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O'Bannon v NCAA first round opinion

Posted: 8/9/2014 4:53 AM

O'Bannon v NCAA first round opinion 


The trial judge's opinion is here.

I haven't given it more than a skim, but it looks like an attempt to play a variation on the old Marbury v. Madison trick of making a sweeping legal opinion but narrowing the result to avoid getting slapped down.

Judge Wilken makes some pretty big shifts in her interpretation of normal antitrust law and most of the opinion reads more like an argument to the inevitable appeal court than a final post-trial judgment.  But then after ruling that her interpretation of antitrust law controls, she makes a fairly insignificant ruling that the NCAA members have to take some of the money to pay total cost of attendance rather than just grant-in-aid amounts.  Which is pretty meaningless, since the power 5 have already stated they are going to raise the stipends.

It's one of the oldest judicial tricks.  The Supreme Court pulled it early on in their successful gambit to become a third branch of government in Marbury vs. Madison.  Basically, back in 1800 President Adams got beat by Jefferson, so Adams tried to pack the courts with a bunch of lame duck appointments like Marbury's.  But since the mail service was pretty nonexistent in 1800 some of the lame duck appointments didn't get delivered.  When Jefferson took office he ordered his SecState (Madison) to deep six any appointments that hadn't been delivered.  Marbury sued.  It went to the supreme Court and Jefferson's people argued that the Court had no right to interfere in disputes between Congress and the Prez, and told the Court that Jefferson wouldn't deliver the appointment no matter what they said (a threat later carried out in a totally different case by Prez Jackson who famously said, Mr. Marshall made he ruling, now he can try to enforce it").  So, the Supreme Court led by Justice Marshall wrote a sweeping opinion claiming that the Supreme Court had the inherent power to be the final judge of any dispute between Congress and the Prez, but then also ruled that a minor appointment enabling law was unconstitutional so Marbury wouldn't get the appointment anyhow.  Basically, they made a claim to a ton of power, but then ruled in such a way as to avoid testing that power.

Judge Wilken's decision looks to trying the same trick.  Turn a lot of antitrust law on its head and lay a foundation for shifting how it works in the future, but make a tiny ruling that just requires the NCAA to do what they were going to do anyway to try to avoid the appeal.

A golden oldie of a scam, but like all scams it really only works on the unwary.  It's been tried many times since by lower courts, and mostly gets appealed anyway because defendants realize that the precedent will bite them later.  It really only works for the Supremes since they can't be appealed.  A lot of people think Roberts was doing something like this in the Obamacare decision--namely killing the old scope of the interstate commerce clause power while giving the Prez what he wanted so that it wouldn't be challenged.

Last edited 8/9/2014 4:57 AM by PiratesRoost

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Posted: 8/9/2014 4:56 AM

Re: O'Bannon v NCAA first round opinion 


MPT,

I have to fly somewhere for work next Friday.  If you want to talk in depth about the granular antitrust law stuff tell me and I'll print off the whole opinion and read it on the plane (it's 100 pages long) and talk with you after.  I probably won't read the whole thing in serious depth otherwise.
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Posted: 8/9/2014 3:06 PM

Re: O'Bannon v NCAA first round opinion 


Seems like sort of an odd ruling but judges are known to make stuff up now instead of following written law. Where is the $5,000 figure coming from. Is that just some made up amount from a judge? I have a feeling that the judge knew that the NCAA was totally in the wrong legally, but tried to come up with the best ruling possible for the establishment. It is kind of like the recent cases of reverse discrimination where the plaintive is given only one dollar in damages. I think this has happened in Georgia and Michigan.
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Posted: 8/10/2014 12:36 PM

Re: O'Bannon v NCAA first round opinion 



Alaric wrote: Seems like sort of an odd ruling but judges are known to make stuff up now instead of following written law. Where is the $5,000 figure coming from. Is that just some made up amount from a judge? I have a feeling that the judge knew that the NCAA was totally in the wrong legally, but tried to come up with the best ruling possible for the establishment. It is kind of like the recent cases of reverse discrimination where the plaintive is given only one dollar in damages. I think this has happened in Georgia and Michigan.

In the end, the Establishment always wins.  Only way the Establishment can fall is from the inside, all major change or revolution occurs from within

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Posted: 8/11/2014 2:27 AM

Re: O'Bannon v NCAA first round opinion 



Alaric wrote: Seems like sort of an odd ruling but judges are known to make stuff up now instead of following written law. Where is the $5,000 figure coming from. Is that just some made up amount from a judge? I have a feeling that the judge knew that the NCAA was totally in the wrong legally, but tried to come up with the best ruling possible for the establishment. It is kind of like the recent cases of reverse discrimination where the plaintive is given only one dollar in damages. I think this has happened in Georgia and Michigan.

I'm pretty sure $5K is the difference Emmert said there was between the current amount of the grant-in-aid scholarship and the "total cost of attendance" at most power 5 level schools. 

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Posted: 8/11/2014 10:17 AM

Re: O'Bannon v NCAA first round opinion 


The ruling is being appealed anyway.

If the findings of fact hold, there is the potential for that number to be adjusted in the future by all manners of claims.  Moreover, it is likely that it would give the union case a better chance of succeeding if it held.  

The NCAA is completely nonplussed by the squishy if-you-want-to $5000 per year compensation trust funds.  They are concerned about the domino effects.

Moreover, there is the possibility of appealing the proper value of the likenesses as being potentially greater than the amount specified at larger institutions.  Or asking that the number be COLA-ed.  Etc.

Amateurism is on life support for revenue-producing sports in the larger athletic institutions.  The NCAA is extremely attached to its preservation and will act like some children of comatose brain-dead parents - keep it on life support until you are forced to abandon it by somebody else.  The NCAA has large pocketbooks and so they will put up a grand display in the hopes of victory.
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Posted: 8/11/2014 10:44 AM

Re: O'Bannon v NCAA first round opinion 


I'm actually quite interested in the ruling generally, and would certainly enjoy a discussion on it. I'm not at all convinced that Wilken "turn[ed] a lot of antitrust law on its head" here; it seems much more that the biggest thing she did was wipe away most of the NCAA's "we're exempt from antitrust law due to [excuse X]" defenses and look at what they do under the typical microscope of antitrust law.

I mean, obviously the $5k number is totally arbitrary, but even there she does cite some amount of reasoning, even though it seems weak (in large part, relying on the same survey that was generally trashed as being unreliable).
 
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Posted: 8/11/2014 11:39 AM

Re: O'Bannon v NCAA first round opinion 


Alright, I'll read it Friday on the plane.

I can say that holding human beings to be the "supply" both the commodity supplied as well as "supplier" that are effected by restraints on trade is wholly new to antitrust law.  A district court or two over the century plus of antitrust law might have made an employee ruling (i.e. Google/Apple case) but I'm fairly sure no circuit court, let alone the Supreme Court, has ever allowed antitrust law to displace employment law.
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Posted: 8/11/2014 11:43 AM

Re: O'Bannon v NCAA first round opinion 



BearEEGoodSir wrote: The ruling is being appealed anyway.

If the findings of fact hold, there is the potential for that number to be adjusted in the future by all manners of claims.  Moreover, it is likely that it would give the union case a better chance of succeeding if it held.  
...
Can't say I'm terribly surprised.  The NCAA must know that if allowed to stand this ruling would just keep coming back to bite them.  FWIW, I think the findings of law are far more damning to the NCAA.  It's applying antitrust law at all that hurts them, the facts only determine how much.  The NCAA's dream scenario is a finding that recruting is not an arena where antitrust law can operate.
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Posted: 8/11/2014 12:40 PM

Re: O'Bannon v NCAA first round opinion 



PiratesRoost wrote: Alright, I'll read it Friday on the plane.

