Certiorari To The United States Court Of Appeals For The Ninth Circuit

No. 20–512. Argued March 31, 2021—Decided June 21, 2021 1

Colleges and universities across the country have leveraged sports to bring in revenue, attract attention, boost enrollment, and raise money from alumni. That profitable enterprise relies on “amateur” student-athletes who compete under horizontal restraints that restrict how the schools may compensate them for their play. The National Collegiate Athletic Association (NCAA) issues and enforces these rules, which restrict compensation for student-athletes in various ways. These rules depress compensation for at least some student-athletes below what a competitive market would yield.

   Against this backdrop, current and former student-athletes brought this antitrust lawsuit challenging the NCAA’s restrictions on compensation. Specifically, they alleged that the NCAA’s rules violate §1 of the Sherman Act, which prohibits “contract[s], combination[s], or conspirac[ies] in restraint of trade or commerce.” 15 U. S. C. §1. Key facts were undisputed: The NCAA and its members have agreed to compensation limits for student-athletes; the NCAA enforces these limits on its member-schools; and these compensation limits affect interstate commerce. Following a bench trial, the district court issued a 50-page opinion that refused to disturb the NCAA’s rules limiting undergraduate athletic scholarships and other compensation related to athletic performance. At the same time, the court found unlawful and thus enjoined certain NCAA rules limiting the education-related benefits schools may make available to student-athletes. Both sides appealed. The Ninth Circuit affirmed in full, holding that the district court “struck the right balance in crafting a remedy that both prevents anticompetitive harm to Student-Athletes while serving the procompetitive purpose of preserving the popularity of college sports.” 958 F. 3d 1239, 1263. Unsatisfied with that result, the NCAA asks the Court to find that all of its existing restraints on athlete compensation survive antitrust scrutiny. The student-athletes have not renewed their across-the-board challenge and the Court thus does not consider the rules that remain in place. The Court considers only the subset of NCAA rules restricting education-related benefits that the district court enjoined. The Court does so based on the uncontested premise that the NCAA enjoys monopsony control in the relevant market—such that it is capable of depressing wages below competitive levels for student-athletes and thereby restricting the quantity of student-athlete labor.

Held: The district court’s injunction is consistent with established antitrust principles. Pp. 15–36.

  (a) The courts below properly subjected the NCAA’s compensation restrictions to antitrust scrutiny under a “rule of reason” analysis. In the Sherman Act, Congress tasked courts with enforcing an antitrust policy of competition on the theory that market forces “yield the best allocation” of the Nation’s resources. National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85, 104, n. 27. The Sherman Act’s prohibition on restraints of trade has long been understood to prohibit only restraints that are “undue.” Ohio v. American Express Co., 585 U. S. ___, ___. Whether a particular restraint is undue “presumptively” turns on an application of a “rule of reason analysis.” Texaco, Inc. v. Dagher, 547 U. S. 1, 5. That manner of analysis generally requires a court to “conduct a fact-specific assessment of market power and market structure” to assess a challenged restraint’s “actual effect on competition.” American Express, 585 U. S., at ___. Pp. 15–24.

   (1) The NCAA maintains the courts below should have analyzed its compensation restrictions under an extremely deferential standard because it is a joint venture among members who must collaborate to offer consumers the unique product of intercollegiate athletic competition. Even assuming the NCAA is a joint venture, though, it is a joint venture with monopoly power in the relevant market. Its restraints are appropriately subject to the ordinary rule of reason’s fact-specific assessment of their effect on competition. American Express, 585 U. S., at ___. Circumstances sometimes allow a court to determine the anticompetitive effects of a challenged restraint (or lack thereof) under an abbreviated or “quick look.” See Dagher, 547 U. S., at 7, n. 3; Board of Regents, 468 U. S., at 109, n. 39. But not here. Pp. 15–19.

   (2) The NCAA next contends that the Court’s decision in Board of Regents expressly approved the NCAA’s limits on student-athlete compensation. That is incorrect. The Court in Board of Regents did not analyze the lawfulness of the NCAA’s restrictions on student-athlete compensation. Rather, that case involved an antitrust challenge to the NCAA’s restraints on televising games—an antitrust challenge the Court sustained. Along the way, the Court commented on the NCAA’s critical role in maintaining the revered tradition of amateurism in college sports as one “entirely consistent with the goals of the Sherman Act.” Id., at 120. But that sort of passing comment on an issue not presented is not binding, nor is it dispositive here. Pp. 19–21.

