Tuesday, November 19, 2013

O’Bannon Antitrust Class Action Against NCAA Survives Pleading Challenge

On October 25, United States District Court Judge Claudia Wilken denied the National Collegiate Athletic Association's motion to dismiss the civil class action complaint of a group of former Division I college basketball and football players. Led by former UCLA basketball star Ed O'Bannon, the players are suing the NCAA for alleged violations of the Sherman Antitrust Act. The lawsuit also named two other defendants, EA Sports and Collegiate Licensing Company (CLC). Notably, both are reported to have reached a confidential settlement with the plaintiffs in September 2013. 

The District Court's decision removes one of the last obstacles standing in the way of the plaintiff's motion for class certification, which, if granted, would allow the plaintiffs to try the case on the merits. If a jury finds in the plaintiffs' favor, the NCAA could conceivably be faced with a judgment in the billions of dollars. The parties have already briefed the class certification motion and the court has heard oral argument; they now await a decision from Judge Wilken.

Essentially, the lawsuit claims that the NCAA impermissibly required student athletes to relinquish all rights in perpetuity to the commercial use of their names, images, and likenesses, including after they graduate and are no longer subject to NCAA regulations. The claims against the NCAA concern the use of players' names and images in both live and archival broadcasts and footage, while the claims against CLC and EA Sports concern the same use in paraphernalia, such as jerseys, and in video games, where player-avatars are modeled after and closely resemble actual players. The former players claim that the defendants conspired to unfairly and unlawfully deprive them of their right to receive compensation for such.

The NCAA's motion to dismiss the operative complaint was based primarily on an argument stemming from a 1984 US Supreme Court case, NCAA v. Board of Regents, in which the Court commented in dicta that not paying student-athletes was necessary to "preserve the character and quality of the NCAA's product." However, Judge Wilken rejected this premise, noting that, in the Board of Regents case, the Supreme Court "focused on a different set of competitive restraints than the rules challenged in this case,” … “never even analyzed the NCAA's ban on student-athlete compensation under the rule of reason” – which is one of the factors for analyzing an antitrust claim – "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.'"

Although its co-defendants opted to settle the plaintiffs' claims rather than risk certification of the class and a potentially-enormous judgment, the NCAA has vowed that it will contest this lawsuit all the way to the Supreme Court, if necessary. In fact, the same day that Judge Wilken denied its motion to dismiss, the NCAA sought leave of the Supreme Court to intervene in a separate but related action regarding rights of publicity.

Maidie E. Oliveau
Counsel
Stanley G. Stringfellow II
Associate
Arent Fox, Los Angeles
maidie.oliveau@arentfox.com
stanley.stringfellow@arentfox.com

This article originally appeared on the Arent Fox internet site on 1 November. You can access the original by clicking here.


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