I can say that holding human beings to be the "supply" both the commodity supplied as well as "supplier" that are effected by restraints on trade is wholly new to antitrust law.  A district court or two over the century plus of antitrust law might have made an employee ruling (i.e. Google/Apple case) but I'm fairly sure no circuit court, let alone the Supreme Court, has ever allowed antitrust law to displace employment law.
Did Wilken's ruling somehow displace employment law?  What I read is that the NCAA, as a cartel of otherwise (sort of) independent employees, can no longer legally do certain specific things that they had been doing.  Did Wilken's ruling at any point mandate specific performance from the schools (employers) themselves?  My read is that she only made injunctions against the cartel, not the employers themselves.

If what you mean is that there are few cases specifically dealing with antitrust wrt employment contracts, my presumption would be that this is because this type of behavior is almost presumptively illegal without specific exemptions.  On the other hand, the injunction order (pages 63-65) stated:

The NCAA argues that Plaintiffs cannot prevail under a monopsony theory because they have not presented evidence of an impact on price or output in a “downstream market.” Trial Tr. 2766:16-:22 (Stiroh). They cite Dr. Stiroh’s testimony that the only way that a restraint on an input market -- such as a market for recruits’ athletic services and licensing rights -- can give rise to an anticompetitive harm is if that restraint ultimately harms consumers by reducing output or raising prices in a downstream market. Whatever merit Dr. Stiroh’s views might have among economists, they are not supported by the relevant case law. The Supreme Court has indicated that monopsonistic practices that harm suppliers may violate antitrust law even if they do not ultimately harm consumers. In Mandeville Island Farms v. Am. Crystal Sugar Co., 334 U.S. 219 (1948), the Supreme Court considered whether an agreement among sugar refiners to fix the prices they paid for sugar beets constituted a violation of the Sherman Act. It concluded that “the agreement is the sort of combination condemned by the Act, even though the price-fixing was by purchasers, and the persons specially injured . . . are sellers, not customers or consumers.” Id. at 235. Notably, the Court reached this conclusion despite a vehement dissent from Justice Jackson noting that the price of sugar had not been affected by the refiners’ agreement. Id. at 247. The majority’s decision, thus, “strongly suggests that suppliers . . . are protected by antitrust laws even when the anti-competitive activity does not harm end-users.” Telecor Communications, Inc. v. Sw. Bell Tel. Co., 305 F.3d 1124, 1134 (10th Cir. 2002); see also Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 988 (9th Cir. 2000) (“The Supreme Court’s references to the goals of achieving ‘the lowest prices, the highest quality and the greatest material progress’ and of ‘assur[ing] customers the benefits of price competition’ do not mean that conspiracies among buyers to depress acquisition prices are tolerated. Every precedent in the field makes clear that the interaction of competitive forces, not price-rigging, is what will benefit consumers.” (emphasis added)).


This is consistent with a long line of cases, including some decided by the Ninth Circuit, recognizing that restraints on competition within a labor market may give rise to an antitrust violation under § 1 of the Sherman Act. See, e.g., Anderson v. Shipowners’ Ass’n, 272 U.S. 359, 365 (1926) (holding that a multiemployer agreement among ship owners restrained trade in a labor market for sailors); Todd v. Exxon Corp., 275 F.3d 191, 201 (2d Cir. 2001) (Sotomayor, J.) (holding that a conspiracy among oil industry employers to set salaries at “artificially low levels” restrained trade in a labor market and noting that “a horizontal conspiracy among buyers [of labor] to stifle competition is as unlawful as one among sellers”); Ostrofe v. H.S. Crocker  Co., Inc., 740 F.2d 739, 740 (9th Cir. 1984) (holding that a multiemployer agreement in the paper lithograph label industry may restrain trade in a “market for personal services”). It is also consistent with the many recent cases, some of which are cited above, recognizing the validity of antitrust claims against the NCAA based on anticompetitive harms in a labor market. See, e.g., Agnew, 683 F.3d at 346 (recognizing that the NCAA’s scholarship rules may restrain trade in a “labor market for student-athletes” and noting that “labor markets are cognizable under the Sherman Act”); Law v. NCAA, 134 F.3d 1010, 1015 (10th Cir. 1998) (finding that an NCAA rule capping compensation for entry-level coaches restrained trade in a “labor market for coaching services” and noting that “[l]ower prices cannot justify a cartel’s control of prices charged by suppliers, because the cartel ultimately robs the suppliers of the normal fruits of their enterprises”);



etc.

That even includes a specific labor case involving the NCAA as a cartel depressing prices, which was also found to be illegal, even though again there, it's monopsonistic practices depressing wages, as opposed to monopolistic practices increasing prices for end-user consumers.

x
PiratesRoost wrote: 
BearEEGoodSir wrote: The ruling is being appealed anyway.

If the findings of fact hold, there is the potential for that number to be adjusted in the future by all manners of claims.  Moreover, it is likely that it would give the union case a better chance of succeeding if it held.  
...
Can't say I'm terribly surprised.  The NCAA must know that if allowed to stand this ruling would just keep coming back to bite them.  FWIW, I think the findings of law are far more damning to the NCAA.  It's applying antitrust law at all that hurts them, the facts only determine how much.  The NCAA's dream scenario is a finding that recruting is not an arena where antitrust law can operate.
I'd have to agree with this part.  If the NCAA could walk away with just the ruling, they'd live with it.  But the law findings are crushing for them.  Basically all of their hand-waving self-proclaimed exemptions from anti-trust law were pretty soundly rejected.
 

Last edited 8/11/2014 12:42 PM by MrPacTen

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Posted: 8/11/2014 6:23 PM

Re: O'Bannon v NCAA first round opinion 


Cartmann did not realize there were 100,000 potential Plaintiffs.. heck even if only 25% of that makes a claim, that is $125 Million!  So the potential cost to the NCAA is huge even for this one case. 

$5000 to each plaintiff is not much, but the laywers get about 30% of each $5000.  If it does get to $125 Million, that  is about $41 Million to the Lawyers!  If 50% of the potential plaintiffs makes claims, that is $82 Million to the Lawyers!  Once again this proves why class action lawsuits are retarded.  Only ones that makes out ore the Lawyers.

As a Cartmanntarian, I feel that Anti-Trust Laws are also all very lame.  What Anti-Trust laws do is punish the winners no matter how just the winners are.  Cartmann has no problems with the NCAA controlling a slave trade if the slaves don't mind being slaves.   

If the slaves don't like the NCAA, than they should just all boycott NCAA Football.  SLAVERY IS A CHOICE.

I know it sucks that a stud HS Football Player really has no choice but to play NCAA ball if he wants to reach the NFL peaks, but hey, that is life.. maybe this is a clue to someone out there to start a NFL Developmental League to develop the best Football Players.  Set up schools that are actually real schools that actually educate the Players.  Like a Baseball or Soccer Academy.  

By now we all know that NCAA Football Players are anything but students.  A lot of them have less than a 6th grade education.  These slaves are NOT Students, they are Ringers...  NCAA can't claim they are giving these Slaves a free education, because in reality these RINGERS do NOT get any education.  All they get is a piece of paper called a Degree in exchange for their services.  Class warfare means anyone can be in the right or legal if they have Money.  With NCAA-Football, instead of Class Warfare, we now have athletic-skillz warfare.  That it does not matter how Stupid you are, you CAN always get a College Degree by how great of an athlete you are.