   (3) The NCAA also submits that a rule of reason analysis is inappropriate because its member schools are not “commercial enterprises” but rather institutions that exist to further the societally important noncommercial objective of undergraduate education. This submission also fails. The Court has regularly refused these sorts of special dispensations from the Sherman Act. See FTC v. Superior Court Trial Lawyers Assn., 493 U. S. 411, 424. The Court has also previously subjected the NCAA to the Sherman Act, and any argument that “the special characteristics of [the NCAA’s] particular industry” should exempt it from the usual operation of the antitrust laws is “properly addressed to Congress.” National Soc. of Professional Engineers v. United States, 435 U. S. 679, 689. Pp. 21–24.

  (b) The NCAA’s remaining attacks on the district court’s decision lack merit. Pp. 24–36.

   (1) The NCAA contends that the district court erroneously required it to prove that its rules are the least restrictive means of achieving the procompetitive purpose of preserving consumer demand for college sports. True, a least restrictive means test would be erroneous and overly intrusive. But the district court nowhere expressly or effectively required the NCAA to show that its rules met that standard. Rather, only after finding the NCAA’s restraints “patently and inexplicably stricter than is necessary” did the district court find the restraints unlawful. Pp. 24–29.

   (2) The NCAA contends the district court should have deferred to its conception of amateurism instead of “impermissibly redefin[ing]” its “product.” But a party cannot declare a restraint “immune from § 1 scrutiny” by relabeling it a product feature. American Needle, Inc. v. National Football League, 560 U. S. 183, 199, n. 7. Moreover, the district court found the NCAA had not even maintained a consistent definition of amateurism. Pp. 29–30.

   (3) The NCAA disagrees that it can achieve the same pro-competitive benefits using substantially less restrictive alternatives and claims the district court’s injunction will “micromanage” its business. Judges must indeed be sensitive to the possibility that the “continuing supervision of a highly detailed decree” could wind up impairing rather than enhancing competition. Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U. S. 398, 415. The district court’s injunction honored these principles, though. The court enjoined only certain restraints—and only after finding both that relaxing these restrictions would not blur the distinction between college and professional sports and thus impair demand, and further that this course represented a significantly (not marginally) less restrictive means of achieving the same procompetitive benefits as the NCAA’s current rules. Finally, the court’s injunction preserves considerable leeway for the NCAA, while individual conferences remain free to impose whatever rules they choose. To the extent the NCAA believes meaningful ambiguity exists about the scope of its authority, it may seek clarification from the district court. Pp. 30–36.

958 F. 3d 1239, affirmed.

 Gorsuch, J., delivered the opinion for a unanimous Court. Kavanaugh, J., filed a concurring opinion.

1 Together with No. 20–520, American Athletic Conference et al. v. Alston et al., also on certiorari to the same court.


Certiorari To The United States Court Of Appeals For The Federal Circuit

No. 19–1434. Argued March 1, 2021—Decided June 21, 2021 1

The question in these cases is whether the authority of Administrative Patent Judges (APJs) to issue decisions on behalf of the Executive Branch is consistent with the Appointments Clause of the Constitution. APJs conduct adversarial proceedings for challenging the validity of an existing patent before the Patent Trial and Appeal Board (PTAB). During such proceedings, the PTAB sits in panels of at least three of its members, who are predominantly APJs. 35 U. S. C. §§6(a), (c). The Secretary of Commerce appoints all members of the PTAB—including 200-plus APJs—except for the Director, who is nominated by the President and confirmed by the Senate. §§3(b)(1), (b)(2)(A), 6(a). After Smith & Nephew, Inc., and ArthroCare Corp. (collectively, Smith & Nephew) petitioned for inter partes review of a patent secured by Arthrex, Inc., three APJs concluded that the patent was invalid. On appeal to the Federal Circuit, Arthrex claimed that the structure of the PTAB violated the Appointments Clause, which specifies how the President may appoint officers to assist in carrying out his responsibilities. Art. II, §2, cl. 2. Arthrex argued that the APJs were principal officers who must be appointed by the President with the advice and consent of the Senate, and that their appointment by the Secretary of Commerce was therefore unconstitutional. The Federal Circuit held that the APJs were principal officers whose appointments were unconstitutional because neither the Secretary nor Director can review their decisions or remove them at will. To remedy this constitutional violation, the Federal Circuit invalidated the APJs’ tenure protections, making them removable at will by the Secretary.

