Opinion
Case No. 2:90-CV-1439
July 19, 2002
OPINION AND ORDER
This matter is before the Court for consideration of the Plaintiffs' Motions for Preliminary and Permanent Injunctive Relief to enjoin the Defendant NCAA's enforcement of the "Two in Four Rule." The Court heard testimony on both of the motions over a four-day period. For the reasons that follow, the Plaintiffs' Motion for Preliminary Injunction is denied and Plaintiffs' Motion for Permanent Injunction is held in abeyance.
I.
Plaintiffs, Worldwide Basketball and Sport Tours, Inc., the Gazelle Group, Inc., Sports Promotions, LLC and Sports Tours International ["Plaintiffs"], commenced this action on December 21, 2000 against the National Collegiate Athletic Association ["NCAA"] alleging that the NCAA's enforcement of the "two in four" rule is a violation of § 1 and 2 of the Sherman Act, 15 U.S.C. § 1, 2. On August 6, 2001, the Plaintiffs filed a Motion for Preliminary Injunction. The parties engaged in discovery and a hearing date was established. Prior to the hearing, the parties consented to the consolidation of the hearings on the requested preliminary and permanent injunctions. The Court has jurisdiction over this case pursuant to 28 U.S.C. § 1331.
Plaintiffs are engaged in the business of promoting sporting events, including events which involve Division 1 mens' college basketball. Among the events which Plaintiffs have promoted over the years are: the Puerto Rico Shootout, the Puerto Rico Holiday Classic, the Coaches v. Cancer Challenge, the National Association of Basketball Coaches Classic, the San Juan Shootout, and others. The Plaintiffs are arrangers of these events but are not themselves the sponsors of the events.
With respect to sponsoring agencies, NCAA Bylaw 30.10.1.3 provides:
The sponsoring organization of any certified event shall be either an active or affiliated member or a member conference of the Association. An institution that is a sponsoring organization must conduct the sport of basketball on the intercollegiate level. For certified events in Alaska, Hawaii, or Puerto Rico, the sponsoring agency must be an active or provisional NCAA member located in that state or territory. If a sponsoring agency wishes to conduct a certified event in a U.S. state or territory outside of the contiguous 48 states (e.g. Alaska, Hawaii, Puerto Rico, Virgin Islands), all competition in the event must take place within such state or territory.
Defendant's Exhibit 1.
The NCAA is an unincorporated association of approximately 1,200 members comprised of four-year colleges and universities and athletic conferences. The NCAA is a non-profit, tax exempt organization headquartered in Indianapolis, Indiana. The NCAA essentially functions as a standard-setter, although in the sport of mens basketball, it also acts as a sponsor of the well-known end of season NCAA Championship Tournament.
The Two in Four Rule applies to basketball teams comprising Division I of the NCAA, which encompasses 319 of the largest schools and their athletic conferences.
The Two in Four Rule is codified at NCAA Bylaw § 17.5.5.3, which states:
17.5.5.3 Certified Events. An institution shall be permitted to participate in no more than one certified event during a given academic year and not more than two certified events every four years. Participation in a certified event shall count as a single contest in the institution's maximum contest limitations. Such events, other than a foreign tour. . . must be certified by the Championships/Competition Cabinet Subcommittee on Certified Events pursuant to Bylaw 30.10.1. . .
Defendant's Exhibit 1.
The NCAA is responsible for establishing the maximum number of regular season mens college basketball games that maybe played in Division 1. Exempt events, i.e., events which include games that do not count against the regular season maximum number of games, have been played in college basketball since the 1960's. The events follow a tournament format in which teams, generally between four to eight, play 2, 3 or 4 guaranteed games. Regardless of the number of games actually played, teams playing in a certified tournament were credited with only one game played for purposes of calculating the total games allowable in a single season.
Initially, exempt events were required to be played outside the contiguous 48 United States, in the locales of Alaska, Hawaii or Puerto Rico. The exemptions were appealing to teams for the opportunity to play "free" games and to travel. Later, the NCAA permitted exempted tournaments to be played in the continental United States. In 1985, the NCAA created additional exemptions for two events: the Preseason NIT and the Preseason Basketball Hall of Fame games.
In the late 1980's the NCAA, at the behest of the President's Commission, studied student athlete welfare. As a result of the study, the NCAA concluded that intercollegiate athletics, especially football and basketball, were interfering with the academic demands placed on the student athlete. As a consequence, in 1990, the NCAA Convention concluded that reduction in time demands for students playing the sports of football and basketball were warranted. The Convention adopted bylaws limiting the number of regular season games; the start of practices; the extent of pre-practice conditioning activities; the start of the season; and the number of games any single student could play. The Convention also adopted a `one in four rule,' which restricted participation in any particular event to once in every four years. In 1990, there were few exempt events. By 1994-95, the number of such events grew to 10; in 1998-99 there were 19 and in 2000-01, there were 25.
Unfortunately, these measures have had little effect. The number of men participating in Division I — A basketball who graduate from college is only 32%, the lowest of any college sport. (The Knight Commission, NCAA Report issued September 8, 2001).
In 1996, the NCAA began the process of "certifying" exempt events, thus leading to the designation "certified events." Events gained certification by way of approval of a certified events subcommittee of the NCAA. As the number of events grew, some teams were able to play a greater number of such events which, regardless of the number of games actually played, counted as only one game.
In 1997, legislation was drafted that eventually became Proposal 98-92. The proposal included the following: (1) Division I schools could play 28 rather than 27 games per season; (2) participation in any exempt event would count as a single game; (3) schools could play any particular exempt event only once in four years; and (4) schools could play only one event per year. In July 1998, the Events Contest Subcommittee approved the legislation and it was forwarded to the Division I member institutions for comment.
The NCAA refers to its rules as "legislation."
In September 1998, the Championship and Competition Cabinet reviewed and modified Proposal 98-92, adding the "two in four" rule. The amendment was approved by the Management Council in October 1998 and by the Board of Directors in January 1999. The two in four rule does not apply to the post-season NCAA Tournament, nor does it apply to conference tournaments, which are part of the regular season. (NCAA Bylaw § 17.5.5.1.1). Consequently, teams which play in these tournaments have none of the games counted toward the maximum permissible number of games per season. Furthermore, there is currently a moratorium by the NCAA on certification for new exempt events.
