THE NCAA LEGAL DRAMA CONTINUES: 14-DAY TEMPORARY RESTRAINING ORDER BECOMES JOINT MOTION REQUESTING PRELIMINARY INJUNCTION PERMITTING TWO-TIME TRANSFER ATHLETES TO PLAY DESPITE NCAA RULE

By Christina Stylianou & Gregg E. Clifton

In a fast moving series of legal actions and agreements involving the NCAA and the state attorneys general from Ohio, Colorado, Illinois, New York, North Carolina, Tennessee and West Virginia, the NCAA and the seven plaintiff states have now filed a joint motion seeking to convert the recent temporary restraining order (TRO) issued by U.S. District Court Judge John Pierson Bailey from the Northern District of West Virginia into a preliminary injunction, vacating the scheduling of a preliminary injunction hearing and expedited discovery.

Judge Bailey’s recent TRO enjoined the NCAA from enforcing its Transfer Eligibility Rule against multi-time transfer athletes pending its decision on the plaintiff states’ request for a preliminary injunction seeking the same relief. Despite initial statements from the NCAA indicating a willingness to challenge the issuance of Judge Bailey’s TRO, the NCAA unexpectedly agreed to file the joint motion to convert the 14-day TRO issued by Judge Bailey into a preliminary injunction voluntarily.

The terms of the negotiated preliminary injunction restrict the NCAA from being able to enforce its transfer rule during the pendency of the case against student-athletes who have transferred schools more than one time. Specifically, the NCAA agreed in the terms of the negotiated preliminary injunction to forego enforcement of its transfer rule limiting multi-time transfers from participating in NCAA sanctioned competitions during the period that the injunction remains in effect. The impact of the proposed settlement will allow all winter and spring multi-time transfer athletes to participate in their complete season without fear of retaliation from the NCAA.

This matter originally arose from the NCAA’s current transfer rule, which permits underclassmen to transfer once without penalty but prohibit multi-time transfer student-athletes from competing with their new school for one year unless they successfully obtain a waiver from the NCAA to do so. Judge Bailey’s original TRO prohibited the NCAA from enforcing this rule against athletes who had transferred schools more than once. The TRO also prohibited the NCAA from penalizing institutions under the Rule of Restitution for permitting impacted athletes to compete pursuant to the court order, but in defiance of the Transfer Eligibility Rule, if the order was later vacated, reversed, or otherwise invalidated. Both of these prohibitions on the NCAA were to remain in place for 14 days, until the court could hear and decide the plaintiffs’ arguments for a longer-term preliminary injunction seeking the same relief on December 27, 2023.

The lawsuit was initially brought against the NCAA by the states of Ohio, Colorado, Illinois, New York, North Carolina, Tennessee, and West Virginia, who allege that the NCAA’s transfer rules and waiver process violate federal antitrust law. In their motion seeking the TRO, the states argued that the NCAA’s transfer rule caused multi-time transfer athletes to “suffer immediate and irreparable harm by continuing to be barred from competing this season in their respective collegiate sports and by facing transfer decisions burdened by the risks of ineligibility that the Rule imposes on second-time transferring college athletes.”

As federal law requires on a motion for a TRO, the court’s analysis reviewed (1) the states’ likelihood of success on the merits, (2) the likelihood of irreparable harm absent injunctive relief, (3) the balance of hardships, and (4) the public interest. In analyzing the likelihood of success of the plaintiffs’ action, the court considered the merits of antitrust claims against the NCAA, relying in large part on the Supreme Court’s 2021 Alston decision and using that decision to determine that the NCAA is indeed subject to the Sherman Antitrust Act. The court’s analysis under the Act determined that the Transfer Eligibility Rule harms college athletes, as well as consumers of college athletics, and that the NCAA’s procompetitive justifications for the rule are pretextual and that its purported “academic” goals for its athletes can be accomplished through less restrictive alternatives.

With respect to the second prong of its analysis, the court discussed at length the harmful effects of the Transfer Eligibility Rule on athletes, from impacts to athletes’ mental health and wellbeing by restricting their movement to and ability to compete at schools better suited to them, to the dimming of prospects for athletes in terms of visibility, eligibility, NIL opportunities, and drafting opportunities to professional sports. Highlighting the critical importance of each game, the court made clear that it found these harms to significantly outweigh any potential harm to the NCAA and that it, in fact, found that no harm to the NCAA would result from granting the temporary restraining order. Moreover, it determined that granting the order would serve the public interest by promoting the free and fair competition in labor markets guaranteed by antitrust law.

Since the court’s decision was issued and prior to the submission of the more recent joint motion, the NCAA released a mixed response, initially stating publicly that athletes who participated in competition pursuant to the District Court’s order would not lose a year of eligibility if the court’s decision was later overturned. Subsequently, however, the NCAA changed its position, issuing a memorandum to its Division I member schools attempting to explain what the court’s decision would mean for intercollegiate athletics in the interim and stating that athletes would, in fact, lose a year of eligibility if they competed during the initial two-week period granted by Judge Bailey if the court’s issuance of the TRO was reversed.

The NCAA’s sudden decision to participate in the filing of the joint motion along with the seven states was most likely motivated by the court’s analysis in its temporary restraining order and its determination that the plaintiff states were likely to succeed on the merits and ultimately be granted the preliminary injunction following the scheduled December 27, 2023 hearing. Specifically, the NCAA and plaintiff states are requesting that the court convert the TRO into a preliminary injunction that will remain in place until the case is decided. In response to specific questions raised to the NCAA, the organization spokesperson Saquandra Heath confirmed, “the NCAA will not enforce the year in residency requirement for multiple-time transfers and will begin notifying member schools.” She concluded her comments by stating that the proposal is “the best outcome for multiple-time transfer student-athletes wishing to compete immediately.”

As a result of the joint submission, the hearing that was ordered to be held on Dec. 27 regarding the plaintiff states’ initial request for a preliminary injunction, will almost certainly result in the dismissal of the previously ordered hearing once the joint submission is reviewed and signed off on by Judge Bailey.