule and the bracket expansions is
that they were enacted in response to the "membership's changing
characteristics and the growth in the number of Division I
basketball teams." NCAA Brief at 8. That explanation has little
to do with whether the rule is noncommercial. Moreover, one of
NCAA's procompetitive justifications for the rule is that it
ensures the best teams will participate in the NCAA Tournament
which makes it more attractive to broadcasters, advertisers and
fans. Thus, the rule cannot be said to be noncommercial.
Secondly, NCAA argues that the Postseason Rules fall into the
category of rules sanctioned by the Supreme Court in NCAA v.
Board of Regents, 468 U.S. 85, 101 (1984), such as those which
determine the size of the field, the number of players on a team and those which regulate physical violence. NCAA points out that
all sports leagues structure their postseason championships, and
require their member teams to participate in the final
championship games, if selected. NCAA argues that it is
reasonable as a matter of law for a league to require its member
institutions to share the responsibility of enhancing their joint
product by requiring that all selected teams participate in the
league's final championship game, especially since the member
institutions benefit from consumer interest in the championship.
Even assuming that NCAA is a sports league and that the above
statements have merit, MIBA is not challenging only the
Commitment to Participate Rule. MIBA argues that the combination
of the Commitment to Participate Rule and the One Postseason
Tournament Rule make it impossible for them to host a postseason
tournament in which invitees of the NCAA Tournament participate.
In combination, the rules do not simply require teams to
participate in the NCAA Tournament if invited. They also prevent
teams from competing in both tournaments. Therefore, the
challenged rules and expansions are not so obviously reasonable
as to fall into the group of restrictions sanctioned by Board of
As explained in the prior opinion, MIBA has adequately shown an
agreement among the 1,200 institutions which are NCAA members.
Metro. Intercollegiate Basketball Ass'n, ___ F. Supp. 2d ___,
2004 WL 2202582, at *6. MIBA has also shown that NCAA should not be
treated as a single entity under a Copperweld Corp. v.
Independent Tube Corp., 467 U.S. 752, 771 (1984), analysis.
Id. Thus, NCAA's third argument to avoid § 1 scrutiny is
It has already been determined that the Commitment to
Participate Rule must be examined under a full rule of reason
analysis. Metro. Intercollegiate Basketball Ass'n,
___ F. Supp. 2d ___, 2004 WL 2202582, at *9 (declining to apply a per se
rule or quick look analysis). Because the challenged rules are subject to
§ 1 scrutiny, it is necessary to examine the Commitment to
Participate Rule, as well as the other four Postseason Rules,
under the rule of reason.
In order to meet its initial burden under the rule of reason,
MIBA must be able to show an actual adverse effect on competition
as a whole in the relevant market. In order to determine whether
the Postseason Rules have a substantially adverse effect on
competition, the relevant market must be defined. For antitrust
purposes the relevant market comprises products that consumers
view as "reasonably interchangeable" with the product which the defendant sells. See, e.g., United
States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395
(1956); Eastman Kodak Co. v. Image Technical Servs., Inc.,
504 U.S. 451 (1992). The definition of the relevant market is an
issue of fact for trial. See, e.g., Jennings Oil Co. v.
Mobil Oil Corp., 539 F. Supp. 1349, 1352 (S.D.N.Y. 1982).
MIBA alleges that the relevant market is Division I men's
college basketball, which includes submarkets of the business of
operating Division I men's college basketball tournaments and the
business of operating postseason tournaments in particular. The
Postseason NIT is currently the only postseason Division I men's
basketball event other than the NCAA Tournament. MIBA's expert,
Professor Noll, has provided a ...