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Posted: 8/11/2014 11:45 PM

Re: O'Bannon v NCAA first round opinion 


MPT,

I think you are entirely too trusting of Judge Wilken's parenthetical description of her supporting cases, all or most of which are attempting to broaden antitrust law from the conventional understanding of those rulings. 

1. You can't understand Mandeville without understanding US v. Socony and Northwest Wholesale Stationers.

US v. Socony Vaccum Oil 310 US 150 (1940) is the first big purchaser's group case finding liability.  Basically you have a bunch of midwestern oil companies who sell some of their gas wholesale to independent service stations ("jobbers"), as well as running their own retail stations.  The price to the jobbers is pegged to the Texas spot price for oil, which fluctuates based on supply.  The oil companies form a group to buy up Texas oil when there are production excesses to keep the spot price high for their wholesale contracts with jobbers (and store the excess and sell it whenever production drops and spot price rises).  Supreme Court upholds its prior cases saying that a combination whose sole purpose is price fixing is per se illegal regardless of whether it does so through purchase or sale.
(The sole purpose part btw, is why Wilken could not fit the case into a per se category, since it would be very hard to claim that the sole and only real purpose of the NCAA is to price fix against recruits)

Northwest Wholesale Stationers, Inc. v. Pacific Stationary & Printing Co., 47 US 284 (1985) is the seminal case on purchasers groups whose sole purpose is not price fixing.  "[NW Wholesale] is a wholesale purchasing cooperative whose membership consists of office supply retailers in the pacific northwest states. nonmember retailers can purchase supplies from petitioner at the same price as members, but since petitioner annually distributes its profits to members in the form of a percentage rebate, members effectively purchase supplies at a lower price than do nonmembers."  [pacific was a member but got booted and decided to go nuclear and blow the whole thing up with an antitrust suit.]  "the case also raises broader questions as to when per se antitrust analysis is appropriately applied to joint activity that is susceptible of being characterized as a concerted refusal to deal." 

the meat of the decision is below:

"the decision of the cooperative members to expel pacific was certainly a restraint of trade in the sense that every commercial agreement restrains trade. chicago board of trade v. united states,246 u. s. 231, 246 u. s. 238 (1918). whether this action violates § 1 of the sherman act depends on whether it is adjudged an unreasonable restraint. ibid. rule-of-reason analysis guides the inquiry, see standard oil co. v. united states,221 u. s. 1 (1911), unless the challenged action falls into the category of "agreements or practices which, because of their pernicious effect on competition and lack of any redeeming virtue, are conclusively presumed to be unreasonable, and therefore illegal, without elaborate inquiry as to the precise harm they have caused or the business excuse for their use."  northern pacific r. co. v. united states,356 u. s. 1, 356 u. s. 5 (1958). this per se approach permits categorical judgments with respect to certain business practices that have proved to be predominantly anticompetitive. courts can thereby avoid the "significant costs" in "business certainty and litigation efficiency" that a full-fledged rule of reason inquiry entails. arizona v. maricopa county medical society,457 u. s. 332, 457 u. s. 343-344 (1982). see also united states v. topco associates, inc.,405 u. s. 596, 405 u. s. 609-610 (1972). the decision to apply the per se rule turns on "whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output . . . or, instead, one designed to 'increase economic efficiency and render markets more, rather than less, competitive.'" broadcast music, inc. v. columbia broadcasting system, inc.,441 u. s. 1, 441 u. s. 19-20 (1979) (citations omitted). see also national collegiate athletic assn. v. board of regents of university of oklahoma,468 u. s. 85, 468 u. s. 103-104 (1984) ("per se rules are invoked when surrounding circumstances make the likelihood of anticompetitive conduct so great as to render unjustified further examination of the challenged conduct")."  [bold added].

"this court has long held that certain concerted refusals to deal or group boycotts are so likely to restrict competition without any offsetting efficiency gains that they should be condemned as per se violations of § 1 of the sherman act. see klor's, inc. v. broadway-hale stores, inc., 359 u. s. 207 (1959); united states v. general motors corp.,384 u. s. 127 (1966); radiant burners, inc. v. peoples gas light & coke co.,364 u. s. 656 (1961); associated press v. united states,326 u. s. 1 (1945); fashion originators' guild of america, inc. v. ftc,312 u. s. 457 (1941); eastern states retail lumber dealers' assn. v. united states,234 u. s. 600 (1914). the question presented in this case is whether northwest's decision to expel pacific should fall within this category of activity that is conclusively presumed to be anticompetitive."
...
"
cases to which this court has applied the per se approach have generally involved joint efforts by a firm or firms to disadvantage competitors by "either directly denying or persuading or coercing suppliers or customers to deny relationships the competitors need in the competitive struggle."

[notice that the focus is on competitors, not the coerced supplier.  this will be important later].

...
" in addition, the practices were generally not justified by plausible arguments that they were intended to enhance overall efficiency and make markets more competitive. under such circumstances, the likelihood of anticompetitive effects is clear, and the possibility of countervailing procompetitive effects is remote. "

"a
lthough a concerted refusal to deal need not necessarily possess all of these traits to merit per se treatment, not every cooperative activity involving a restraint or exclusion will share with the per se forbidden boycotts the likelihood of predominantly anticompetitive consequences. for example, we recognized last term in national collegiate athletic assn. v. board of regents of university of oklahoma that per se treatment of the ncaa's restrictions on the marketing of televised college football was inappropriate -- despite the obvious restraint on output -- because the "case involves an industry in which horizontal restraints on competition are essential if the product is to be available at all." 468 u.s. at 468 u. s. 101."  [emphasis added]

"wholesale purchasing cooperatives such as northwest are not a form of concerted activity characteristically likely to result in predominantly anticompetitive effects. rather, such cooperative arrangements would seem to be "designed to increase economic efficiency and render markets more, rather than less, competitive." broadcast music, inc. v. columbia broadcasting system, inc., supra, at 441 u. s. 20. the arrangement permits the participating retailers to achieve economies of scale in both the purchase and warehousing of wholesale supplies, and also ensures ready access to a stock of goods that might otherwise be unavailable on short notice. the cost savings and order-filling guarantees enable smaller retailers to reduce prices and maintain their retail stock so as to compete more effectively with larger retailers." [emphasis added]

[notice that the combination for economy of sale is in fact anticompetitive as to the supplier's ability to charge higher rates.]

"wholesale purchasing cooperatives must establish and enforce reasonable rules in order to function effectively. disclosure rules, such as the one on which northwest relies, may well provide the cooperative with a needed means for monitoring the creditworthiness of its members.[]  nor would the expulsion characteristically be likely to result in predominantly anticompetitive effects, at least in the type of situation this case presents. unless the cooperative possesses market power or exclusive access to an element essential to effective competition, the conclusion that expulsion is virtually always likely to have an anticompetitive effect is not warranted."

---cjr commentary - after reading this case, the organization of wilken's opinion probably makes more sense.  it rules that purchasing group review is rule of reason unless
the sole purpose of the group to to perform an activity that has been found per se unreasonable before (i.e., that is known to always cause price fixing or bar competitive entry).  It also holds that the beneficial effects like purchasing efficiency must be weighed against the anticompetitive effects, which is why half of Wilken's opinion is essentially an argument that the NCAA's beneficial effects don't weigh up to the anticompetitive effects.  Northwest Wholesalers is the seminal case because ti is one of those opinions that takes a bunch of sometimes disparate but important rulings and synthesizes them into a workable framework for review.

