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The Depth of Deppe’s Case Against the NCAA

After facing an onslaught of litigation on almost every possible amateurism restriction, the NCAA now faces another lawsuit. The newest suit targets restrictions on Division I Football Bowl Subdivision (FBS) student-athlete transfers and scholarship limits.[i] The current zeitgeist views NCAA transfer restrictions as harsh non-compete clauses for a class of people that are not legally considered employees.

Peter Deppe was originally recruited and enrolled as a walk-on punter at Northern Illinois University. After being told by his special teams coach that he would be on scholarship the next semester, that coach left, and this statement was not honored by the head coach. After realizing he would not be on scholarship, he attempted to transfer immediately in an effort to earn an athletic scholarship elsewhere (Iowa University), but Iowa seemed to only be interested if he would have been immediately eligible to participate in Fall 2016. Thanks to the NCAA transfer rules on FBS players, Deppe would have to sit out one year in residence. With no waiver coming from Iowa, and unable to file himself, Deppe was going to have to sit out the 2016 season. As a result of his inability to become immediately eligible to play in Fall 2016, Deppe’s transfer to Iowa fell through.

Deppe filed suit against the NCAA, alleging that the NCAA’s limit on the number of football scholarships a school may provide, as well as the NCAA’s rules on transferring student athletes illegally restrain trade in violation of the Sherman Act. The complaint seeks not only damages for Deppe, but also injunctive relief against the NCAA’s FBS scholarship limits and transfer restrictions.

The Sherman Act and the NCAA: More Awkward than a Junior High Sadie Hawkins Dance

Most of the recent lawsuits against the NCAA’s perceived hegemony are for violations of antitrust law regarding agreements which restrain trade. Courts have been hesitant to interfere within NCAA matters (and extremely limited in their rulings when they do interfere), so each of these cases faces an uphill battle to change the status quo. Courts are not well suited to handle NCAA issues, and neither is antitrust law.[ii] In the past, the court system has been mostly deferential to the NCAA when it comes to applying antitrust law to amateurism regulations. Judge Claudia Wilken displayed this deference in her initial O’Bannon decision:

“To the extent other criticisms have been leveled against the NCAA and college policies and practices . . . it is likely that the challenged restraints, as well as other perceived inequities in college athletics and higher education generally, could be better addressed as a policy matter by reforms other than those available as a remedy for the antitrust violation found here.  Such reforms and remedies could be undertaken by the NCAA, its member schools and conferences, or Congress.”

The plaintiffs in these lawsuits assert that the market for players (labor), revenue, and athletic scholarships are inherently commercial; and designed to bring in money, as “schools make millions of dollars annually as a result of these transactions.”[iii] The complaint paints a picture across all football, but especially FBS, of booming profits; with schools, conferences, and the NCAA all sitting on a Scrooge McDuck-esque vault of cash. While revenue is always brought up to show commercialism, the NCAA can always rebut with the expenses that these institutions shell out in the first place. Then the plaintiffs argue that the money spent on expenses would go to student athletes absent the NCAA’s restrictions; and the arguments go on and on… Attorneys have attempted to force the issue of applying the Sherman Act to the NCAA’s “anti-competitive” commercial behavior, metaphorically jamming the square peg into a round hole with little real success to date.[iv]

Deppe contends that but for the NCAA restriction on the number of football scholarships a school can offer, he would have not only received a scholarship at Northern Illinois, but also had more offers from other schools recruiting him.[v] Deppe further alleges that absent the scholarship restrictions,[vi] Northern Illinois would not have had to retract their “promise” of an athletic scholarship, regardless of the coaching change.[vii] The complaint continues to say that student-athletes forced to sit out a year are less valuable to a coach, and therefore less likely to earn one of these limited scholarships.[viii]

Even if Deppe convinces a court that the scholarship caps are illegal restraints of trade, he will likely struggle to prove any damages.  Absent a statement from the new coach at NIU, Deppe will struggle to show he would have been granted a scholarship at NIU absent the cap.  Perhaps the new coach would have given it to a backup linebacker or other player instead of a punter.

If Student-Athletes Aren’t Employees, Why the Non-Compete Clause?