Plaintiffs challenge the two in four rule as a violation of §§ 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. § 1 and 2.
II.
Standard for Injunctive Relief
The Court will first resolve the parties' disagreement as to the appropriate standard in an antitrust action seeking preliminary and permanent injunctive relief. Plaintiffs' request for preliminary and permanent injunction is brought pursuant to § 16 of the Clayton Act, 15 U.S.C. § 26, which provides:
Any person, firm, corporation. or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws, . . . when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings.15 U.S.C. § 26.
The United States Supreme Court has held that, in order to obtain an injunction under § 16, an antitrust Plaintiff "must allege threatened loss or damage `of the type the antitrust laws were designed to prevent and that flows from that which makes defendants' acts unlawful.'" Cargill Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 113 (1986), quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977).
Plaintiffs rely on the foregoing in seeking relief in this Court. The Defendant NCAA does not refer to § 16 of the Clayton Act but rather, simply relies upon the standard applicable to injunctions generally. With respect to Plaintiffs' request for permanent relief, the Defendant argues that Plaintiffs must show that they "will actually suffer continuing irreparable injury in the absence of the permanent injunction. . ." (NCAA's Bench Memorandum Regarding Permanent Injunction Standard at 3). Defendant cites to the Sixth Circuit decisions of United States v. Szoka, 260 F.3d 516 (6th Cir. 2001) and Kallstrom v. City of Columbus, 136 F.3d 1055 (6th Cir. 1998) in support of this position.
In Szoka, the Sixth Circuit reviewed the issuance of a permanent injunction entered against an individual who made unauthorized radio transmissions without a license in violation of the Federal Communications Act of 1934, 47 U.S.C. § 301. The injunction was issued under 47 U.S.C. § 401 (b). The appellant argued that the district court erred in issuing the injunction without considering the standard applicable to permanent relief generally; that is, "whether the plaintiff has demonstrated (1) a continuing irreparable injury if the court fails to issue the injunction, and (2) the lack of an adequate remedy at law." Szoka, 260 F.3d at 522, citing Kallstrom v. City of Columbus. 136 F.3d 1055, 1067 (6th Cir. 1998). The Sixth Circuit rejected this argument and concluded that the district court did not err because Congress provided, by statute, the basis for the issuance of equitable relief
The statute provides:
If any person fails or neglects to obey any order of the Commission other than for the payment of money, while the same is in effect, the Commission or any party injured thereby, or the United States, by its Attorney General, may apply to the appropriate district court of the United States for the enforcement of such order. If. after hearing, that court determines that the order was regularly made and duly served, and that the person is in disobedience of the same, the court shall enforce obedience to such order by a writ of injunction or other proper process, mandatory or otherwise, to restrain such person or the officers agents, or representatives of such person, from further disobedience of such order, or to enjoin upon it or them obedience to the same.47 U.S.C. § 401 (b).
Section 16 of the Clayton Act is similar to the statute at issue in Szoka, insofar as the statute provides the basis for injunctive relief Section 16 specifically provides that private parties may sue for injunctive relief as to "threatened loss or damage by a violation of the antitrust laws." 15 U.S.C. § 26. Under this standard, a plaintiff must demonstrate "a significant threat of injury from an impending violation of the antitrust laws or from a contemporary violation likely to continue or recur." Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 130 (1969). Thus, contrary to Defendant NCAA's assertion, demonstration of actual injury, in the sense traditionally applied to permanent injunctions generally, is not required for purposes of § 16.
Nonetheless, the law is clear that in order to obtain preliminary or permanent injunctive relief under § 16 of the Clayton Act, Plaintiffs must prove the existence of "some cognizable danger" of violation of the type the antitrust laws are designed to prevent. Law v. NCAA, 185 F.R.D. 324, 349 (D. Kan. 1999), citing United States it W.T. Grant Co., 345 U.S. 629, 633 (1953).
With this standard in mind, the Court proceeds to consider the merits of Plaintiffs' request for preliminary and permanent injunctive relief.
III.
Plaintiffs' Request for Injunctive Relief
Section 1 of the Sherman Act
Plaintiffs claim that the two in four rule violates * I of the Sherman Act. The statute provides:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. . .15 U.S.C. § 1.
In Northern Pacific R. Co. v. United States, 356 U.S. 1, 4-5 (1958) the Supreme Court explained the significance of the Act:
The Sherman Act was designed to be a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade. it rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic political and social institutions. But even were that premise open to question, the policy unequivocally laid down by the Act is competition. And to this end it prohibits `Every contract, combination . . . or conspiracy, in restraint of trade or commerce among the Several States.'
Since, however, newly every contract that binds parties to an agreed course of conduct "is a restraint of trade," to a certain extent, the Supreme Court has limited § 1 of the Sherman Act to only the prohibition of "unreasonable restraints of trade." NCAA v. Board of Regents, 468 U.S. 85, 98 (1984). Thus, in order to prevail on a claim under § 1, the Plaintiffs must show that (1) there was an agreement, conspiracy, or combination between two or more entities; (2) the agreement was an unreasonable restraint of trade under either a per se or a rule of reason analysis; and (3) the restraint affected interstate commerce. Law to NCAA, 134 F.3d 1010, 1016 (10th Cir. 1998).
Application
With respect to the first element, there is no dispute that the two in four rule was formed as the result of an agreement among NCAA members. Needless to say, the parties dispute the second and third elements, i.e., whether the two in tour rule constitutes an unreasonable restraint of trade affecting interstate commerce.
Approaches to determining whether there is an unreasonable restraint on trade
In NCAA v. Board of Regents, 468 U.S. 85 (1984), the Supreme Court discussed the various approaches used to determine whether an agreement is an unreasonable restraint of trade. In that case, two Universities which were members both of the NCAA and the College Football Association ["CFA"], challenged an NCAA plan which limited the total number of televised intercollegiate football games and the number of games that any one college could televise. The CFA had negotiated a contract with a television network which would have allowed a more liberal number of television appearances for each college and would have increased the CFA revenues. The NCAA notified the CFA that it would take disciplinary action against any members who did not comply with the NCAA plan. Two Universities then challenged the NCAA plan under § 1 of the Sherman Act.
