Court Decision Halts NCAA Enforcement Of Two-In-Four Rule

Aug. 4, 2003

INDIANAPOLIS - The same federal judge who last year held in abeyance a request for a permanent injunction from plaintiffs who have sued the NCAA over the "two-in-four" rule has now granted that injunction.

The opinion issued July 28 from U.S. District Judge Edmund A. Sargus Jr. grants the plaintiffs in the case -- Worldwide Basketball and Sports Tours, Inc.; Sports Promotions, LLC; and Sports Tours International -- a permanent injunction that prevents the NCAA from enforcing the rule allowing Division I institutions to participate in certified basketball contests no more than twice every four years.

The NCAA will file for a stay on the decision until the 2004-05 academic year.

The legislation in question, Proposal No. 98-92, became effective in 2000-01 and precluded institutions from participating in more than one certified event in a given academic year and not more than two certified events every four years.

Division I governance groups passed the legislation to increase competitive equity by giving more basketball teams the opportunity to compete in the certified events. College and university presidents also favored the rule because it promoted academics by reducing the overall number of games played, since the rule required all games played in a certified event to count toward the season total rather than only as one game. Because of this change, the Division I Board of Directors at the same time approved another proposal that increased the maximum number of games in basketball from 27 to 28.

Plaintiffs, however, sought relief from the rule in December 2001, alleging that it violated antitrust laws and that the two-in-four rule impaired their ability to fill events.

Last July after the rule had completed its second year, Sargus denied the plaintiffs' request for a preliminary injunction and held their request for a permanent injunction in abeyance, indicating his desire for the rule to play out through years three and four before determining whether it did in fact cause a financial loss, as plaintiffs claimed.

Sargus' latest decision comes after year three of the rule and says that the NCAA, by implementing the two-in-four restriction, is acting in an anti-competitive manner without promoting a beneficial interest.

Sargus noted the intricacies of the case, since the NCAA does not fit the traditional model when it comes to antitrust review.

"Courts have recognized that the NCAA has important rule-making functions, such as establishing the rules of the game and protecting the welfare of student-athletes," Sargus said. "While acting in this rule-making capacity, the NCAA is not subject to traditional antitrust limitations."

Instead, Sargus said, the courts have applied a concept known as the "rule of reason," which forms a judgment about the competitive significance of the complaint. In this particular case, Sargus said, if the plaintiffs demonstrate that the rule has a substantially adverse effect on competition, the NCAA must justify the anti-competitive effect with "countervailing beneficial justifications."

The court found there had been a net decline of 72 games, or 3.3 percent of all school-scheduled games because of the rule. The court found that represented "a substantial reduction in the number of school-scheduled basketball games." That being so, Sargus said, "Under the rule of reason, the NCAA must establish a bona fide justification demonstrating the virtues of the policy."

The court then went on to reject as not credible the three reasons offered by the NCAA to justify the rule: (1) It furthers the goals of competitive equity among large and smaller schools, (2) it furthers the goal of students avoiding missed class time, and (3) it makes a more uniform season by stabilizing schedules and preventing an excessive number of games from being played.

Sargus said, "The number of exempt games played by lesser-known, non-power conference teams has actually decreased, resulting in harm to the class of teams which the NCAA claims its rule would benefit."

Additionally, Sargus found the rule only affects at most 5 percent of the total games played. "If student welfare were the justification, to be effective, the rule would certainly have to regulate the other 95 percent of games played. The rule does not equalize the number of games each team ultimately plays, since it excludes conference tournaments and the NCAA tournament."

The NCAA's Jeff Howard, managing director of public relations, said he was disappointed with the judge's decision.

"The NCAA thinks the ruling is wrong and it seems clear that the Association, through its legitimate processes, should regulate the season, rather than promoters of exempt contests. It's unfortunate that the decision came at such a late date with much of the scheduling already in place for this season."



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