Ed O'Bannon v. NCAA class certification hearing: What's at stake?
The email popped in late last week from colleague Stewart Mandel: "If I'm understanding this correctly, from the court's calendar, all of these lawyers are expected to attend Thursday's hearing," Mandel wrote. "Will there be room in the courtroom for anyone else?" What followed was a list of more than 100 attorneys, each representing a plaintiff, a defendant or some interested party in the Ed O'Bannon v. NCAA case currently pending in the Northern District of California. This cavalcade of J.D.s will pack a courtroom in Oakland, Calif., on June 20 to argue whether the O'Bannon case should go forward as a class action lawsuit.
SI.com legal analyst Michael McCann has broken down the legal concepts each side will try to prove in Judge Claudia Wilken's courtroom, but we laypeople have only one question: What does this mean for the NCAA and college athletes?
The immediate answer is: nothing. Wilken probably won't issue a ruling until later this summer on whether to certify the class. The arguments Thursday will help inform that ruling, but so will reams of motions and evidence filed during the course of the case. Wilken has several options, and while all could result in a financial hit for the NCAA, only one has the power to fundamentally change the business model for major college sports.
Let's get a few things clear before we proceed. No matter what happens, this case will not end college sports. Major Division I conferences will not suddenly stop offering athletic scholarships. In the real world, people don't simply walk away from multibillion-dollar businesses. In most of the potential outcomes, the NCAA will continue to operate in a fashion similar to the way it operates now. Even in the complete nightmare scenario for the NCAA, some organization will still exist to govern major college sports. It will probably still be called the NCAA. But this case does have the power to change some of the core rules, and those changes could have a profound effect on college sports.
That last possibility is why so many lawyers are working on this case. The plaintiffs' attorneys view the NCAA as a poor man's Big Tobacco. A direct hit on the NCAA would mean a massive financial score and significant prestige. That's why firms have invested millions into this case since it was filed in 2009. While it may seem as if O'Bannon and his fellow plaintiffs are David, from a legal firepower standpoint, they are actually Goliath in this analogy. But those law firms don't recoup their investments unless they manage a huge settlement or judgment. That fact could become quite important depending on what Wilken decides about class certification.
If this case were only about the NCAA's and EA Sports' use of likenesses of former players, it wouldn't be such a big deal. That was the original intent of O'Bannon's suit. The former UCLA basketball star didn't understand why he wasn't being paid when the NCAA and EA Sports used his likeness in videos and video games. This seemed fairly cut and dried. The older EA Sports games featured "classic teams." So if someone played as the 1980 Georgia team in the college football game, that team had a freshman running back who dominated, wore No. 34 and had exactly the same skin tone as Herschel Walker. Only a fool would believe RB34 wasn't modeled after Walker, who, like all the other former players at that time, didn't receive a cut of the profits. (This has since changed. When NCAA Football 14 is released next month, it will feature the likenesses of more than 1,400 former players -- all of whom have been paid for the rights to their likeness. This is not a coincidence.) If this case were only about this issue, the NCAA and EA Sports probably would just settle with the former players and promise never to trade on their likenesses again. (This is different from current players, many of whom sign forms that allow their schools and conferences to trade on their likenesses while they're in school.) The defendants were clearly in the wrong for several years, and the players are entitled to damages. The settlement would be expensive, but it certainly wouldn't bankrupt anyone.
But that isn't all this case is about. Wilken changed the game in January when she ruled that current college athletes could join the suit and that athletes could go after a cut of the money the NCAA and the conferences receive for the broadcast rights to college sporting events. Television has become the main economic driver in college sports, thanks in part to a lawsuit against the NCAA -- by the schools themselves -- in the early 1980s. Now, instead of this case strictly being an NCAA issue, it also is an issue for all of the conferences. With the class certification decision, Wilken has the opportunity to either continue down this much broader road or walk the case back to its original circumstances.
Wilken has three choices:
1. She can deny the plaintiffs' motion for class certification.
2. She can certify the class for only the former players.
3. She can certify the class for former and current players.
Those first two options are probably the least expensive for the defendants. If Wilken doesn't certify the class at all, individual athletes will have to bring their own suits. The NCAA likely would have to settle quite a few cases, but the organization would not die by a thousand paper cuts. If Wilken only certifies the class to include former players, the NCAA probably would have to fork over a significant settlement. This probably is preferable to going to trial, where a judgment against the NCAA could result in punitive damages, which, under federal antitrust law, would be tripled. But the NCAA has a war chest for precisely this sort of thing. It would be fine in this situation.
The third option is the nuclear option. This is the one over which all those attorneys have salivated. Bringing in current players means bringing in current TV deals. All those contracts with ESPN and Fox that the major conferences nearly tore themselves to pieces over? They'd be in play. Conference networks for the Big Ten, Pac-12 and SEC? They'd be in play. McCann writes that this option probably would induce a settlement, but I'm not so sure. Bringing all these elements into the mix would cause a severe spike in the price of a settlement. Had the NCAA and conferences gone to the plaintiffs after the January ruling and offered to set aside a modest cut of the annual profits for athletes -- payable upon graduation -- the plaintiffs probably would have settled. If this happens? The plaintiffs will ask for the moon.
The NCAA's best option in this scenario may be to push all in and hope for a victory at trial or on appeal. A loss under these circumstances probably would result in massive damages. Even if the damages were manageable, schools and conferences would have to alter the NCAA's rules to give athletes a bigger slice of the profits. It also could open a Pandora's box of issues. The NCAA's amateurism rules were created essentially as a tax dodge. A "student-athlete" can't be an employee, according to NCAA logic. In this scenario, athletes would look even more like employees, and that brings taxation and worker's compensation into the equation. Fortunately for the schools and conferences, they would have time to make necessary adjustments. A case such as this would likely be appealed all the way to the U.S. Supreme Court, so it wouldn't end anytime soon.
There's no use laying odds on which scenario Wilken will choose. But when she does eventually issue her ruling, we'll know if this case is a speed bump or a game-changer.