Initially, the Supreme Court observed that the NCAA "is an association of schools which compete against each other to attract television revenues, not to mention fans and athletes." Id. at 99. Under the plan, however, the NCAA created "a horizontal restraint — an agreement among competitors on the way in which they will compete with one another. A restraint of this type has often been held to be unreasonable as a matter of law." Id. at 99. The Court explained that, "[b]y restraining the quantity of television rights available for sale, the challenged practices create a limitation on output" which has routinely been considered an unreasonable restraint of' trade. Id. In addition, the NCAA plan operated to preclude any "price negotiation between broadcasters and institutions, thereby constituting horizontal price fixing, perhaps the paradigm of an unreasonable restraint of trade." Id.
The Court further observed that "[h]orizontal price fixing and output limitation are ordinarily condemned as a matter of law under an `illegal per se' approach because the probability that these practices are anticompetitive is so high. . ." Id. at 100. Thus, the per se approach is applied "when `the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output.'" Id., quoting Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 19-20 (1979). Under this approach, an agreement to limit output or fix prices is unreasonable per se without inquiring into the particulars of the specific market. Id.
Despite the foregoing, the Supreme Court declined to apply the per se analysis to the restraint at issue in Board of Regents because of the fact that the industry is one "in which horizontal restraints on competition are essential if the product is to be available at all." Id. at 101. The Court observed that the NCAA plays a vital role in enabling the particular product — college football — to be marketed. By enacting rules such as those affecting the size of the field, the number of players on a team, and the nature of permissible physical contact, the NCAA preserves the integrity of the product. Thus, according to the Supreme Court, competition is enhanced, not diminished. Id. at 101-02. The Court concluded that, although the NCAA's plan at issue in Board of Regents restrained the ability of member institutions to compete in terms of price and output, in light of the NCAA's role, a per se approach was not warranted. Rather, the Court applied the rule of reason analysis in a "quick look" form. Under this approach, a restraint is "presumed unreasonable without inquiry into the particular market context in which it is found." Id. at 100.
As the Tenth Circuit later explained in Law it. NCAA, 134 F.3d 1010 (1998), under the full rule of reason analysis, the Plaintiff bears the initial burden of showing that an agreement has a substantially adverse effect on competition. if this burden is met, the Defendant then must show the procompetitive virtues of the agreement. Once this is shown, the Plaintiff then must show that the challenged conduct is not reasonably necessary to achieve the legitimate objectives or that the objectives can be achieved in a substantially less restrictive manner. Id. at 1019.
With regard to the Plaintiffs initial showing — anticompetitive effect — the Plaintiff may satisfy this burden by "indirectly proving that the defendant possessed the requisite market power within a defined market or directly by showing actual anticompetitive effects, such as control over output or price." Law, 134 F.3d at 1019. When the challenged agreement amounts to a horizontal limit on price or output, the "quick look" rule of reason analysis is used because in such a case "anticompetitive effect is established, even without a determination of the relevant market. . ." Id. at 1020. Indeed, as the Supreme Court held in Board of Regents, "when there is an agreement not to compete in terms of price or output, `no elaborate industry analysis is required to demonstrate the anticompetitive character of such an agreement.'" Board of Regents, 468 U.S. at 109, quoting National Society of Professional Engineers, 435 U.S. 679, 692 (1987). Proof of market power is not required when the "very purpose and effect of a horizontal agreement is to fix prices so as to make them unresponsive to a competitive marketplace." Law, 134 F.3d at 1020.
"Quick Look" vs. Full Rule of Reason Analysis
In the case at bar, Plaintiffs urge the Court to apply the "quick look" rule of reason approach used by the Supreme Court in Board of Regents and by the Tenth Circuit in Law. The Defendant NCAA opposes this view and argues that a full rule of reason analysis must be used to determine the alleged anticompetitive effect of the two in four rule since, according to the NCAA, the rule does not involve price fixing or output restraints. Plaintiffs take issue with this approach and argue that the two in four rule does in fact amount to an output restraint because it limits the member institutions' ability to participate in certified events, which thereby eliminates the Plaintiffs — promoters of the events — as competitors. (Plaintiffs' Post Trial Memorandum at 1).
While the Court acknowledges that the rule at issue in this case is not a typical standard setting regulation, such as those defining the length of season, the size of playing field, etc., the Court nonetheless concludes that application of the "quick look" rule of reason approach is not appropriate. Although Plaintiffs argue that the two in four rule results in a limitation on output, any such limitation is unlike the obvious horizontal restraints on output found in Board of Regents and Law. In this case, decreased output comes in the form of the Plaintiff promoters alleged inability to secure participation of NCAA member institutions in certified events no more than twice in every four years. According to Plaintiffs, because of the rule, "major" NCAA institutions cannot participate in the Plaintiffs' events on an annual basis. thereby making it inure difficult for Plaintiffs to secure the appearance of other teams in their events, which arguably results in the events being less financially successful and will lead to a decrease in output in the third and fourth years of the rule's effect. There are, however, 25 exempt events and 319 teams in Division I. Thus, focusing on the total number of available teams, as opposed to only the "major" reams, would tend to negate Plaintiffs' argument of a potential decrease in output.
The decrease in output which Plaintiffs contend exists is not analogous to the restraint on output found in Board of Regents in which the NCAA plan, on its face, limited the number of games that could be televised and the number of televised games in which any team could participate. The two in four rule simply does not have the "obvious anti-competitive effects" as the rule at issue in Board of Regents so as to dispense with the hill rule of reason analysis. Thus, the Court declines the employ the "quick look" approach and will consider whether the Plaintiffs have met the burden of showing whether the two in four rule has an anticompetitive effect under the full rule of reason analysis.
IV.
Evidence Offered to Demonstrate Alleged Anticompetitive Effect of Two in Four Rule
Expert Testimony
Plaintiffs have presented the expert testimony of Robert D. Tollison, a Professor of Economics at the University of Mississippi. Tollison concludes that the two in four rule has the anticompetitive effect of reducing output, a central issue in this case.
Tollision received his Ph.D. from the University of Virginia in 1969. Tollison has studied antitrust economics with a particular emphasis on the workings of the NCAA.
