By Edward Schauder of Davidoff Malito & Hutcher LLP
(What follows is a summary of the recently decided In Re NCAA Student-Athlete Name & Likeness Licensing as well as two underlying cases.)
On a May 2, 2011 order, a federal court granted video game maker Electronic Arts, Inc.’s motion to dismiss the claim a group of former student athletes for failure to state a claim in an antitrust case.
The court found that the plaintiffs had failed to adequately allege in its claims “(1) that EA participated in a price-fixing conspiracy with use of their images, likenesses and names; and (2) that EA participated in a ‘group boycott refusal of the deal’ conspiracy for us of their images, likenesses and names.” The court granted the plaintiffs leave to amend to plead facts that would show that EA agreed to participate in the alleged conspiracies.
The plaintiffs additional allegations and EA once again moved to dismiss the complaint for failure to plead a sufficient factual basis “to suggest that EA entered into any agreement relating to an antitrust conspiracy with NCAA and CLC.” Furthermore, to plead a claim for a violation of § 1 of the Sherman Act, the plaintiffs must plead facts that suggest the existence of “a contract, combination or conspiracy among two or more persons or distinct business entities that intended to impose an unreasonable restraint of trade.” There must be a meeting of the minds over a concerted, anti-competitive product.
The first claim the court analyzed was the allegation of Price-Fixing Conspiracy. EA alleged that the plaintiffs’ claims fell into two categories: “(1) allegations regarding EA’s efforts to obtain additional rights to use student-athlete names and likenesses; and (2) allegations regarding EA’s alleged use of student-athlete publicity rights.” EA believed that these allegations were not sufficient to state a claim that EA agreed to take part in an antitrust price-fixing conspiracy.
However, the court found that the plaintiffs added an allegation that was important — EA agreed to follow the NCAA’s rules regarding the prohibition on compensating current NCAA student-athletes, and also agreed to not compensate former NCAA student-athletes. The court found that EA has compensated former student-athletes in limited circumstances, such as using one on the cover of NCAA football. Because EA agreed to not compensate former student-athletes it went beyond the NCAA’s rules and requirements, which satisfied the pleading requirements because it showed that EA was actively participating in ensuring former student-athletes would not be compensated for their images, likeness and names. Motion to dismiss on this cause of action was denied.
The second claim by EA was that the plaintiffs’ claim should be dismissed because the plaintiffs have not adequately pled that “EA provided assistance necessary to NCAA’s efforts to maintain its rules barring compensation of student-athletes related to their athletic skills.” The allegation stated by the plaintiffs that EA went beyond the requirements of the NCAA by refusing to compensate former student-athletes meant that EA’s alleged agreement not to offer compensation helped further the NCAA and CLC’s boycott of compensation of former student-athletes. If EA was willing to pay the former student-athletes then CLC and NCAA efforts would be ineffective. The court found that EA failed to show how such an agreement would fit into the “rational legitimate commercial efforts.” The motion to dismiss by EA on this cause of action was denied.
The court also denied EA’s attempts to dismiss the plaintiffs’ common law claims because they are Sherman Act claims.
In Re NCAA Student-Athlete Name & Likeness Licensing, 2011 U.S. Dist. Lexis 82682 (N.D. Cal. 2011)
Underlying and Related Cases
Dryer v. National Football League, 689 F.Supp.2d 1113 (D. Minn. 2010)
In Dryer, former professional football players brought suit against the National Football League (“NFL”) alleging that the NFL violated their common-law and statutory rights of publicity when the NFL used video footage from the games in which these players played in promotional works such as the NFL’s “History” series. These videos were used to promote the NFL. The “History” series featured the Plaintiffs’ names and their images from when they were playing football.
The former players raised three complaints: 1) that the NFL’s use of their names and images was false endorsement under section 43(a) of the Lanham act, 15 U.S.C. § 1125; 2) the right of publicity under the common law and applicable statutes of the 50 states, in particular Minnesota, California, Texas, and Arizona; 3) the NFL was unjustly enriched because it used the Plaintiffs’ names and images without their permission to promote the NFL. In contrast, the NFL argued that the Plaintiffs’ claims were barred by the 1st amendment, preempted by the Copyright act, and that the players failed to make out a claim under the Lanham Act for false endorsement.
