A federal court judge on Friday denied an NCAA motion to dismiss a major challenge to the economic model of big-time college sports in a ruling strongly siding with players asking the court to allow them to be compensated for their images and likenesses in television and other media products.
The decision was the latest blow to the NCAA, the lone defendant left in what has become known as the Ed O'Bannon antitrust case. EA Sports, the video game manufacturer, and the Collegiate Licensing Company, which represents the NCAA and member schools in trademark opportunities, recently agreed to settle the case with the plaintiffs for $40 million.
"It is a significant ruling and clears the path for student-athletes to secure some measure of fairness," said Rob Carey, the lawyer for some of the 20 players who have filed a consolidated claim.
Next up for Judge Claudia Wilken is issuing an opinion on whether to certify the players' claim as a class action, which would bring thousands of current and former players into the case and grow the potential damages into the billions, should the NCAA eventually lose at trial.
"It's a relief," said Sonny Vaccaro, an NCAA critic who has advised the plaintiffs' attorneys. "There are no more options for the NCAA in getting this case thrown out [on procedural grounds]. She just keeps moving it forward, and now the players have some closure. They will get their day in court. That's all you can ask for."
After the ruling, NCAA chief legal officer Donald Remy released a statement saying the ruling wasn't a total loss for the governing body.
"We continue to believe the rules establishing the revered traditions of college sports are fully consistent with the antitrust laws, as the United States Supreme Court and other courts have repeatedly made clear," Remy said. "Today's decision means that this issue will be decided at a later stage in this proceeding, and we look forward to that opportunity.
"Importantly, the Court also recognized that the First Amendment presents serious questions regarding plaintiffs' new claims concerning the alleged use of names, images and likenesses in live broadcasts of football and basketball games. We expect to seek judgment in our favor on these new live broadcast claims in our upcoming summary judgment motion."
In its court filings, the NCAA made several arguments for dismissing the players' claims before the class certification stage. Most significantly, the organization contended the claims are "nothing more than a challenge to the NCAA's rules on amateurism" and must be rejected because, in the NCAA's view, the Supreme Court already ruled in 1984 that players cannot be paid.
That case stripped the NCAA of its ability to control television rights, handing them over to individual schools and conferences. But buried in the middle of the majority opinion, written by former Justice John Paul Stevens, was the following sentence: "In order to preserve the character and quality of the [NCAA's] 'product,' athletes must not be paid, must be required to attend class, and the like."
The NCAA has long used that sentence to justify its model in the courts. But Wilken rejected that language, from the case known as NCAA v. Board of Regents, as the law of the land.
"[That case] focused on a different set of competitive restraints than the rules challenged in this case," Wilken wrote. "Indeed, the Supreme Court never even analyzed the NCAA's ban on student-athlete compensation under the rule of reason nor did it cite fact findings indicating that this is the type of [restraint] which is 'essential if the [NCAA's] product is to be available at all.'
"While Board of Regents [gives] the NCAA 'ample latitude' to adopt rules preserving 'the revered tradition of amateurism in college sports,' it does not stand for the sweeping proposition that student-athletes must be barred, both during the college years and forever thereafter, from receiving any monetary compensation for the commercial use of their names, images and likenesses."
Experts noted that although the case was filed more than four years ago, it's still at a relatively early stage when the plaintiff's arguments are given considerable leeway. In 2006, players passed the class certification hurdle with a federal judge in a case, White vs. NCAA, that challenged the NCAA's prohibition on schools covering the full cost of attendance -- an amount about $2,500 more than the annual value of an athletic scholarship.
The players ended up settling with the NCAA in a manner that didn't produce any real change in the model. The NCAA shifted $10 million into an educational fund that qualified athletes could tap into. The plaintiffs' lawyers feared challenging the Supreme Court language about not paying players, said Ernie Nadel, a Bay Area economist who worked on and inspired the lawyers to take up the White case.
"I told them it's just dicta," said Nadel, using a legal term that refers to an opinion that is authoritative but not binding. "They said, 'Oh, but it's very strong dicta.'"
Wilkens' forceful opinion, supported in her ruling by citing language from other court decisions, debunks that notion, Nadel said.
"It's basically the judge saying the king has no clothes," he said. "There is no Supreme Court protection for the NCAA's position that players cannot be compensated. She's saying we have to stop pretending that it's a Supreme Court mandate."
Marc Edelman, a law professor at the Zicklin School of Business at Baruch College (N.Y.), who has written extensively on antitrust issues and college sports, said the NCAA will be in a tough spot if the class gets certified.
"The NCAA has run with the statement for 30 years [that players cannot be paid]," Edelman said. "The court today explicitly rejected that. If the class action is granted, the NCAA's chances of maintaining the status quo are dismal. Now that the plaintiffs are able to challenge NCAA on the merits of its case, there is [a] very strong chance that O'Bannon will prevail."
Wilken gave the NCAA two weeks to file an answer to her order.
Remy has said the NCAA will fight all the way to the Supreme Court, a venue Edelman expects will eventually take up the case if given the opportunity.
But Ramogi Huma, president of the National College Players Association, an advocacy group backed by the United Steelworkers union, said he wonders whether NCAA member schools will allow the organization's legal team to push it that far without entering into settlement talks.
"Class certification will be the game-changer in terms of momentum, and also pressure -- real, true pressure to do something so the NCAA doesn't lose control of a multibillion-dollar industry," he said. "At the end of the day, the conference commissioners will control what happens."