Before considering Tollison's opinions and their relevance to the instant action, the Court will resolve the pending motion of the NCAA to exclude Tollison's testimony under Fed.R.Evid. 702. The Court notes that Defendant's motion was filed prior to the commencement of the hearing. After establishing Tollison's credentials and ability to testify on the present issues, Plaintiffs tendered Tollison as a expert. The NCAA conceded at the hearing that Tollison's is an expert. Nonetheless, the NCAA continues to challenge the foundational evidence upon which Tollison relied in forming his opinions.
Fed.R.Evid. 702 allows opinion testimony by experts when the witness is "qualified as an expert by knowledge, skill, experience, training or education" and "[i]f scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue." In Daubert it Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1986), the Supreme Court set forth several factors to aid district courts in determining whether or not to admit an expert's testimony. As the Sixth Circuit has explained:
The district court must determine whether the evidence `both rests on a reliable foundation and is relevant to the task at hand.' In assessing relevance and reliability, the district court must examine whether the expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact to understand or determine a fact in issue.' This involves a preliminary inquiry as to whether the reasoning or methodology underlying the testimony is scientifically valid and whether that reasoning or methodology properly can be applied to the facts in issue. Some of the factors that may be used in such an inquiry include: (1) whether the theory or technique has been tested and subjected to peer review and publication, (2) whether the potential rate of error is known, and (3) its general acceptance. This inquiry is a flexible one, with an overarching goal of assessing the `scientific validity and thus the evidentiary relevance and reliability' of the principles and methodology underlying the proposed expert testimony. "A trial judge must have considerable leeway in deciding in a particular case how to go about determining whether particular expert testimony is reliable." Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 152, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999).
Conwood Co., L.P. v. U.S. Tobacco Co., 290 F.3d 768, 792 (6th Cir. 2002) (internal citations omitted). Furthermore, "mere `weaknesses in the factual basis of an expert witness' opinion. . . bear on the weight of the evidence rather than on its admissibility." McLean v. 988011 Ontario. Ltd., 224 F.3d 797, 801 (6th Cir. 2000), quoting United States v. LE. Cooke Co., 991 F.2d 336, 342 (6th Cir. 1993).
In this case, the NCAA takes issue with Tollison's reliance on the availability of' the "top 50" teams, as ranked according to the final 2001 College RPI rankings, as opposed to some other number of "top" teams. As the NCAA acknowledges, Tollison's reliance on this number is based on Plaintiffs' assertion that they need "major" teams to assure the success and viability of their exempt tournaments. The Court concludes that this portion of Defendant's objection goes to the weight, rather than to the admissibility, of Tollison's testimony.
The NCAA also Lakes issue with the manner in which Tollison determined the number of teams left to play in years three and four of the two in four rule. Tollison concluded that only 5 of the top 50 teams would be eligible to play; Defendant contends that, using Tollison's "top 50 teams," 22 would be available to play. At the hearing, during cross-examination, Tollison testified that, under his analysis, using Big 6 conference teams, 22 teams would be left available to play in years three and four of the rule. Again, the Court concludes that Defendant's objection to Tollison's testimony bears on the weight to be given his testimony, not the admissibility. Thus, the Court finds no basis for excluding Tollison's testimony under Rule 702. The Defendant's prehearing motion is denied.
The Big 6 consists of teams in the following conferences: the ACC, the Big 12, the Big East, the Big Ten, the Pac 10 and the SEC. (Plaintiffs' Exhibit 8).
According to Tollison, because of the rule, there will not be a sufficient number of teams from the "major" conferences to make the Plaintiffs' certified tournaments viable for all four years. Tollison defined the "relevant market" for his analysis as NCAA Division I mens' basketball; the Defendant agrees with this definition. Tollison identified the competitors in this market as the NCAA, television promoters, schools, and the Plaintiff certified event promoters. According to Tollison, because the two in four rule cuts in half the number of major teams, i.e., Big 6 Conference teams, available to play in the Plaintiffs' certified events over a four year period, output will necessarily reduced by years three and four. Tollison opined that "major" school participation is necessary to attract fans, television, sponsors and other non-major teams who would otherwise not be able to play a major team on a neutral event site.
Tollison supported has opinion by identifying the remaining availability of Big 6 schools for play in certified events over the next two years, which are years three and four of the challenged rule. According to Tollison, the 68 schools within the Big 6 category initially have 136 slots available over the four years of the rule, from 2000-04, to participate in certified events. In the first two years of the rule, i.e. the 2000-01 season and 2001-02 season, 92 available slots were used. This leaves 44 remaining slots. However, since at least 22 slots are already scheduled to be used in three prominent exempt events — the Preseason NIT, the Maui Invitational and the Great Alaska Shootout — only 22 slots remain to fill other certified events in years three and four of the rule. According to Tollison, this decrease will result in the elimination of many exempt events, which means a reduction in output.
Defendant NCAA takes issue with Tollison's opinion, arguing that his analysis confuses competitors with competition. As noted above, Defendant challenges Tollison's reliance on the Big 6 while ignoring teams from other major conferences, such as the Atlantic 10, Conference USA, Mountain West, and Western Athletic Conferences. Defendant also takes issue with Tollison's failure to consider the fact that the number of certified events Plaintiffs have promoted over the years has increased. In 1999, Plaintiffs promoted 9 events; in 2000, they promoted 10 events; in 2001, they promoted 12 events. According to the Defendant, this disproves Tollison's theory' that the two in tour rule will necessarily decrease output. Further, Defendant argues that by simply focusing on Plaintiffs' events, Tollison has ignored the effect of the two in four rule on the overall relevant market — Division I mats' college basketball.
The NCAA has offered the testimony of two expert witnesses. The first, Louis A. Guth, received his Bachelor's degree in Economics from Harvard University and holds a Mater's degree in Economics from the University of Pennsylvania. Guth is employed as the Senior Vice President of National Economic Research Associates, Inc., a firm of consulting economists.
