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Speaker 1: This is Bloomberg Law, with June Brusso from Bloomberg Radio.

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Speaker 1: Student athletes dominated the n C Double A and the

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Speaker 1: competition at the Supreme Court with a score of nine

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Speaker 1: to zero. The decision clears the way for greater compensation

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Speaker 1: for college football and basketball players, and may also loosen

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Speaker 1: the National Collegiate Athletic Association's grip over college sports. During

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Speaker 1: oral arguments, Justice is Brett Kavanaugh, Clarence Thomas, and Samuel

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Speaker 1: Alito questioned why the athletes weren't getting a bigger share

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Speaker 1: of the billions of dollars schools collect from sports. I

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Speaker 1: mean you said earlier, Uh, this would allow the players

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Speaker 1: to receive six thousand dollars a year, as if that

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Speaker 1: were some exorbitant amount when the TV contracts are in

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Speaker 1: the billions. Well it just, uh, the coaches salaries have

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Speaker 1: ballooned and they're in the amateur ranks, as are the players.

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Speaker 1: So the argument is they are recruited, their used up,

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Speaker 1: and then they're cast aside without even a college degree.

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Speaker 1: So they say, how can this be defended in the

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Speaker 1: name of amateurism? Joining me is Audrey Anderson, head of

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Speaker 1: the Higher education practice at bass baryan sims Audrey. Justice

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Speaker 1: Gorstch wrote that the n C double A sought immunity

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Speaker 1: from the normal operation of the antitrust laws. Explain what

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Speaker 1: he meant well. I think one of the things that's

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Speaker 1: really interesting to me about this opinion is that Justice

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Speaker 1: Gorsuch really upheld and relied on what the courts below

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Speaker 1: had done. So he said, look, there was a really

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Speaker 1: extensive trial record here, and the district court judge was

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Speaker 1: really thorough and careful in the way that she approached it,

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Speaker 1: and she applied the anti trust laws in just the

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Speaker 1: right way. What he said was, Look, the ant double

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Speaker 1: A just didn't have the proof. I agree with some

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Speaker 1: of their legal points here, but they lost on the

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Speaker 1: proof at trial. They could not prove that their rules

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Speaker 1: limiting what kind of compensation student athletes could earn really

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Speaker 1: increased consumer demand for their product, which is what they

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Speaker 1: had to do under the anti trust laws. So they

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Speaker 1: lost on the facts, not on the law. Tell us

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Speaker 1: about anti trust law as it applies here. So what

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Speaker 1: the m C double A really wanted here June was

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Speaker 1: to get some kind of deferential review under the antitrust

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Speaker 1: laws for amateurism. Rules of the m C double A

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Speaker 1: and the Court was having none of it. Becore such said, look,

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Speaker 1: we have this rule of reason analysis, which is what

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Speaker 1: we use under the anti trust laws, and that's what's

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Speaker 1: appropriate for the m C double A. They also get

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Speaker 1: a rule of reason analysis, and it's a very fact

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Speaker 1: intensive analysis and it was appropriately applied here. During the

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Speaker 1: oral arguments, several of the johnsices expressed concerns about blurring

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Speaker 1: the distinction between amateur and professional athletics. Did you see

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Speaker 1: any of that concern in the opinion. That's really interesting.

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Speaker 1: Justice Gorsuch started the opinion with the really old history

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Speaker 1: from the eighteen hundreds and early nineteen hundreds about how

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Speaker 1: dirty with money sports was at that point in time,

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Speaker 1: which really created the m C double A. But I've

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Speaker 1: heard the court at oral argument June be really concerned

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Speaker 1: about what's our next case going to be, what's the

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Speaker 1: next rule that they're going to try to stripe down?

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Speaker 1: And our court's going to be embroiled forever knit picking

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Speaker 1: the m C double as rules. So there is no

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Speaker 1: nod to that concern at all in the opinion, And

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Speaker 1: in fact, Justice Kavanaughs concurrence is a bring it on

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Speaker 1: kind of an enthusiastic all to arms almost against any

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Speaker 1: other rules of the m C double A. I kind

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Speaker 1: of a very unusual concurrency. Wonder you know what the

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Speaker 1: m C double A ever did to Justice Havanaugh. But

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Speaker 1: there's nothing in the opinion that makes you think that

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Speaker 1: they had any of those concerns. Butsoever, And I don't

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Speaker 1: know what happened between oral argument and the opinion, except

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Speaker 1: maybe that they kind of figured out that there was