Held: The judgment is vacated, and the case is remanded.

941 F. 3d 1320, vacated and remanded.

  The Chief Justice delivered the opinion of the Court with respect to Parts I and II, concluding that the unreviewable authority wielded by APJs during inter partes review is incompatible with their appointment by the Secretary of Commerce to an inferior office. Pp. 6–19.

  (a) The Appointments Clause provides that only the President, with the advice and consent of the Senate, can appoint principal officers. With respect to inferior officers, the Clause permits Congress to vest appointment power “in the President alone, in the Courts of Law, or in the Heads of Departments.” Pp. 6–8.

  (b) In Edmond v. United States, 520 U. S. 651, this Court explained that an inferior officer must be “directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate.” Id., at 663. Applying that test to Coast Guard Court of Criminal Appeals judges appointed by the Secretary of Transportation, the Court held that the judges were inferior officers because they were effectively supervised by a combination of Presidentially nominated and Senate confirmed officers in the Executive Branch. Id., at 664–665. What the Court in Edmond found “significant” was that those judges had “no power to render a final decision on behalf of the United States unless permitted to do so by other Executive officers.” Id., at 665.

  Such review by a superior executive officer is absent here. While the Director has tools of administrative oversight, neither he nor any other superior executive officer can directly review decisions by APJs. Only the PTAB itself “may grant rehearings.” §6(c). This restriction on review relieves the Director of responsibility for the final decisions rendered by APJs under his charge. Their decision—the final word within the Executive Branch—compels the Director to “issue and publish a certificate” canceling or confirming patent claims he had previously allowed. §318(b).

  The Government and Smith & Nephew contend that the Director has various ways to indirectly influence the course of inter partes review. The Director, for example, could designate APJs predisposed to decide a case in his preferred manner. But such machinations blur the lines of accountability demanded by the Appointments Clause and leave the parties with neither an impartial decision by a panel of experts nor a transparent decision for which a politically accountable officer must take responsibility.

  Even if the Director can refuse to designate APJs on future PTAB panels, he has no means of countermanding the final decision already on the books. Nor can the Secretary meaningfully control APJs through the threat of removal from federal service entirely because she can fire them only “for such cause as will promote the efficiency of the service.” 5 U. S. C. §7513(a); see Seila Law LLC v. Consumer Financial Protection Bureau, 591 U. S. ___, ___. And the possibility of an appeal to the Federal Circuit does not provide the necessary supervision. APJs exercise executive power, and the President must be ultimately responsible for their actions. See Arlington v. FCC, 569 U. S. 290, 305, n. 4.

  Given the insulation of PTAB decisions from any executive review, the President can neither oversee the PTAB himself nor “attribute the Board’s failings to those whom he can oversee.” Free Enterprise Fund v. Public Company Accounting Oversight Bd., 561 U. S. 477, 496. APJs accordingly exercise power that conflicts with the design of the Appointments Clause “to preserve political accountability.” Edmond, 520 U. S., at 663. Pp. 8–14.

  (c) History reinforces the conclusion that the unreviewable executive power exercised by APJs is incompatible with their status as inferior officers. Founding-era congressional statutes and early decisions from this Court indicate that adequate supervision entails review of decisions issued by inferior officers. See, e.g., 1 Stat. 66–67; Barnard v. Ashley, 18 How. 43, 45. Congress carried that model of principal officer review into the modern administrative state. See, e.g., 5 U. S. C. §557(b).