In Guth's opinion, 98-92, including the two in four rule, has the effect of increasing, rather than decreasing the number of basketball games played in Division I mens' programs. Guth's opinion is based on the fact that the number of certified events has grown over the years to a total of 25 in 2000-01. Guth observes that with the addition of the 28th game to the playing season, there is an increase in output in the relevant market. Further, (Guth observes that as the number of certified events has increased, the number of games has increased. While Guth recognizes Plaintiffs' argument that major team participation results in certified events being lucrative, Guth opines that 98-92 has the effect of "re-balancing" the amount of subsidy given to certified events. In Guth's view, as a matter of economics, certified tournaments are subsidized tournaments, with the NCAA being the source of the subsidy. Guth's opinion is that 98-92 will not prevent exempt tournaments from competing freely in the market with non-exempt tournaments and other games. Consequently, Guth views 98-92 as pro-competitive.
Defendant also offers the expert testimony of Jerry Hausman, Professor of Economics at the Massachusetts Institute of Technology. Hausman received a Bachelor's degree from Brown University and a Ph.D. in Economics from Oxford University. Hausman has published over 120 research papers in leading economies journals and has particular knowledge with respect to antitrust issues. Hausman is currently an Advisory Editor for the Journal of Sports Economics.
The Court notes that Plaintiffs object to Hausman's testimony on the basis that it is cumulative. Whether to consider his testimony is within the Court's discretion. The Court finds it appropriate u consider the testimony despite the fact that it may in a certain extent be duplicative of Guth's testimony. Plaintiffs' objection is overruled.
Hausman takes issue with Tollison's characterization of the NCAA as a "cartel" and concludes that since the NCAA has the ability to limit the number of games which can be played in Division I mens basketball, the NCAA also has the ability to limit the number of exempt games which can be played. According to Hausman, 98-92 is pro-competitive because it increases the overall output of games in Division I. Hausman also views the two in four rule as pro-competitive because by limiting the number of exempt tournaments able to be played by a single team, the"special exemption" is distributed more evenly among all teams. Hausman opines that even if there is a decrease in the number of exempt tournaments, no anti-competitive effect would result because the overall number of games in Division [increases.
As Hausman points out, in 1998-1999, there were 4,695 Div. I games; in 1999-2000, there were 4,911 Div. I games; and, in 2000-2001, there were 4,930 games played. Hausman acknowledges that if some certified events cease to exist the number of games would decrease. This is particularly the case given that separate and apart from the two in four rule, there is currently a moratorium on the certification of new events by the NCAA. According to Hausman, however, the decrease would not equate with a "substantially adverse effect" on the relevant market.
The Court notes that the increase in the number of games is diametrically opposed to the intent of college presidents who supported enacting the two in four rule. Dr. Kirwan, formerly President of the Ohio State University and the current Chairman of the Board of Directors for NCAA Division I, testified about his concern over the proliferation of games played in Div. 1 mens college basketball. Dr. Kirwan noted that mens basketball has the lowest graduation rate of any collegiate mens sport. Dr. Kirwan supported 98-92 as a means of reducing the number of games, when in fact, the rule has operated to increase the number of games, given the addition of the 28th game per season.
Nonexpert Testimony
In focusing on the increase in number of games, Defendant relies on another aspect of Proposition 98-92 — the addition of the 28th game to the playing season. Plaintiffs take issue with the reliance on this addition in evaluating the alleged adverse effect of the two in four rule. Plaintiffs simply focus on the two in four rule itself, without considering the addition of the 28th game.
The Court concludes that consideration of the twenty-eighth game is not appropriate in evaluating the purported anticompetitive effect of the two in four rule. While 98-92 may have included both the addition of the 28th game as well as the two in four rule, the Plaintiffs challenge only the two in four rule. The packaging of both rule changes in a single proposal does not change the rule of reason analysis. The addition of an extra game per season to all teams in the relevant market does not, by itself, eliminate the potential anti-competitive harm of the two in four rule, which affects only certified events.
Alternatively, Defendant also contends that the total number of games played in certified events has increased: In 2000-01, 192 games were played; in 2001-02, 231 games were played. Nonetheless, as the Plaintiffs aptly observe, the effect of the two in four rule is best considered in years three and four, which begins with the upcoming college basketball season. As Plaintiff Lee Frederick testified, he is unable to predict the effect of the rule in years three and four.
Plaintiffs present evidence of their current scheduling for the 2002-03 season to show the purported anticompetitive effect of the rule. The Court notes that these are, at best, estimates and are not a final determination of which teams will play in Plaintiffs' events. The current schedules are as follows:
Promoter Event Format Commitments
Gazelle Coaches v. Cancer 4 teams Syracuse
Gazelle BCA Invitational 8 teams ------
Gazelle Guardians Classic 16 teams Brown, New Hampshire, Mt. St. Marys
Gazelle BCA Classic 4 teams ------
Sport Tours New Orleans 8 teams Tulane, Nicholls State, Knockout Maine, Indiana State
Sport Tours Hawaii Pac. U 8 teams Hawaii Pac. U. Shootout
Sport Tours San Juan 8 teams UPR-Maya, Sacred Heart Shootout Duquesne, Troy St., Denver
Dorna NABC Classic 4 teams E. Wash., Wisconsin, N. Illiniois, Winthorp
Dorna America's Youth 4 teams ------ Classic
Dorna CoSIDA Classic 4 teams ------
Worldwide Las Vegas Tourn. 8 teams ------
Worldwide Las Vegas Invit. 8 teams ------
Worldwide Las Vegas Classic 8 teams ------
According to Plaintiffs, their inability to fill the tournaments with the requisite number of teams is a result of the operation of 98-92,
Defendant submits that there are other factors that effect the Plaintiffs' alleged inability to continue their events in years three and four of the rule. The total number of games played in the certified events has increased as follows:
Year Number of games in Certified Events Number of Events
1999-2000 214 26 2000-2001 192 22 2001-2002 231 25
As the Defendants point out, the greater number of events and number of games impacts the ability of Plaintiffs to schedule teams to play. This argument would have greater force, under traditional notions of competition, if some events would fold and new events would be scheduled. Given the current moratorium on certification of new events, this cannot occur.
Defendant's expert, Dr. Guth, conceded that, in light of the moratorium, if certified events fold over the next two years, there will be a decrease in output in the relevant market. The question is, however, whether any such decrease amounts to a substantially adverse effect on competition. From the record before the Court, this question is impossible to answer without data concerning years 3 and 4.
