How many legal threats is the NCAA facing? Let's count them
The NCAA can look in almost every direction these days and see legal fires. They are mounting by the month. The smoke is billowing.
Ever since the high-profile and landmark O’Bannon and Alston cases exposed legal cracks in the association’s amateurism construct, courts have been increasingly looking askance at the model’s alignment with antitrust law.
Now, a smorgasbord of consequential issues – from NIL compensation in recruiting and the NCAA’s multi-time transfer policy to whether athletes deserve a share of escalating broadcast media rights pies – have found their into the courts. Legal threats also stem from two ongoing National Labor Relations Board proceedings weighing whether certain athletes are employees of their universities, leagues or the NCAA.
There are two primary ways the NCAA can stave off further legal challenges: Secure its long-sought federal reform bill from Congress, which would grant the association some antitrust protection and codify that student-athletes are not employees. Or, following an anticipated settlement in the House v. NCAA antitrust case in the coming months, create a new, sustainable financial model that enables athletes to collectively bargain with schools, leagues or the NCAA.
“We’re getting sued for nonsense,” retiring American Athletic Conference Commissioner Mike Aresco told On3 in the fall. “College sports is not the candy store for these lawyers – that’s how they view it now.”
Other stakeholders view it differently, saying the NCAA needs to reimagine the industry’s financial model so it can comply with antitrust law.
In the meantime, legal threats have come fast and furious. Here is a digestible (hopefully) snapshot of the major legal challenges currently facing the NCAA and what’s at stake in each case.
House v. NCAA
What’s at stake: The NCAA and Power Five conferences could owe thousands of athletes some $4.2 billion in retroactive NIL pay and broadcast revenue. And rule changes could take hold that would permit schools and conferences to pay NIL dollars to athletes for any reason, including athletic performance.
The likeliest outcome is a settlement between plaintiffs and the NCAA prior to January’s trial date, a deal that would usher in a true revenue-sharing model for big-time college sports. Both sides are in “deep discussions” as settlement talks escalate, ESPN reported. On3 confirmed that talks entail potentially allowing schools to pay athletes between $15 million and $20 million.
But legal experts tell On3 that the new financial model would also need to enable athletes to collectively bargain compensation and other benefits in order for the NCAA to avoid further lawsuits in the coming years.
What to know: The case is at the forefront of every industry leader’s mind because it could radically change the college sports ecosystem. U.S. District Judge Claudia Wilken‘s class-action ruling in November was consequential because potential damages wouldn’t only be in play for three plaintiffs: former Arizona State swimmer Grant House, former Illinois football player Tymir Oliver and TCU basketball player Sedona Prince.
Thousands of athletes who fall into the following classes could receive damages: The classes include one for Division I football and men’s basketball players who have competed collegiately since June 15, 2016. One for women’s basketball players from the same date and an additional sports class – including all other sports – from the same date are also in play.
In addition, an injunctive relief class encompasses all Division I athletes who competed from June 15, 2020 – when the complaint was filed – through the case’s judgment. A trial is scheduled for Jan. 27, 2025, but both sides have engaged in settlement talks.
Wilken is the same judge who ruled against the NCAA in O’Bannon and Alston at the trial court level. Clearly, she is not averse to ruling that NCAA compensation rules violate antitrust law. Also of note: NCAA President Charlie Baker said during the 11th Congressional hearing that all of college sports – not only the named defendants – would likely absorb the cost of damages owed if the NCAA loses the case.
Johnson v. NCAA
What’s at stake: The plaintiffs in the case, former Villanova football player Trey Johnson and other Division I athletes are asking that athletes be deemed employees subject to the Fair Labor Standards Act. That requires covered employees to be paid minimum wage and overtime pay, much like non-athletes at colleges who participate in work-study programs.
What to know: The case was originally filed in the U.S. Eastern District Court of Pennsylvania in November 2019. Last February, both sides made oral arguments before the three-judge panel on the U.S. Court of Appeals for the Third Circuit in Philadelphia. It was clear from the judges’ line of pointed questions that they found the NCAA’s arguments about why athletes are not compensated suspect and unconvincing. In fact, they signaled they believe at least some athletes are indeed employees of schools and potentially the NCAA.
The judges illuminated the circular nature of the NCAA’s time-honored contention that student-athletes are not professional athletes because they don’t expect compensation from the school. While the case’s focus is narrow, a determination that college athletes are employees would be monumental. It could lead to athletes being subject to various employment laws and workplace protections.
Additionally, the NLRB could use the outcome to bolster a finding that college athletes are indeed employees of schools, conferences and/or the NCAA, and thus are entitled to unionize.