Now we come to Mandeville Island Farms v. Am. Crystal Sugar Co., 334 U.S. 219 (1948).  Mandeville fits nicely into the Northwest Wholesalers framework as one of the cases where per se review is allowable because the sugar refiners in this case formed a purchasing group with the obvious and sole intention to fix the price at which they would buy sugar beets from farmers..  A vital point key to the case though was that the sugar refiners controlled the supply of seeds that the farmers needed to grow sugar beets.  the refiners would issue the seeds and pay for the crop, but would not sell seeds outside their contracts.  So what you have is both a purchasers and supplier's group acting with the sole purpose of fixing prices.  You may have noticed that Wilken's commentary is silent about this supply control. 

The other thing her commentary is silent about is US v. E. C. Knight & Co. (1895), one of the very first antitrust cases.  It was essentially the same case of sugar refiners acting against farmers, but without the seed control element.  The Court in E. C Knight held that since the growing and refining were done in one state that those portions could not be interstate trade, and therefore could not be subject to the antitrust laws since Congress wrote those laws under the Constitutional right of the fed to regulate interstate commerce.  The scope of interstate commerce clause power had broadened a lot between E. C Knight in1895 and Mandeville in 1948.  the key holding of Madeville is not what Wilken says, but the fact that it tacitly overrules Mandeville and brings antitrust law current with interstate commerce law meaning that if the finished product impenges on interstate commerce, the antitrust law applies to every level of its manufacture. 

Because the key holding of the case is that antitrust law applies at all levels of manufacture in an end-product in interstate commerce, there is some rather high flown language about buyers sellers suppliers and wholesalers all being subject to antitrust law.  And hence you get Wilken's favored quote:

"the agreement is the sort of combination condemned by the Act, even though the price-fixing was by purchasers, and the persons specially injured . . . are sellers, not customers or consumers". 

But this quote is taken quite out of context and chopped up more than a little.  The full sentence is here:

"It is clear that the agreement is the sort of combination condemned by the Act, even though the price-fixing was by purchasers, and the persons specially injured under the treble damage claim are sellers, not customers or consumers."  [bold added].

The bolded part makes the context a bit more clear.  The Mandeville court was not creating new law or claiming that harm to sellers had replaced harm to the market (aka consumers) as the test for antitrust violations.  The Mandeville court was just saying that it did not matter that the sellers would get the trebled damages so long as the violation was the sort of harm to the market that the Sherman Act had outlawed.  And you see that in later quotes throughout the opinion: "Again, as we have said, the vital thing is the effect on commerce, not the precise point at which the restraint occurs or begins to take effect in a scheme as closely knit as this in all phases of the industry."  "It is rather whether the statute's policy has been violated in a manner to produce the general consequences it forbids for the public and the special consequences for particular individuals essential to the recovery of treble damages."

And Wilken's claim in raising the dissent of Jackson is to try to say that harm to the sellers is enough by itself with no harm to the market since the Court made its ruling "despite a vehement dissent from Justice Jackson noting that the price of sugar had not been affected."  but this is an attempt to confuse price with harm to the market--the very mistake justice jackson made in his dissent.  the antitrust laws do not require proof of increased price, only harm to the market.  harm to the market is usually proved by decreasing competition, not price because monopolies will often lower prices in order to gain control before raising them.  the mandeville court ably addressed the harm on the market in the last quarter of its opinion, developed around the one-two thesis that harm to the supplier shows that a monopoly was effectively formed (what we would now call a cartel) and "it is inconceivable that the [refiner's] monopoly so created will have no effects for the lessening of competition in the later interstate phases of the overall activity or that the effects in those phases will have no repercussions upon the prior ones, including the price received by the growers."  hence, the mandeville court  still requires harm to the market and get there by saying harm to growers in a vertically integrated market where the refiners are also seed controllers and wholesalers shows competition will be eliminated at all other other levels in the chain.  judge wilken cannot say the same one-two analysis applies to the ncaa since it is not a vertically integrated monopoly/cartel, so she instead goes for the theory that harm to the seller has replaced harm to the market and quotes the case more than a little out of context to get there. 

the other cases cited are similarly knocked a little off kilter.

we've talked about exxon v. todd before.  the 2nd circuit there did not, as wilken tires to make it appear, rule that the "supplier"/employee was the relevant market.  they turned that on its head and held that the employer was the relevant market and that any job with any of them was interchangeable from the point of view of the employee.  wilken could not follow that line of reasoning because there is no evidence to support the notion that a recruit thinks playing for alabama is interchangeable with playing for new mexico.  (though in the new power 5 autonomy world, a better argument could be had here than when taking the entire fbs as a market).  and the 10th circuit telcor case she cites also follows the exxon v. todd rationale of making the employer the market and saying the employers are interchangeable (elasticity of demand).  the 9th circuit knevelbard dairies case (which is a big case for an unrelated jurisdictional holding) actually undercuts her by saying same and mandeville that harm on the market is required.

the ostrofe case is described out of context much worse than mandeville.  the price fixing plan there had nothing to do with restraints on hiring, though you would never guess it from her parenthetical:  "holding that a multiemployer agreement in the paper lithograph label industry may restrain trade in a “market for personal services."  the ostrofe court actually describes the price fixing plan as: "the conspiracy consisted of a continuing agreement and concert of action among the manufacturers to fix and maintain label prices, submit rigged bids, allocate customers and territories, and "boycott those persons, including plaintiff, who have interfered or threatened to interfere with their illegal plan."  the difference is because ostrofe is actually a whistleblower case.  mr. ostrofe wouldn't go along with the bit rigging plan, so they fired and blackballed him.  he sued them for the antitrust violation claiming for his personal losses with the usual trebled damages.  the ostrofe court did not find antitrust law overwhelmed employment law, they found just like mandeville that the harm to the market is the key thing, not whom the trebled damages are going to.

the only case she doesn't cite out of context in your quoted text is anderson v. shipowners assn., 272 us 359 (1926).  this is one of the shortest antitrust opinions in history, less than 2 pages, with almost no discussion of effect to consumers--probably because the merchant marine act of 1920 had rendered the case moot by destroying the seaman's associations before the court ever ruled.  since it deals with union hall hiring practices it is also doubled mooted by the nira and the creation of the nlrb in 1933.  the thin opinion appears on its face to be  employment regulating.  the supreme court since has greatly narrowed its interpretation as holding that antitrust law applies where there is a combination to keep qualified tradesmen out and the purpose is to control the supply (of shipping available in this case) in order to artificially raise prices.  more than a few law profs contend that it actually was primarily an employment law case and teach it as one of those scenarios where the court made a ruling, changed its mind and then used later opinions to mash it into the new line of reasoning.  i tend to agree with that reading, but the justification that it is all about excluding workers entirely specifically to price fix by supply fixing rely on the following quotes:
  • "these associations and their members have entered into a combination to control the employment, upon such vessels, of all seamen upon the pacific coast, and to that end the associations have established and maintain offices in san francisco and san pedro, cal., where seamen are engaged and supplied to the operators of the vessels. among other requirements, every seaman seeking employment is compelled to register, receive a number, and await his turn according to the number, before he can obtain employment, the result of which is that seamen, well qualified and well known, are frequently prevented from obtaining employment at once, when, but for these conditions, they would be able to do so.
  • "That the effect of the combination now under consideration, both as to the seamen and the owners, is precisely what this language condemns, is made plain by the allegations of the bill which we have just summarized. The absence of an allegation that such was the specific intent is not important, since that is the necessary and direct consequence of the combination and the acts of the associations under it, and they cannot be heard to say the contrary. [citation omitted]. It is not important, therefore, to inquire whether, as contended by respondents, the object of the combination was merely to regulate of employment of men, and not to restrain commerce."

