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O’Bannon decision may start NCAA dominoes falling

BRIAN C. KONKEL
Law Bulletin columnist

Published: October 24, 2016

Three weeks ago, on Oct. 3, the U.S Supreme Court denied cross-petitions by Ed O’Bannon and the NCAA to determine whether student athletes are entitled to compensation for the commercial use of their names, images and likenesses stemming from participation in college athletics.

Seven years after the initial suit was filed in the U.S. District Court for the Northern District of California, both parties petitioned the Supreme Court to hear portions of the case earlier this year. While the denial of certiorari was not unexpected given the high court’s low acceptance rate, the denial brings an abrupt end to one of the most well-publicized sports cases in recent memory and raises questions about the future plight of amateur student-athletes.

The denial of certiorari leaves a somewhat unsatisfying result for both parties following the 9th Circuit’s decision which affirmed in part, and reversed in part, the ruling of the U.S, District Court. See O’Bannon v. NCAA, 802 F. 3d 1049 (9th Cir. 2015). In a statement released by the NCAA, the association stated it was disappointed, but glad the 9th Circuit agreed that “amateurism is an essential component of college sports.”

Previously, the 9th Circuit found that certain NCAA amateurism rules do violate federal antitrust laws. However, the court said that the NCAA essentially cures the antitrust harm by allowing schools to offer student-athletes so many benefits. Therefore, the NCAA is not obligated to make any additional changes to itself or its affiliates.

The 9th Circuit vacated a more substantial remedy established by Judge Claudia Wilken of the district court, allowing colleges and universities to pay student-athletes up to $5,000 per year while they are in school with payment deferred until exhaustion of eligibility.

The end of the O’Bannon case leaves student-athletes in essentially the same position they were in prior to the suit, and the NCAA is outwardly touting the preservation of “amateurism.” What that term means going forward, however, may not be so clear. There are a number of parallel paths being pursued that might further alter the collegiate athletics landscape.

O’Bannon established that the NCAA is vulnerable on anti-trust grounds, and at least two federal cases are expected to challenge the NCAA with cases more pointedly focused on this issue.

In March 2014, Martin Jenkins, a former Clemson football player, filed suit against the NCAA and five major NCAA conferences in a class action, seeking to have schools compete for athletes in ways that financially benefit the players.

Jenkins argues the defendants have illegally conspired to limit the value of athletic scholarships to tuition, room, board, books and fees (i.e. “cost of attendance”). The suit alleges that the NCAA is an “unlawful cartel” and current restrictions are a “blatant violation of antitrust laws” and should be struck down. For its merits, the O’Bannon case did not make such strong assertions, in part because the case originally started as a right of publicity case, not an antitrust suit.

The plaintiffs are asking the court to enjoin the defendants from restraining any affiliate institutions from negotiating, offering or providing remuneration to members of the football or basketball teams in compensation for their services as athletes. If successful, this would essentially create a free-market recruitment system in major college athletics.

The case is also being heard by Wilken. Earlier this year, Wilken denied the defendants’ motion for judgment on the pleadings. See In re NCAA Grant-in-Aid Cap Antitrust Litigation, 2016 WL 4154855 (Aug. 5, 2016).

Wilken concluded the case could proceed because although the O’Bannon decision barred cash compensation separate from educational expenses, it left the door open to other potential remedies. If successful, the Jenkins suit could have wide-reaching implications beyond that even contemplated by O’Bannon.

Another claim filed by Shawne Alston, a former West Virginia football player, challenges the NCAA’s right to cap compensation for student athletes at the value of a scholarship and asserts violations of the Sherman Antitrust Act by the NCAA and its member institutions by conspiring to unreasonably restrain economic activity.

Alston argues that the NCAA and its member institutions are in violation of the Sherman Act. The act’s purpose is to prohibit competitors from conspiring to unreasonably restrain economic activity. The Alston case is currently consolidated with others seeking to challenge the cap on compensation, but the case is unique in that it seeks monetary damages for student-athletes that received scholarships before scholarships were increased to include cost of attendance.

The groundswell of legal decisions supporting student-athletes’ rights has come from the National Labor Relations Board as well. The NLRB recently referred to student-athletes as “statutory employees” in a ruling declaring football players at Northwestern University have a right to freely express themselves in the media. While generally unrelated to the pending cases challenging on anti-trust grounds, the NLRB decision is clearly part of a growing trend.

It will be interesting to see how the NCAA continues to evolve in light of O’Bannon and the other pending lawsuits. Wholesale changes are unlikely at this point, but the NCAA did recently increase the amount of aid schools can provide athletes in the form of scholarships, taking into account estimated values of travel, clothing and food.

Several conferences already increased the aid to student-athletes before the O’Bannon litigation came to a close. It is clear that these cases are having an impact.

While O’Bannon is over and may not have had the immediate desired effect for student-athletes, the full breadth of potential ramifications have yet to be felt. The publicity surrounding the case brought the issue to the forefront and collegiate athletes are now far more likely to speak out.

Former Northwestern quarterback Kain Colter’s NLRB fight was but one example. Wisconsin basketball star Nigel Hayes’ subtle protest at ESPN’s “College Gameday” last weekend was yet another.

From a precedential standpoint, the O’Bannon decision is sure to be cited by the Jenkins plaintiffs. A win for Jenkins is far from guaranteed, but its impact could be far reaching. When viewed from a historical lens the O’Bannon case may be seen as the impetus for sweeping reform, whatever form that change ultimately takes.

Brian C. Konkel is an attorney in the sports law practice group at Duggan, Bertsch LLC. The sports law practice group is all-encompassing but focuses on the litigation needs of players, coaches, teams and schools. He can be reached at bkonkel@dugganbertsch.com.


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