Judge denies Houston Christian University's motion to intervene in the House v. NCAA case

U.S. District Judge Claudia Wilken denied Houston Christian University’s motion to intervene in the House v. NCAA case and associated proposed settlement of that landmark case and two others.

Wilken’s ruling comes as House plaintiffs and named defendants – the NCAA and power conferences – are seeking the judge’s certification in the coming months on the historic settlement that will unveil a new financial model for the rapidly evolving college athletics industry.

Houston Christian’s June 20 motion to intervene in the case was the first formal objection to the settlement, whose broad terms plaintiffs and named defendants agreed on May 23. HCU, a member of the Southland Conference, contends its interests were not represented in settlement talks.

In her denial of HCU’s motion, Wilken wrote that HCU’s arguments in support of its motion for intervention are “essentially objections to the settlement agreement, which are premature because the settlement agreement has not yet been filed. But even if they were not premature, the court would not consider them because HCU, as a non-class member, lacks standing to object to the settlement agreement.”

Wilken added that HCU argued that its motion to intervene is not untimely because it acted as soon as it learned that the proposed settlement agreement is contrary to its interests, and that it could not have moved to intervene sooner because the parties did not conduct their settlement negotiations publicly. The court is not persuaded, she wrote.

“I’m not terribly shocked that HCU’s motion to intervene was denied,” Boise State sports law professor Sam Ehrlich posted on social media. “I was curious whether the denial would be narrowly tailored to HCU’s arguments or written more broadly – which would signal to all other schools that they shouldn’t bother jumping in too. This is – very – broad.”

If certified by Wilken in the coming months, the settlement entails the NCAA and all 32 Division I conferences paying $2.8 billion in damages over a 10-year period, and schools, at their discretion, being permitted to share as much as $22 million annually with athletes. The settlement is also expected to settle two other antitrust cases facing the NCAA: Carter and Hubbard.

The long-form House settlement agreement is expected to be submitted to Wilken in the U.S. District Court for the Northern District of California on Friday.

What did Houston Christian argue?

In its motion to intervene, the school said, “The proposed settlement institutionalizes the diversion of money that would otherwise inure to the member institutions for the core mission of education and research, by requiring them to pay damages for athletes’ name, image, and likeness and establishing a continuing formula for doing so on a go-forward basis.”

On July 5, plaintiffs’ lawyers filed a motion requesting that HCU’s motion to intervene be denied.

In court documents, plaintiffs’ lawyers assert that the motion to intervene amounts to a “premature objection” to the proposed settlement. They also claim that, as a non-party in the case, HCU “lacks standing to object to a class-action settlement. Because its motion for intervention is really an objection to the proposed settlement, it should be dismissed on this basis alone.”

In its July 12 reply to its motion to intervene, Houston Christian stated that it wasn’t until “approximately” May 23 – when the NCAA and Power Five conferences agreed to settlement terms – that HCU learned it would have to pay some $3 million over 10 years in backpay damages.

Houston Christian alleged the proposed settlement will cause its university and others to “divert funds from the core mission of education and research, in favor of funding big-time sports entertainment, without any finding that HCU has deprived student-athletes of their right to benefit from the use of their name, image and likeness.”

HCU added that the parties’ position is that the school has “no right to its own money, but the plaintiffs and defendants do. They believe they can spend HCU’s money as they see fit, all in furtherance of the cause of big-money sports and to the detriment of students pursuing a higher education at a non-Power 5 school.”

Other leagues push back on House settlement

In the leadup to the May 23 settlement approval, other non-power conferences also pushed back because they said their interests were not represented in settlement talks and the damages model disproportionately affects schools outside power leagues.

Conferences learned earlier in May that they would be on the hook for the bill, sources said. They also received a memo in the days leading up to the settlement laying out the financial breakdown, according to sources. Some 60% of the $1.6 billion that falls to conferences will come from leagues outside the Power Five fraternity and 40% will fall to power leagues.

That breakdown spurred Big East Commissioner Val Ackerman to voice what she termed “strong objections” to the proposed damages framework in recent emails to NCAA President Charlie Baker and his legal counsel.

In her May 18 memo, a copy of which was obtained by On3, Ackerman wrote: “The liability of the 22 non-FBS conferences (including the Big East) under the proposed formula appears disproportionately high, particularly because the primary beneficiaries of the NIL ‘back pay’ amounts are expected to be FBS football players.”

Plus, the damages model prompted the group of 22 commissioners outside the FBS ranks to propose an alternate damages framework, which would have shifted the percentage of the damages bill that falls to power leagues to nearly 60%. The proposal went nowhere fast.

“We have not been involved in the settlement negotiations or damage allocation modeling and learned of the settlement status two weeks ago,” read the letter from the 22 commissioners sent to several NCAA governing boards, a copy of which was obtained by On3.