NCAA Bylaw 14.5.5.1, also known as the “Transfer Eligibility Rule,” requires student athletes who transfer between Division I schools twice to wait one year to compete again. The States allege this rule is a “no-poach agreement between horizontal competitor member schools . . . to allocate the market for the labor of NCAA Division I college athletes” that denies “college athlete[s] . . . the full benefits of participation in Division I NCAA athletics” and consumers a more competitive game to watch. The States raise their claim under Section One of the Sherman Act. In rebuttal, the NCAA claims that but for the restriction, frequent transferring would destroy the defining amateurism of the NCAA, and student academics and team stability would suffer.
On December 7, the States moved for a Rule 65 temporary restraining order, and the Northern District of West Virginia granted it. The court ruled that the transfer rule and its enforcement rules are “essentially horizontal agreements among competitors,” and “[t]he sole difference between this case and Alston is that Alston involved compensation,” whereas the States challenge “an even more direct restraint on trade: . . . rules which prohibit a student from playing.” In the court’s view, student athletes suffered because the NCAA’s member schools are keeping students from the “institution[s] that provide[] the best environment for their academic, mental, and economic well-being” by threatening students’ scholarships; name, image, and likeness income; and prospects at going pro. The court also agreed that athletic competition might be depressed by the rule because it benefits “larger and historically successful sports programs by allowing them to retain talented players.” The court then held that the NCAA’s alleged procompetitive justifications were pretextual or at least unduly restrictive.
On December 26 the court has granted the parties’ joint motion to convert the temporary restraining order into a preliminary injunction.
