Can a sports sanction constitute an illegal work restriction? A review of NCAA v. Coach Todd McNair

Published 16 April 2019 By: Maureen Weston

Todd McNair

Can a sport governing body’s sanctions against an individual – coach or player – constitute an illegal restriction on one’s right to work? According to the court in McNair v. National Collegiate Athletic Association, the answer is yes (at least in California).

The University of Southern California (USC) Trojan football team dominated college football in 2005, with then Heisman Trophy winner Reggie Bush leading the Trojans to a National Championship. The glory of the victory waned shortly thereafter upon news that the National Collegiate Athletic Association (NCAA), the governing regulatory body for collegiate sports in the United States, had issued a “notice of inquiry” into the USC football and the men’s basketball program. After a protracted investigation and Infractions Hearing process, the NCAA Committee on Infractions issued its report declaring that USC had committed major violations of NCAA regulations in the operation of the football and the men’s basketball programs.1 Among those sanctioned were USC former running-backs Coach, Todd McNair, who was found to have violated recruiting bylaws and rules against unethical conduct. The committee issued a one-year “show-cause2 sanction against McNair, and USC declined to renew his contract. Ever since, McNair has been fighting the NCAA in court for “ruining his career,” as he claimed that the sanctions requiring NCAA member schools to disassociate from him prevented him from coaching college football and thereby violated California right to work laws.

This article examines the case, looking specifically at:

  • The NCAA’s infractions case against USC;

  • Coach McNair’s action against the NCAA;

  • Did the NCAA “Show-Cause Order” sanction constitute an illegal work restraint?

  • California’s right-to-work law and its impact on the NCAA’s sanctioning authority;

  • Could California law invalidate NCAA sanctions?

The NCAA Infractions Case against USC

On June 10, 2010, the NCAA Committee on Infractions (COI) issued its report finding that USC’s football, men’s basketball, and women’s tennis programs committed various NCAA violations.3 Regarding the football program, the report found major violations involving Reggie Bush’s relationship with player agents, Lloyd Lake and Michael Michaels, who had provided Bush and his family with cash, travel expenses, and a home where Bush’s parents lived rent free for over a year.4

The NCAA determined that McNair, then running-backs coach at USC and a close friend of Bush, was aware of the benefits Bush was receiving and that McNair engaged in unethical conduct.5 The report stated that McNair “knew or should have known” about Bush’s improper dealings and that McNair “provided false and misleading information to the enforcement staff.6

The COI ruled that USC’s failure to monitor and the nature of the benefits received by the high-profile athletes in question constituted a lack of institutional control.7 As sanctions, the NCAA imposed a two-year post-season bowl ban against USC, a loss of thirty football scholarships over the 2012-2014 seasons, and vacated all wins in which Bush participated in while ineligible, including the 2005 National Championship.8 Bush returned his Heisman Trophy from 2005. With respect to McNair, the NCAA imposed a one-year penalty and ordered that USC was required to show cause for “why it should not be penalized further if it fails to permanently disassociate.9 Under the Show Cause Order, McNair was “prohibited from engaging in any on or off-campus recruiting at USC.” Further, the Show Cause Order applied if any other NCAA member institution sought to employ McNair and such institution had to comply with the penalty imposed and to show cause why that institution should demonstrate compliance with the “penalties restricting the athletically related duties of [McNair].10

While the USC football program has since rebounded (winning the Rose Bowl in 2017 and remaining a top brand in collegiate athletics), and while Reggie Bush and USC Head Football Coach Pete Carroll landed lucrative careers in the NFL, McNair remained unemployed as a coach and spent the next seven years challenging the NCAA sanction against him.11

Coach McNair Sues NCAA

In 2011, McNair sued the NCAA for “ruining his career,” alleging defamation, negligence, and breach of contract claims and seeking $27 million in damages in Los Angeles Superior Court.12 McNair alleged that the NCAA’s charges of unethical conduct against him were erroneous, biased, and based on false accusations. He challenged the fairness of the COI deliberative process and contended that the sanctions irreparably harmed his reputation. In denying the NCAA’s request to seal the files, Judge Shaller ruled that the NCAA’s report with respect to McNair was “malicious.”13 After a three week jury trial, the jury ruled that McNair had not proven his case against the NCAA.14

Despite the jury verdict in the NCAA’s favor on the state common law claims, Judge Shaller (coincidentally a USC alum whom the NCAA had unsuccessfully tried to disqualify), separately issued a declaratory judgment ruling that the NCAA’s Show-Cause Order created an unlawful restraint on McNair’s ability to engage in his profession in violation of California statutory law.15 According to the court, the trial evidence proved that

[t]he penalty had the effect of restricting McNair's ability to become employed at another NCAA member school during the one-year penalty period and was a substantial factor in McNair's continuing unemployment at an NCAA member school . . .16

Did the NCAA “Show-Cause Order” Sanction constitute an Illegal Restraint?

