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In denying O'Bannon case, Supreme Court leaves future of amateurism in limbo

The Supreme Court on Monday declined to hear O'Bannon v. NCAA, leaving the future of amateurism in college sports in murky waters for now.

Seven years after former UCLA basketball star Ed O’Bannon filed a federal lawsuit against the NCAA over whether Division I men’s basketball and football players ought to be compensated for the commercial use of their names, images and likenesses, the U.S. Supreme Court on Monday denied petitions by both O’Bannon and the NCAA to review the case.

The denial was expected. The Supreme Court only accepts about 1% of cases for review and frequently declines to hear cases of substantial importance to large classes of people—including, as illustrated here, thousands of college athletes, former college athletes and their respective universities.

The denial also leaves in place a 2015 decision by the U.S. Court of Appeals for the Ninth Circuit in favor of O’Bannon. A three-judge Ninth Circuit panel consisting of Judges Sidney Thomas, Jay Bybee and Gordon Quist found that certain NCAA amateurism rules violate federal antirust law. Those rules, the court determined, constituted an anti-competitive conspiracy by the more than 1,200 member NCAA colleges, conferences and affiliate organizations. The purpose of such a conspiracy was to deny men’s basketball and football players of the monetary value of their names, images and likenesses when used for commercial purposes.

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While O’Bannon prevailed at the Ninth Circuit, he and many college athlete advocates hoped that the Supreme Court would review the case and decree a more substantial remedy. There were expectations, for example, that student-athletes might receive significant compensation through licensing agreements and other arrangements related to broadcasts and other commercial products. (In 2013, Electronic Arts reached a $40 million settlement to resolve related name, image and likeness claims connected to the company’s college video games.) The Ninth Circuit essentially rejected more substantial remedies. It instead reasoned that, by allowing colleges to offer student-athletes additional compensation up to the full cost of attendance, the NCAA cures the antitrust harm caused by its otherwise unlawful amateurism rules. Such a measure is already in place, meaning the Ninth Circuit’s ruling in O’Bannon compels no additional changes of the NCAA or its member schools, conferences and other affiliated organizations.

Two of the three Ninth Circuit judges also vacated a more substantial remedy imposed earlier in the litigation by U.S. District Judge Claudia Wilken. In 2014, Judge Wilken ruled that colleges must reward men’s basketball and football players up to $5,000 per year while they are in school for the use of their names, images and likenesses, with payment made after they graduate. This idea encountered problems for several reasons, including that it was never clear why $5,000 and not $1,000, $10,000, $100,000 or some other number was the appropriate cap or, for that matter, why any fixed cap was appropriate under antitrust law—an area of law that promotes competition. To the disappointment of some, the Ninth Circuit’s ruling ensures that a payment system won’t be implanted. As a result, the NCAA’s controversial system of “amateurism” largely remains in place.

Moving forward: Jenkins v. NCAA moves to the forefront

Had the Supreme Court taken the O’Bannon case, the justices could have provided some degree of closure as to whether and how college athletes should be compensated for the commercial use of their names, images and likenesses. The Court might have also provided guidance on how altering compensation rules would interact with Title IX, a federal law that, among other things, requires that male and female college athletes be treated equally. Instead, the debate will go on. Along those lines, the Ninth Circuit’s decision in O’Bannon can be used as favorable precedent for other legal challenges to NCAA amateurism rules.

The precedent of O’Bannon is a particularly significant point in regards to a case brought by sports attorneys Jeffrey Kessler and David Greenspan on behalf of Martin Jenkins and other players. In 2014, these players sued the NCAA under federal antitrust law. Their case is being heard in the U.S. District Court for the Northern District of California, the same court that heard the O’Bannon case. Further, Judge Wilken, who ruled for O’Bannon, is presiding over this litigation.

The legal argument brought by the Jenkins’ plaintiffs is straightforward. They contend that the NCAA and its member schools, conferences and affiliated organizations have unlawfully conspired to cap the value of athletic scholarships to tuition, room, board, books and fees. Their proposed remedy would be that colleges—which already compete for star high school athletes—compete in ways that financially benefit the players.

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As a hypothetical, consider what Jameis Winston, as a high school senior, might have received in compensation if Florida State University, the University of Alabama and Auburn University entered into a bidding war for his enrollment. Presumably, Winston, a coveted recruit, would have received much more than a full ride in college. Perhaps he would have received several hundred thousands of dollars or even more during his freshman year.

To be clear, under the Jenkins model, colleges would not be required to pay star athletes more than what the colleges already provide through athletic scholarships. Colleges, however, could no longer “conspire” with one another on a system where no school pays student-athletes in excess of athletic scholarships. Attorneys for Jenkins stress that while most colleges claim to lose money on their athletics programs, it seems money is being made given the multi-million dollar salaries paid to coaches, as well as the construction of large new stadia and sophisticated training facilities.

If Jenkins prevails, it would upend the NCAA’s system of amateurism. O’Bannon’s victory at the Ninth Circuit, while more muted in effect than he sought, can be used as precedent for Jenkins. At the same time, the NCAA might use the O’Bannon decision to highlight the judicial reluctance to imposing sweeping changes to amateurism. The NCAA would insist that the changes sought by Jenkins would interfere with the NCAA’s stated goals of promoting education and the college experience.

Cases similar to O’Bannon may be brought in other federal circuits and lead to conflicting decisions and uncertainty

The Jenkins case is not the only current or potential case that might be influenced by the Supreme Court declining to hear O’Bannon. Don’t be surprised if cases that closely resemble O’Bannon are brought in jurisdictions outside of the Ninth Circuit. The Ninth Circuit governs federal districts in nine states and two Pacific Island jurisdictions: Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington, Guam and the Northern Mariana Islands. Along those lines, the O’Bannon decision is controlling precedent in the Ninth Circuit and its federal districts, but is only persuasive—that is, non-binding—precedent in other federal circuits and districts.

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Consequently, an “O’Bannon-like” case brought by a student-athlete in Alabama, New York, or Illinois or one of the 38 other states not in the Ninth Circuit could lead to a court decision that conflicts with the Ninth Circuit’s ruling in O’Bannon. Keep in mind, a student-athlete who uses the O’Bannon decision to sue need not be a college student. With certain NCAA amateurism rules being found in violation of antitrust law, a high school athlete might challenge those rules as they relate how colleges recruit him or her. In that scenario, the NCAA and member schools might become confused about which rules to apply to student-athletes’ name, image and likeness rights. It’s possible the Supreme Court may ultimately need to resolve such a question, but it would be years from now.

In short, while the O’Bannon case may be over, the extent of its impact will take years to play out.

Michael McCann, SI's legal analyst, is a Massachusetts attorney and the founding director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law.