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Speaker 1: really no way to address that concern. That that's just

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Speaker 1: a very messy aspect of our antitrust laws. That they

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Speaker 1: are very fact based, that they are based on what

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Speaker 1: the market looks like at any given point in time,

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Speaker 1: and that parties that are able to bring forth appropriate

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Speaker 1: evidence are able to challenge those rules. And I guess

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Speaker 1: to give Justice Kavanaugh a little more credit, this could

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Speaker 1: also be seen as, come on, n double A, give

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Speaker 1: your rules a real look and see whether you can't

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Speaker 1: be more accommodating to the interests of your labor pool

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Speaker 1: with this ruling. Does this open the door to more

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Speaker 1: lawsuits by student athletes over the n C double as rules?

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Speaker 1: It does. There already is another class action lawsuit, at

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Speaker 1: least one. There's probably several pending right now. Already, and yes,

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Speaker 1: it definitely opens the door to more litigation like this

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Speaker 1: and they will all be citing Justice Kavanaugh concurrent. So,

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Speaker 1: under current n double A rules, scholarship funds to student

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Speaker 1: athletes are capped at the cost of attending school, things

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Speaker 1: like tuition and room and board. What can they get

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Speaker 1: after this ruling? The injunction only applies to Division one

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Speaker 1: football and men's and women's basketball because those were the

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Speaker 1: only students in the certified class. So as to those

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Speaker 1: student athletes, schools can provide them education related benefits that

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Speaker 1: are not cash in an unlimited amount. So more book,

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Speaker 1: computer equipment, musical instruments, all related to their education in

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Speaker 1: an unlimited amount. As to something that is cash or

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Speaker 1: cash equivalent, they can only give that in an academically

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Speaker 1: related benefit in an amount of fifty dollars because that's

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Speaker 1: the amount right now that the m C double A

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Speaker 1: says that student athletes may be eligible for for athletically

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Speaker 1: related awards. Also it includes study abroad internships, and schools

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Speaker 1: can be very inventive in shaping these education related benefits.

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Speaker 1: So are we talking tens of thousands of dollars or more?

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Speaker 1: Some student athletes may be able to get that amount

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Speaker 1: of benefit, they could also get scholarships for graduate school.

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Speaker 1: So yes, we are. But right now schools are putting

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Speaker 1: out lots and lots of money for better athletic facilities,

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Speaker 1: for coaching staff, for other things. They're competing on the

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Speaker 1: basis of money that's going to other things that do

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Speaker 1: not quite as directly benefit the student athletes. So competing

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Speaker 1: on the basis of money is nothing new. They're doing

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Speaker 1: that right now. It just doesn't as directly benefit the

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Speaker 1: student athletes. More than a dozen states have already passed

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Speaker 1: laws that allow college athletes to be paid for the

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Speaker 1: use of their name, image, and likeness, and on July first,

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Speaker 1: seven of those laws are going to take effect. Where

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Speaker 1: does that play into all this? You have to understand

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Speaker 1: that this is separate from the case that was decided.

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Speaker 1: Name image and likeness laws are talking about what third parties,

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Speaker 1: not the schools themselves, but third parties can pay to

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Speaker 1: license the name, image, and likenesses of student athletes. You know,

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Speaker 1: there's a lot of different ways this could happen, but

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Speaker 1: some of the easiest ones. You might think of our

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Speaker 1: car dealership in the college town where a student athlete

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Speaker 1: is pays for the name, image and likeness of the

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Speaker 1: quarterback for the football team and uses that on their advertising,

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Speaker 1: or a student athlete has a social media presence and

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Speaker 1: somebody pays to put advertising on it. Those are both

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Speaker 1: ways that a third party might pay for the name,

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Speaker 1: image and likeness of a current student athlete. That's what

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Speaker 1: these laws are about. The only thing that stops student

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Speaker 1: athletes from doing those kind of deals right now is

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Speaker 1: that the N double A would say that they're ineligible

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Speaker 1: to participate in N double A competition because if you

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Speaker 1: get that kind of revenue right now under MC double

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Speaker 1: A rules, you're ineligible. The state laws say in our

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Speaker 1: state university, you can't have a rule that, so the

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Speaker 1: student athlete is ineligible to participate in athletic competitions because

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Speaker 1: he or she gets money for their name, image and likeness.

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Speaker 1: So I think that most universities will abide by the

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Speaker 1: state law rather than the double A rules. Onto the

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Speaker 1: Supreme Court decision, individual athletic conferences can still set limits

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Speaker 1: if they choose to. So what that means is that

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Speaker 1: what the rules that have been found it violate the

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Speaker 1: any trust laws are the rules that the double A set.

