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Ninth Circuit Blocks Injunction Of NCAA Restrictions On Student Compensation

Posted  August 4, 2015

By Hamsa Mahendranathan

The U.S. Court of Appeals for the Ninth Circuit has granted the NCAA’s request for a stay of a district court injunction that would have permitted colleges to begin compensating student athletes for the use of their names, images, and likenesses.

Last year, Judge Claudia Wilken of the U.S. District Court for the Northern District of California found that the NCAA violated antitrust law “by agreeing with its member schools to restrain their ability to compensate” basketball and football players.  The district court ruled in the Ed O’Bannon antitrust lawsuit that the NCAA should be enjoined from enforcing rules that would prohibit schools or conferences from offering students a share of revenues generated by use of their names, images, and likenesses.

The injunction has two major restrictions: (1) when a limited share of such revenue is offered to a student while he or she is in school, the NCAA may not cap this compensation below the cost of attendance (with scholarships counting towards the capped amount); and (2) the NCAA cannot prevent schools or conferences from depositing shares of such revenues into trusts payable to the students when they leave school.  As to the latter restriction, although the NCAA may cap the amount of money held in the trust, this cap cannot be less than $5,000 per year.

The NCAA appealed the decision to the Ninth Circuit, and sought a stay of the injunction pending the appeal.  The timing of the stay was critical to the NCAA, as the injunction would have affected offer letters that schools could begin to send as of last Saturday.

The Ninth Circuit’s decision maintains the status quo regarding compensation of student athletes for the time being, and suggests that the court is carefully considering the mechanics of the injunction, and may even have issues with the ruling itself.

Edited by Gary J. Malone

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