In re: National Collegiate Athletic Association Athletic Grant-In-Aid Cap Antitrust Litigation

Corrected Plaintiffs' Opening Argument Modified to Reflect Final Trial Exhibit Numbers (pursuant to to 960 Order on Administrative Motion to File Under Seal) by Nicholas Kindler, John Bohannon, Justine Hartman, Afure Jemerigbe, Shawne Alston, Duane Bennett, Chris Davenport, Don "DJ" Banks, Nigel Hayes, Chris Stone, Alex Lauricella, Michel'le Thomas, Kendall Gregory-McGhee, Ashley Holliday, Dalenta Jameral "D.J." Stephens, India Chaney, Kendall Timmons, Dax Dellenbach, Kenyata Johnson, Martin Jenkins, Kyle Theret, Barry Brunetti, Sharrif Floyd, Alec James. Modified on 9/1/2018

Northern District of California, cand-4:2014-md-02541

Current View

Full Text

3 1 Steve W. Berman (pro hac vice) Jeffrey L. Kessler (pro hac vice) Craig R. Spiegel (SBN 122000) David G. Feher (pro hac vice) 2 HAGENS BERMAN SOBOL SHAPIRO LLP David L. Greenspan (pro hac vice) 1918 Eighth Avenue, Suite 3300 Joseph A. Litman (pro hac vice) 3 Seattle, WA 98101 WINSTON & STRAWN LLP Telephone: (206) 623-7292 200 Park Avenue 4 Facsimile: (206) 623-0594 New York, NY 10166-4193 Telephone: (212) 294-6700 5 Facsimile: (212) 294-4700 6 Jeff D. Friedman (SBN 173886) HAGENS BERMAN SOBOL SHAPIRO LLP 7 715 Hearst Avenue, Suite 202 Berkeley, CA 94710 8 Telephone: (510) 725-3000 Sean D. Meenan (SBN 260466) Facsimile: (510) 725-3001 Jeanifer E. Parsigian (SBN 289001) 9 WINSTON & STRAWN LLP 101 California Street 10 Bruce L. Simon (SBN 96241) San Francisco, CA 94111 Benjamin E. Shiftan (SBN 265767) Telephone: (415) 591-1000 11 PEARSON, SIMON & WARSHAW, LLP Facsimile: (415) 591-1400 44 Montgomery Street, Suite 2450 12 San Francisco, CA 94104 Telephone: (415) 433-9000 13 Facsimile: (415) 433-9008 Class Counsel for Jenkins and Consolidated Action Plaintiffs 14 15 Class Counsel for Jenkins and Consolidated Action Plaintiffs 16 [Additional counsel listed on signature page] 17 18 UNITED STATES DISTRICT COURT 19 NORTHERN DISTRICT OF CALIFORNIA 20 OAKLAND DIVISION 21 IN RE: NATIONAL COLLEGIATE ATHLETIC Case No. 4:14-md-2541-CW ASSOCIATION ATHLETIC GRANT-IN-AID Case No. 4:14-cv-02758-CW 22 CAP ANTITRUST LITIGATION CORRECTED PLAINTIFFS' 23 OPENING ARGUMENT MODIFIED TO REFLECT FINAL TRIAL 24 EXHIBIT NUMBERS This Document Relates to: 25 ALL ACTIONS 26 27 28 CORRECTED PLAINTFFS' OPENING ARGUMENT MODIFIED TO REFLECT FINAL TRIAL EXHIBIT NUMBERS CASE NOS. 4:14-MD-02541-CW 3 1 I. INTRODUCTION 2 Colleges and universities ask their Division I ("D-I") basketball and FBS football players to 3 vigorously compete against one another on the basketball court and on the football field. And the 4 schools compete against one another without limitation to attract top coaches and trainers and 5 administrators, to construct the largest stadia and the most lavish suites, and to secure the most lucrative 6 broadcast and sponsorship and licensing agreements. In the multi-billion dollar business of D-I 7 basketball and FBS football, competition is stifled only—and entirely—when it comes to 8 compensating athletes for their services. 9 Following years of litigation, the Court entered summary judgment for Plaintiffs on their initial 10 burden to prove the existence of agreements that inflict significant anticompetitive harm in defined 11 ("relevant") markets. Just two issues now remain for trial: First, whether Defendants can meet their 12 burden to prove that the challenged compensation restraints1 cause procompetitive effects because they 13 are necessary to (i) maintain consumer demand for D-I basketball and FBS football (i.e., Defendants' 14 "amateurism" justification) or (ii) integrate Class Members into their campus or academic 15 communities (i.e., Defendants' "integration" justification). And, second, if the Court were to find that 16 Defendants have carried their burden to show that the restraints cause a material procompetitive effect, 17 whether Plaintiffs could, in turn, demonstrate that any such procompetitive benefit(s) can be achieved 18 through one or more less-restrictive alternatives. 