By Jeff Birren
It is undeniable that law students across the country are currently preparing law review articles on the Ninth Circuit ruing in Ed O’Bannon v. NCAA (802 F. 3d 1049, (9th Cir. 9-30-15). The Supreme Court did not reject the NCAA’s cert. petition under October 2016 so the case is ripe for sports law professors and law students to debate. However, even as that case is analyzed and argued about, the legal impact of that ruling continues to be thrashed out in Martin Jenkins v. NCAA before the same district court judge who heard O’Bannon. To make sense of that, one must step back in time.
The O’Bannon case was scheduled for a bench trial in June 2014. The plaintiffs sought not damages but various injunctions to prohibit the NCAA from continuing to enforce various rules limiting financial aid and compensation college football players and men’s basketball players could receive. The plaintiffs had repeatedly beat back motions to dismiss, summary judgment and interlocutory appeals to the Ninth Circuit.
In March 2014, the firm of Winston & Strawn filed a 45-page antitrust complaint against the NCAA. Tens of pages of florid prose led to a single claim for violation of Section 1 of the Sherman Act, 15 U.S.C. 1 et seq. The case was filed in United States District Court in New Jersey. Jeffrey Kessler served as the public relations voice of the case. He stated publicly that the “main objective is to strike down permanently the restrictions that prevent athletes in Division 1 basketball and the top tier of college football from being fairly compensated for the billions of dollars in revenues that they help generate…We’re looking to change the system. That’s the main goal. We want the market for players to emerge” (“Jeffrey Kessler files against NCAA,” Tom Farrey ESPN.com, March 18, 2014). The law firm had geared up for the case in part by hiring Tim Nevius, a former investigator for the NCAA in rules violation cases.
This case was sent to Judge Claudia Wilken — then presiding judge of the U.S. District Court for the Northern District of California — who was the trial court judge for O’Bannon. Once before Judge Wilken, the NCAA wasted no time in filing a motion to dismiss, claiming that prior rulings in the O’Bannon matter negated the allegations of the complaint. Judge Wilken denied the motion without a written explanation on October 10, 2014,(Martin Jenkins et al., v. NCAA, No. C 14-2758 CW, Docket No. 86 (Subsequent references to the written record will refer to “Jenkins, Docket No. __).
The case proceeded, though most remained focused on the O’Bannon trial. That began in June, 2014, and after a three-week bench trial, Judge Wilken ruled for the O’Bannon plaintiffs on August 8, 2014 (7 F.Supp. 3d 955 (N.D. Cal, 2014)). Judge Wilken found that the NCAA had violated the antitrust laws and enjoined the NCAA from enforcing two rules. The first rule capped the so-called grant-in-aid, the athletic scholarship to amounts that were often thousands of dollars below the actual cost of attending the college. She also enjoined the NCAA from preventing schools from setting up deferred compensation accounts for players, and allowing the member institutions from placing up to $5,000 annually in a deferred compensation account for each Division 1 basketball and tier one football player. In simple terms, this meant delayed compensation for those college athletes. Three months later Judge Wilken granted class certification in Jenkins and in In Re National Collegiate Athletic Association Grant-In-Aid Cap Antitrust Litigation (No. 4-md-02541-CW and 4:14-cv-02758-CW Docket No, 305). Those plaintiffs were now on solid ground, seeking unlimited compensation for the college athletes. Then came the bomb, bursting in air over the heads of everyone involved in all of the college cases.
On September 30, 2015, the Ninth Circuit ruled in the O’Bannon case, 802 F.3d 1049 (Ninth Cir. 2015)). The Ninth Circuit swept aside all of the NCAA’s defenses as a matter of law, and upheld the district court injunction as related to the cost of actual attendance. However, it struck down the ruling that had allowed deferred compensation. The district court “clearly erred” in this regard (Id. at 1077). The Court found that the evidence relied upon was “threadbare” and ultimately, paying the athletes above educational expenses “is a quantum leap,” (Id. at 1080). The Court also acknowledged “the Supreme Court’s admonition that we must afford the NCAA ample latitude to superintend college athletics, Bd. Of Regents, 468 U.S. 1t 120” (Id.).
Both sides sought filed petitions for certiorari in the Supreme Court, so O’Bannon’s ultimate impact on Jenkins remained uncertain. The parties stipulated to several case deadlines in May 2016. That included a fact discovery deadline, a deadline for expert discovery, deadlines for dispositive motions and a September 19, 2017 hearing date for dispositive motions (Jenkins Docket No. 390).
Yet one thing remained clear: the Ninth Circuit had struck down the ruling that had granted deferred compensation to college athletes. Buoyed by that ruling, the NCAA again filed a motion for judgment on the pleadings in Jenkins and the consolidated case. The NCAA sought to dismiss Jenkins in its entirety, since the thrust of the Jenkins case was to seek compensation for those athletes. That motion seemed altogether logical following the O’Bannon decision. The plaintiffs fought back, since their entire case depended upon getting past that motion. Their opposition was filed on May 31, 2016 (Jenkins Docket No, 214). The opposition made it abundantly clear that the “classes suffer antitrust harms by being undercompensated for the services they offer as student-athletes” (Id. at 1). The motion goes on to claim that since they were making different claims than the O’Bannon plaintiffs, they would build a very different factual record and that O’Bannon did not bar their attempts to seek compensation. It was not “squarely addressed” by the Circuit (Id. at 12), the new cases involve “different plaintiffs asserting different claims and seeking different relief” (Id.). The plaintiffs seized upon the O’Bannon language that the record was “threadbare” and repeated throughout, almost as a mantra, that the cases were different (Id. at 13). In a last ditch effort to avoid O’Bannon, the Jenkins plaintiffs asked the court to delay ruling until after the time it would remand the case to the New Jersey district court, where, happily enough for the plaintiffs, O’Bannon would not be controlling (Id. at 18/19). That last thought did not impress Judge Wilken and the hearing on the NCAA’s motion to dismiss was held on August 2, 1016 (Jenkins Docket No. 453).
Judge Wilken must have known how she would rule since the written order denying the motion followed three days later. However, she did not buy the plaintiffs’ argument that they should be permitted to make a new record in their attempts to seek unlimited compensation. Judge Wilken instead held that the O’Bannon decision “simply forecloses one type of relief Plaintiffs previously sought: cash compensation untethered to education expenses. While O’Bannon is binding on this Court, it cannot provide the basis for judgment on the pleadings… The Ninth’s Circuit decision in O’Bannon limits the types of relief Plaintiffs may seek but it does not provide a basis upon which a judgment on the merits can be rendered” (Jenkins Docket No. 459). What is now left apparently is the plaintiffs’ claims for other “’benefits and ‘in-kind’ compensation” (Id.). The term “benefits” was in the original prayer for relief, but the obvious thrust of the complaint was the rules that limited “enumeration” for the college athletes. It remained a matter of curiosity to see what those non-cash “benefits” and “in-kind compensation” will turn out to be in the hands of lawyers seeking statutory attorney fees.
Thus, the Jenkins case goes forward, but as a mere shadow of its former self. A damages class certification motion will be heard sometime in early 2017, and that should give a better idea of what sorts of things the plaintiffs will be seeking (Jenkins Docket No. 522). Whatever that might turn out to be, it cannot include the explicit compensation that was sought when the case was filed over two-and-a-half years ago.
Birren is the former general counsel of the Oakland Raiders.
