Thousands of current and former NCAA student-athletes have reached a landmark settlement with video game maker EA Sports and the Collegiate Licensing Company (CLC) over the unauthorized use of their names and likenesses, an agreement that could have far-reaching implications for the business of collegiate athletics.
“Today’s settlement is a game-changer because, for the first time, student-athletes suiting up to play this weekend are going to be paid for the use of their likenesses,” Eugene Egdorf of the Lanier Law Firm told Sports Litigation Alert. “We view this as the first step toward our ultimate goal of making sure all student-athletes can claim their fair share of the billions of dollars generated each year by college sports.”
The parties submitted a notice announcing their agreement to the U.S. District Court for the Northern District of California on September 26. According to the notice, the settlement terms will be submitted to the court soon for approval. The NCAA is not part of the settlement and remains as a defendant. Earlier in the day, EA Sports announced on its website that the company will not produce a college football game next year.
EA Sports was sued over its unapproved use of students’ likenesses and physical descriptions in the company’s popular “NCAA Football” and “NCAA Basketball” video games. CLC faced similar claims based on the sale of items branded with college athletes’ names.
Egdorf’s firm (http://www.lanierlawfirm.com), along with lead trial attorney Tim McIlwain (http://www.mcilwainlaw.com/home), represent former Rutgers University quarterback Ryan Hart, who originally filed his claim against EA Sports in 2009. Similar cases have been filed on behalf of former UCLA basketball star Ed O’Bannon, former University of Cincinnati and professional basketball great Oscar Robertson, former West Virginia University running back Shawne Alston, and University of Nebraska quarterback Sam Keller.
In May, the U.S. Court of Appeals for the Third Circuit in New Jersey reversed an earlier district court ruling by denying EA Sports’ attempt to dismiss Hart’s lawsuit based on claims of First Amendment free speech protections. The U.S. Court of Appeals for the Ninth Circuit in California similarly rejected EA Sports’ claims for First Amendment protections in Keller’s case with a ruling handed down in July.
EA Sports Responds
“This is as profoundly disappointing to the people who make this game as I expect it will be for the millions who enjoy playing it each year,” said Cam Weber, the general manager of American football for EA Sports, in a statement.
“Just like companies that broadcast college games and those that provide equipment and apparel, we follow rules that are set by the NCAA —but those rules are being challenged by some student-athletes.
“The ongoing legal issues combined with increased questions surrounding schools and conferences have left us in a difficult position—one that challenges our ability to deliver an authentic sports experience, which is the very foundation of EA Sports games.”
The NCAA Remains a Target
Meanwhile, the NCAA was not a party to the settlement talks, and is preparing for trial. It had been reported that NCAA General Counsel Donald Remy has retained former U.S. solicitor Seth Waxman to handle appeals and the California-based firm of Munger, Tolles and Olson for trial work
“We’re prepared to take this all the way to the Supreme Court if we have to,” NCAA chief legal officer Donald Remy told USA Today. “We are not prepared to compromise on the case.”
For his part, Steve Berman, managing partner of Hagens Berman and lead attorney in the Keller litigation, said his firm is “looking forward” to presenting its case “against the NCAA to a jury at trial. We believe the facts will reveal a startling degree of complicity and profiteering on the backs of student athletes.”
Next Steps After the Settlement
Michael McCann, Professor of Law and Director of the University of New Hampshire’s Sports & Entertainment Law Institute, believes the judge overseeing the settlement will make some requirements of the parties.
“Before she approves any settlement, Wilken will demand details about how the settlement would impact college athletes,” McCann wrote. “She will want to know, for instance, which players are entitled to benefit from the settlement and what methodology will be used to determine how much money each player receives. Timing of payments will also be of interest to Wilken, such as whether current college players are compensated immediately or whether they have to wait until their NCAA eligibility expires.
Impact on Current Players
Joseph Hanna of Goldberg Segulla, who has been following the litigation, offered his thoughts of whether the settlement entitles current players to compensation.
“It’s unclear whether active players will be allowed to collect immediately or will have to wait until the end of their college careers,” he told Sports Litigation Alert. “The wait may be required by an NCAA rule that prohibits current players from receiving compensation.
“That rule, along with other issues, is being challenged by the players as the case proceeds against the NCAA. After EA’s announcement, the NCAA did not comment on the settlement but said that it would still fight its case. Its chief legal officer said they were ‘prepared to take this all the way to the Supreme Court if we have to.’
“The resolve to continue fighting is understandable given how much the NCAA has at stake. A settlement or loss at trial will change college sports dramatically and redefine amateur status in collegiate athletics.”
Was It a Good Deal for EA, CLC?
“By settling prior to Judge Wilken’s decision on class certification, EA and CLC are likely paying either a discount or premium depending on how Wilken decides,” wrote McCann in an article that appeared on SI.com. “Here’s why: the price tag of settlement from O’Bannon’s vantage point would be higher if Wilken certifies his class. A certified class would mean potentially tens of thousands of plaintiffs are suing EA and CLC instead of merely the handful of plaintiffs named by O’Bannon. Conversely, if Wilken declines to certify O’Bannon’s class, the case would become smaller and EA and CLC may have then paid more to settle than necessary. An analysis by SI.com of Wilken’s prior certification decisions suggests she will likely certify O’Bannon’s class. If she does, it would reflect well upon EA and CLC’s decision to settle.”
