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What Ed O'Bannon's victory over the NCAA means moving forward

What Ed O'Bannon's victory over the NCAA means moving forward Photo:

In a significant, but carefully limited, legal victory for advocates of student-athletes, U.S. District Judge Claudia Wilken has ruled in favor of former UCLA basketball star Ed O’Bannon and issued an injunction against certain aspects of NCAA amateurism rules. 

Most crucially, Wilken determined that the NCAA and its member schools and conferences are in violation of antitrust law by not letting NCAA members compete to compensate Division I men’s basketball and football players for their name, image and likeness rights (“NIL rights”). This is a major development in the legal history of the NCAA, which until now had avoided courts holding that its controversial system of “amateurism” violated antitrust law. From that lens, Wilken validated O’Bannon’s central thesis and sparked a brave new world of college sports and the law.

Wilken, moreover, sharply criticized the NCAA’s legal justifications and its expert witnesses throughout her 99-page opinion. She left no doubt that she categorically rejected the NCAA’s theories about the connection between amateurism and NIL rights. Wilken regarded the NCAA’s educational and policy arguments about denying student-athletes all compensation for NIL rights as wholly unconvincing. She also discarded NCAA claims that college basketball and football players could seek alternate career paths through the Arena Football League and the NBA D-League, dismissively noting, “The evidence shows that elite football and basketball recruits rarely pursue careers in these second-tier leagues immediately after high school and overwhelmingly prefer to play for FBS football teams and Division I basketball teams.” At times, Wilken’s verbiage seemed to embrace the values of NCAA critic and former marketing executive Sonny Vaccaro, an unpaid but highly-influential advisor to the O’Bannon team and without whom the O’Bannon case may have never occurred.

Sweeping rhetoric but narrow change

The thrust of Wilken’s critique would lead one to believe her injunction would compel the NCAA to accept sweeping, radical change. Instead, her actual injunction of NCAA rules and policies seemed almost tepid by comparison. 

For instance, Wilken’s injunction permits the NCAA to cap compensation to student-athletes at the cost of attendance, as that term is defined by the NCAA. While cost of attendance is a higher dollar figure than a grant-in-aid (athletic scholarship), it is nonetheless a limited dollar amount that may not lead to significant quality of life changes for most basketball and football players. 

Wilken similarly offered a restrained remedy in regards to NIL rights. While she agreed with O’Bannon that student-athletes are entitled to compensation for NIL rights to be paid via a trust after college, she permitted the NCAA to cap the amount per student to $5,000 for every year a student is NCAA eligible. To be sure, football and men’s basketball players will soon obtain a new type of compensation because of Wilken’s order, and in that regard, O’Bannon is clearly victorious. But up to $5,000 a year while in college, payable after college, is not quite the all-encompassing change that some NCAA critics sought.

Wilken also ruled that the NCAA can continue to prohibit student-athletes from endorsing products. This is an important limitation not only because it prevents highly-marketable college players from signing endorsement deals without losing their NCAA eligibility, but it shrinks the potential role that player agents -- some of whom viewed the O’Bannon case as their ticket to representing college athletes – will play in a post-O’Bannon world. 

Wilken also provided a de facto victory for television networks, media companies and video game publishers that profit from college sports. She reasoned these companies are not obligated to negotiate group licenses with student-athletes.

The inevitable appeal

Wilken’s order will not go into effect until the start of the next recruiting cycle, which Wilken associates with recruits who enroll in college on July 1, 2016 or thereafter. Of benefit to O’Bannon, Wilken’s order stipulates that the order cannot be stayed (postponed) until it takes effect. However, her stipulation on the order not being stayed can be challenged by the NCAA. The NCAA would first ask her to reconsider the stipulation. Assuming that fails, it could then appeal to the U.S. Court of Appeals for the Ninth Circuit, which has appellate jurisdiction over Wilken. An appeal to the Ninth Circuit prior to the order taking effect would be through what is known as an interlocutory appeal, a rarely granted form of appeal where an appellate court reviews a trial judge before otherwise permitted by the judge.

Assuming the NCAA cannot successfully challenge Wilken’s until the order takes effect, it would then petition the Ninth Circuit to vacate Wilken’s injunction. This petition would be part of an appeals process that could last two or three years, or substantially longer should the NCAA win along the way. An NCAA appeal would first be heard by a three-judge panel that sits on the Ninth Circuit. In a best-case scenario for the NCAA, this panel would vacate Wilken’s injunction and rule that the NCAA could restore its amateurism rules. If the NCAA instead fails before the three-judge panel, it could then seek a review “en banc,” which would constitute a new hearing before 11 of the 29 judges who sit on the Ninth Circuit.

NCAA's loss in O'Bannon case not a total blow

Sports Illustrated's Andy Staples breaks down the specifics of U.S. District Judge Claudia Wilken's ruling in the O’Bannon v. NCAA case.

Unfortunately for the NCAA, the Ninth Circuit is regarded as one of the most labor-friendly appellate courts in the United States. O’Bannon’s attorneys are surely confident that the Ninth Circuit will not reverse Wilken. 

The NCAA’s last step would be to petition the U.S. Supreme Court for review. The Supreme Court, however, is unlikely to hear the case, as it only grants cert to about one percent of petitions. The notoriety and importance of the O’Bannon case would likely attract the attention of the nine justices, but those same justices routinely decline to hear cases of arguably greater importance.