The second part of Deppe’s lawsuit centers around the transfer restrictions on NCAA FBS student-athletes. Under NCAA Bylaw, FBS football, basketball, baseball, and men’s ice hockey athletes are not eligible to transfer and play immediately, costing the athlete one available season of eligibility. These transfer rules were in part put in place to help students transition to life on a new campus (both culturally and academically), but also to prevent poaching and tampering situations.

It is important to note that Division I student-athletes have five full academic years (two semesters, three trimesters, or four quarters) of eligibility to satisfy four seasons of competition. This five-year clock of eligibility starts upon full-time enrollment to any collegiate institution. In many cases, a student-athlete who does not meet the one-time transfer exception and has to sit for one year may still use all four seasons of competition.

Deppe, on the other hand, was redshirted in his first year (not competing does not use a season of competition), so he still had 4 seasons of eligibility remaining in which to use four seasons of competition after one year of collegiate enrollment. Being forced to sit out a year for a transfer residence would not allow him to use all four seasons of competition, having only three seasons of eligibility remaining. Where Deppe gets hurt is losing two years of eligibility. Between his redshirt year and an academic year in residence, these both fall under “Circumstances Within Control” that do not warrant an extension of a student-athlete’s five-year clock, regardless of having more than one such season.[ix] Because of this, Deppe would argue that he is harmed not only by failing to receive a scholarship he otherwise would have, but also because he loses a season of competition due to the NCAA transfer rules.

While attempting to file a waiver for Deppe, plaintiff’s counsel was told by the NCAA that an institution must file a waiver, and Iowa (the school with “standing”) had not filed anything. The NCAA would likely argue that this rule is not to shut out student-athletes from the process, but rather to minimize the amount of work for the NCAA to only work on transfer waivers when it is clear the new school actually wants to bring in a transfer athlete. This minimizes waivers that the NCAA gets to concrete situations that definitively need relief; an important, if often ignored issue, for the chronically understaffed and overworked NCAA.

The timing of filing is clearly inconvenient (not filing until he actually enrolls at your school for a fall sport is difficult), but it would be no worse than collecting documentation and spending time on a task that never comes to fruition. Iowa may not have wanted to file a waiver, but Deppe was not yet out of options from the NCAA perspective on how to proceed. Deppe could have had any institution he transferred to file a “run-off” waiver in an attempt to extend his five year clock and mitigate some of the harm he claims he suffered (losing a season of competition).  “Run-off” waivers are typically applied in cases where a student-athlete must transfer due to getting cut, benched or otherwise “run off” of a team usually due to a coaching change or injury, and wants to avoid losing one of their five years of eligibility by sitting out. Given courts’ historic reticence to get involved with large NCAA principles like amateurism, filing a lawsuit over a rule that still has a possible NCAA remedy may not play in the plaintiff’s favor.

Is Deppe v. NCAA the case to bring down the NCAA?

While many would think this should be a slam dunk case forcing the NCAA to change its transfer restrictions and scholarship caps, the complaint faces a number of issues which may ultimately be fatal to Mr. Deppe’s case.  Many of the arguments the complaint cites attempt to tie in the scholarship restrictions in with overly harsh transfer restrictions in football, which combined lead to Deppe failing to receive a scholarship, and fulfilling all four seasons of competition. The arguments try to tie these harms to anti-competitive effects that the rules bring about, but many simply appeal to an emotional response as opposed to legally supported arguments. Why should coaches be able to move freely while athletes cannot? Why do these complex transfer restrictions with academic transition in mind apply to a good student?[x] Arguments like these are for the most part clever attempts by attorneys to disguise the real issues at hand.  For example, while it is repeated often in the media, college coaches, especially in revenue sports do not move “freely.”  Nearly every revenue sport coaching contract has a buyout which must be paid to allow the coach to move.

