Federal Court Enjoins Enforcement of NCAA’s Transfer Eligibility Rule

On Dec. 7, the states of Ohio, Colorado, Illinois, New York, North Carolina, Tennessee, and West Virginia filed a Complaint and Motion for Preliminary Injunction and Temporary Restraining Order in the U.S. District Court for the Northern District of West Virginia, seeking to halt the enforcement of NCAA Bylaw 14.5.5.1, otherwise known as the Transfer Eligibility Rule. The bylaw imposes a one-year delay in the eligibility of certain college athletes transferring between NCAA member institutions for the second time in their collegiate career. To avoid sitting out a full year, college athletes transferring for the second time in their collegiate career must obtain a waiver from the NCAA. Waivers are granted on a discretionary basis and require the athlete to meet strict guidelines.

The Complaint alleges that Bylaw 14.5.5.1 violates antitrust law because it “unjustifiably restrains the ability of . . . college athletes to engage in the market for their labor as NCAA Division I college athletes.” In support of the request for relief, the Complaint lists several anticompetitive effects resulting from the Transfer Eligibility Rule, including but not limited to “impair[ing] college athletes’ ability to take advantage of current and future opportunities derived from their name, image, and likeness.”

Following a Dec. 13 hearing, the federal district court entered a Temporary Restraining Order enjoining the NCAA’s enforcement of Transfer Eligibility Rule for 14 days pending a Preliminary Injunction hearing on Dec. 27. However, prior to the hearing and at the parties’ request, the court converted the Temporary Restraining Order into a Preliminary Injunction that will remain in place until the court decides the merits of the case. In its Order, the court explained that the “NCAA cannot take any action to retaliate against any athlete that participates in athletic competition during the period of this Preliminary Injunction, or the member institution that such athlete attends based on the athlete’s reliance upon the terms of this Preliminary Injunction.” In short, this means that the NCAA and its member institutions cannot enforce the Transfer Eligibility Rule until there is a full and final trial and decision on the merits. The court advised that the case will be set for trial no sooner than the last day of competition in the 2023-24 winter and spring sports season and sanctioned tournament play. Thus, the fate of the Transfer Eligibility Rule, and its corresponding impact on college athletes in the NIL market, will be determined later this year, either after a trial or by another amendment to the NCAA transfer rules. We will continue to keep you updated as this matter develops.

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