NCAA attorney Steven Katz said a victory for the athletes would result in a “minefield of unforeseen consequences.” He specified that those adversely affected would be female athletes and raised questions related to Title IX.
A three-judge panel is currently weighing whether federal district court Judge John Padova applied the correct standard when he denied the NCAA’s initial motion to dismiss.
Carter v. NCAA
What’s at stake: The antitrust class-action lawsuit against the NCAA and Power Five conferences requests an injunction permanently restraining the NCAA from enforcing all rules restricting the compensation and benefits that college athletes can receive in exchange for their athletic services. The case also seeks treble damages for the compensation these athletes would have received absent what the complaint calls the NCAA’s unlawful restraints.
What to know: In December, the 70-page antitrust lawsuit was filed in the Northern District of California Federal Court. It alleges NCAA rules that prohibit schools from paying athletes violate antitrust laws. The plaintiffs – Duke football player Dewayne Carter, Stanford soccer player Nya Harrison and TCU basketball player Sedona Prince – who filed the complaint are represented by familiar names, Jeffrey Kessler and Steve Berman.
“The House case is already seeking a broadcast sharing with the student-athletes with respect to the value of their NIL,” Kessler told The Associated Press. “This case would also allow student-athletes, if we’re successful, to get broadcast revenues for their performance.”
The attorney duo is once again a thorn in the side of the NCAA, having successfully sued the NCAA in the Alston case and continuing to represent plaintiffs in the high-stakes House case. Attorneys requested an injunction, which would prohibit the NCAA from enforcing rules against pay-for-play compensation throughout the duration of the case.
“In college sports, only the athletes are treated as ‘amateurs,'” the lawsuit said. “Everyone else involved enjoys the compensation that results from unrestrained competition for the athletes’ services.”
Fontenot v. NCAA
What’s at stake: This class-action lawsuit is not about NIL. It wants revenue to be allocated by the free market, explaining that, “These college football and basketball players bring in billions of dollars in television revenue for defendants and their member schools. Everyone profits from their efforts: the NCAA, the conferences, the schools and the coaches. Everyone, that is, except the players themselves, because the NCAA prohibits it.”
What to know: Alex Fontenot, a former football player at Colorado, filed the class-action lawsuit against the NCAA and power conferences, alleging that NCAA rules that prohibit athletes from receiving compensation from schools and leagues violate antitrust law.
“This lawsuit aims to change that,” states the complaint, which was filed in U.S. District Court in Colorado. “It focuses on the ever-increasing television revenue and other revenue brought in by these athletes’ labor, of which the athletes would be entitled to receive a substantial portion, but for the NCAA’s rules.”
The lawsuit spells out how enormous broadcast rights deals have escalated in recent years and how College Football Playoff revenue will also skyrocket this year when the event expands from four to 12 teams. The Knight Commission on Intercollegiate Athletics has said that CFP expansion will generate some $1.4 billion annually in new revenue – none of which will flow to the athletes on the field.
“The need for ‘amateurism’ was always a fallacy,” the lawsuit states. “But the current state of college athletics has put the proverbial nail in the coffin for the NCAA’s amateurism argument.”
The complaint also references recently fired Texas A&M football coach Jimbo Fisher and his $76 million severance package.
“If that type of money can go to a fired coach,” the lawsuit states, “then surely the players on the team can be fairly compensated.”
State of Ohio vs. NCAA
What’s at stake: The case’s key question: Will college athletes be able to transfer multiple times without a waiver? In April, the NCAA Division I Council adopted emergency legislation to remove the year-in residency requirement for multiple transfers and instead base their eligibility to compete on academic standards.
In other words, all undergraduate college athletes can transfer multiple times and be permitted to play immediately – without having to sit out a year – provided they meet specific academic benchmarks.
So, where does this case stand? The case remains active but signs point to it wrapping up soon, Mit Winter, a college sports attorney with Kennyhertz Perry, told On3.
On April 23, the NCAA filed a motion to extend its date to answer the plaintiffs’ complaint (which was agreed to by the plaintiffs). In that motion, it said the parties’ efforts to resolve the case are “almost final,” but they need another extension of the answer deadline to complete negotiations. The deadline to answer was extended by the court the next day to June 5.
With NCAA rule changes in place, a final resolution is expected soon.
What to know: In December, attorneys general from seven states – Ohio, Colorado, Illinois, New York, North Carolina, Tennessee and West Virginia – filed a lawsuit against the NCAA, challenging the association’s limits on athletes transferring multiple times. The complaint was led by Ohio AG Dave Yost.