Personally, fwiw, I think this is the best case for your and Wilken's preferred rule that purchase price fixing should be per se illegal, but she knew the Supremes had curtailed this ruling a lot and federal employment law had mooted it anyway so it would not have been firm ground by itself.

In conclusion--and out of breath--your quoted text is a pretty good example of why I said the opinion is basically a Marbury v Madison type of deal.  It makes a lot of legal conclusions that are not really justified by the actual authorities and tried to render a judgment that would avoid it getting challenged.  If appeal is actually rendered (case could still settle), I doubt the out of context is work in Wilken's opinion is going to make a lot of difference.  Any law clerk good enough to get a circuit court clerkship would read ever underlying case on their own even if he/she was not already familiar with antitrust law.  I think Wilken's intent was not to deceive on appeal so much as to suggest a line of possible reasoning that an already friendly justice might latch on to.

Last edited 8/11/2014 11:46 PM by PiratesRoost

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Posted: 8/11/2014 11:49 PM

Re: O'Bannon v NCAA first round opinion 


But that's all just on the cases cited in your quote of the opinion, many of which I already knew the primary holdings of.  I still have not actually given Wilken's a deep read, my thoughts on her opinion are just from a 20-25 minute skim, and I might change them after getting a few hours to read in detail.
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Posted: 8/12/2014 12:06 AM

Re: O'Bannon v NCAA first round opinion 



EricCartmann wrote: Cartmann did not realize there were 100,000 potential Plaintiffs.. heck even if only 25% of that makes a claim, that is $125 Million!  So the potential cost to the NCAA is huge even for this one case. 

$5000 to each plaintiff is not much, but the laywers get about 30% of each $5000.  If it does get to $125 Million, that  is about $41 Million to the Lawyers!  If 50% of the potential plaintiffs makes claims, that is $82 Million to the Lawyers!  Once again this proves why class action lawsuits are retarded.  Only ones that makes out ore the Lawyers.
...

From what I read of the opinion, the judge did not award any money damages, just an injunction against the NCAA's future conduct.

From what I read, all that was won was an injunction that the NCAA can't 1) cap a sports scholly below total cost of attendance, 2) can't ban schools from creating a trust fund to pay players equal shares from use of likeness rights, and 3) for the trust fund can't cap the payout per player any lower than $5K per year.

Past athletes like O'Bannon don't get $5K, only those going forward.  They could get more though.  Wilken's injunction just said the NCAA cap on likeness right payouts cannot be lower than $5K.  She did not say whether any cap over $5K would be legal just that one under $5K would not be legal.
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Posted: 8/12/2014 1:02 PM

Re: O'Bannon v NCAA first round opinion 


However, the judge DID award order the NCAA to pay all of the plaintiff's legal fees, so while the legal team likely did not make out like bandits, they are all getting their hourly fees related to the case compensated for them if the ruling holds.

I am completely certain that this relatively minor sum is not a huge part of the NCAA's decision to appeal.

I am unsure as to whether the decision was actually limited in its scope to merely men's basketball and football. I believe that part of the rationale for the wording was so that schools would not be forced to set scholarships at levels that would bankrupt their programs, whether or not the sport was revenue generating. However, schools WOULD be allowed to up their scholarship values to a minimum of the caps listed in the decision. Hence, Utah gymnastics could feasibly decide to effectively offer higher scholarships by being willing to set up those trust funds for their gymnasts, just as Stanford could offer those funds for women's volleyball.

Essentially as long as a sport received television coverage from somewhere on any regular basis, a school could claim it desired to compensate the participating athletes for their image rights in such a trust structure. Certainly women's volleyball, baseball, and women's basketball could qualify.

This is fantastic for the Pac-12. Our ridiculously strong presence in the non-revenue sports outside of lacrosse and hockey could potentially be magnified because we would be stealing recruits with our more valuable scholarships. Well, at least Stanford, USC and Oregon would be doing a chunk of that.

The poor public schools might have to ask boosters to fund the trust funds, but at least the boosters could do that sort of thing legally! Hmm... boost our program by offering $5000/year for each athlete you wish to support. There are some wealthier fans willing to jump on board such things.
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Posted: 8/12/2014 1:22 PM

Re: O'Bannon v NCAA first round opinion 


@PR: It sounds like your fundamental objection to the Wilken ruling is the idea that in general, monopsonistic anti-competitive behavior is not subject to anti-trust law, including but not limited to rule of reason (you spend some time objecting to per se treatment of monopsonistic behavior, but since that wasn't used here, I am not quite sure of the relevancy of that discussion). If this is not your actual objection, feel free to ignore the rest of this post. Presuming that this is your objection, though...

1) My understanding is that anti-trust very much applies to monopsonstic anti-competitive behavior that harms suppliers. There are a number of cases where courts have ruled that debatably anti-competitive behavior that only harms competitors and NOT suppliers or end-user consumers is legal (harm to competitors != harm to markets), but since here we're discussing harm to suppliers (as opposed to harm to competitors like NAIA schools, D3 schools, the NFL, potential other competing leagues etc.) I feel pretty comfortable pushing those cases largely to the side as far as analyzing relevant precedent goes.


2) I think we get at the key point when you say "claiming that harm to sellers had replaced harm to the market (aka consumers) as the test for antitrust violations". If my reading of your commentary is correct, you subscribe to the theory that "consumers" (or purchasers of a product) must be harmed for there to be any anti-trust violation (more or less the "Chicago school" if I understand terminology correctly).

Or, in other words, that anti-trust law provides essentially zero protection to producers, and ONLY exists to protect end-users. So if, for instance, car-makers conspired to hold down the price of steel, or steel-makers conspired to hold down the wagers of steel workers, this would therefore be OK under anti-trust law.
But this interpretation seems very problematic, not just in terms of common sense, but the very case - Mandeville vs American Crystal Sugar ( http://caselaw.lp.findlaw.com/...4&invol=219) that you cite (bolded emphasis mine):

It is clear that the agreement is the sort of combination condemned by the Act,15 even though the price-fixing was by purchasers,16 and the persons specially injured under the treble damage claim are sellers, not customers or consumers
...
The statute does not confine its protection to consumers, or to purchasers, or to competitors, or to sellers. Nor does it immunize the outlawed acts because they are done by any of these. Cf. United States v. Socony-Vacuum Oil Co., 310 U.S. 150 ; American Tobacco Co. v. United States, 328 U.S. 781 . The Act is comprehensive in its terms and coverage, protecting all who are made victims of the forbidden practices by whomever they may be perpetrated

In other words, the REALLY key point of the decision is not the missed "treble damages" part, but the (also missed) part that explicitly says that antitrust law applies to ANYONE harmed, not just end-point consumers. I'm not aware of any Supreme Court level precedent that argues against this basic point. And I do think that it's notable that Wilken cites the dissent there, since the dissent raised the argument that only end-point consumer harm mattered, and the ruling opinion of the court explicitly rejected that line of thinking.


