On Tuesday, a California federal judge allowed former and current NCAA athletes to advance to the next round in a high-stakes battle that challenges the underpinnings of amateur sports and potentially puts billions of dollars of TV money on the line.
But a review of the judge’s decision indicates that the assessment is a tad premature. Instead, it would be more accurate to say that the judge isn’t ready to foreclose the possibility of putting TV money at stake after the class of plaintiffs made significant changes in what they were asking for in the lawsuit.
Initially, former athletes like UCLA basketball star Ed O’Bannon brought claims that demanded money from ancillary merchandise like video games that exploited their images and likenesses. The theory of the original lawsuit was that the NCAA forced student-athletes to sign “perpetual release” forms giving up their rights to this type of income and that the collegiate sports association then engaged in a vertical antitrust conspiracy with licensees like Electronic Arts to enforce this position.
The former athletes believed themselves not subject anymore to NCAA governance but couldn’t make their own deals because it was alleged that the NCAA’s partners were boycotting them.
But in the three or four years that various lawsuits on this issue have been pending, the athletes have experienced some successes and other roadblocks in pushing their claims. There’s also the prospect that TV revenue represents a much greater prize, and over the years, the NCAA has faced public scrutiny about its position of denying amateur athletes a portion of the huge financial success that is college football and basketball.
In late 2011 and early 2012, the class of plaintiffs began pushing to compel broadcasters such as Fox and TBS to share details of TV contracts. In August, the plaintiffs experienced some success when a magistrate judge, against the objection of the NCAA, ordered the NCAA to turn over information relating to revenue that its members receive from broadcast television, radio and Internet rights as well as reports tied to income from sponsorships, licensing, sales of advertising and more.
The plaintiffs then sought to amend how they wanted to be certified as a class, which prompted the NCAA to file a motion to strike.
According to that October motion (read in full here), the NCAA argued that the certification motion “profoundly changes every significant aspect of the antitrust claims,” and the NCAA demanded that the judge “not reward plaintiffs’ gamesmanship.”
In particular, the proposed class action would now cover both former and current NCAA athletes and remedy a situation where the NCAA set up alleged “collusive restraints” not to pay athletes for “their names, images and likenesses in connection with live television broadcasts of games and video games.”
As a remedy, the plaintiffs are demanding 50 percent of all revenue earned by the NCAA and its members for Division I football and basketball. Certainly, if successful, that adds up to billions of dollars — and would shake up college sports and possibly TV contract dealmaking.
In a decision on Tuesday, U.S. District Court judge Claudia Wilkins considers whether the athletes should be barred from prosecuting claims that are materially different from the original claims.
“This is not reason to preclude Antitrust Plaintiffs from moving for class certification,” she writes. “Instead, these contentions are more properly considered as arguments supporting denial of the motion for class certification on its merits.”
By shifting the proceedings to a debate of the merits, the judge will next examine, among other possible arguments, the NCAA’s position that the plaintiffs haven’t properly alleged the existence of a horizontal conspiracy that would support a class of antitrust plaintiffs.
In the original motion, the NCAA’s lawyers pointed out that “not a single named plaintiff has alleged facts demonstrating that he was ‘included’ in a live broadcast of ‘game footage’ during plaintiffs’ proposed class period, nor has any named plaintiff alleged that NCAA amateurism or eligibility rules prevented him, while he was in school, from selling an individual or ‘group’ license to a school or broadcaster in connection with live broadcasts of games in which he played.”
The two sides have issued statements in reaction to Tuesday’s ruling, which set a June 20 hearing to consider the class certification motion.
“Now the (NCAA and its co-defendants) are facing potential liability that’s based on the billions of dollars in revenue instead of tens or hundreds of millions,” said Michael Hausfeld, interim lead counsel for the plaintiffs, to ESPN. “It’s a more accurate context for what the players deserve.”
“Although our motion to strike was denied, the judge has signaled skepticism on plaintiff’s class-certification motion and recognized the plaintiffs’ radical change in their theory of the case,” said NCAA general counsel Donald Remy in a statement. “This is a step in the right direction toward allowing the NCAA to further demonstrate why this case is wrong on the law and that plaintiffs have failed to demonstrate that this case satisfies the criteria for class litigation.”
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