Deppe’s best argument is that the transfer restrictions “helping” a student-athlete settle in academically at a new institution could be addressed by less restrictive alternatives.  For example, the NCAA could have a rule that a student with high academic credentials does not have to sit a year, while students with lower grades do. Schools are not penalized for a student-athlete transferring to another four-year school with at least one year complete and a 2.6 GPA,[xi] why should student-athletes be penalized in the same situation? This is a proven instance where the NCAA has a relaxed view of four-year transfers, and could similarly be applied to the year in residence if one primary reason behind the rule is academic transition. Additionally, as other sports have the one-time transfer exception (regardless of academic achievement), Deppe can at least argue that the academic reasons may not be as significant as otherwise stated.

Deppe will likely have less luck arguing about the scholarship cap since the procompetitive benefit to that restriction is much stronger than the tenuous argument about academics above.  All sports tend to need roster limits in order to prevent one team from simply acquiring vastly more players than other teams, in the same way that sports need all teams to play the same number of games or have uniform playing surface dimensions (all arguably restrictions on trade).  Here, the scholarship limit is a form of a roster limit, and is one of the least restrictive methods to achieve this balance. Ultimately the NCAA will argue that it sells a better product by ensuring that the talent pool is at least somewhat spread out.

Regarding the transfer restrictions, Deppe losing a season of competition is probably too ephemeral and speculative for a court to award damages.  His best option would be to argue that he is due the value of the scholarship he would have received at Iowa absent the NCAA transfer restrictions, however this too will be difficult to prove with certainty as Iowa’s failure to file for a waiver for Deppe provides some degree of doubt as to whether or not Deppe was definitely going to receive a scholarship for that year.

Although the complaint raises valid arguments, more so against the NCAA’s transfer restrictions than the scholarship limits, overall it does not present a concrete reason as to why the Sherman Act is the answer, or why antitrust laws are the appropriate remedy for the situation. The antitrust laws are designed to protect consumers from harm to competition, not harm to participants in a market or even to competitors within a market.  Deppe may have been better off simply filing a case for breach of contract seeking reliance damages against NIU or Iowa. While we will see how the case progresses (if it does), I would hazard a guess that the U.S. District Court for the Southern District of Indiana is not where meaningful change to the NCAA transfer restrictions or scholarship limits occurs.

[i] This case is incredibly similar (basically identical) to a case brought in November, Pugh v. NCAA.

[ii] Esteemed sports lawyer (and fellow Sports Esquires Blog writer) Andrew Sensi believes efforts may be better spent lobbying Congress and working with the Power 5 Conferences based on courtroom outcomes involving the NCAA to date. Both the courts and the NLRB have said as much.

[iii] Deppe v. NCAA, paragraph 61.

[iv] Indeed, after years of litigation, the only change the O’Bannon appeals court forced the NCAA to make, was one the NCAA had already approved on its own.  So far, only the attorneys are winning.

[v] According to paragraph 6, Deppe had one Division I scholarship offer, one Division II scholarship offer, was among the top two prospects for a scholarship offer at two schools, and was a preferred walk-on at four schools.

[vi] NCAA Bylaw (FBS) states that a football team can have 85 scholarships

[vii] It is worth noting that coming out of high school, Deppe did not have many actual scholarship offers, begging the question of whether he is “scholarship athlete” caliber. Did he not receive a scholarship due to NCAA restrictions, or because he did not meet a particular team’s criteria?

[viii] Not a legal argument in any way, shape, or form, but it is amusing that a lawsuit about the scholarship limit involves an athlete that the limit has the least affect on. Even if the limit were raised, how many schools have two full-scholarship punters if one isn’t a graduating senior? (I don’t know, but just wondering.)

[ix] NCAA Bylaw

[x] The complaint goes so far as to cite an ESPN sportswriter who complains about the complexity of transfer rules, but there are reasons legislation is dense. As different situations arise, the rules have to be able to address them. Tax code is incredibly dense too but no one is realistically calling for that to be scrapped.

[xi] For Academic Progress Rate purposes. NCAA APP (Academic Performance Program) Manual, pg. 196.

About Sean Dotson

Sean currently works in the Athletics Compliance Office at Appalachian State University. He graduated from Tulane University School of Law with a certificate in Sports Law in 2012, and graduated from Tulane University with a B.A. in History in 2009. Sean has previously worked with multiple sports agents, and as a law clerk in workers’ compensation court.

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