From the vantage point of the Plaintiffs, tournaments require "major" teams for the events to be profitable. Further, by filling most of the available slots with schools in the first two years of the rule, slots in years three and four will, presumably, be harder to fill with other schools. The fact that the slots will be harder for Plaintiffs to fill does not necessarily lead to the conclusion of a substantially adverse effect on competition. Plaintiffs could conceivably sponsor events that do not draw as many "major" schools in years three and four and then resume filling their events with "major" schools when the four year cycle starts again. While this result would no doubt impact on Plaintiffs' profits, such a loss does not necessarily equate with a decrease in competition in the market.
It is clear that the antitrust law protects competition, not competitors. Brown Shoe Co. v. United States, 370 U.S. 294. 320 (1962). It is Defendant's contention that Plaintiffs cannot show the sort of injury that is protected by the antitrust law so as to warrant injunctive relief. In order to succeed on their claim under § 1, the Plaintiffs must show "antitrust injury" as opposed to mere "economic injury." See Valley Prods. Co. v. Landmark, 128 F.3d 398, 402 (6th Cir. 1997). Antitrust injury is "`injury of the type the antitrust laws were intended to prevent and that flows from that which makes the defendants' acts unlawful'" Id., quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). In considering whether this standard is met, the Court is to consider the "directness or indirectness of the asserted injury." Associated General Contractors of California, Inc. v. California state Council of Carpenters, 459 U.S. 519, 529 (1983).
Defendant contends that any injury Plaintiffs may suffer in years three and four is economic and is not attributable to the alleged adverse effect of the two in four rule on the market of certified events. In support of this argument, Defendant relies on, inter alia, the decision of the Sixth Circuit in Hodges v. WSM, Inc., 26 F.3d 36 (6th Cir. 1994).
In Hodges, the Plaintiff operators of an airport shuttle and sightseeing service in Nashville, Tennessee sued the Defendants Grand Ole Opry Tours, Opryland, USA and WSM, Inc., for allegedly violating § 1 of the Sherman Act. The Defendants decided that they would operate their own sightseeing shuttle service. Any other service which wanted to transport passengers from the Defendants' hotel to the airport had to agree that it would refrain from running a sightseeing shuttle service. The Plaintiffs wanted to transport both sightseers and airport passengers. Consequently, the Defendants refused to authorize the Plaintiffs to enter upon their property and pick up airport passengers. Plaintiffs alleged that Defendants' agreement with the other operators excluded Plaintiffs from the marketplace. The district court concluded that Plaintiffs failed to show antitrust injury, and the Sixth Circuit agreed.
In reaching its decision, the Sixth Circuit reasoned that the injury "resulted from defendants' lawful refusal to grant plaintiffs access to their private property. . . Their injury was not an `antitrust injury' because it did not result from any decrease in competition among shuttle operators." Hodges, 26 F.3d at 39. Further, the Court held that plaintiffs "did not allege, nor could they, that the illegal antitrust conduct was a necessary predicate to their injury or that defendants could exclude plaintiffs only by engaging in the antitrust violation." Id.
The requirement of antitrust conduct as a necessary predicate to Plaintiffs' injury was later applied in the case of Valley Products Co. v. Landmark, 128 F.3d 398 (6th Cir. 1997). in Valley, the Plaintiff, a manufacturer of soap and other hotel amenities, sued the Defendant Hospitality Franchise Systems, Inc., a franchiser of lodging facilities which held trademark and tradename rights for various large hotels. Plaintiff claimed that the Defendant's termination of its vendor agreement amounted to an antitrust violation. The Sixth Circuit held that Plaintiff failed to show sufficient antitrust injury because the Defendant was within its legal rights to certify or nor certify the Plaintiff vendor with the right to use logos in the manufacture of hotel amenities "even though that denial may have the unfortunate effect of excluding Plaintiffs from the HFS guest amenity market." Id. at 404. The Court concluded that injury to the Plaintiffs was not a result of decrease in competition in the marketplace but rather from the lawful termination of a contract.
In the case at bar, Defendant argues that application of the antitrust injury rule yields the same result; that is, that the purported harm to Plaintiff is not the result of decreased competition in the marketplace. Defendant contends that the Plaintiffs, as promoters of certified events, are simply non-competitive middlemen who "package or repackage the product that colleges provide using an NCAA-created subsidy." (Defendant's Post-Hearing Brief at 18). According to Defendant, the NCAA member institutions are "owners" and providers of the input in the games and Plaintiffs are simply middlemen who stand to make a profit.
In further support of this argument, Defendant cites HyPoint Technology, Inc. v. Hewlett Packard Co., 949 F.2d 874 (6th Cir. 1991). Plaintiff in HyPoint Technology was computer maintenance firm which sued the Defendant computer manufacturer for allegedly violating the antitrust laws by withdrawing its guarantee to customers that it would provide customer service response for computer repairs within four hours of a call for service. Prior to this action, Hypoint actually had the initial contact with the customers and Hypoint arranged for Hewlett-Packard repair personnel to perform service on the computers. Subsequently, Hewlett-Packard became aware of this arrangement and decided that its employees should not be used for this service of Hypoint. As a result, Hewlett-Packard modified its response to customer requests for service and agreed to provide a guaranteed four hour response time only to customers who contracted with Hewlett-Packard and not with Hypoint. Plaintiff argued that this decision was made to exclude Plaintiff and other competitors from the marketplace.
The Sixth Circuit concluded that, although the Plaintiff was a competitor of the Defendant as to service contacts, it was a competitor "in a semantic sense, but not as a matter of economics" because not "every injury to a competitor is an antitrust violation." Id. at 877. The Court concluded that no injury to competition occurred as a result of the Defendant's decision to not apply the four hour guarantee in all circumstances. "It was in fact beneficial to competing service organizations" because the evidence showed that certain customers were angered and looked for other service providers. Id. Furthermore, the Court noted that, although the Plaintiff was injured as a result in the change in response time policy, the circumstance arose solely from the Plaintiffs vicarious use of the defendant's service business. The Court observed that nothing prevented the Plaintiff from continuing to offer the same kind of service in isolation after the Defendant made its decision. Id. at 879.
Defendant argues that Plaintiffs in this case make the same unavailing argument, because as in Hypoint, the Plaintiffs herein are middlemen who simply want to "plug" themselves into college basketball and reap the profits. Defendant contends that Plaintiffs do not have the right under the antitrust law to a guaranteed input and profits. According to the Defendant, despite the two in four rule, certified events will continue and any decrease in the Plaintiffs' ability to supply tournament games involves no injury to competition and therefore does not implicate antitrust laws.