Did the Show-Cause Order sanction that restricted McNair’s ability to work in NCAA college sports, and the stigmatizing effect of that sanction on his career, violate California law that protects the rights of persons to engage in their chosen occupation?

A show-cause order requires a school to demonstrate to the NCAA why it should not be subject to a penalty against a staff member found to have violated NCAA regulations.17 The penalty operates against the sanctioned individual and any NCAA member university that employs them.18 The penalty imposed against the coach stays with him or her for an established period of time and transfers to any school that hires the coach.19 As a result, it often diminishes a coach’s ability to retain their current job or be hired by other NCAA programs.20

California’s Business and Professional Code, section 16600, states that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.21 The statutory purpose is to promote open competition and employee mobility to pursue work of their choosing.22

Judge Shaller determined that the NCAA sanction, which member institutions agreed to enforce, restricted ‘anyone,’ within the meaning of section 16600, not just parties to the contract between the NCAA and USC. The court noted that the Show Cause Order applied to all NCAA member schools. Accordingly,

the [NCAA] penalty . . . had the effect of restricting McNair’s ability to become employed at another NCAA member institution during the one-year penalty period and was a substantial factor in McNair’s continuing unemployment at an NCAA member school.23

Noting that the state legislature “[i]ntended to broadly remove any impediments in contracts by which the right to engage in business and occupations of one’s choosing could be abridged,24 the court ruled that “McNair’s ability to practice his profession as a college football coach has been restricted, if not preempted, not only in Los Angeles and California, but in every state in the country.25 The court entered a declaratory judgment invalidating the NCAA Show Cause Order as an unlawful restraint on McNair’s right to work.26

California Right-to-Work Law’s Impact on NCAA Sanction Authority

The NCAA is a national association comprised of over 1300 public and private colleges and universities nationwide. These member institutions agree to abide by the NCAA bylaws and its sanctioning authority. The NCAA has historically been successful in defending itself against challenges to its enforcement powers. In 1979, the University of Nevada, Las Vegas (UNLV) men’s basketball coach, Jerry Tarkanian, challenged the NCAA’s show cause penalty against him as a Constitutional Due Process violation by arguing that the NCAA engaged in state action acting jointly with UNLV, a public institution, in enforcing the penalty.27 Due process protections did not apply, however, because the U.S. Supreme Court held that the NCAA was a private association and that a public school’s act of complying with NCAA rules did not convert NCAA to a state actor.28

Other plaintiffs have been similarly unsuccessful in challenging show cause orders on Constitutional, contract law, as well as tortious interference claims.29 In Cohane v. NCAA,30 former SUNY Buffalo head coach Timothy Cohane, under a show cause order due to a finding violation of NCAA rules, lost his claim that NCAA and SUNY Buffalo acted together to deprive him of his liberty interest in his reputation without according constitutional due process and tortiously interfered with his contract with the institution.31 The court held that the defendants joint conduct did not amount to state action and that the mere loss of job prospects is not a specific and adverse action imposed by the defendants, but rather is a normal repercussion of damaged reputation.32 Hairston v. NCAA, held that players were not third-party beneficiaries to assert a breach of contract claim under the NCAA rules.33

An NCAA “show cause order” certainly flags the affected coach, yet is not necessarily a death knell to a career in college sports. Bruce Pearl, Kelvin Sampson, and Chip Kelly are a few notable coaches who received the show-cause penalty but did not end their coaching careers.34 And a school seeking to hire an affected coach can demonstrate “cause” why the coach would not pose a threat to the program, such as imposing restrictions on recruiting. But, as Judge Shaller noted regarding McNair, the show cause order is

[i[n essence equivalent to a college coaching career-terminating sanction since no NCAA member school, including USC, would likely risk the exposure to sanctions that would impact their athletic programs and lucrative media-related and athletic program income or status by even considering hiring or retaining McNair at any later date after sanctions expired because his reputation was tainted by the penalty.35

