By Gregg E. Clifton, of Jackson Lewis
United States District Court Judge Claudia Wilken has ruled that the NCAA is in violation of federal antitrust laws by prohibiting major college football and men’s basketball student-athletes from receiving compensation for the use of their names, images and likenesses in broadcasts and video games.
Following a three week non-jury trial in June, Judge Wilken ruled in favor of a group of plaintiffs led by former UCLA basketball player Ed O’Bannon. O’Bannon sued the NCAA and alleged that the organization had violated antitrust laws by working with schools and conferences to make sure the student-athletes never received a share of the revenues generated from the use of their images in broadcasts and video games. The plaintiffs gave up their right to seek potential monetary damages in a pretrial decision to avoid having the case heard by a jury.
In a 99-page decision, the judge issued an injunction prohibiting the NCAA from enforcing its rules on money given to athletes for the use of their names, images and likenesses. Specifically, Judge Wilken found, “The challenged NCAA rules unreasonably restrain trade in a market for certain educational and athletic opportunities offered by NCAA Division I schools.”
Rejecting the numerous arguments offered by the NCAA during the trial to support its operational model, Judge Wilken considered the NCAA’s rationale but stated, “the justifications offered by the NCAA do not justify this restraint and could be achieved through less restrictive means” while still protecting the competition.
However, the judge’s decision did provide a small victory for the NCAA. While finding the current NCAA policies in violation of federal law, Judge Wilken did acknowledge that the NCAA could set a cap on the money paid to athletes as compensation for the use of their names and likenesses as long as the NCAA permitted at least $5.000 per athlete per year of competition for players at major football and basketball schools. Her injunction allows the money to be set aside in a trust for every year an athlete remains academically eligible to compete. The money would be paid to the athlete upon the expiration of his eligibility or graduation, whichever comes first. Specifically, Judge Wilken stated, “the NCAA’s witnesses stated their concerns about student-athlete compensation would be minimized or negated if compensation was capped at a few thousand dollars per year.”
While authorizing the creation of this compensation trust, Wilken stopped short of allowing athletes to receive money for endorsing commercial products.
“Allowing student-athletes to endorse commercial products would undermine the efforts of both the NCAA and its member schools to protect against the ‘commercial exploitation’ of student-athletes,” Wilken ruled.
NCAA Chief Legal Officer Donald Remy disagreed with certain aspects of the Judge’s decision. A few days after the decision, he announced the NCAA would appeal, issuing the following statement:
“We remain confident that the NCAA has not violated the antitrust laws and intend to appeal. We will also be seeking clarity from the District Court on some details of its ruling.
“It should be noted that the Court supported several of the NCAA’s positions, and we share a commitment to better support student-athletes. For more than three years, we’ve been working to improve the college experience for the more than 460,000 student-athletes across all three divisions. On Thursday, the Division I Board of Directors passed a new governance model allowing schools to better support student-athletes, including covering the full cost of attendance, one of the central components of the injunction. The Court also agreed that the integration of academics and athletics is important and supported by NCAA rules.
“Further, the Court rejected the plaintiffs’ claims that the NCAA licensed student-athletes’ names, images and likenesses to EA Sports or anyone else. It also rejected the plaintiffs’ proposed model where athletes could directly market their names, images and likenesses while in college.
“We look forward to presenting our arguments on appeal, and in the meantime we will continue to champion student-athlete success on the field and in the classroom.”