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The Minnesota District Court relied on a three-part test from Porous Media Corp. v. Pall Corp., 173 F.3d 1109, 1120 (8th Cir. 1999) in determining whether the speech constituted commercial speech or an advertisement for 1st amendment purposes. The court found that the films constituted commercial speech and therefore the “constitutional protection to be afforded the films may not outweigh Plaintiffs’ interests in their own identities” and denied the NFL’s motion for judgment on the pleadings in this regard. The court further held that the NFL’s defense that the Copyright Act, 17 U.S.C.§ 301, preempts any right-of-publicity claims the Plaintiffs may have is not applicable. The players claimed that the work at issue is not the videos themselves, but the players’ own identities. The court found that the right-of-publicity protects something very different from what the Copyright Act was designed to protect and accordingly therefore the NFL was not entitled to judgment as a matter of law on its Copyright preemption defense. The court further held that the unjust enrichment claim was not preempted by the Copyright act because the NFL did not infringe on a copyright, but instead the NFL infringed on the players’ own identities. Furthermore, the court also held that signing a contract that addresses the subject matter of an unjust enrichment claim does not void all future unjust enrichment claims ab initio.
Finally, the court also shot down the NFL’s Lanham act defense at this stage in the proceedings. The court held that it could not employ the applicable tests to determining solely on the pleadings that the NFL’s use of the players’ names and images was explicitly misleading or confusing. Accordingly, the NFL’s motion for judgment on the merits was denied.
Keller v. Electronic Arts, Inc., 2010 WL 530108 (N.D. Cal 2010)
In Keller, the Plaintiff was the former starting Quarterback from Arizona State University and the University of Nebraska football teams. The Plaintiff sued Electronic Arts (“EA”), an interactive software developer because their “NCAA Football” videogame series featured a college football athlete that was nearly identical to himself and therefore EA had used his likeness without his permission. The Plaintiff further named the National Collegiate Athletics Association (“NCAA”) and Collegiate Licensing Company (“CLC”) as co-defendants alleging that these associations negotiated the agreements that underlie EA’s use of the Plaintiff’s likeness without his permission. Plaintiff further alleged that the NCAA violated his Indiana right-of-publicity because the NCAA “expressly reviewed and knowingly approved each version of each NCAA-brand videogame.” However, the court dismissed this claim with leave to amend to allege that the NCAA used or conspired with others to violate his right-of-publicity under Indiana law.
The court next addressed the applicability and possibly violation of the Plaintiff’s right-to-publicity claim under California law. The Defendants attempted to employ a transformative use defense to the right-of-publicity claim asserting that the challenged work is protected by the 1st amendment because “it contains significant transformative elements or that the value of the work does not derive primarily from the celebrity’s fame.” The court relied on two cases particularly persuasive in making its decision, Winter v. D.C. Comics¸ 30 Cal.4th 881, 885, 134 Cal.Rptr.2d 634 (2003) and Kirby v. Sega of Am., Inc., 144 Cal.App.4th 47, 55, 50 Cal.Rptr.3d 607 (2006). The court found that while the EA videogame contained transformative elements, the cases cited above focused on the depictions of the individual plaintiffs, not the content of the other portions of the book. Applying that rules to the game, the court focused on the Plaintiff and his depiction in “NCAA Football” and not the game’s other elements. Therefore, the court found that the transformative use defense was not applicable.
The court also found that the Public Interest defense under California law was not applicable because the NCAA Football videogame allowed the consumer to assume the identity of the various athletes and also allowed the videogame player the opportunity to play simulated games as the player. The defendants attempted to cite a variety of other situations involving sports and simulated games in which the Public Interest defense was held as applicable, but the court nonetheless dismissed such claims and found that EA was not entitled to the public interest defense in its motion to dismiss.
The defendants next attempted to employ California Civil Code section 3344(d) that provides a public affairs exception to the statutory right of publicity. The court found that section 3344(d) requires “reporting” of public affairs, and that the use of Plaintiff’s likeness in the videogame extends beyond reporting and was not applicable.
The court went on to find that the Plaintiff sufficiently plead that there was a civil conspiracy claim because it alleged that the NCAA knew of the principles barring the licensing of student-athlete and their images and identities but went along with EA anyways. Furthermore, CLC’s agent immunity defense was insufficient at this early stage of the proceedings. Plaintiff also claimed breach-of-contract, but was unable to identify a contract that he was seeking to enforce and accordingly the court dismissed the claim. Additionally, the court let Plaintiff’s unjust enrichment claim stand finding that the breach-of-contract allegation did not bar the claims and that it was not clear if the alleged contract with the NCAA defined any rights between Plaintiff and EA.
Finally, EA employed an Anti-SLAPP motion to strike the claims under California Civil Code 425.16 to strike all of Plaintiff’s claims against it. The court also struck down this attempt finding that the challenged action arises from protected activity and that the Plaintiff sufficiently showed the probability of success on the merits.
The court denied in part the defendants motion to dismiss, but dismissed the claims with leave to amend regarding the breach-of-contract action and the violation of Indiana right-to-publicity law.
James Floyd, a summer associate at Davidoff Malito & Hutcher LLP, assisted in the preparation of the above summaries.
