The Weekly Longer NIL Thought.
@DarrenHeitner www.HeitnerLegal.com The Legal Solution to Solving Problems™
June 15, 2020.
It's the date that Case No. 4:20-cv-03919 was initiated in the U.S. District Court for the Northern District of California.
You may know of the case by the reference of House v. NCAA, which has made headlines in the recent past, and particularly over the past week, related to the NCAA and the Power conferences choosing to enter into a settlement agreement to avoid what could have been damages that forced the NCAA into bankruptcy (allegedly).
4 years ago, when House v. NCAA was initiated, multiple states considered laws to supersede the NCAA's complete prohibition on college athletes exploiting their NIL rights for commercial gain. The initial Complaint, later amended, was filed one year before the Supreme Court of the United States ruling 9-0 in NCAA v. Alston, striking down the NCAA's restrictions on college athlete education-related compensation.
Steve Berman and his law firm, HAGENS BERMAN SOBOL SHAPIRO LLP, filed the Complaint with a demand for a jury trial and a request to certify a class of plaintiffs. In the Introduction section of the 95-page Complaint, it stated that the NCAA "purports to protect college athletes from commercial exploitation, yet it has conspired to create an anticompetitive market where student-athletes are unable to benefit from the same opportunities that are available to their fellow classmates and powerless to realize the commercial value of their own NILs." It also pointed out that then-NCAA EVP of Regulatory Affairs, Oliver Luck, acknowledged in 2015 that "the name, image, likeness for an individual is a fundamental right—that any individual controls his or her name, image and likeness—and I don’t believe that a student-athlete who accepts a grant-in-aid simply waives that right to his or her name, image, likeness."
And then came the essence of the action: "Notwithstanding the existence of this right and its accompanying economic value, the NCAA and its members have committed violations of the federal antitrust laws and common law by engaging in an overarching conspiracy to: (a) fix the amount that student-athletes may be paid for the licensing, use, and sale of their names, images, and likenesses—at zero; and (b) foreclose student-athletes from the market for licensing, use, and sale of their names, images, and likenesses entirely. In addition to violating the antitrust laws, Defendants have also unjustly enriched themselves and their for-profit business partners."
Lawsuits, even in federal court, can sometimes be slow-moving. As the NIL landscape developed and matured beginning on July 1, 2021, the House v. NCAA case trucked along. But it wasn't until November 3, 2023, that the general public and media members started paying a lot of attention to it. And that is because that is the date that the Court delivered an order granting a motion for certification of damages classes.
In a 52-page decision, the Court certified 3 proposed damage classes. It took a case that was brought by a swimmer (Grant House), a basketball player (Sedona Prince), and a football player (Tymir Oliver) and turned it into one that included over 14,500 athletes. And all of a sudden, the NCAA and the Power conferences were faced with potential damages in the realm of billions of dollars.
There was always a risk that the Court would certify the proposed damage classes, but it was never guaranteed. The NCAA also held out hope that Congress would eventually intervene. Yet, Congress never served as the savior that the NCAA had hoped for.
Fast forward to May 2024. With the plaintiffs possessing massive leverage, the NCAA and Power conferences worried about an adverse final judgment, and all hope lost in Congress bailing out the NCAA, settlement talks started getting very serious. Leak after leak was offered to media members. And now, those parties named as defendants in House v. NCAA decided the ongoing risk is no longer worth it, even if the concept of amateurism must sink in the process.
There is still a long way to go before a settlement becomes official and binding on the parties. However, the plaintiffs and their counsel have been fighting this case for 4 years. They can handle waiting a few more months to let the process play out.
At the end of the day, many athletes who participated in college sports between 2016-2020 could receive a payout, many future college athletes could benefit from a new revenue-sharing system, and we will still see litigation play out depending on what types of restrictions to a free market the NCAA seeks to implement. Overall, it is a general win for athletes.
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