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Speaker 1: So those apply to all student athletes. Now what the

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Speaker 1: courts held the District Court in the Ninth Circuit. Now

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Speaker 1: the Supreme Court says, look if an individual conference, you know,

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Speaker 1: if the A C C or a smaller conference said,

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Speaker 1: look in our conference, all the schools in our conference

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Speaker 1: are going to agree that in our conference, students cannot

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Speaker 1: get these additional academic benefits. That does not violate the

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Speaker 1: any trust laws because cause student athletes would still have

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Speaker 1: a choice. If I want to take advantage of the

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Speaker 1: extra academic benefits, I can choose a school that's not

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Speaker 1: in that conference. If I'm going to that conference, I'm

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Speaker 1: making a choice. I know that I won't get those

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Speaker 1: extra academic benefits, but there's something else at the school

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Speaker 1: in that conference that I really want. The problem was

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Speaker 1: the rule of being set at the n C Double

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Speaker 1: A level, and there's no other league you can enter

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Speaker 1: that competes with the n double A. So there's a

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Speaker 1: lot left to be written to this story. June, you're

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Speaker 1: pointing out all the n I L laws and what's

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Speaker 1: the n C double A going to do with that? Well,

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Speaker 1: there is a possibility probably won't be one of the

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Speaker 1: Power five conferences, but some of the other conferences in

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Speaker 1: Division one very well? Could that rules that say the

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Speaker 1: limits in our conference are different and any individual school

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Speaker 1: can do whatever it wants just because they are allowed

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Speaker 1: to provide study abroad all those other academic benefits doesn't

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Speaker 1: mean they have to. They can, but they don't have to.

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Speaker 1: So it just makes it there's more competition based on

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Speaker 1: what the student athlete is going to get rather than

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Speaker 1: based on what the locker rooms look like. How would

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Speaker 1: you sum up how does this decision change student athletics

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Speaker 1: at this level? I mean, does this change it very much?

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Speaker 1: Or is it all the other things that it's going

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Speaker 1: to lead to. Well, I think this decision is important

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Speaker 1: because it it does say to the n C double

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Speaker 1: a um, really no, really, the anti trust laws apply

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Speaker 1: to you. You can't get a jail get out of

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Speaker 1: jail free card. Based on this board of Regent's case

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Speaker 1: from you don't get a get out of jail free

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Speaker 1: cards saying that you're a joint venture and so things

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Speaker 1: apply differently to you. You, like all other businesses in America,

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Speaker 1: can't make agreements with your competitors that you're going to

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Speaker 1: pay your labor zero dollars. And that's really that that's

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Speaker 1: really important, and that will end up, you know, accruding

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Speaker 1: to the benefits of student athletes, because now some schools

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Speaker 1: will choose to provide greater right now academic benefits to

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Speaker 1: student athletes and some won't, and student athletes can make

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Speaker 1: choices based on what they think is best for them.

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Speaker 1: After the oral arguments, do the unanimity of this decision

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Speaker 1: surprise you, Yeah, I was a little surprised by the unanimity,

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Speaker 1: although the court after oral argument seemed to be all

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Speaker 1: kind of in the same place to me and that

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Speaker 1: they were not buying the n C double a's arguments.

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Speaker 1: But I also got the feeling that they were concerned

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Speaker 1: about the point we've been talking about with in terms

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Speaker 1: of does this open the door to unending litigation against

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Speaker 1: the n C double A on the details of its rule.

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Speaker 1: And I think that once the court really looked at

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Speaker 1: the arguments carefully, I think they kind of said, if

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Speaker 1: that's the outcome, that is just what the antitrust laws do.

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Speaker 1: Thanks Audrey. That's Audrey Anderson of Basparian SIMS President Joe

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Speaker 1: biden OUs did Fannie Mae and Freddie Max regulator after

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Speaker 1: a Supreme Court ruling opened the door and dealt a

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Speaker 1: punishing blow to investors in their challenge to the government's

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Speaker 1: collection of more than one billion dollars in profits from

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Speaker 1: the mortgage giants. In a unanimous ruling written by Justice

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Speaker 1: Samuel Alito, that Justice has rejected the shareholder's argument that

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Speaker 1: the Federal Housing Finance Agency had exceeded its authority in

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Speaker 1: making the agreements that allow the federal government to collect

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Speaker 1: more than three d billion dollars in profits from Fannie