Defendant's argument rests on the premise that there in fact will be no decrease in output in years three and four as a result of the two in four rule. Yet, even Defendant's expert acknowledged that whether a decrease in output will occur is yet to be seen.
The holding in HyPoint Technology is of limited application in this case. While Plaintiffs in this case are clearly dependent on the ability to secure NCAA member institutions for their events., the Plaintiffs have no alternative source for business as did Plaintiff in Hypoint. Plaintiff in Hypoint could have, as the Court observed, continued on in the market in isolation by making its own guarantee for service repair and entering into independent contracts. Plaintiffs herein, however, cannot continue on in isolation if there are no schools available in years three and four of the two in four rule to participate in their events. It is undisputed that the two in four rule limits the ability of schools to play in certified events. Further, the NCAA's market power is significantly more pronounced than that of the Defendant in HyPoint Technology.
The Court cannot conclusively determine at this juncture whether Plaintiffs will be able to show injury of the sort that the antitrust law is designed to prevent. As stated supra, whether the two in four rule has a substantial adverse effect on the market requires consideration of whether there is decreased output as a result of 98-92. Prior to the 2002-03 and 2003-04 seasons, the Court cannot determine whether such diminution will occur, and whether, if it does, Plaintiffs will have suffered cognizable antitrust injury. The Court rejects Defendant's assertion that Plaintiffs' could never show the type of injury that the antitrust laws seek to prevent. Concomitantly, the Court cannot grant injunctive relief based on speculation as to the nature and extent of the purported injury or to the extent that competition may be diminished in years three and four of the rule.
In order to succeed on a § I claim, the Plaintiff bears the initial burden of showing a substantial adverse effect on competition. If this burden is met, the Defendant then must show the procompetitive virtues of the agreement. Once this is shown, the Plaintiff then must show that the challenged conduct is not reasonably necessary to achieve the legitimate objectives or, that the objectives can be achieved in a substantially less restrictive manner.
In this case, it is premature to assess whether Plaintiffs have satisfied their initial burden. Consequently, the Court will not address whether Defendant has successfully shown the procompetitive virtues of the two in four rule or whether the Plaintiffs can show that there are substantially less restrictive alternatives that could justify the virtues of the rule.
While the Court denies the Plaintiffs motion for preliminary injunction, the Court directs that the record remain open for further consideration as to the request for a permanent injunction to determine whether the two in four rule will have a substantially adverse effect on the output of certified event games in years 3 and 4, i.e., seasons 2002-03 and 2003-04.
This is not to be mistaken with any financial harm which the Plaintiffs may suffer from not being able to secure teams for their tournaments. As this Court has made clear, the antitrust law protects competition not competitors. If the Plaintiffs are unable to schedule teams and there is a reduction in output of certified events, then the Court will revisit the issue of whether the two in four rule has a substantially adverse effect on the relevant market. If, however other certified events continue and there is no decrease in output even though some of Plaintiffs' events tail, the Court finds it unlikely that a substantially adverse effect on the market could be found.
In the absence of a showing of actual or clearly threatened anti-trust based harm, a preliminary injunction may not issue. The record, as currently constituted, does not permit the Court to accurately assess the purported anticompetitive effects of the two in four rule at this stage in the rule's life. The record will remain open as to Plaintiffs request for a permanent injunction; further proceedings will be scheduled to develop the record as to the effects of the rule on years three mid four.
Section 2 of Sherman Act
Plaintiffs also seek preliminary and permanent injunctive relief under § 2 of the Sherman Act, which provides:
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.15 U.S.C. § 2.
Plaintiffs contend that the NCAA possesses monopoly power in the relevant market and that it has willfully acquired and will maintain this power by virtue of the two in four rule.
In order to succeed on this claim, the Plaintiff must show: "(1) the possession of monopoly power in the relevant market, and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966). Such power includes the "power to control prices or exclude competition." Id. at 571.
As stated above, the Court cannot determine at this juncture, whether the two in four rule has excluded competition so as to advance a claim under § 2 of the Sherman Act. The Court leaven open Plaintiffs' request for relief under this section, in the event that the Court later finds the two in four rule to adversely affect output on the relevant market. Thus, Plaintiffs' request for relief under § 2 is held in abeyance.
V.
There are two remaining matters raised by Plaintiffs that warrant discussion: the alleged adverse intent of the NCAA in enacting the two in four rule and, the request that this Court draw adverse inferences on two evidentiary matters.
With respect to the first issue, in pursuing their claim for injunctive relief, Plaintiffs place great emphasis on the alleged adverse intent of the Defendant NCAA in enacting the two in four rule. While the NCAA, which is comprised of approximately 1,200 colleges, universities, and athletic conferences, sets rules related to all major college sports to foster the goal of promoting student-welfare, the NCAA also occupies a unique role with respect to the sport of mens college basketball. The NCAA is the owner of the well-known end of the season National Championship Tournament, which is played in the months of March and April each year. This tournament is known as one of the premier sporting events in the country and is responsible for generating the predominant source of the NCAA's annual revenue.
The Plaintiffs argue that the legislative history of the two in four rule evidences an anticompetitive intent on the part of the NCAA to eliminate certified events and shift revenues to the NCAA and its member institutions Plaintiffs contend that, beginning in 1995, the NCAA began to review the revenues received by outside promoters, such as Plaintiffs, to determine if such revenues could be derived by member institutions. According to Plaintiffs, onerous certification and travel reimbursement requirements were instituted as a means to eliminate such events. According to the testimony of Plaintiff Lee Frederick, a member of the Exempted Contests Subcommittee told him that the rule was intended to drive outside prompters out of business. The NCAA denies any such intent and asserts that the detailed certification and reimbursement requirements are simply art outgrowth of the NCAA'S function as a standard setter.
