Attorneys acting on behalf of two current college athletes on Monday filed a federal antitrust lawsuit against the NCAA and the Power Five conferences that could substantially increase the tension — and financial stakes — connected to athletes’ ability to make money off their name, image and likeness.
The suit, which seeks to be a class action, not only asks that the NCAA be prevented from having association-wide rules that “restrict the amount of name, image, and likeness compensation available” to athletes but also seeks unspecified damages based on the share of television-rights money and the social media earnings it claims athletes would have received if the NCAA’s current limits on NIL compensation had not existed.
This has the potential to put, conservatively, hundreds of millions of dollars at stake. As allowed under federal antitrust law, the suit seeks to cover athletes who played in any of the past four years and carry forward through the date of a final judgment. In addition, if a jury decides to award damages to an antitrust plaintiff, the amount is tripled.
Specifically, the suit claims that football, men’s basketball and women’s basketball players at schools in the Power Five conferences are entitled to damages related to the use of their NIL’s during telecasts of games and that athletes in any sport at a Power Five school are entitled to damages related to social media earnings.
“The college sports industry has been immensely profitable for every party involved except the players themselves,” the plaintiffs’ lead attorney, Steve Berman, said in a statement. “… For too long, the NCAA’s bylaws, constitution and rules have governed all aspects of college sports, and we think these outdated and unnecessary regulations are unlawfully keeping college athletes from compensation that is rightfully theirs.”
Monday’s filing adds to a series of recent developments threatening to destabilize a college sports landscape also being shaken by the coronavirus pandemic and protests in the aftermath of George Floyd’s death in Minneapolis.
Less than a month ago, a three-judge panel of the 9th U.S. Circuit Court of Appeals unanimously upheld a district court ruling that the NCAA had violated antitrust law with its limits on various benefits athletes can receive from their schools. On Friday, Florida Gov. Ron DeSantis put his state alongside California and Colorado in passing a law aimed at helping college athletes make money off their NIL.
The moves by those three states and the introduction of similar bills in dozens of other states prompted the NCAA Board of Governors to approve in April a set of principles that set up significant reforms related to athlete name, image and likeness. But the association and the Power Five conferences also have been actively lobbying for federal legislation that would supersede the states’.
And, according to Tom McMillen, the CEO of an association that represents athletics directors of Football Bowl Subdivision schools, AD’s are concerned about “conflicts (with schools’ existing sponsorship deals) and displacements” of athletics department revenue that could occur with changes in NIL rules being proposed by the NCAA.
The Board of Governors’ vote in April was preceded by a committee report that expressed concern that “antitrust challenges will continue” and added, “it is appropriate and advisable for the Association to seek an exemption from federal and state antitrust laws.”
The new case was filed in U.S. District Court in the Northern District of California’s Oakland Division. This is the same venue through which several other antitrust suits against the NCAA related to college-athlete compensation have proceeded over the past 10-plus years. In the two cases that have gone to trial there before Judge Claudia Wilken, the NCAA has been found in violation of antitrust law.
The named plaintiffs in the new case are Arizona State men’s swimmer Grant House, an Olympic hopeful, and Oregon women’s basketball player Sedona Prince. Berman’s firm, Hagens Berman Sobol Shapiro LLP, has sued the NCAA and other defendants multiple times on a range of issues, including athlete compensation, the use of athletes’ NIL in video games, concussions and the association’s transfer rules.
The firm has not gone undefeated against the NCAA, but in 2014 it sued the association and a group of 11 conferences on behalf of athletes and eventually came away with a $208.7 million damages settlement that was distributed to current and former athletes in October 2019.
In that instance, in part because of the then-ongoing Ed O’Bannon antitrust case, the NCAA appeared headed toward letting schools award athletic scholarships based on the full cost of attending college rather than traditional components of tuition, room, board, books and mandatory fees. Acting on behalf of former West Virginia football player Shawne Alston, the Hagens Berman firm sued for both an injunction that would prevent the NCAA from having limits on what athletes can receive from their schools, as well as damages based on the difference between the value of a cost-of-attendance-based scholarship and the value of a traditional scholarship.
The damages portion settled in February 2017. The dispute over the injunction went to trial, and Wilken ruled in March 2019 that while the NCAA can limit benefits to athletes that are not related to education, it cannot limit benefits that are related to education — potentially including cash or cash-equivalent awards based on academics or graduation. Wilken’s findings were upheld by the 9th U.S. Circuit of Appeals last month, although that ruling remains subject to further action.
The new complaint opens with the story of former Duke men’s basketball player Zion Williamson suffering a sprained knee when his shoe from Nike — Duke’s contracted outfitter — split apart. It covers the widespread social media followings of college athletes and recently announced efforts by schools, including Nebraska and Colorado to initiate programs to help their athletes build their personal brands.
It cites the NCAA’s multi-billion-dollar multi-media and marketing rights contract connected to the Division I men’s basketball tournament, other TV deals by conferences and alleges that “student-athletes do not receive any share in those revenues apart from the limited scholarships and benefits that NCAA rules permit. Absent these restraints, student-athletes would receive the market value commensurate with what they contribute.”
And while noting the NCAA’s proposed changes to its NIL rules, the suit alleges that “it remains unclear whether and what meaningful changes will actually be implemented absent a court order” and that the NCAA “is in fact actively and aggressively seeking an exemption from federal and state antitrust law that would allow it to continue its anticompetitive practices without legal repercussion.”
“Finally,” the complaint alleges, “the NCAA has not made any statements indicating that it will financially compensate the thousands of student-athletes who it already injured by unlawfully prohibiting them from benefiting from their own NIL’s.”