The NCAA’s Current Legal Argument in O’Bannon

Last week the NCAA made its second major attempt to quash the class-action lawsuit headlined by Ed O’Bannon regarding student-athlete likenesses and their use in video games and game broadcasts. Along the way the plaintiffs have won a number of victories, but no more important than defeating the NCAA’s motion to strike new claims from the case. Now the NCAA is opposing the heart of the matter: certification of the class.

A little background is in order. The O’Bannon plaintiffs originally focused on the use of current and former student-athlete likenesses in video games. Last year, the plaintiffs amended their complaint and raised an issue of a different magnitude: use of student-athlete likenesses in game broadcasts. This would attack not video game revenue, with a relative pittance for the NCAA and schools, but television revenue, the lifeblood of the NCAA, conferences, and many schools. The NCAA filed a motion to strike, essentially saying it was a bait-and-switch. The judge did not agree, so the NCAA has filed its motion against certification of the class.

The NCAA’s argument against certification of the class is multi-faceted, but comes down to one central issue: that there are no enough issues common to all class members. In class action litigation, there must be enough issues common to all members of the class and all members of the class must be entitled to roughly equal damages. Otherwise, the claims must be litigated separately.

The NCAA relies heavily on its victory in a case regarding scholarship limits. Walk-on football players filed a class action against the NCAA arguing that in the absence of the 85 scholarship limit, they would have received full athletic scholarships. The court in that case refused to certify the class, because each player would have to prove individually that he would have received a football scholarship.

In addition, damages were not equal across the entire class. Schools would not award an infinite number of scholarships in the absence of NCAA limits, so each athlete who could prove he would have gotten a scholarship means some other athlete would not have not gotten one. These conflicts within the proposed class helped keep the class from being certified which ultimately ended the case.

In the O’Bannon case, the NCAA uses the same two theories to attack the work of Roger Noll, an expert economist on the plaintiff’s side. According to the NCAA, Noll argues that in the absence of NCAA amateurism rules, student-athletes would have sold their broadcast rights as a group license, with every student-athlete on the team being paid the same amount.

The NCAA jumped on some of the admittedly more absurd outcomes under such a scheme, like how a walk-on basketball player at Stanford would have made over $300,000 selling his broadcast rights, but Andrew Luck would have made about $40,000. This, the NCAA claims, illustrates the lack of common issues amongst the class and the conflicts within it. Because athletes would not agree to such a system in the free market, each athlete must prove what his broadcast rights are worth. Each athlete who proves he deserves a bigger portion of TV revenue reduces how much the rest of class has to fight over.

The NCAA also raises a number of defenses to the claim that athletes have broadcast rights to sell in the first place. The NCAA points to the First Amendment, copyright law, and some state laws to argue that athletes do not have a publicity right they can sell in sports broadcasts. The state laws would be especially problematic for the plaintiffs as they raise a major issue that cannot have a common answer for the entire class.

The oddest thing about the NCAA’s filing opposing certification of the class is that it does not really explain why the NCAA is not liable at all. Instead what it does is explain why each athlete should have to file a separate lawsuit. But in doing so, the NCAA is required to blueprint how it could be picked to death by hundreds or thousands of individual lawsuits over the next decade.

The hearing on class certification is set for June of this year, with trial to commence in July 2014. The moral of the story so far is that neither side has dealt a crushing blow, and each believes it has a very strong hand to play in the coming months and years.

Posted on by John Infante
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One Response to The NCAA’s Current Legal Argument in O’Bannon

  1. NCAA BBALL Tourney Represents Bad Timing for NCAA says:

    The NCAA’s argument about a walk-on in one sport receiving 300k while a star QB in another sport receives 40k as evidence that such a system would be clearly not “common-sensical” is a bad, and losing argument.

    The sports scene is littered with “free market” examples of athletes who’s split of a guaranteed TV money is a very small amount, with the stars of the sport receiving comparatively much less than other ancillary entities (see NASCAR, PGA, PBR, TV revenue payouts for NFL players vs. NFL referees, ect). The athletes and competitors agree to these deals since the lions share of their revenue will flow from prize money and endorsements.

    With the NCAA basketball tournament set to kick off, this is an especially troubling example for the NCAA, as their “credit” system, which is literally millions of dollars of prize money per tournament win, is paid entirely from TV revenue, and completely in consideration of which teams “win”. This then stands to reason, that star basketball players will actually make more money (that’s common sense) then walk-on players on bad teams, or players of other sports who’s tournament is not so highly regarded (again common sense). With the NCAA’s new Football Playoff set to kick off, and the TV revenue earned therein, it similarly stands to reason that star FB players who play in, and advance within the NCAA tournament, will earn more money than walk-on players on bad teams, or players in other sports who’s playoff system is not so highly coveted (again, that’s just common sense). Agreeing to a small guaranteed split of TV money for all, in return for a share of the TV money in the form of prize money is standard business practice for individual athletes and competitors, and the NCAA even currently (see the NCAA bball credits) does the same. The only iteration is paying the players, instead of the “school” / administrators.

    Thus, the NCAA cannot possibly claim “athlete’s wouldn’t agree to any sort of uniform revenue split, because such an outcome would defy common sense” when the exact system they set-up itself defies commone-sense. The NCAA prohibits athletes from receiving endorsements and prize money (the revenue stream available to every other competing athlete (yes, even Olympic runners despite the singlet prohibition)), yet athletes still agree to play and sign up in droves. Arguing “common sense” when the system itself is completely uncommon-sensical is a bad argument, since, by definition, the athletes would indeed agree to such a deal since because of the NCAA’s own illogical and unreasonable operating bylaws and competition framework.

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