With respect to alleged adverse intent of the NCAA regarding the two in four rule, the Plaintiffs focus on the legislative history of the rule itself. The NCAA Constitution requires that proposed legislation have a stated "rationale." The stated purpose of Proposal 98-92 initially was one of "concern" about the proliferation of exempt events and the belief that funds from the events should accrue more to institutions than to outside promoters. This rationale was presented in connection with the various NCAA subcommittees and committees but was removed from the final version of the rule due to "legal concerns." Prior to the passage of Proposal 98-92. the rationale was revised to reflect concerns over "competitive equity" among the many Division I institutions and their ability to compete in certified events.
In October 1998, the Div. I Championships/Competition Cabinet identified the rationale as follows:
The Cabinet continues to be concerned about the proliferation of exempted basketball events (both inside and outside of the continental United States), particularly those that involve outside sponsors that appear to benefit at least financially more than the Division I institutions participating in such events. In addition, the cabinet believes that as many Division I institutions as possible should be given an opportunity to compete an exempted events, particularly those offshore, so that the inherent recruiting and competitive advantages are distributed equitably across schools. Allowing too many exempted basketball contests off the mainland, however, may lead to pressure from coaches in other sports to receive the same opportunities to travel outside the continental United States
(Def Exhibit 90).
This proposal will address competitive equity concerns by giving many Division 1 institutions an opportunity to compete in certified events, particularly those outside the continental United States, so that the inherent recruiting and competitive advantages are distributed equally among Division I institutions. This proposal will provide Division I men's and women's basketball programs greater flexibility in the scheduling of basketball contests. it will permit institutions the opportunity to participate in certified contests in accordance with the legislation or to add additional contests to the institution's regular-season schedules during those years in which the institution either is not permitted to engage in a certified contest or chooses not to participate in such an event.
(Def. Exhibit 106).
Although negative inferences could be drawn from a review of the legislative history of Proposal 98-92, as the Defendant observes, there is other evidence to discount any negative animus on the part of the NCAA. John Parry, member of the NCAA Management Council and athletic director of Butler University, testified on deposition that the NCAA had no ill desire to harm Plaintiffs by enacting 98-98. Rather, the intent was to allow non-major schools a greater ability to participate in certified events. Dr. Kirwan testified that, for various university presidents, the purpose of the rule was to promote academics by reducing the number of games played. This goal was clearly subverted by the addition of an extra game to permit a maximum of twenty eight countable games per year.
As with most policies adopted by large organizations, rules proposed by NCAA officials may be supported by others for various, often conflicting, motives. Clearly, with regard to 98-92, the motivation of university presidents was the promotion of student-athlete education. Coaches and Athletic Directors appear to have had a different motivation, which included increasing the number of overall games and spreading out the number of teams in exempt events. Given the lengthy process undergirding the passage of 98-92, it is not surprising that various actors in the proceedings may have had differing motivations in supporting the rule.
With respect to antitrust law, evidence of intent to harm a competitor does not necessarily comport with an antitrust violation. "Mere allegations of business disparagement are not the type of injuries to competition that the antitrust laws were designed to prevent" Re/Max International v. Realty One, Inc., 900 F. Supp. 132, 159 (1995). Furthermore, "[a]nimosity, even if rephrased as `anticompetitive intent' is not illegal without anticompetitive effects." Schachar v. American Academy of Ophthalmology Inc., 870 F.2d 397, 400 (7th Cir. 1989).
This Court concludes that whether or not the two in four rule constitutes an antitrust violation depends upon the effect of the rule on output, not on the motives of some NCAA representatives. The purported bad intent of the NCAA is not necessarily relevant to the issue at this juncture in the action. The Court remains mindful, however that "good motives" as stated in the legislation, "will not validate an otherwise anticompetitive practice." NCAA v. Board of Regents, 468 U.S. 85, 101 n. 23 (1984).
Plaintiffs also urge the Court to draw an adverse inference from the NCAA's failure to produce requested secretary's notes of NCAA committee and subcommittee meetings dealing with the legislative purposes for the two in four rule. The minutes to the meetings reference the existence of such notes. The NCAA concedes that certain hand-written secretary notes were discarded "well before this litigation commenced." (Defendant's Post Hearing Brief at 31). In addition, NCAA employees, Berst and Mallonee, who are familiar with the NCAA meeting practices, testified that the NCAA has no official policy with respect to the keeping of secretary notes.
The Court finds it inappropriate to draw an adverse inference from the failure of Defendant to produce certain of its secretary notes. There is no reason to discredit the testimony of Berst and Mallonee that the NCAA did not have an official policy regarding the keeping of notes even though their existence may be referenced in committee minutes. Furthermore, even if an adverse inference were to be drawn, such inference would do little to advance Plaintiffs' claims at this point. As the Court has stated, it is the adverse effects of the two in four rule on output in the relevant market that will determine whether this Court finds an antitrust violation.
Similarly, the Court declines to draw an adverse inference from the Defendant's failure to call Richard Ensor as a witness at the hearing. According to Plaintiffs, Ensor, a former member of the NCAA, had earlier advocated the elimination of outside-sponsored mens basketball events. As the Defendant points out, however, Plaintiffs could have called Ensor as a witness. Thus, the Court declines to draw an negative inference from the Defendant's failure to call Ensor.
VI.
On June 25, 2002, Plaintiffs filed a motion for temporary relief to: (1) prevent the NCAA from denying certification to Plaintiffs events for lack of information that will be available following the Court's ruling; (2) prevent the NCAA from allegedly misinforming Division I schools that the rule will be in effect regardless of the Court's ruling; and (3) requiring the NCAA to send an agreed upon communication to all Division I schools accurately indicating that if the Court rules in Plaintiffs' favor, that the 2 in 4 rule cannot apply to the upcoming season.
The Court conferred with counsel on the above motion when it was filed, pursuant to S.D. Ohio Local Rule 65.1. It was agreed that the matter would be held in abeyance pending this Court's ruling on the merits of the request for permanent injunctive relief. The Plaintiffs conceded that the motion would be moot following the Court's ruling.
In light of the Court's ruling on the Request for Permanent Injunctive Relief, the Plaintiffs' June 25, 2002 motion is denied as moot.
VII.
For the above stated reasons, the Court DENIES Plaintiffs' Motion for a Preliminary Injunction and HOLDS IN ABEYANCE a decision as to Plaintiffs' request for a Permanent Injunction pending further proceedings as to the effect of Rule 98-92 on the output of games in years three and four.
IT is SO ORDERED.