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Speaker 1: and Freddie. As Alito and Justice is Neil Gorsuch and

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Speaker 1: Clarence Thomas remarked during closing arguments, it was a big

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Speaker 1: gask by the shareholders. The way in which the agency

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Speaker 1: carries out its responsibility as conservator has a profound effect

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Speaker 1: on the housing market and therefore a profound effect on

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Speaker 1: ordinary people. Counsel, your remedial ask is a big one

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Speaker 1: and and hard, hard frust to swallow. I know, But

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Speaker 1: how would we unscramble the egg here? My guess is

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Speaker 1: Jonathan Macy, a professor at Yale Law School. So what's

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Speaker 1: your reaction to this decision? This is just a devastating

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Speaker 1: blow to hedge funds and others who had really bet

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Speaker 1: on a different outcome. And you know, I think at

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Speaker 1: this point it's going to be very hard to show

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Speaker 1: damages for the little bit of the case that's left.

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Speaker 1: Olders can't recover most of the overpayments. And so these

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Speaker 1: big companies like you know, fair Home and Pershing Square,

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Speaker 1: who took a big gamble on the Court's deciding that

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Speaker 1: there was a takings of property here, really lost out.

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Speaker 1: I'm a little bit surprised and disappointed by the ruling,

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Speaker 1: but I can't say that it comes as a complete surprise.

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Speaker 1: Why did the court find the structure of the f

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Speaker 1: a f A unconstitutional? Well there, I know this has

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Speaker 1: come up many many times. He came up also with

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Speaker 1: the Consumer Financial Protection Bureau. The question is whether you

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Speaker 1: can install as of these agencies in a manner in

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Speaker 1: which you can't remove them. And the Justice has said,

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Speaker 1: we're going to just basically fix the statute and make

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Speaker 1: it so you can remove the head of the agency,

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Speaker 1: which cures any constitutional defect and allows the agency to continue.

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Speaker 1: And so Mark Collabria, who is the f hf A

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Speaker 1: director and wanted to release you know, Fannie and Freddie

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Speaker 1: from government control, he could now be fired and up

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Speaker 1: he was immediately fired by Biden. So what does replacing

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Speaker 1: Callabria mean for Fatnie and Freddy and the mortgage market.

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Speaker 1: It was huge for Fannie and Freddie. The mortgage market

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Speaker 1: in a nutshell because it means that we're not going

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Speaker 1: to privatize these agencies, which is what Trump wanted to do,

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Speaker 1: and they'll remain under the auspices of the government. It

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Speaker 1: will be that the mortgage markets will be a little

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Speaker 1: bit more insulated from market forces. That should mean, you know,

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Speaker 1: the lower interest rates will continue because the extent that

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Speaker 1: it makes a practical difference, the government controlled agency, particularly

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Speaker 1: in a Biden administration, will be much more in favor

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Speaker 1: of you know, loose money housing policy and keeping interest

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Speaker 1: rates low. Let's talk now about the part of the

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Speaker 1: opinion that dealt with the suite that was created under

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Speaker 1: the agreement. Tell us about that. Basically, the ideal was

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Speaker 1: that to the extent that interest rates moved, entities were

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Speaker 1: now making gigantic profits, that the shareholders were not allowed

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Speaker 1: to benefit from the increase in revenue was because there

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Speaker 1: were these sweep accounts that swept all the money into

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Speaker 1: the U. S. Treasury. They basically said that that was fine,

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Speaker 1: that the Federal Housing Finance Agency did not exceed its

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Speaker 1: authority under federal law when it implemented that sweep account.

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Speaker 1: Over time, the sweep account was huge. They swept over

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Speaker 1: a hundred billion dollars in profits from you know, Fannie

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Speaker 1: May and Freddie Mack, and it would have been a

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Speaker 1: huge balloon to shareholders if that money had to be returned,

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Speaker 1: And that was really the core of the lawsuit from

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Speaker 1: the standpoint of these investors and why this decision was

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Speaker 1: such a crushing blow to them. The justices are sending

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Speaker 1: the case back to the lower court, but on this

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Speaker 1: really narrow issue explained that for us, basically there's no

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Speaker 1: improper interference by government in the management of the business.