For the past few decades, the NCAA has in general remained successful in defending against challenges to its enforcement authority. However, the challenges continue to mount. Unlike previous decisions, Judge Shaller did not defer to the NCAA or acknowledge the NCAA’s role in protecting college sports.36 The NCAA’s status as a private association was relevant in holding it subject to state law. The court cited the NCAA’s private actor status as grounds for rejecting the NCAA’s contention that its sanction is analogous to regulatory restrictions on the practice of law, medicine, or accounting or to collective bargaining agreements which are authorized by federal or state legislation, as opposed to private contract. Professional sports leagues disciplinary sanctions are generally protected under federal law when they are a product of collective bargaining and accordingly preempt state law. For example, due to the federal statutory protection for collective bargaining rules, NFL rules withstood §16600 in Hebert v. Los Angeles Raiders.37

Could California Law Invalidate NCAA Sanctions?

California law does not govern other states. Yet, McNair’s interpretation of the NCAA sanctions under relevant state law could impact future cases challenging the show-cause order under pro-employment policies against the NCAA’s enforcement authority power.38 In Tarkanian, the United States Supreme Court referred to the NCAA’s status as a national entity as a critical fact.39 The NCAA does not act under the color of any individual state’s law. If California institutions are protected against show cause penalties, this would chip away at the NCAA’s enforcement power.

The power given to the NCAA in Tarkanian has remained consistent historically. When the Nevada legislature enacted a statute requiring the NCAA to give additional due process protections to institutions, coaches, and student-athletes after Tarkanian, the NCAA won its challenge to that statute on the basis of the Dormant Commerce Clause, with the court finding that the statute interfered with interstate commerce.40 The Dormant Commerce Clause prohibits state laws that unduly burden interstate commerce. Notably, the NCAA did not argue Dormant Commerce Clause in McNair.41

According to the court, the NCAA “[c]annot because it is a non-profit, amateur organization, without collective bargaining agreements.42 Further pressing the Dormant Commerce Clause argument could be the strongest grounds to challenge the California court’s ruling.43

The ruling in McNair is based on California’s unique law which is notably favorable to individuals and an unusual application of the law to the NCAA.44 The ruling may also be limited because the penalty is imposed through NCAA rules on other institutions that would hire McNair, and is not a non-compete agreement between McNair and USC or the NCAA.45 The NCAA sanctions do not necessarily constitute a restraint on competition or on a direct employer-employee relationship.46 As California sports attorney Danielle Ochs notes, “[t]his is really about a punitive rule of a third party organization that has members. It is an interesting application that I have never seen before.47

The NCAA’s justification for the show-cause penalty is to monitor coaches found to have violated association rules and thereby protect the integrity of sport.48 If changes are made to the NCAA’s enforcement authority, changes should be nationally applicable. A scenario where California is immune from show-cause penalties could produce problematic results. For example, a ruling that would allow creating different standards for coaches in California and allow schools in California to hire coaches under the penalty would create significant problems for the NCAA. If the NCAA is to continue to have enforcement authority, changes should be nationally applied or run the risk of rendering an uneven playing field.

Post-Script Note McNair’s New Trial

On January 16, 2019, Judge Shaller granted McNair’s Motion for New Trial on two grounds:

  1. on the defamation claim, there was an “insufficiency of the evidence to justify the verdict”; and

  2. Juror No. 2 should have been disqualified for implied bias. 49

The court ruled that the NCAA’s COI reports, which formed the grounds for sanction against McNair, was “false” in a material way and that the jury’s ruling in favor of the NCAA was not substantiated by sufficient evidence. 50 Secondly, Juror No. 2, who served as the presiding juror in deliberations and made the deciding vote in the 9-3 verdict in favor of the NCAA, was an attorney whose firm had previously participated as co-counsel for NCAA in this case and should have been disqualified. The show-cause penalty, which had been severed from the jury trial, “remains unchanged.51 The NCAA has also filed Notice of Appeal and Cross-Appeal. The saga continues.

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Maureen Weston

Maureen Weston

Maureen Weston is Professor of Law at Pepperdine University School of Law and Director of the Entertainment, Media & Sports Dispute Resolution Project.  She received her J.D. from the University of Colorado, and B.A. in Economics/Political Science at the University of Denver.  Professor Weston teaches courses on arbitration, mediation, negotiation, international dispute resolution, legal ethics, and U.S. and international sports law.  She serves as Faculty Advisor to the Sports & Entertainment Law Society and Dispute Resolution Journal, and as coach for ICC Mediation Advocacy and Sports & Entertainment Law Negotiation competitions.