3) There are other examples of the "only end-point consumer harm matters" theory, but they generally seem to get shot down. The NCAA in its closing brief explicitly cited a monopsony type case (page 23) Kamine vs Rochester ( http://www.leagle.com/decision...amp;amp;%20ELEC ), citing the language

The problem with this type of monopsony power, then, is that ultimately it can injure consumers by forcing up the price of the end product. Where the risk of that happening is slight or nonexistent, however, monopsony power per se does not create an antitrust concern.

That's a US District Court case, and seems pretty clear-cut that monopsonistic conduct is actually OK as long as it just harms suppliers and not consumers.

HOWEVER, that precise legal conclusion was explicitly rejected on the 10th Circuit Appeals Court (which I understand has higher precedent authority) in Telecor vs SW Bell ( http://openjurist.org/305/f3d/...lephone-company ), with language including:

The two district court cases cited by Southwestern Bell — both of which contain language suggesting that harm to end-users is at least a relevant consideration in determining whether a monopsony is actionable under antitrust law, see Kamine/Besicorp Allegany L.P., 908 F.Supp. at 1203 (stating that, where there is little risk that monopsony "can injure consumers by forcing up the price of the end product ... monopsony power per se does not create an antitrust concern"); Addamax Corp. v. Open Software Found., Inc., 888 F.Supp. 274, 280 (D.Mass.1995) (noting that "[o]nly with control of a downstream market can the monopsonist decrease output and raise prices") — are inadequate to overcome the unmistakable import of the case law cited above.

and
Although Southwestern Bell is correct that antitrust laws were "especially intended to serve consumers," that hardly suffices to prove that a monopolist may act with impunity so long as end-use consumer prices are unaffected.
and
On its merits, Southwestern Bell's monopsony argument is unpersuasive. The Supreme Court's treatment of monopsony cases strongly suggests that suppliers (under Southwestern Bell's theory of the market, the location owners) are protected by antitrust laws even when the anti-competitive activity does not harm end-users. In its leading monopsony case, the Supreme Court stated:
It is clear that the [anti-competitive buyer's price-fixing] agreement is the sort of combination condemned by the [Sherman] Act, even though the price-fixing was by purchasers, and the persons specially injured under the treble damage claim are sellers, not customers or consumers.


If there are district court or higher precedent cases that specifically argue that producer harm (as opposed to competitor harm) is NOT actionable under antitrust law, AND have not subsequently been shot down by higher appeals courts, I'd be quite curious to see them. But at this point, the legal precedent seems awfully clear on that point.



4) There's also plenty of legal theory backing up the conclusion that producer harm very much matters in antitrust law. Consider:

- http://digitalcommons.law.seat...context=faculty -
The most basic purpose of antitrust law is to protect consumers from such behavior. A closely related goal is to protect small suppliers like farmers and ranchers from price fixing by large buyers. When buyers with market power agree to depress the prices they pay small, competitive suppliers, they exploit them in the same way that colluding sellers exploit consumers.

- http://www3.nd.edu/~ndlrev/arc...kwood_Lande.pdf
In both sell-side and buy-side cases, in other words, the ultimate goal is the same—preventing firms that have unfairly acquired power from exploiting their trading partners, buyers or sellers. In short, the goal is competitive prices (and other terms) for all
...
Many commentators have pointed out that Bork's terminology was confusing or misleading because economic efficiency, as commonly measured, consists of the SUM of consumers' surplus and producers' surplus. The more accurate synonym for economic efficiency it total welare

- http://www.roberthjackson.org/...anti-trust-law/
The antitrust laws, perhaps more than any other public policy, owe their existence to the insistence of the farmers. They first came into State legislation in the agricultural States as a result of farm support. They took their place in the national statute books in 1890 supported largely by the influence of the farm protest movement. They constituted a part of what was known as the "granger laws" and came to enactment as the result of the granger movement or "populist" uprising which caused more jitters among conservatives of that day than the New Deal does today.
...
Let us consider the farmer as an individual seller. When the farmer attempts to sell his produce he has no bargaining power that compares with that possessed by his only buyers. He finds a concentrated control and ownership of the only channels by which his produce may reach its ultimate market. Thirteen manufacturers bought 64 percent of the 1934 tobacco crop; three manufacturers alone bought 46 percent of the 1934 crop. I take it, no one will doubt that when three buyers take 46 percent of a crop those three are in a position to fix the price. They would be strange persons if they did not take advantage of the power they have


So in terms of legal theory, the Chicago interpretation that you apparently seem to be backing (if I'm reading you right) doesn't seem to have much backing in general theory or explicit precedent.

 
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Posted: 8/12/2014 3:27 PM

Re: O'Bannon v NCAA first round opinion 


Digging deeper into that Mandeville case ( http://openjurist.org/334/us/219 ), since you've explicitly said:

The bolded part makes the context a bit more clear. The Mandeville court was not creating new law or claiming that harm to sellers had replaced harm to the market (aka consumers) as the test for antitrust violations. The Mandeville court was just saying that it did not matter that the sellers would get the trebled damages so long as the violation was the sort of harm to the market that the Sherman Act had outlawed. And you see that in later quotes throughout the opinion: "Again, as we have said, the vital thing is the effect on commerce, not the precise point at which the restraint occurs or begins to take effect in a scheme as closely knit as this in all phases of the industry." "It is rather whether the statute's policy has been violated in a manner to produce the general consequences it forbids for the public and the special consequences for particular individuals essential to the recovery of treble damages."

Essentially, you seem to be arguing at least one of a couple things:

1) The S.C. did not claim that "harm to sellers had replaced harm to the market (aka consumers) as the test for antitrust violations". I'm not quite sure how far you're going with this. If you simply mean that it would be wrong to totally ignore end consumer harm in all future antitrust cases and only care about producer harm, I'd agree wtih that statement, but it's basically a straw man, since no one is arguing that point. To me, it instead reads like you are arguing that it'd be wrong to ever use producer harm as an explicit test of anti-competitive behavior, and that only end-user consumer harm is a valid antitrust test. Again, if I'm misreading you, please let me know.

2) Embracing a "producer harm" antitrust standard (at least in cases involving monopsony behavior and producer harm) would be "creating new law".

wrt point #2, I'd be very curious to see analyses of antitrust law, either before or after Mandeville, that argue that monopsonistic behavior is exempted as long as it only harms producers (not competitors, but producers further up the supply chain), provided that consumers are unarmed. So far I've seen very little to this effect and a whole lot to the opposite effect.

wrt point #1, it's fairly clear that in this case, the SC very much used a "producer harm" standard (or at least used it in conjunction with other items). Every time they talk about producer harm their language embraces it as a relevant standard of anti-competitive behavior, and there are a lot of mentions: Consider (I excerpt out a lot of the decision commentary, including a LOT of commentary relating to how broad of a mandate antitrust law has, and discussion about why they get to regulate local commerce as well as explicitly and directly interstate commerce), various bolded items are mine:

