• August 27, 2014

NCAA Avoids Damages in Antitrust Case, but Players Still Could Gain

A federal judge on Friday certified class-action status for part of the claims brought by nearly two dozen major-college athletes intent on gaining a share of the NCAA's licensing revenue, allowing the group to challenge the economic model in big-time sports.

But the judge denied the players' attempts to sue as a class for damages against the past use of their names and likenesses, dealing a significant victory to NCAA colleges and reducing the association's potential financial liability.

In her 24-page ruling, Judge Claudia Wilken of the U.S. District in Oakland, Calif., said that the plaintiffs—who include Division I basketball and football players—may proceed as a class in their efforts to test the NCAA's limits on compensating athletes beyond the value of their scholarships.

But the billions of dollars in damages that could have been in play, should the athletes have proved as a group a violation of federal antitrust law, were essentially taken off the table as Judge Wilken ruled that the plaintiffs were not a viable class.

Some legal scholars believe the ruling diminishes the threat to the NCAA's concept of amateurism, suggesting that, even if the plaintiffs prevail at trial, they would have the opportunity to share in licensing revenue only after they completed their athletic eligibility.

Instead, said Matthew Mitten, a law professor and director of the National Sports Law Institute at Marquette University, "the judge seems to be focusing on whether the NCAA can do anything to prevent players from receiving any economic benefit from what they did while they were in college."

But the class action is a significant move toward college athletes' being paid, wrote Michael McCann, director of the Sports and Entertainment Law Institute at the University of New Hampshire's School of Law, in an article on SI.com.

And it increases the possibility that players will eventually form an association for entering into licensing deals, he said. In such a world, television networks would have to negotiate not only with the NCAA, he said, but with representatives of college athletes, who could also sign separate licensing contracts with the manufacturers of video games and other products.

A Blow to Former Players

Judge Wilken's decision dealt a blow to former players who had sought damages for the use of their names and likenesses in television broadcasts and other media. The judge found that the plaintiffs had not demonstrated common harm to a prospective class.

But the ruling did not appear to dampen the enthusiasm of the plaintiffs.

"The court's decision is a victory for all current and former student-athletes who are seeking compensation on a going-forward basis," Michael Hausfeld, the lead lawyer for the players, said in a written statement. "While we are disappointed that the court did not permit the athletes to seek past damages as a group, we are nevertheless hopeful that the court's decision will cause the NCAA to reconsider its business practices."

In a statement, the NCAA referred only to the judge's denial of certification for damages.

"We are pleased that the court correctly found that conducting a classwide trial for claimed damages for student-athletes who played college football and men's basketball going back nearly a decade would be completely unmanageable and unprecedented," said Donald Remy, the association's chief legal officer. "We have long maintained that the plaintiffs in this matter are wrong on the facts and wrong on the law. This ruling is one step closer to validating that position."

Legal experts were divided on whether the ruling would cause the two sides to enter into settlement discussions. Mr. Mitten said the judge's decision makes it "much more likely" that the case will proceed to trial, in part because the NCAA does not face damages, which would have been trebled under antitrust law.

Mr. McCann, however, believes the judge's order creates incentives for both the NCAA and the plaintiffs, who include Ed O'Bannon, a former UCLA star, to consider a deal.

"The case is not as valuable as O'Bannon had sought, especially for former student-athletes," he wrote, "but the prospect of college athletes' being compensated in the future would still constitute a hefty new cost for colleges."

There is also the question of how favorably a jury would consider the claims. Plaintiffs' lawyers have focused on the fast-growing money flowing into the game, painting athletes as victims of an unfair system and deserving recipients of a bigger cut.

The NCAA opposes a pay-for-play model and has said it will fight the matter to the Supreme Court, if necessary. But in recent months, many members of the association have suggested a new openness to player benefits.

The two sides are expected to respond to the judge's ruling in the coming weeks and are set to meet on February 20 for a case-management conference. A trial is scheduled for June.

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