19 Plaintiffs will prove at trial that the answer to the first question is "no"—Defendants will fail 20 to come forward with any evidence capable of demonstrating that their claimed justifications are 21 anything more than NCAA mythology—requiring judgment against Defendants on this ground alone. 22 But even were the Court to proceed to try the existence of less-restrictive alternatives, Plaintiffs would 23 still prevail because the trial evidence will show that there are ample alternatives to achieve any 24 ostensible benefit of amateurism and/or integration without extinguishing all competition for Class 25 Members' services on the basis of compensation and benefits. Most notably, Defendants could permit 26 27 1 In Section III, below, Plaintiffs organize the challenged rules and demonstrate why they do not require 28 individual rule-by-rule discussions at trial. 1 CORRECTED PLAINTFFS' OPENING ARGUMENT MODIFIED TO REFLECT FINAL TRIAL EXHIBIT NUMBERS CASE NOS. 4:14-MD-02541-CW 3 1 individual conferences—which, as presently constituted, do not possess market power—to set their 2 own rules concerning compensation and benefits, without NCAA-wide agreements or conferences 3 colluding with one another. This would allow each conference to make its own decisions about the 4 claimed procompetitive need for compensation caps while, at the same time, providing Class Members 5 and the relevant markets with the benefits of competition among the conferences and their members. 6 Trial Issue #1: Are the Challenged Rules Necessary to Maintain Consumer Demand 7 Because They Enforce the NCAA's Concept of Amateurism? No—the trial will show that 8 Defendants cannot meet their burden to prove their amateurism justification. They will not (in contrast 9 to O'Bannon) be able to offer any expert economic testimony purporting to show that the challenged 10 rules regarding amateurism are needed to promote consumer demand. Nor (in contrast to O'Bannon) 11 will Defendants be able to offer any testimony from their only disclosed consumer survey expert that 12 permitting additional forms of compensation to Class Members would adversely impact consumer 13 demand. Rather, Dr. Isaacson has already testified, and the trial will show, that he did not even attempt 14 to examine or predict future consumer demand in the event that additional forms of compensation were 15 permitted. Similarly (and, again, in contrast to O'Bannon), Defendants will not be able to offer 16 testimony from any disclosed media expert that the compensation restrictions foster consumer demand 17 among broadcasters or viewers. In fact, despite Defendants' professed belief that amateurism is the 18 essential driver of consumer demand, Plaintiffs are aware of no evidence of the NCAA or any 19 conference or any school conducting an empirical study about the relationship between Defendants' 20 amateurism rules and consumer demand. Defendants' effort to bring in evidence from O'Bannon to 21 resuscitate their failure to provide such evidence in this case should be rejected. 22 Also, this Court has already held to be inadmissible Dr. Elzinga's testimony relating to the 23 competitive impact of the challenged rules, based on his inapplicable and rejected concept of a 24 "multisided platform" market. And, in the event that any portion of his disclosed testimony is found, 25 on reconsideration, to be germane to the relevant markets found by the Court, and conceded by 26 Defendants during the summary judgment argument in this case, he still will not be able to offer any 27 empirical evidence or analysis with respect to the critical issue of the impact of amateurism on 28 2 CORRECTED PLAINTFFS' OPENING ARGUMENT MODIFIED TO REFLECT FINAL TRIAL EXHIBIT NUMBERS CASE NOS. 4:14-MD-02541-CW 3 1 consumer demand because Dr. Elzinga has already testified that he did not study any data on this issue. 2 Instead, Defendants will parade out their own employees to offer self-serving, lay opinion speculation 3 about how offering even a penny more than a cost-of-attendance ("COA") scholarship would be 4 ruinous to consumer demand. This speculative lay testimony is not only inadmissible, but it also will 5 be indistinguishable from the same kind of dire warnings that Defendants trotted out to oppose COA 6 in prior cases. The subsequent economic facts have proven that these shrill warnings, like those 7 asserted here, were utterly false, and the sky did not fall on consumer demand. 