  According to the Government and Smith & Nephew, heads of department appoint a handful of contemporary officers who purportedly exercise final decisionmaking authority. Several of their examples, however, involve inferior officers whose decisions a superior executive officer can review or implement a system for reviewing. See, e.g., Freytag v. Commissioner, 501 U. S. 868. Nor does the structure of the PTAB draw support from the predecessor Board of Appeals, which determined the patentability of inventions in panels composed of examiners-in-chief without an appeal to the Commissioner. 44 Stat. 1335–1336. Those Board decisions could be reviewed by the Court of Customs and Patent Appeals—an executive tribunal—and may also have been subject to the unilateral control of the agency head. Pp. 14–18.

  (d) The Court does not attempt to “set forth an exclusive criterion for distinguishing between principal and inferior officers for Appointments Clause purposes.” Edmond, 520 U. S., at 661. Many decisions by inferior officers do not bind the Executive Branch to exercise executive power in a particular manner, and the Court does not address supervision outside the context of adjudication. Here, however, Congress has assigned APJs “significant authority” in adjudicating the public rights of private parties, while also insulating their decisions from review and their offices from removal. Buckley v. Valeo, 424 U. S. 1, 126. Pp. 18–19.

  The Chief Justice, joined by Justice Alito, Justice Kavanaugh, and Justice Barrett, concluded in Part III that §6(c) cannot constitutionally be enforced to the extent that its requirements prevent the Director from reviewing final decisions rendered by APJs. The Director accordingly may review final PTAB decisions and, upon review, may issue decisions himself on behalf of the Board. Section 6(c) otherwise remains operative as to the other members of the PTAB. When reviewing such a decision by the Director, a court must decide the case “conformably to the constitution, disregarding the law” placing restrictions on his review authority in violation of Article II. Marbury v. Madison, 1 Cranch 137, 178.

  The appropriate remedy is a remand to the Acting Director to decide whether to rehear the petition filed by Smith & Nephew. A limited remand provides an adequate opportunity for review by a principal officer. Because the source of the constitutional violation is the restraint on the review authority of the Director, rather than the appointment of APJs by the Secretary, Arthrex is not entitled to a hearing before a new panel of APJs. Pp. 19–23.

 Roberts, C. J., delivered the opinion of the Court with respect to Parts I and II, in which Alito, Gorsuch, Kavanaugh, and Barrett, JJ., joined, and an opinion with respect to Part III, in which Alito, Kavanaugh, and Barrett, JJ., joined. Gorsuch, J., filed an opinion concurring in part and dissenting in part. Breyer, J., filed an opinion concurring in the judgment in part and dissenting in part, in which Sotomayor and Kagan, JJ., joined. Thomas, J., filed a dissenting opinion, in which Breyer, Sotomayor, and Kagan, JJ., joined as to Parts I and II.

1 Together with No. 19–1452, Smith Nephew, Inc., et al. v. Arthrex, Inc., et al. and No. 19–1458, Arthrex, Inc. v. Smith Nephew, Inc., et al., also on certiorari to the same court.


Certiorari To The United States Court Of Appeals For The Second Circuit

No. 20–222. Argued March 29, 2021—Decided June 21, 2021

Respondent shareholders (Plaintiffs) filed this securities-fraud class action alleging that The Goldman Sachs Group, Inc., and certain of its executives (collectively, Goldman) violated securities laws and regulations prohibiting material misrepresentations and omissions in connection with the sale of securities. 15 U. S. C. §78j(b); 17 CFR §240.10b–5. Plaintiffs allege that Goldman maintained an artificially inflated stock price by repeatedly making false and misleading generic statements about its ability to manage conflicts. Under Plaintiffs’ inflation-maintenance theory, Goldman’s alleged misrepresentations caused its stock price to remain inflated until the market reacted to the truth about Goldman’s practices—at which point Goldman’s stock price dropped and Plaintiffs suffered losses. Seeking to certify a class of Goldman shareholders harmed by reliance on Goldman’s alleged misrepresentations, Plaintiffs invoked the presumption, endorsed by the Court in Basic Inc. v. Levinson, 485 U. S. 224, that investors are presumed to rely on the market price of a company’s security, which in an efficient market will reflect all of the company’s public statements, including misrepresentations. The Basic presumption allows class-action plaintiffs to prove reliance through evidence common to the class. Goldman in turn sought to defeat class certification by rebutting the Basic presumption through evidence that its alleged misrepresentations had no impact on its stock price. After an initial round of litigation which resulted in a remand from the Second Circuit, the District Court certified the class based on Goldman’s failure to establish by a preponderance of the evidence that its alleged misrepresentations had no price impact. The Second Circuit authorized an appeal under Federal Rule of Civil Procedure 23(f), and affirmed in a divided decision, finding that the District Court’s price impact determination was not an abuse of discretion. Goldman now argues that the Second Circuit erred twice: first, by holding that the generic nature of Goldman’s alleged misrepresentations is irrelevant to the price impact inquiry; and second, by assigning Goldman the burden of persuasion to prove a lack of price impact.