The complaint alleges the restrictions violate federal antitrust law by serving as an illegal restraint on college athletes’ ability to market their labor and control their education.
U.S. District Judge John Preston Bailey in West Virginia in December granted a temporary restraining order, which afforded immediate eligibility to college athletes not able to compete because of the multi-time transfer year-in-residency requirement. Then came the all-important preliminary injunction agreement between the plaintiffs and the NCAA, which granted immediate eligibility to multi-time transfers through the fall.
Earlier this year, the U.S. Department of Justice and attorneys general from more states – Minnesota, Mississippi, Virginia and the District of Columbia – also joined the lawsuit.
The NCAA has said in court documents that the AGs “seek to remake collegiate athletics and replace it with a system of perpetual and unchecked free agency.”
Tennessee and Virginia v. NCAA
What’s at stake: The case will ultimately determine whether high school and transfer portal athletes can negotiate NIL deals with collectives and boosters as part of recruiting inducements without fear of the NCAA policing such activity. The case’s eventual outcome could leave the NCAA powerless in governing NIL in college sports.
What to know: On the heels of news that the NCAA is investigating alleged NIL transgressions at Tennessee, attorneys general in Tennessee and Virginia filed an antitrust lawsuit against the association, challenging its ban on NIL compensation being used as an inducement in the recruitment of high school and transfer portal athletes.
Filed in the Eastern District of Tennessee, the complaint asserts that the NCAA is “enforcing rules that unfairly restrict how athletes can commercially use their name, image and likeness at a critical juncture in the recruiting calendar.” It added: “These anticompetitive restrictions violate the Sherman Act, harm the States and the welfare of their athletes, and should be declared unlawful and enjoined.”
On Feb. 23 — in a ruling still reverberating throughout the college sports world — U.S. District Court Judge Clifton L. Corker issued a preliminary injunction. That ruling means that the NCAA cannot prohibit athletes from negotiating NIL deals with collectives and boosters until the case is settled or goes to trial.
“Without the give and take of a free market, student-athletes simply have no knowledge of their true NIL value,” Corker wrote in his decision. “It is this suppression of negotiating leverage and the consequential lack of knowledge that harms student-athletes.”
The court has ordered that the NCAA and “all persons in active concert or participation with the NCAA” are restrained from enforcing the interim NIL policy, NCAA bylaws or any other authority that prohibits athletes from negotiating NIL compensation.
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“An endless patchwork of state laws and court opinions make clear partnering with Congress is necessary to provide stability for the future of all college athletes,” the NCAA said in a statement.
But in the wake of the preliminary injunction halting the NCAA’s power to prohibit recruits and transfer portal athletes from negotiating their NIL, President Charlie Baker issued updated guidance in March to membership that all investigations involving third-party NIL collectives were paused.
On May 1, Tennessee and Virginia amended their complaint against the NCAA, adding three states — Florida, New York and the District of Columbia — in the legal battle.
Corker’s ruling came after he denied the states’ temporary restraining order against the NCAA because he cited that there was not enough requisite irreparable harm for the order to be issued. Tennessee and Virginia filed a declaration from Tennessee head coach Josh Heupel, who presented a case of irreparable harm, ahead of the preliminary injunction hearing.
The preliminary injunction ruling is just a start. At its core, the lawsuit is an antitrust case. Corker has already written in his temporary restraining order decision that Tennessee and Virginia are likely to succeed on the merits of their claim under the Sherman Act.
The case is proceeding against the backdrop of Tennessee stakeholders unleashing blistering criticism toward the NCAA. University Chancellor Donde Plowman, in a letter to the NCAA, wrote: “Instead, 2 1/2 years of vague and contradictory NCAA memos, emails and ‘guidance’ about name, image and likeness has created extraordinary chaos that student-athletes and institutions are struggling to navigate. In short, the NCAA is failing.”
Hubbard v. NCAA
What’s at stake: This is another potential billion-dollar damages case against the NCAA. As the attorney Winter noted, it is seeking back pay for Power Five and Big East athletes who would have received Alston academic incentive payments before those payments were allowed.
What to know: Former Oklahoma State football player Chuba Hubbard and former Oregon and Auburn track and field athlete Keira McCarrell filed a class-action lawsuit against the NCAA and several conferences, seeking damages for not being allowed to receive Alston academic achievement benefits. College athletes can be awarded up to $5,980 annually in Alston benefits.