The main question is whether, in the circumstances pleaded, California sugar refiners who sell sugar in interstate commerce may agree among themselves to pay a uniform price for sugar beets grown in California without incurring liability to the local beet growers under the Act. Narrowly the question is whether the refiners' agreement together with the allegations made concerning its effects shows a conspiracy to monopolize and to restrain interstate trade and commerce or one thus affecting only purely local trade and commerce.
...
The material facts pleaded, which stand admitted as if they had been proved for the purposes of this proceeding, may be summarized as follows: Petitioners' farms are located in northern California, within the area lying north of the thirty-sixth parallel. The only practical market available to beet growers in that area was sale to one of three refiners
...
Sometime before the 1939 season the three refiners entered into an agreement to pay uniform prices for sugar beets. The mechanics of the price-fixing arrangement were simple. The refiners adopted identical form contracts and began to compute beet prices on the basis of the average net returns of all three rather than the separate returns of the purchasing refiner. Inevitably all would pay the same price for beets of the same quality.
...
The specific allegation is added that the sugar manufactured by respondent and the other northern California refiners from beets grown in the region 'was, during all of said period (1938 to 1942), sold in interstate commerce throughout the United States.'
...
By way of legal as well as ultimate factual conclusions the amended complaint charged that respondent had unlawfully conspired with the other northern California refiners to 'monopolize and restrain trade and commerce5 among the several states and to unlawfully fix prices to be paid the growers * * * all in violation of the anti-trust laws * * *'; and that each refiner no longer competed against the others as to the price to be paid the growers, but paid the same price on the agreed uniform basis of average net returns.
...
It is clear that the agreement is the sort of combination condemned by the Act,15 even though the price-fixing was by purchasers,16 and the persons specially injured under the treble damage claim are sellers, not customers or consumers.17 And even if it is assumed that the final aim of the conspiracy was control of the local sugar beet market, it does not follow that it is outside the scope of the Sherman Act. For monopolization of local business, when achieved by restraining interstate commerce, is condemned by the Act. Stevens Co. v. Foster & Kleiser, 311 U.S. 255, 261, 61 S.Ct. 210, 213, 85 L.Ed. 173. And a conspiracy with the ultimate object of fixing local retail prices is within the Act, if the means adopted for its accomplishment reach beyond the boundaries of one state. United States v. Frankfort Distilleries, 324 U.S. 293, 65 S.Ct. 661, 89 L.Ed. 951.
The statute does not confine its protection to consumers, or to purchasers, or to competitors, or to sellers. Nor does it immunize the outlawed acts because they are done by any of these. Cf. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129; American Tobacco Co. v. United States, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575. The Act is comprehensive in its terms and coverage, protecting all who are made victims of the forbidden practices by whomever they may be perpetrated. Cf. United States v. South-Fastern Underwriters Ass'n, supra, at page 553 of 322 U.S., page 1173 of 64 S.Ct., 88 L.Ed. 1440.
...
Even without the uniform price provision and with full competition among the three refiners, their position is a dominating one. The growers' only competitive outlet is the one which exists when the refiners compete among themselves. There is no other market. The farmers' only alternative to dealing with one of the three refiners is to stop growing beets. They can neither plant nor sell except at the refiners' pleasure and on their terms. The refiners thus effectively control the quantity of beets grown, harvested and marketed, and consequently of sugar sold from the area in interstate commerce, even when they compete with each other. They dominate the entire industry. And their dominant position, together with the obstacles created by the necessity for large capital investment and the time required to make it productive, makes outlet through new competition practically impossible. Upon the allegations, it is absolutely so for any single growing season. A tighter or more all-inclusive monopolistic position hardly can be conceived.
There were indeed two distinct effects flowing from the agreement for paying uniform growers' prices, one immediately upon the price received by the grower rendering it devoid of all competitive influence in amount; the other, the nee ssary and inevitable effect of that agreement, in the setting of the industry as a whole, to reduce competition in the interstate distribution of sugar.
...
These restrictive and monopolistic effects, resulting necessarily from the practices allegedly intended to produce them, fall squarely within the Sherman Act's prohibitions, creating the very injuries they were designed to prevent, both to the public and to private individuals.
...
It does not matter, contrary to respondent's view, that the growers contracting with the other two refiners may have been benefited, rather than harmed, by the combination's effects, even if that result is assumed to have followed...Both types of injury are present in this case, for in addition to the restraints put upon the public interest in the interstate sale of sugar, enhancing the refiner's controls, there are special injuries affecting the petitioners resulting from those effects as well as from the immediate operation of the uniform price arrangement itself.

PS I'm rereading the dissent, and it seems like the dissent is essentially making the argument, NOT that a fundamentally important issue is producer vs consumer harm (which is what Wilken read into it), but rather that the fundementally important issue was local vs inter-state commerce.  In other words, the inter-state sugar market wasn't harmed, and therefore LOCAL (emphasis mine) producer harm in a separate market didn't matter.  So not a matter of defining harm, but a matter of defining jurisdiction.  Consider:

It appears to me that the Court's opinion is based on assumptions of fact which the petitioner disclaimed in the court below. These assumptions are permissible inferences from the amended complaint only if we disregard the way in which the amendments came about.
On hearing, the trial judge apparently considered that a cause of action would be stated only if the complaint alleged that the growing contracts affected the price of sugar in interstate commerce. But the contracts accompanying the pleadings indicated that the effects ran in the other direction. The market price of interstate sugar was the base on which the price of beets was to be figured.
...

The trial judge therefore suggested that the references to restraint of trade in sugar in interstate commerce created an ambiguity in the complaint.  Accordingly, the plaintiff, at the suggestion of the court and for the specific purpose of this appeal, filed an amended complaint which completely eliminated the charge that the agreements complained of affected the price of sugar in interstate commerce
...
The District Court then held that since no beets whatever moved in interstate commerce and since there was no charge in the amended complaint that the cost or quality of the product which did move in interstate commerce was in any way affected, no cause of action was stated. The appeal was taken and the Circuit Court of Appeals affirmed

This Court, however, decides the case as though the original complaint as it related to sugar had not only remained unchanged but had been proved by evidence. Despite the deletion from the complaint of the allegation concerning the price of sugar, the Court assumes, without allegation or evidence, that the price of sugar is affected and on that basis builds its thesis that the Sherman Act has been violated. 


Again, I'm not a lawyer (duh), but it seems to be that Jackson is making the argument that the inter-state sugar market was not actually affected (not that it wasn't affected good/bad, that it wasn't affected at all), and because the inter-state market wasn't affected, the Sherman Act didn't apply to the local-only effect.  Specifically, that dissent disagreed with (bold mine):



The specific allegation is added that the sugar manufactured by respondent and the other northern California refiners from beets grown in the region 'was, during all of said period (1938 to 1942), sold in interstate commerce throughout the United States.'

...
Instead it was alleged upon information and belief that, as a result of the alleged conspiracy, respondent did not conduct its interstate operations as carefully and efficiently as previously or 'as it would have had said conspiracy not existed

...
Further charges were that as 'a direct, expected and planned result of said conspiracy, the free and natural flow of commerce in interstate trade was intentionally hindered and obstructed
...

Broadly petitioners regard the entire sequence of growing the beets, refining them into sugar and distributing it, under the arrangements set forth, as a chain of events so integrated and taking place in interstate commerce or in such close and intimate connection with it that, for purposes of applying the Sherman Act, the complete sequence is an entirety and no part of it can be segregated from the remainder so as to put it beyond the statute's grasp.

Respondent, on the contrary, broadly severs the phase or phases of growing and selling beets from the later ones of refining them and of marketing the sugar. The initial growing process together with sale of the beets, and it would seem also the intermediate stage of refining, are taken to be 'purely local,' since all occurred entirely within California; therefore were wholly intrastate events; and consequently were beyond the Sherman Act's reach.

Connected with this severance is the assertion that the complaint alleges no monopolistic or restrictive effects upon interstate commerce, but only such effects in the intrastate phases of the industry.