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Speaker 1: So it means that the investors will have a chance

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Speaker 1: to show that they were harmed by the fact that

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Speaker 1: the agency was unconstitutional because of a lack of presidential

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Speaker 1: control over f h f A directors who basically approved

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Speaker 1: implemented the policy that was at the heart of the case,

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Speaker 1: which was this sweep policy. So do you think they'll

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Speaker 1: be able to prove that. It seems like a tenuous connection,

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Speaker 1: and I think it will be extremely I mean, I

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Speaker 1: think the premise of your question is really important, which

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Speaker 1: is a lot of this will come down to the

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Speaker 1: burden of proof, and it will be very difficult, I think,

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Speaker 1: to show. And I think the directors will strenuously argue

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Speaker 1: that they weren't influenced at all by the lack of

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Speaker 1: presidential control. I think that's a real long shot. I

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Speaker 1: take it you think that justices should have come out

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Speaker 1: a different way. You know, it's a difficult thing, is

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Speaker 1: an emotional matter, June. Frankly, I was hoping that it

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Speaker 1: would come out the other way. In fact, I think

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Speaker 1: that what the government did was terrible stream you know,

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Speaker 1: interjection of the government into what should be you know,

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Speaker 1: a private enterprise kind of situation and taking money for

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Speaker 1: the government at the expense of the shareholders who had

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Speaker 1: put their capital at risk, is you know, something you

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Speaker 1: really don't want to see in a country governed by

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Speaker 1: the rule of law. On the other hand, as a

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Speaker 1: practical matter, you know, we're living in a time of

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Speaker 1: tremendous profitibly get government spending and government budget deficits, and

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Speaker 1: from that perspective, it's hard to find them that the

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Speaker 1: justices would make the government fork over such a huge

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Speaker 1: amount of money. And you know, increasing the government budget

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Speaker 1: deficit by even more. Is this another nod to the

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Speaker 1: you know, the idea of the unitary executive. Well, this

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Speaker 1: is certainly, uh, this is certainly a nod to the

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Speaker 1: idea that, uh, there there's something meaningful about the separation

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Speaker 1: of powers and that there are willings in which it's

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Speaker 1: appropriate to construct regulatory agencies in their ways in which

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Speaker 1: it's not. And it is a little bit of a

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Speaker 1: help to the unitary executive. But but uh, but I

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Speaker 1: out of fault it on that ground. I mean, I

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Speaker 1: do think that that you know, we have we we

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Speaker 1: live in a democracy, and when the administrations change change,

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Speaker 1: it ought to be possible to change the heads of

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Speaker 1: these administrative agencies. I mean, do you buy the idea that, um,

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Speaker 1: the president having the power to fire someone changes the

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Speaker 1: way they act. Oh yeah, definitely. If people want to

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Speaker 1: keep their jobs and the administration changes, I don't have

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Speaker 1: to change their behavior. Will put it definitely, Biden in

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Speaker 1: the light the l Mark Collabora was operating the agency.

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Speaker 1: He's gonna find and put in somebody who's going to

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Speaker 1: operate the agency in the ways he finds congenial. So

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Speaker 1: it's not often a question of will the people in

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Speaker 1: the jobs chase their behavior, it's will the people in

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Speaker 1: the jobs be the same people or will they get

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Speaker 1: will they change with the administration. And we have a

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Speaker 1: huge philosophical ideological changes we saw in the last election,

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Speaker 1: you know, the shift from Trump to Biden. You're always

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Speaker 1: going to see people that can work, collaborate, following by

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Speaker 1: the wayside and installing people who are going to be

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Speaker 1: more congenial to the political and economic views of the

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Speaker 1: administration that won the election. So, now, does this decision

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Speaker 1: have any um impact outside of the f h F

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Speaker 1: A context. Not really. This is a very special kind

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Speaker 1: of bureaucracy. I mean, here's the It isn't a broader

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Speaker 1: you know, so on the sweet side of it, there's

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Speaker 1: really not much of a presidential of value um On

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Speaker 1: the ind hand, in terms of you know, it's just

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Speaker 1: a uh, you know, it's just another case that says that,

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Speaker 1: you know, a certain minister of agency structures like Fannie

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Speaker 1: May and Freddie mac are not going to be you know,

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Speaker 1: don't pass constitutional muster. And we see the same kind

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Speaker 1: of arguments made up with respect to sec administrative judges

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Speaker 1: or the Consumer Financial Protection Bureau. The same you know,

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Speaker 1: issues have arisen with respect to their constitutionality of those arrangements.

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Speaker 1: Thanks for being on the Boomberg Law Show, John, that's if,

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Speaker 1: Sir Jonathan Macy of Yale Law School. I'm June Grazzo

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Speaker 1: and you're listening to Bloomberg