8 Although it is not Plaintiffs' burden to disprove that the amateurism compensation caps are 9 procompetitive, Plaintiffs' evidence will do just that. For starters, the trial record will show that the 10 NCAA has admitted—post O'Bannon, via the binding 30(b)(6) testimony of Kevin Lennon—that 11 Defendants already permit Class Members to receive numerous "incidental-to-participation" and 12 Student Assistance Fund ("SAF") benefits that are "not related to the principle of amateurism,"2 that 13 are in addition to full COA, and that have not adversely affected consumer demand.3 Permitting these 14 additional "participation" benefits to be paid to individual Class Members puts total compensation 15 significantly above COA for many thousands of Class Members without harming consumer demand. 16 This post-O'Bannon development is devastating to Defendants' arbitrary and ever-changing 17 amateurism justification. Indeed, as Mr. Lennon testified, the amount and kind of participation benefits 18 permitted to cross the COA line are based not on any principle of "amateurism," but rather by "what 19 the [NCAA] membership agrees to provide."4 Plaintiffs' economists—Dr. Rascher and Dr. Noll— 20 will further demonstrate the lack of any procompetitive consumer-demand effect from Defendants' 21 enforcement of their "amateurism" compensation rules by, among other things, showing that broadcast 22 revenue, ticket sales, sponsorships, and other proxies for consumer demand have continued to increase 23 significantly at the same time that the value of permitted compensation to Class Members has also 24 increased significantly, rising not just to COA but beyond through scholarships, participation benefits, 25 SAF disbursements, and Pell Grants. Compensation has gone up so much that most Class Members 26 2 NCAA (Kevin Lennon) Tr. 58:20-59:1. 27 3 Id. 63:21-64:1. 4 28 Id. 72:17-25. 3 CORRECTED PLAINTFFS' OPENING ARGUMENT MODIFIED TO REFLECT FINAL TRIAL EXHIBIT NUMBERS CASE NOS. 4:14-MD-02541-CW 3 1 already receive substantially more compensation than COA, including compensation that is untethered 2 to education. Further, Plaintiffs' consumer survey expert—Hal Poret—will show that his survey 3 demonstrates that if schools and conferences were allowed to provide Class Members with various 4 forms of additional compensation and benefits that currently are prohibited, it would not negatively 5 impact viewership or attendance.5 In short, the trial will expose amateurism as a mythical 6 procompetitive justification devoid of evidentiary support in the post-O'Bannon world—an emperor 7 with no clothes. 8 Trial Issue #2: Is Defendants' "Integration" Justification Procompetitive? No— 9 Defendants will be unable to meet their burden to prove their "integration" justification. Although 10 Defendants will argue at trial that Plaintiffs' requested injunction would hinder D-I basketball and FBS 11 football players' integration into college life and pursuit of a college education, they will not even be 12 able to prove, in the first instance, that Class Members are currently well-integrated. To the contrary, 13 the trial evidence will show that Defendants have taken numerous destructive steps regarding 14 scheduling, team commitments, and the construction of private athlete facilities that harm Class 15 Members' ability to integrate into their schools or to improve their academic work. The fundamental 16 premise of Defendants' integration defense is a sham. Equally important, even if Class Members were 17 well-integrated, Defendants will have zero proof at trial that any such integration is the result of the 18 challenged rules and a national cap on compensation. Defendants' proffered expert on this point, Dr. 19 James Heckman, does not help them satisfy their burden. Dr. Heckman's testimony stands for the 20 unremarkable and undisputed proposition that attending college has benefits. But he did not study 21 what matt