...
Paragraph XIX of the amended complaint summarized petitioners' conclusions as follows: 'By reason of the foregoing acts of the defendant and its said conspirators, interstate commerce in sugar was illegally restrained, competition therein was not only substantially lessened but was destroyed, the price of sugar beets was illegally fixed, and an illegal monopoly was established, all in violation of the anti-trust laws of the United States to the damage of plaintiffs as aforesaid

...
In United States v. Frankfort Distilleries, 324 U.S. 293, 297, 65 S.Ct. 661, 663, 89 L.Ed. 951, we said: 'It is true that this Court has on occasion determined that local conduct could be insulated from the operation of the Anti-Trust laws on the basis of the purely local aims of a combination, insofar as those aims were not motivated by the purpose of restraining commerce, and where the means used to achieve the purpose did not directly touch upon interstate commerce
...

It is suggested that Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315, is inconsistent with our conclusion here. The Court there held first that the Sherman Act did not apply because the program was sponsored by the State of California. Contrary to the present suggestion, the opinion assumes that the relation between the intrastate and the interstate commerce in raisins was sufficient to justify federal regulation, if the state-sponsored program of prorating had been 'organized and made effective solely by virtue of a contract, combination or conspiracy of private persons, individual or corporate.' 317 U.S. at page 350, 63 S.Ct. at page 313, 87 L.Ed. 315. The case therefore contains no suggestion, on the facts or on the law, contrary to the result now reached.
...

With no further support from the record, it has been assumed that the ambiguity so elided was the reference to restraint of interstate trade in sugar and hence the petitioners in making it stated themselves out of court.

Basically, the court case is NOT a "producer vs consumer harm" fight (even the defense acknowledges producer harm, and their primary cited defense is simply "purely local... therefore wholly intrastate... consequently beyond the Sherman Act's reach").  Neither plaintiff nor defense, majority nor dissent, actually argue that as a general principle, harm to producers is OK under Sherman.  And indeed, as previously noted, it's stated over and over again the harm to producers is indeed a valid antitrust case.

 

Last edited 8/12/2014 3:53 PM by MrPacTen

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Posted: 8/12/2014 3:41 PM

Re: O'Bannon v NCAA first round opinion 


I keep waiting for a bill to come to my office after I read some of this stuff.
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Posted: 8/12/2014 5:12 PM

Re: O'Bannon v NCAA first round opinion 



BearEEGoodSir wrote: However, the judge DID award order the NCAA to pay all of the plaintiff's legal fees, so while the legal team likely did not make out like bandits, they are all getting their hourly fees related to the case compensated for them if the ruling holds.

Yes.  Attorneys fees are mandatory in any antitrust action whether for injunctive relief or damages.  (I imagine there were no damages because the former players are not competitors with the NCAA, money damages are usually only for competitors harmed by the conduct, not all others indirectly harmed).

I am completely certain that this relatively minor sum is not a huge part of the NCAA's decision to appeal.

I agree.

I am unsure as to whether the decision was actually limited in its scope to merely men's basketball and football. I believe that part of the rationale for the wording was so that schools would not be forced to set scholarships at levels that would bankrupt their programs, whether or not the sport was revenue generating. However, schools WOULD be allowed to up their scholarship values to a minimum of the caps listed in the decision. Hence, Utah gymnastics could feasibly decide to effectively offer higher scholarships by being willing to set up those trust funds for their gymnasts, just as Stanford could offer those funds for women's volleyball.

IIRC correctly Wilken kicked out any attempt to introduce evidence of the economic effect of Title IX.  I imagine that is an issue that will get some play on appeal.

Essentially as long as a sport received television coverage from somewhere on any regular basis, a school could claim it desired to compensate the participating athletes for their image rights in such a trust structure. Certainly women's volleyball, baseball, and women's basketball could qualify.

You are far too limited.  Title IX will almost certainly require that women's sports get trust funds in an amount somewhere near what the men get, regardless of whether women's sports makes a red cent.

(I'm not making any moral judgment on Title IX, just saying how it's equality and parity provisions will very likely work).

This is fantastic for the Pac-12. Our ridiculously strong presence in the non-revenue sports outside of lacrosse and hockey could potentially be magnified because we would be stealing recruits with our more valuable scholarships. Well, at least Stanford, USC and Oregon would be doing a chunk of that.

I think Title IX would operate in a more across the board sort of way.

The poor public schools might have to ask boosters to fund the trust funds, but at least the boosters could do that sort of thing legally! Hmm... boost our program by offering $5000/year for each athlete you wish to support. There are some wealthier fans willing to jump on board such things.

You raise an interesting point.  Wilken's opinion assumes that the money for the trust fund would come from tv and likeness revenues, but I do not know if she wrote anything that would stop boosters from filling the funnel.
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Posted: 8/12/2014 5:18 PM

Re: O'Bannon v NCAA first round opinion 



PiratesRoost wrote:
BearEEGoodSir wrote: However, the judge DID award order the NCAA to pay all of the plaintiff's legal fees, so while the legal team likely did not make out like bandits, they are all getting their hourly fees related to the case compensated for them if the ruling holds.

Yes.  Attorneys fees are mandatory in any antitrust action whether for injunctive relief or damages.  (I imagine there were no damages because the former players are not competitors with the NCAA, money damages are usually only for competitors harmed by the conduct, not all others indirectly harmed).

I am completely certain that this relatively minor sum is not a huge part of the NCAA's decision to appeal.

I agree.

I am unsure as to whether the decision was actually limited in its scope to merely men's basketball and football. I believe that part of the rationale for the wording was so that schools would not be forced to set scholarships at levels that would bankrupt their programs, whether or not the sport was revenue generating. However, schools WOULD be allowed to up their scholarship values to a minimum of the caps listed in the decision. Hence, Utah gymnastics could feasibly decide to effectively offer higher scholarships by being willing to set up those trust funds for their gymnasts, just as Stanford could offer those funds for women's volleyball.

IIRC correctly Wilken kicked out any attempt to introduce evidence of the economic effect of Title IX.  I imagine that is an issue that will get some play on appeal.

Essentially as long as a sport received television coverage from somewhere on any regular basis, a school could claim it desired to compensate the participating athletes for their image rights in such a trust structure. Certainly women's volleyball, baseball, and women's basketball could qualify.

You are far too limited.  Title IX will almost certainly require that women's sports get trust funds in an amount somewhere near what the men get, regardless of whether women's sports makes a red cent.

(I'm not making any moral judgment on Title IX, just saying how it's equality and parity provisions will very likely work).

This is fantastic for the Pac-12. Our ridiculously strong presence in the non-revenue sports outside of lacrosse and hockey could potentially be magnified because we would be stealing recruits with our more valuable scholarships. Well, at least Stanford, USC and Oregon would be doing a chunk of that.

I think Title IX would operate in a more across the board sort of way.

The poor public schools might have to ask boosters to fund the trust funds, but at least the boosters could do that sort of thing legally! Hmm... boost our program by offering $5000/year for each athlete you wish to support. There are some wealthier fans willing to jump on board such things.

You raise an interesting point.  Wilken's opinion assumes that the money for the trust fund would come from tv and likeness revenues, but I do not know if she wrote anything that would stop boosters from filling the funnel.
FYI, Wilken's specific language was (page 92):

Second, the NCAA could permit its schools to hold in trust limited and equal shares of its licensing revenue to be distributed to its student-athletes after they leave college or their eligibility expires. The NCAA could also prohibit schools from funding the stipends or payments held in trust with anything other than revenue generated from the use of the student-athletes’ own names, images, and likenesses.


So she didn't specifically write anything that forced the $ to come directly from NIL money, BUT she did explicitly give the NCAA the freedom to make that prohibition themselves.
 
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