USA Today first reported that lawyers for the plaintiffs filed a motion that seeks to give the case class-action status. According to the suit, the damages class should include athletes who competed in the Power 5 and Big East anytime between the beginning of the 2019-20 academic year and the end of the 2021-22 academic year.
The newspaper reported that the NCAA is arguing that the Hubbard case should not be granted class-action status because the “highly varied and diverse ways in which … schools implemented Alston awards present inherently individualized issues.”
NATIONAL LABOR RELATIONS BOARD CASES
USC the Pac-12 Conference and NCAA
What’s at stake: At least a subset of athletes could be deemed employees of USC, the Pac-12 and/or the NCAA. An employee model would transform college sports in ways both known and unknown.
Here is why this case carries enormous implications: The National Labor Relations Act applies to private institutions. But because the Pac-12 and NCAA are charged with being joint employers, the outcome could potentially open the door for athletes at public universities to be deemed employees of their conference or the NCAA.
What to know: The final hearing in the NLRB case involving USC, the Pac-12 Conference and the NCAA concluded last month in a Los Angeles regional office. Parties have until July 31 to submit written arguments before the record closes.
Administrative Law Judge Eleanor Laws is presiding over an all-important case that alleges the three charged parties are joint employers of USC’s football and men’s and women’s basketball players.
They are alleged to have misclassified those athletes as student-athletes rather than employees and maintained certain overbroad rules in the USC Student-Athlete Handbook.
With the likelihood of appeals, the entire process could take years. Opponents claim it could result in athletes being fired and prompt many universities ill-equipped financially for such a model to cut non-revenue sports.
An employee model would usher in the era of athletes collectively bargaining with schools or leagues because they would be able to unionize.
At the 11th NIL-related Congressional hearing, when UCLA quarterback Chase Griffin was asked about potentially being fired in an employment model, he said: “That’s not really up to the athletes. That’s up to the NLRB. But based on the time, effort and hours, we operate as employees currently.”
At issue is how much, if any, control schools exercise over athletes – an element NLRB General Counsel Jennifer Abruzzo referenced in her headline-making September 2021 memo.
“Players at academic institutions perform services for institutions in return for compensation and subject to their control,” Abruzzo wrote. “Thus … policies underlying the NLRA, Board law, and the common law fully support the conclusion that certain players at academic Institutions are statutory employees who have the right to act collectively to improve their terms and conditions of employment.”
Dartmouth men’s basketball players
What’s at stake: This too could open the door for a subset of athletes to be deemed employees of their universities – a scenario the NCAA is determined to prevent. Laura A. Sacks, a Boston-based NLRB regional director, issued a landmark ruling Feb. 5, one that is still echoing throughout college sports. Sacks concluded that the Dartmouth players are employees of their college.
In early March, the Dartmouth players voted to unionize. The college has requested a review of Sacks’ Feb. 5 ruling by the NLRB. The Ivy League — a non-party that has interest in the case’s outcome — also formally stated its request for a NLRB review of the decision.
This could be a lengthy review process that could ultimately land in the U.S. Supreme Court.
What to know: As expected, the question of how much control Dartmouth exerts over athletes played heavily in Sacks’ decision.
The ruling states, “Dartmouth exercises significant control over the basketball players’ work. The players are required to provide their basketball services to Dartmouth only. The Student-Athlete Handbook in many ways functions as an employee handbook, detailing the tasks athletes must complete and the regulations they may not break.”
Additionally, the ruling details that Dartmouth determines when players will practice and play, as well as when they will review film, engage with alumni, or take part in other team-related activities. When the basketball team participates in away games, the ruling states, Dartmouth determines when and where the players will travel, eat, and sleep.
The process began Sept. 13, when a petition filed with the NLRB by the Service Employees International Union identified 15 players from Dartmouth as seeking representation. October brought four days of witness testimony during a virtual pre-election hearing.
During the October hearing, Dartmouth junior basketball player Cade Haskins laid out the conditions and school protocols that he believes should warrant the basketball players being formally deemed employees of the college.
Among other highlights:
One of the arguments Dartmouth’s legal team espoused was that the players there are not employees because, unlike men’s basketball programs elsewhere, the Ivy League program loses several hundred thousand dollars per year.
The line of questioning from the athletes’ attorney, John Krupski – who sat before a framed photo bearing the words “Collective Bargaining Matters” – most often drilled down on the notion of control.
Haskins laid out that athletes agree to give their NIL rights to Dartmouth without receiving compensation.
Krupski hammered home that student managers can be compensated by the college through a work-study program. Yet, he stressed, the athletes on the team who perform on the court are not permitted to be compensated by the school.