Collegiate Athlete Litigation: The Antitrust Class-Action Lawsuit That Could End The NCAA – Anti-trust/Competition Law

NCAA sport was on its summer break, but that didn’t stop college athletics from making headlines. On June 21, 2021, the Supreme Court ruled NCAA v Alston, 594 US ___ (2021), unanimously lifting an NCAA restriction on the educational benefits that a college can offer student athletes. Then, on July 1, numerous state laws and a change in NCAA rules went into effect that allow college athletes to receive compensation for their name, image and likeness (NIL). While these developments have left their mark, what comes next could have an even bigger impact on the NCAA. Participate in In re College Athlete NIL Litigation (also known as In re NIL Litigation), a class action lawsuit in the U.S. District Court for the Northern District of California.

In re NIL Litigation’s story begins on June 15, 2020 when Grant House, a swimmer from the state of Arizona, and Sedona Prince, a basketball player from the University of Oregon, filed a class action lawsuit against the NCAA and the Power Five Conferences (Pac -12, Big Ten, Big 12, SEC and ACC). About three weeks later, on July 8, 2020, Tymir Oliver, a former defensive tackle for the University of Illinois with the same local attorney as House and Prince, filed an essentially similar lawsuit against the NCAA. House, Prince and Oliver (the plaintiffs) challenged the NCAA’s ban on granting student athletes compensation for their NIL, arguing that the ban was against antitrust law in that it was a conspiracy to set the amount that student athletes would earn Athletes are allowed to pay for licensing and selling their NIL at $ 0 and because it prevents student athletes from entering the market for licensing and / or selling their NIL. On behalf of all current and former Division I students who had competed in the four years prior to the filing of the lawsuits, plaintiffs filed for an injunction prohibiting enforcement of the NCAA’s limitation on NIL compensation. On behalf of athletes in the Social Media Damages1 subclass, plaintiffs sought income from social media that athletes would have received without the NCAA’s NIL restrictions. And on behalf of athletes in the Group Licensing Damages2 subclass, plaintiffs claimed the proportion of group licensing revenue from game broadcasts that athletes would have received without the NCAA’s NIL restrictions.

It was no accident that these cases were filed in California. Both House and Oliver relied on California’s Fair Pay to Play Act, which would allow student athletes to benefit financially from their NIL from January 2023. Plaintiffs argued that if California law (which was the first of its kind at the time) went into effect, it would create an unrestricted market for the use of NILs by students and athletes. Although the NCAA opposed the Fair Pay to Play Act and continued to enforce NIL restrictions, the organization began easing its restrictions, voting in October 2019 to allow students to use their NIL, and advocating recommended rule changes in April 2020 Issued by an internal working group that would allow athletes to receive compensation for certain activities, including endorsements, autographs and personal appearances. As such, plaintiffs argued that the NCAA’s previous positions on NIL benefits were unfounded and were therefore entitled to the requested discharge.

Fast forward to today. On July 14, 2021, the District Court passed an order combining House and Oliver’s lawsuits into In re NIL Litigation. On July 26, 2021, plaintiffs filed a consolidated amended complaint. In the amended complaint, among other things, a subclass for damage due to lost opportunities3 and a subclass for damage to former players4 and players from FBS football teams in independent schools were added to the definition of the subclass for group license damage. The amended complaint also cites the Alston ruling, noting that the Supreme Court unanimously rejected the NCAA’s position that its amateurism restrictions are not the subject of traditional antitrust analysis. The NCAA had argued that NCAA v. Board of Regents, 468 US 85, 119 (1984) considered an antitrust exception to the NCAA’s model of amateurism. However, the Supreme Court dismissed this argument, instead finding that the NCAA is subject to reasonable antitrust control for exercising monopsony power in the market for student and athlete services (i.e., a single buyer controls the demand for goods or Services). Based on this finding, the Alston court denied the existence of an amateurism exemption, finding that the NCAA’s restriction on educational services violated US antitrust law.

While Judge Neil Gorsuch in his majority Alston statement made sure that this should only apply to the disputed limitation of educational services, it is not difficult to see how the rejection of an amateurism exception from antitrust law by the Supreme Court on the contested NIL restrictions in In re NIL litigation. In addition, Judge Kavanaugh was not so reluctant in his unanimous opinion, specifically addressing the legality of the remaining NCAA compensation rules, noting that they should each be subject to a basic analysis without the benefit of an exception to amateurism. He even went so far as to recognize that the NCAA “suppresses the payment of student athletes” by fixing prices for the athletes’ labor, suggesting that he believes it is against antitrust law to prevent athletes from going directly for their work get paid.

The NCAA has 21 days to respond to the amended complaint, with a deadline ending August 16, 2021. This is the first opportunity the NCAA has in court to comment on the Alston Supreme Court ruling and its impact on its model of amateurism. Expect the NCAA to argue that the Alston decision is limited to the explicitly addressed educational benefit limitation and therefore has no bearing on whether the NCAA should pay compensation to former NIL proficiency class members they received without the NIL limitations would have received. But with the rejection of the antitrust exception in Alston and Kavanaugh’s comment on whether a pricing measure introduced by the NCAA will survive antitrust scrutiny, the NCAA’s defense may not stand up. We could look at the complete restructuring of the NCAA amateurism model.

Footnotes

1 The Social Media Damages subclass is defined as all current and former student-athletes who were at any time between four years prior to the filing of the lawsuit and the date of the judgment.

2 The Group License Indemnification subclass is defined as any former NCAA athlete who competed on a Division I sports team at any time between four years prior to the filing of the lawsuit and the date of the judgment.

3 The Lost Opportunities Damages sub-class is defined as all current Division I athletes in the second or later year of eligibility (or the first year of eligibility after receiving a red shirt in the previous year) who received NIL compensation for all or part of the period between July 1, 2021 and June 30, 2022.

4 The Former Player Injury subclass is defined as all former NCAA athletes who at any time between the age of 15

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