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sportsgeekonomics · 4 years ago

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My notes/loose transcription of the NCAA v. Alston Supreme Court hearing, March 31, 2021

I am going to try to keep my SCOTUS commentary in this thread and try to be factual (albeit sarcastic, when warranted). Stay tuned.

And we're up with Roberts introducing the case and asking Seth Waxman to start. Bang... we're off.

Waxman begins with a myth, that college sports have always been amateur. he says 2 errors: lower courts redefined amateurs too narrowly. Then allowed cash payments. This would make college sports professional, he says. He argues the NCAA rules are so clearly good that subjecting them to a full rule of reason is a nightmare. Roberts asks: SO you want Quick Look? Waxman, yes, but we also realize it's a little weird to say we lost at trial but we were so clean there's no way we should have been asked to defend ourselves. Roberts says we've never used Quick Look to dismiss a case. Waxman agrees in a "look over here" way by pivoting to other cases outside of SCOTUS. Roberts interrupts. Asks "pay for play" question WHICH I DID NOT EXPECT. A factual question about amateurism. This bodes well for athletes, I think Thomas up -- says he is curious why coaches aren't also paid less than pro coaches. Waxman explains Law v. NCAA prevents them from doing this. Claims that Law says Amateurism is good but capping coaches pay is wage fixing. Will be interesting what Thomas responds Thomas says it's odd to him coaches pay has ballooned. Now he turns to Board of Regents. Thomas asks if SCOTUS did a quick look re: amateurism in BoR. Waxman has to explain BoR was unrelated to amateurism, but rather TV. He explains the TV restraint was explored under FULL rule of reason. Then he tries to explain the way you get from that to the Quick Look, and cites American Needle "twinkling of an eye"/ Breyer is up. Breyer asks "what are you complaining about?" The injunction? Breyer than says "that could be VERY expensive" (sounds like Breyer is pro-Amateurism, sadly) is that what you are attacking? Waxman says antitrust courts lack the ability to judge amateurism. Breyer is like "what is the line in the injunction that allows the [dreamed of craziness]" Waxman lists some "pay for play" things in the injunction Waxman focuses on the schools' ability to essentially label as educational thing that are not "necessary or reasonably limited" to education Waxman says -- look at college coaches salaries -- they went through the roof. Alito up. Alito lists some of the amici who explain how everything other than college athlete spay is outrageously professional.

Waxman embraces the State Law NIL stuff -- look this will allow them to be paid, so they will ignore academics and focus on money. List the 35 hour rule (is it 35?) Says only 24-25 schools make money. We have an Everybody's Broke moment!

Alito is going on on the statistical shenanigans of NCAa grad rates., Asks what the P5 FB grad rate is -- Alito understand those #s are padded with crew and fencing teams. Surprising! omg, Alito paraphrases Schwarz saying Athletes are already paid. Scholarships are a form of pay. Waxman says "not under our definition of pay" Will Alito come back with the idea that the definition game is circular logic? [SPOILER ALERT -- Kavanaugh did just this later!]

Alito says his time is up. Sotomayor up. Why aren't the conferences, which remain allowed to enforce amateurism, still able to to enforce? Waxman claims its a prisoner's dilemma, but the prisoner's dilemma was rejected in this case record. Ken Elzinga explicitly claimed Prisoner's dilemma. Roger Noll demolished the argument. Elzinga dropped it at trial. Waxman answers Sotomayor with slippery slopes, OMG to much judicial supervision. It will be a parade of law suits, with people who were harmed asking for justice. (why is that bad?)

Elena Kagan brings the FIRE: Isn't amateurism just a price fixing cartel? Why not think of this as competitors getting together with total market power and fixing prices?

Waxman says the product is not a new thing ( think he's implying this is not a sham). Kagan interrupts. Things have change since 100 years ago. Says she's unmoved. Says "competitors as to labor combining to fix prices" I'm thinking I may propose to J. Kagan. Kagan continues, "Why does there need to be coordination on the cost of labor?" Waxman says "b/c we define the product" by price-fixing. Kagan says that might work except isn't the court's evidence that "lack of pay to play" was not what drives demand. Waxman disputes. Says 10% of people would watch less if $10K grants were given. Then he says this is about product differentiation. She thanks him. Gorsuch up.

Gorsuch gives a long preamble on how he loves loose JV rules. But then Gorsuch says the same thing as Kagan: Here we have Monopsony control over labor price. That's not the usual JV situation. Why isn't Monopsony control over labor, at least, enough to get to a full rule of reason

<OMG FREUDIAN SLIP>Waxman says the NCAA is defined as the reduction of COMPETITION. Then corrects himself to Compensation.

He says as long as you accept the NCAA is defined by capped pay, then all you need is abbreviated review. Points to pro-NCAA cases in other circuits. Gorsuch says Waxman did not answer his question.

Gorsuch asks "does the monopsony status matter for level of rule of reason scrutiny?" Waxman: What level of inquiry rests in step 3. (But I think that admits Rule of Reason, no?)

