NCAA reaches settlement with Keller plaintiffs: What does it mean?
The sports trial of the century, O'Bannon v. the NCAA, began on Monday with a bang. The NCAA announced it has reached two proposed settlements: one with Electronic Arts and the Collegiate Licensing Company to resolve a lawsuit the NCAA filed against them last November, and a second with former Arizona State quarterback Sam Keller, who is suing the NCAA over avatars of college athletes appearing in video games. These settlements are subject to approval by U.S. District Judge Claudia Wilken and would require the NCAA to pay $20 million to football and men's basketball players who appeared in certain video games. To be clear, Ed O'Bannon is not a party to either settlement. The O'Bannon trial, which began on Monday morning with O'Bannon testifying on the stand, will continue.
The NCAA settlements are significant developments. Last September, O'Bannon reached a proposed settlement with EA Sports and the CLC, which O'Bannon had sued along with the NCAA over the use of former and current athletes' names, images and likenesses. Details of the O'Bannon-EA Sports-CLC settlement were revealed last week. EA Sports and CLC agree to pay current and former athletes about $40 million, with individual players receiving up to $4,000 for their avatars appearing in NCAA Football and other EA games. Some of those athletes would presumably gain additional money through the NCAA's $20 million proposed settlement with Keller.
The NCAA sought to block the O'Bannon-EA Sports-CLC settlement by lawsuit. That suit faced long odds, however, likely motivating the NCAA to settle. The NCAA's central legal argument was that EA Sports and the CLC were to blame for college athletes suing the NCAA over video games in which avatars of those athletes seem to appear. The NCAA contended that EA Sports and the CLC were entrusted with developing and publishing games that would not lead to subsequent lawsuits against the NCAA. The problem for the NCAA is that emails surfaced suggesting that NCAA officials were complicit in those games' use of athletes' identities. The NCAA also insisted EA Sports and the CLC had contractual obligations to notify the NCAA of any settlement in advance, though it is unclear if such arguments would have prevailed in court.
Limited direct impact on O'Bannon trial
At first glance, the NCAA's settlements should have no direct bearing on the O'Bannon trial. For starters, O'Bannon's legal arguments concerning video games fall under antitrust law rather than right of publicity law. O'Bannon charges the NCAA and its members formed an anti-competitive cartel to deprive players of an opportunity to license themselves in games and other properties. Keller, by contrast, charges the NCAA and its members violated right of publicity law by misappropriating players' images and likenesses in video games. Keller settling with the NCAA would remove the right of publicity claim, but not the antitrust claim.
More importantly, O'Bannon is seeking fundamental change to NCAA amateurism rules so that current and former Division I football and men's basketball players can negotiate deals for their names, images and likenesses. He would obtain this change only through an injunction ordered by Wilken. The injunction would compel the NCAA to change its rules or risk contempt of court charges.
In that respect, O'Bannon's trial is about the future, not about compensation for past wrongs. Therefore, the NCAA, EA Sports and the CLC agreeing to pay for past wrongs in old video games does not change amateurism rules and thus does not address the core issue at stake in the O'Bannon case. If O'Bannon genuinely wants the NCAA to change, he cannot settle for money. Rather, the only settlement that would work for O'Bannon would be for the NCAA to agree to change its amateurism rules.
Potentially extensive indirect impact on O'Bannon trial
First, the NCAA appears to be paying Keller and other athletes who appeared in video games a fairly modest amount of money. Sure, $20 million is a significant figure in the abstract, but not for an entity that generates a billion dollars in revenue a year. The NCAA's settlement with Keller could suggest that the NCAA was confident it would defeat Keller but could not pass on this deal. Or, more interestingly, the settlement might signal that the identity value of college athletes in video games is not particularly high. To be certain, those athletes will also benefit from the $40 million O'Bannon settlement with EA Sports and the CLC. But athletes expecting to become wealthy through appearing in video games will be disappointed. They will likely receive thousands of dollars at most -- not tens of thousands or hundreds of thousands.
For EA Sports and other potential publishers of college sports video games, this is important budgetary information should O'Bannon prevail. It suggests the price to negotiate licenses with current and former college athletes may not be all that daunting. This could prove good news for video game enthusiasts, especially those disappointed by the absence of college basketball games on the market.
Second, it's important to note that a modest settlement over video games does not necessarily mean the value of current and former athletes in live broadcasts and archival footage is also low. The NCAA settlements do not appear to cover those commercial uses of players' names, images and likenesses. Economists hired by O'Bannon as experts indicate that the real money is in broadcasting, not in video games, so potential damages by O'Bannon and others in subsequent litigation against the NCAA may still be high.
Finally, the NCAA settlements should limit any flow of information, evidence and other discovery from EA Sports, the CLC and Keller to O'Bannon. Settlements normally contain confidentiality clauses, which would bar the settling parties from collaborating with O'Bannon. This development would benefit the NCAA, which wants to prevent the disclosure of information to O'Bannon and others who might sue the NCAA.
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. [video:]