It should be acknowledged that O'Bannon could also appeal Wilken's injunction. While O'Bannon appealing would seem counter-intuitive given that he "won," Wilken's injunction allows the NCAA to cap NIL trusts to $5,000 a year. This is arguably a significant concession to the NCAA and its members. Wilken's rationale for a $5,000 cap -- as opposed to a higher dollar number -- was not entirely clear in her opinion. Along those lines, it is not readily apparent why it is unlawful for the NCAA to "collude" to cap at $0, but not at $5,000. However, Wilken highlighted that NCAA broadcast expert Neal Pilson admitted he would not be troubled by $5,000. This amount of money is also arguably consistent with consumer preference data obtained by NCAA pollster Dr. J. Michael Dennis. At this moment it does not appear that O'Bannon will appeal what is generally a victory for his side, but if he does, expect the $5,000 cap to be a core issue.

Will the NCAA lobby Congress and President Obama for relief?

If the appeals process fails, the NCAA would be forced to fully comply with Wilken’s order. But the appeals process is not the NCAA’s only legal recourse. The NCAA could also petition Congress and President Obama to pass a law that would effectively reverse Wilken’s order. The NCAA might raise similar educational and policy arguments that it unsuccessfully tried in the O'Bannon trial with a different audience than Wilken. The NCAA could add other points, such as expressing concern as to how Wilken's order might complicate Title IX compliance for many universities. Bear in mind the NFL successfully utilized this type of legislative approach in the early 1960s after a federal judge ruled its national television contract violated antitrust law. NFL commissioner Pete Rozelle lobbied Congress with arguments similar to those the NFL unsuccessfully raised in court. Congress then passed, and President Kennedy signed, the Sports Broadcasting Act of 1961, a law that carved out an exception for the NFL and other pro leagues’ national television contracts under antitrust law. It was not the first time in American history where Congress passed, and the President signed, a new law that nullified a judge’s decision. 

While it is conceivable that Congress and President Obama could rescue the NCAA, the odds seem decidedly stacked against legislative intervention. Members of both political parties have expressed concerns about the treatment of student-athletes, and recent legislative proposals are designed to tightly regulate, rather than empower, the NCAA. Also, to paraphrase the late Lloyd Bentsen, Mark Emmert is no Pete Rozelle.

Wilken’s order may not be good news for other lawsuits against the NCAA

Wilken seemed frustrated that she could not do more for O’Bannon under antitrust law. In a passage I found telling, she stressed “It is likely that the challenged restraints, as well as other perceived inequities in college athletics and higher education generally, could be better addressed as a policy matter by reforms other than those available as a remedy for the antitrust violation found here. Such reforms and remedies could be undertaken by the NCAA, its member schools and conferences, or Congress.” Wilken, in other words, seems to believe that the best path to changes in college sports will emerge not through litigation but through negotiation and cooperation. 

Wilken’s message could be discouraging news for others who bring NCAA cases before her. Keep in mind, Wilken is the same judge who will hear lawsuits brought by current and former players over whether the grant-in-aids are in violation of antitrust law. Shawne Alston, Martin Jenkins and several other current and former players have sued the NCAA, arguing that the cap on athletic scholarships to tuition, room, board, books and fees is a violation of antitrust law. While Wilken stressed her order in the O’Bannon case was separate from other NCAA antitrust litigation, her reticence towards antitrust solutions is likely uninvited news to other antitrust plaintiffs suing the NCAA in her court.

Uncertain legal interaction of O’Bannon decision with Title IX awaits

The O’Bannon case was limited to whether a certain set of NCAA amateurism rules are lawful under antitrust law, an area of law centered on justice in economic markets. Barring a successful appeal by the NCAA or a change in federal antitrust law, Wilken’s injunction will require the NCAA to make changes to its rules, as discussed above. 

Significantly, Wilken’s injunction only contemplates changes to NCAA rules to make those rules comport with antitrust law (as interpreted by Wilken). It was not within her charge to consider whether any changes might lead to violations of other areas of law that contemplate different types of justice, as those other areas of law were not raised in O’Bannon’s claims. Herein lies a legal and administrative problem for the NCAA and its member schools. Any change that leads to colleges compensating men’s basketball and football players more than women athletes could run afoul of Title IX, a federal law that requires gender equity in college sports. 

Wilken’s injunction will not necessarily lead colleges to violate Title IX, particularly since basketball and football players will have to wait until after their NCAA eligibility expires in order to access their NIL trust funds. But it might, especially since those trust funds will reflect compensation accrued while they were in school. Adding to the legal uncertainty is that Title IX was designed more than four decades ago, long before legislators could envision a world of antitrust litigation over NIL rights in college sports. Title IX's legislative history is unlikely to provide answers.  

It stands to reason that the U.S. Office for Civil Rights, which has oversight over Title IX, will issue guidance to college administrators now tasked with figuring out how to comply with the O’Bannon decision but not violate Title IX in doing so. It is also stands to reason that Title IX lawsuits will arise in the aftermath of O’Bannon, with women student-athletes objecting to their male counterparts receiving a new type of compensation.

Michael McCann is a Massachusetts attorney and the founding director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law. He is also the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law.

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