UPDATE: Judge Wilken Renders Additional Decision Against NCAA
U.S. District Judge Claudia Wilken of the Northern District of California has continued her ongoing pattern of decisions against the NCAA by granting class-action status for the damages portion of the ongoing House v NCAA action. The case involves current and former student-athletes who have sued the NCAA and major college conferences for anti-trust violations and seek a multi-billion dollar award for the student-athlete class of plaintiffs who have been prevented from profiting from the use their names, images and likenesses (NIL).
Judge Wilken’s grant of class-action status follows her recent decision certifying a class seeking injunctive relief in the same matter in late September. It now authorizes potential damages to be awarded to a class well beyond the named plaintiffs who initiated this action, potentially expanding to a class of thousands of current and former student-athletes.
The case was initiated as two separate legal actions in 2020, one brought by Grant House, a former member of the Arizona State University men’s swimming and diving team, and the other brought by Sedona Price, a former member of the University of Oregon women’s basketball team and current member of the Texas Christian University women’s squad. These two actions were brought more than a year before the NCAA and various state laws were introduced and passed authorizing student-athletes to benefit from the commercial use of their NIL. A third lawsuit brought by plaintiff, Tymir Oliver, a former football player at the University of Illinois, also filed in 2020, was ultimately combined and consolidated with the House action.
The primary issue raised in the action is whether the NCAA and the largest conferences (the Power 5) have violated and continue to violate federal anti-trust law by imposing specific and artificial prohibitions restricting the ability of student-athletes to earn NIL-based compensation by sharing in broadcast revenues generated by the rights negotiated by the NCAA and the Power 5. Judge Wilken’s current ruling continues a series of rulings that she has made against the NCAA in two major NCAA cases, Ed O’Bannon and Shawn Alston.
The now certified class of student-athletes seeks damages based on lost revenue arising from the use of their NIL in television broadcasts and video games, as well as lost revenues from commercial NIL uses (e.g., social media deals) that have been lost as a result of the NCAA’s prior restrictions on NIL compensation. Specifically, the lawsuit claims football, men’s basketball and women’s basketball athletes in the Power Five conferences are entitled to damages arising from the unauthorized use of their NIL rights during telecasts of their games and that athletes participating in all Power 5 sports are owed damages arising from unauthorized revenue generated from social media. If successful, this could result in a damages award estimated to be anywhere from $1.4 billion to more than $4 billion.
In addition to this potentially devastating financial damages award, the ultimate finding in the case could also result in a drastic change for college sports. Ultimately, the decision could expand student-athlete NIL revenue streams to include access to the financial benefits derived from the athletic success of their conferences and individual schools, including television broadcast revenues, ticket sales, and school endorsements.
Clearly, the NCAA’s desire and apparent reliance on the arrival of federal legislative intervention to eliminate varying state NIL laws and the ensuing lack of federal direction to help create national uniformity regarding NIL use and formal anti-trust protection from Congress have created a gap in the legal landscape for college sports. That gap has since been filled with a tidal wave of alternative legal challenges by student-athletes, former student-athletes, activist groups, and others.
Judge Wilken’s decision just adds to the NCAA’s full legal docket, which includes an upcoming National Labor Relations Board (NLRB) administrative hearing in Los Angeles that alleges the NCAA, the Pac-12 Conference, and the University of Southern California are joint employers that have unlawfully misclassified college athletes as “student-athletes” rather than employees. While the adjudication process in that case will begin next week, the men’s basketball team at Dartmouth College is also currently seeking to be declared employees in Region 1 of the NLRB in order to move forward with their efforts to unionize and join the Service Employees International Union. In addition, the U.S. Circuit Court of Appeals for the Third Circuit continues to consider the Johnson case, which seeks to use the Fair Labor Standards Act to have athletes treated as school employees entitled to at least the minimum wage and overtime rights under the Fair Labor Standards Act.
While the NCAA hopes for the equivalent of a legal “Hail Mary” from Judge Wilken, the Plaintiffs intend to seek injunctive relief striking down all current restrictions and active prohibitions against athletes’ commercial NIL use, including the ability of conferences to pay student-athletes directly. The federal courts and the NLRB are certainly going to be front and center in the world of college sports in the weeks, months and years ahead, deflecting the focus away from the competition on the courts and gridirons of collegiate competition.