NCAA Fails to Dismiss Antitrust Claims
The National Collegiate Athletic Association has lost a bid to dismiss antitrust claims over its commercial use of the names and likenesses of former collegiate athletes.
In a 24-page ruling issued on Friday, U.S. District Judge Claudia Wilken in Oakland refused to dismiss a lawsuit brought against the NCAA by 25 former student-athletes. Wilken ruled that the athletes adequately pled that the NCAA violated the Sherman Antitrust Act by blocking them from licensing their names and likenesses to video game publishers and other companies.
Student athletes sign an NCAA waiver relinquishing all rights to the commercial use of their names and likenesses, even after they graduate. The NCAA has lent the players' names and likenesses to various commercial ventures, including a popular video game from Electronic Arts Inc. (EA) called "NCAA Football."
In 2009 a retired basketball player named Edward O'Bannon Jr. brought an antirust case against EA, NCAA and the NCAA's licensing arm, the Collegiate Licensing Company. In 2010 O'Bannon's case was consolidated with a similar one filed by former University of Nebraska quarterback Sam Keller. The case eventually grew to include 25 named plaintiffs, who alleged violation of their publicity rights, as well as antitrust violations.
The named plaintiffs have said that they will seek class action status, and that they want the class to include current players as well as former ones. (Because student athletes can't get paid while in college, money generated by their names and likenesses would be held in a trust until their graduation.)
In a January decision, Wilken wrote that she's open to hearing arguments that the certified class should include current athletes. The plaintiffs got even more good news in August when the U.S. Court of Appeals for the Ninth Circuit rejected an argument by EA that it has a First Amendment right to use the likenesses.
Dismayed with those rulings, and no doubt wary of losing the battle over class certification, EA and CLC opted to settle for a combined $40 million on September 27. The NCAA, meanwhile, said it would continue with its defense. Ten days before EA and CLC settled, the NCAA's lawyers at Schiff Hardin filed a motion to dismiss the antirust part of the case. They argued that those claims are simply a challenge to the long tradition of amateurism in college sports. In a 1984 decision called NCAA v. Board of Regents of the University of Oklahoma, the U.S. Supreme Court wrote that the NCAA should have "ample latitude" to preserve the "academic tradition" in collegiate sports.
Wilken rejected that legal argument in Friday's decision. NCAA v. Board of Regents concerned TV broadcasting rights and "provides only limited guidance in cases involving claims by student-athletes," she concluded. The case "does not stand for the sweeping proposition that student-athletes must be barred, both during their college years and forever thereafter, from receiving any monetary compensation for the commercial use of their names, images, and likenesses," she wrote.
The antirust plaintiffs are represented by Hausfeld and Hagens Berman Sobol Shapiro. Hagens Berman partner Steve Berman was not immediately available for comment. Robert Wierenga of Schiff Hardin, who represents the NCAA, was also unavailable for comment.