Kavanaugh turns to the baseball exemption, as having not been replicated. Suggests Board of reasons is dicta (first "dicta" quote I think). Kavanaugh says it seems "schools are conspiring ... to pay no salaries" He calls NCAA's logic circular Kavanaugh comes close to asking the Schwarz question (the Schwarz question is: if school all hate "pay for play," why do you need a rule against it? Who's going to pay?)

Waxman say the NCAA is the most successful product in the history of America. Or he said something close to that. wow. I'd go with the automobile, maybe.

Waxman says EVEN IF CONSUMERS WERE TOTALLY FINE WITH PAID COLLEGE ATHLETES, we still should be allowed to price fix.

Kavanaugh says if consumers are ok what's wrong with $6K? (btw, I think focusing on the amount is the wrong approach, but the fact that Kavanaugh is doing that strikes me a good sign for athletes).

Coney Barrett up. She asks "why does the NCAA get to define what pay is?" She suggests a lot of people play college sports explicitly for the compensation -- getting to go to college.

Waxman says "well producers get to define their products" So we get to define what we think not-pay is, and so we can say "you aren't being paid" C-B asks "is it procompetitive to say people like to watch unpaid people playing sports?" Very unexpected from her!

Coney Barrett asks about the effect if NCAA loses. If we rule against you, what's the impact on Title IX. Waxman admits that schools still have to follow Title IX. (which is correct)

Then Waxman claims evidence in the case shows that schools would cut other sports, men and women. (I believe that is a false statement of the evidence in this case. The only evidence I know shows the money would come from coaches and facilities.)

Waxman summarizing his argument again. Dogs and Cats will live together. Focuses hard on Our Product is Wage-Fixed Sports.

Jeffrey Kessler up. He must be nervous b/c I think he said "lawful" when he meant "unlawful"

He is focused on the quick look vs. full rule of reason as his opening statement. Kessler list off all the past times the NCAA has claimed if they had to relax their cartel rules, college sports would die. Each time, the Courts struck the rule down, college sports did not die. "this is more of the same" Roberts interrupts. Roberts asks a question about whether it was wrong to look at a single rule or if the rules should be viewed in their totality. Likens it to Jenga, suggesting there might be a rule-by-rule approach that eventually leads to it all tumbling down. Kessler says the court didn't do that -- rather it started with ALL rules and then looked at the individual rules after. Roberts passes to Thomas. Thomas asks "what if consumers are shown to be fine with $20K, are we back in Court?" Kessler points to the "Patently and Inexplicably" language (in O’Bannon) and says incrementalism of that sort won't happen. Kessler explain that it was the NCAA that said the $5,980. Thomas asks a very knowledgeable sports question: "won't schools cherry pick athletes from the portal" Kessler explains the NCAA did not assert competitive balance b/c that argument was demolished prior to trial. he explains the Patriot league is not competing with the SEC. [This is true, the NCAA lost their competitive balance argument at summary judgment, meaning it was so weak it didn’t even earn the right to be trotted out at trial] Breyer up. Breyer says it is tough for him. he says it's only partly economic. he sounds VERY much to be in the White dissent camp. He lays out that it could be that the way of viewing the case aren’t really economics. Kessler explains the Society of Engineers case says antitrust is about economics. if you want to go outside of economics, that's Congress, not the court. He then pushes back to Breyer that this would change the sport. Alito tosses Kessler a softball: what is the distinction b/w P5 sports and pro sports. Kessler: The differentiation is that they are students. The educational payments.= may even help that Alito asks whether the NCAA can set *any* educational limits. Kessler says the injunction already does. Quotes Emmert saying it was a good thing. Alito: Is this case the outer limit, or do antitrust laws allow athletes to bargain for things like guaranteed scholarships? Kessler says if they have a restriction that prevents guaranteed scholarships, that might lose. But he emphasizes it would NOT mandate guarantees -- it's about market competition.

Sotomayor offers Kessler a chance to ask for a better injunction. He declines (I would have taken it, but maybe that's why I am tweeting and he's arguing in Court) Sotomayor asks: isn't the $5,980 just judicial price setting? Kessler answers the Court didn't pick that number. the NCAA did. Kagan up. Kagan offers Kessler the same chance to ask for more again. Kessler takes it this time, says We advocated for Conference competition. Essentially asks for the clean injunction. Kagan focuses on the amount. Kessler explains survey showing $10K was ok. Mentions $50K insurance Kagan follows up, asking whether $5,980 is too arbitrary. Kessler focused on the words of the injunction.

Gorsuch now comes back to his love of JV law. Mentions the "new product that otherwise would not exist" standard. He asks, about law (not facts). What makes a searching inquiry into the JV appropriate?

Kessler says, the easier standard IS the Rule of Reason.

Gorsuch begs Kessler to say the Monopsony power of the NCAA makes JV scrutiny important.

