Judge denies NCAA's motion to dismiss antitrust lawsuit

Steve Berkowitz | USA TODAY Sports

A federal judge on Friday denied a motion from the NCAA to dismiss an antitrust lawsuit pertaining to the use of college athletes' names and likenesses.

The ruling, by U.S. District Judge Claudia Wilken, sets the stage for another key ruling that is pending in the case – whether to certify the case as a class action.

Video game manufacturer Electronic Arts and the nation's leading collegiate trademark licensing firm, Collegiate Licensing Co., have reached a proposed settlement in the case. That leaves the NCAA as the lone defendant in a suit whose named plaintiffs are a group of current and former college football and men' basketball players, including former UCLA basketball player Ed O'Bannon.

If the case is granted class-action status, many more plaintiffs could join the case and the damages at stake could be in the billions of dollars.

Michael Hausfeld, a lead attorney for plaintiffs, reiterated his willingness to discuss a settlement with NCAA lawyers and officials, saying Friday's decision "may finally convince or influence them to pull their heads out of the sand."

The NCAA's chief legal officer Donald Remy issued a statement in which he said, in part, the association expects "to seek judgment in our favor ... in our upcoming summary judgment motion" -- a request for a favorable ruling without a trial.

Wilken's basic ruling Friday -- that none of the NCAA's three arguments "provides grounds for dismissing Plaintiffs' claims at this stage" -- was not surprising. The case has been going for about 4 1/2 years, and plaintiffs' arguments are given a great deal of leeway on these types of dismissal motions at this stage.

However, what Wilken wrote in support of her ruling carries some potentially troubling signs for the NCAA. In the course of a 24-page opinion, Wilken indicated that the case should not be be bound by a 1984 Supreme Court ruling that the NCAA has relied upon to preserve its amateurism system. In addition, she let stand the plaintiffs' contention that NCAA rules forbidding schools from offering money to recruits for their labor or for the commercial use of their names and likenesses restrains competition for the athletes and results in lower compensation for the athletes than would otherwise exist in a more competitive market.

"These allegations are sufficient to state a Sherman (Antitrust) Act claim," she wrote.

Sports law icon and antitrust expert Gary Roberts -- former dean of the Indiana University law school in Indianapolis -- said that part of Wilken's opinion is "something that I think will undoubtedly give the NCAA some serious concern."

"If the judge considers the market in which Alabama and LSU and Ohio State compete for the top athletic talent … to be a relevant labor market for anti-trust purposes," Roberts said, "that fundamentally undercuts the very foundation upon which the NCAA rests" at least for football and men's basketball.

Meanwhile, the judge also raised questions about the applicability to this case of the 1984 Supreme Court ruling in NCAA v. Board of Regents, a case that was about control of college football TV rights but the opinion on which included the statement that "in order to preserve the character and quality of the (NCAA's) 'product,' athletes must not be paid, must be required to attend class and the like."

The NCAA has relied upon this language in defending its amateurism system and has successfully used it many prior legal cases.

However, Wilken wrote in Friday's ruling that the case "does not stand for the sweeping proposition that student-athletes must be barred, both during their college years and forever thereafter, from receiving any monetary compensation for the commercial use of their names, images, and likenesses.

"Although it is possible that the NCAA's ban on student-athlete pay serves some procompetitive purpose, such as increasing consumer demand for college sports, Plaintiffs' plausible allegations to the contrary must be accepted as true at the pleading stage."

Wilken also wrote that the Supreme Court "never even analyzed the NCAA's ban on student-athlete compensation under the rule of reason nor did it cite any fact findings indicating that this ban is the type of restraint is 'essential if the (NCAA's) product is to be available at all'. More importantly, the Court never examined whether or not the ban on student-athlete compensation actually had a procompetitive effect on the college sports market."

In a footnote, she added: "Even if the Court had examined the compensation ban under the rule of reason, Plaintiffs have plausibly alleged that the 'business of college sports' has changed dramatically over the three decades since Board of Regents was decided."

This has been an important underlying part of the plaintiffs' case.

"The only entity that ever believed that Board of Regents presumptively immunized any NCAA restraints was the NCAA itself," Hausfeld said Friday.

Remy indicated that the NCAA is far from ready to abandon the Board of Regents case language.

"We continue to believe the rules establishing the revered traditions of college sports are fully consistent with the antitrust laws, as the United States Supreme Court and other courts have repeatedly made clear," his statement said.