Tennessee v. NCAA: NCAA Enjoined from Enforcing NIL Rules and Policies
On February 23, 2024, United States District Judge Clifton L. Corker granted an injunction prohibiting the NCAA from enforcing name, image, and likeness ("NIL") rules and policies. Specifically, Judge Corker granted the Plaintiff's Motion for Preliminary Injunction and "restrained and enjoined [the NCAA] from enforcing the NCAA Interim NIL Policy, the NCAA Bylaws, or any other authority to the extent such authority prohibits student-athletes from negotiating compensation for NIL with any third-party entity, including but not limited to boosters or a collective of boosters, until a full and final decision on the merits in the instant action." This ruling is very important for both athletes and universities facing enforcement actions.
A few weeks prior to insurance of the preliminary injunction, the Plaintiffs, the State of Tennessee and the Commonwealth of Virginia (parens patriae on behalf of college athletes), sought a temporary restraining order, but such request was denied due to the failure to demonstrate irreparable harm. After supplemental briefing and oral argument, Judge Corker granted the requested relief and found that the Plaintiffs demonstrated irreparable harm. A preliminary injunction is an extraordinary remedy not easily granted by federal courts. The Plaintiffs were required to show: 1) a likelihood of success on the merits; 2) irreparable harm; 3) the issuance of an injunction would not cause substantial harm to others; and 4) public interest would be served by the insurance of the injunction.
Judge Coker made several key findings: 1) NCAA rules restricting negotiations of NIL agreements are "explicitly commercial in nature;" 2) the "NIL-recruiting ban has a substantial anticompetitive effect" on the market; 3) the NCAA's proferred pro-competitive justifications -- a) promoting a balance of academics and athletics and b) maintaining a distinction between collegiate and professional athletics -- "are no persuasive procompetitive rationales;" 4) Plaintiff's demonstrated a likelihood of success on the merits; and 5) the "suppression of negotiating leverage and the consequential lack of knowledge" of college athletes constitutes irreparable harm and "will not make [college athletes] whole" at the conclusion of the lawsuit. Judge Corker ultimately concluded that the Plaintiffs met their burden on all four (4) elements necessary to obtain a preliminary injunction.
In addition to restraining and enjoining the NCAA from enforcing rules restricting NIL, Judge Corker also restrained and enjoined the NCAA from enforcing its Rule of Restitution (NCAA Bylaw 12.11.4.2) as it pertains to NIL activities. The Rule of Restitution allows the NCAA to penalize universities and college athletes if the preliminary injunction is "voluntarily vacated, stayed, or reversed." This ruling is a huge benefit to universities and college athletes, if the order is ultimately reversed.
Does the order issued by Judge Corker mean the case is over and the NCAA is sunk? No, a merits trial (if not, settled) will occur where additional arguments and information will be asserted after discovery. Unless modified, however, this order will maintain the status quo until the final trial. In order for the NCAA to have uniformity in the enforcement of NCAA Bylaws, the NCAA will have to apply this ruling all across the country rather than in just Tennessee or the Sixth Circuit (the court of appeals for Tennessee).
For any questions, contact Christian Dennie at cdennie@denniefirm.com.