Kessler takes the bait, explains that unlike other JVs, there's no market test of whether the JV is picking a pro-comp. Points to FN7 of AmNeedle. Kavanaugh asks whether Kessler agrees athletes must be enrolled student in good standing. Then says we need to ask what the NEXT case would be. What is the end game for athlete litigation? Kavanaugh echoes Breyer saying he is concerned. Kessler focuses on antitrust. Says the end game is the NCAA to be subject to rule of reason. Says facts would have to change in the future but today they are no different than yesterday.

Coney Barrett up, suggests both courts were concerned about doing too much. She thinks the lower Courts were being tepid (my word). Given all of that, how is the injunction is a substantially less restrictive? Kessler says these are life-changing benefits, hence substantial.

Kessler summarizing now: He turns to the rule of reason issue again -- they failed to show their rules were reasonable under rule of reason and rule of reasonable provides ample latitude (using NCAA's favorite). Mentions there will be no parade of horribles, and other pro-Defendant rules

Now the gov't is up.

Elizabeth Prelogar is acting Solicitor General.

She is arguing about the Monopsony Power & Rule of reasons things Roberts says the rules changes may be moderate but the legal concepts were not. Should Courts micromanage joint ventures. Prelogar says the Rule of Reason is the proper deference for JVs. She also says step 3 of RoR is not for marginal changes. Thomas up. Thomas says -- won't any NCAA rule be a litigation-palooza? Prelogar leans into the PCJ the NCAA advances. I am not feeling the love for Solicitor Prelogar for being so into amateurism. However, she redeems herself in my book by explaining that Amateurism is not an antitrust good in an of itself. Rather, it needs to be tied to consumer demand. Thomas asks about the $10K... $20K.. etc. if the facts change, Prelogar says, then yes, we should re-examine. She explains if NCAA continues to restraint trade, it SHOULD be subject to more litigation. [THIS IS THE RIGHT ANSWER --- if you want people to stop suing you for price fixing, stop fixing prices!] Breyer up. Asks, don't some JVs have non-economic goals? Prelogar explains that SCOTUS has said many times that Socially beneficial goals is not "cognizable" (allowed as a reason) under antitrust laws. Unless Congress carves out NCAA, the Court needs to think about economics.

Alito asks what is the NCAA's differentiation. Prelogar says Bona Fide Students but then adds And Not Paid beyond Education. Obviously I don't love the second half.

Alito asks: Let's say fans don't like highly paid PRO athletes either... these are not pro-NCAA questions.

Sotomayor asks "how can we be sure we won't destroy college sports?"

Instead of going Andy Schwarz an explaining how labor markets set pay vis-a-vis consumer demand, Prelogar just says the injunction was very narrow. Sotomayor asks about the $5,980. Prelogar focuses on how the amount was based on the athletic awards that don't ruin college sports, so academic rules are ok.

Kagan asks whether the $5,980 is arbitrary. Prelogar says it's not a requirement to give this amount. it's an allowance not requirement. She also focuses on how the NCAA can define restriction to make it bona fide. Kagan: Could the court have gone further? Prelogar: yes,

Gorsuch on "light look" for JV's that create new products again. he says "that assumes a competitive market." But here NCAA has Monoposny, and that justifies stricter look. Gorsuch channels Rascher & Schwarz (2000) saying that if conference set rules, this would be different.

Prelogar also goes all Rascher & Schwarz (2000) saying that no one conference had market power. Gorsuch says the same. This is like they read our paper! Gorsuch even says fans could root for more amateur teams if that what they want.

Kavanaugh asks Prelogar whether these are just sham payments.

She explains the injunction allows NCAA prevention of scams.

I am still reveling that Gorsuch and Prelogar essentially parrotted the paper @daniel_rascher and I wrote back in 1999 and published in 2000.

Coney Barrett is up. She is asking about whether cross-market balancing is good or bad. Prelogar says this is a bad case to consider that major issue b/c no one briefed it. She is like Don't GO Here.

Prelogar summarizes that the NCAA is wrong to say their rules must be immune from analysis b/c it is amateur. Instead they must show that amateurism itself is procompetitive. (more Rascher & Schwarz language). Waxman up on rebuttal. Waxman: Monopony power does NOT change the NCAA's right to define their product and receive deference for that definition. Waxman directly addresses Breyer, who was clearly the most pro-NCAA in his rhetoric. "Net consumer demand IS NOT the test." (wow) The test is whether a business can define its product definition. [I think if this is true, "Unpaid-Labor Produced Sneakers" would be legal] "once it is determined that 'no-pay amateurism'" differentiates the NCAA, that basically means they can't be questioned on those rules.] Then he whines about lots of litigation.

---end of hearing---

Ok, well that was NOT at all what I expected. I think Waxman should be glad for Justice Breyer. I was pleasantly surprised by the Kagan-Gorsuch-Coney Barrett axis focusing on the Rascher-Schwarz hypothesis. here's the paper I was referencing: Rascher and Schwarz Neither Reasonable nor Necessary.pdf

If you'd asked me beforehand what the odds are of it being a hourlong /barf session of paeans to Amateurism, I would said even odds or higher. So I am still a little in shock at how differently it went.

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