  1. The generic nature of a misrepresentation often is important evidence of price impact that courts should consider at class certification, including in inflation-maintenance cases. That is true even though the same evidence may be relevant to materiality, an inquiry reserved for the merits phase of a securities-fraud class action. See Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 568 U. S. 455. A court has an obligation before certifying a class to determine that Rule 23 is satisfied, Comcast Corp. v. Behrend, 569 U. S. 27, 35, and a court cannot make that finding in a securities-fraud class action without considering all evidence relevant to price impact. See Halliburton Co. v. Erica P. John Fund, Inc., 573 U. S. 258, 284 (Halliburton II). The parties now accept this legal framework but dispute whether the Second Circuit properly considered the generic nature of Goldman’s alleged misrepresentations. Because the Court concludes that the Second Circuit’s opinions leave sufficient doubt on this question, the Court remands for the Second Circuit to consider all record evidence relevant to price impact, regardless whether that evidence overlaps with materiality or any other merits issue. Pp. 6–9.

  2. Defendants bear the burden of persuasion to prove a lack of price impact by a preponderance of the evidence at class certification. The Court has held that nothing in Federal Rule of Evidence 301 constrains the Court’s authority to change customary burdens of persuasion under a federal statute, see NLRB v. Transportation Management Corp., 462 U. S. 393, 404, n. 7, and the Court has exercised this authority to reassign the burden of persuasion to the defendant in other contexts. Goldman does not challenge the Court’s relevant precedents, but questions whether the Court exercised this authority in establishing the Basic framework pursuant to the securities laws. The Court concludes that Basic and Halliburton II did allocate to defendants the burden of persuasion to prove a lack of price impact. As relevant here, Basic explains that defendants may rebut the presumption of reliance if they “show that the misrepresentation in fact did not lead to a distortion of price” by making “[a]ny showing that severs the link between the alleged misrepresentation and . . . the price received (or paid) by the plaintiff.” 485 U. S., at 248 (emphasis added). Similarly, Halliburton II held that defendants may rebut the Basic presumption at class certification “by showing . . . that the particular misrepresentation at issue did not affect the stock’s market price.” 573 U. S., at 279 (emphasis added). These references to a defendant’s “showing” require a defendant to do more than produce some evidence relevant to price impact; the defendant must “in fact” “seve[r] the link” between a misrepresentation and the price paid by the plaintiff. Moreover, Halliburton II’s holding that plaintiffs need not directly prove price impact to invoke the Basic presumption, 573 U. S., at 278–279, would be negated in almost every case if a defendant could shift the burden of persuasion to the plaintiffs by mustering any competent evidence of a lack of price impact (including, for example, the generic nature of the alleged misrepresentations). Thus, the best reading of the Court’s precedents assigns defendants the burden of persuasion to prove a lack of price impact by a preponderance of the evidence. Even so, that allocated burden will be outcome determinative only in the rare case in which the evidence is in perfect equipoise. Pp. 9–12.

955 F. 3d 254, vacated and remanded.

 Barrett, J., delivered the opinion of the Court, in which Roberts, C. J., and Breyer, Kagan, and Kavanaugh, JJ., joined in full; in which Thomas, Alito, and Gorsuch, JJ., joined as to Parts I and II–A; and in which Sotomayor, J., joined as to Parts I, II–A–1, and II–B. Sotomayor, J., filed an opinion concurring in part and dissenting in part. Gorsuch, J., filed an opinion concurring in part and dissenting in part, in which Thomas and Alito, JJ., joined.