What legal threats still remain for NCAA? Latest on ongoing litigation

When the NCAA approved settlement terms in the landmark House case late last month, it marked a historic step as college sports continues its rapid evolution before our eyes.

But the NCAA’s legal threats are far from over.

For starters, U.S. District Judge Claudia Wilken must in the coming months certify the settlement, which would close the door on at least three antitrust cases: House, Carter and Hubbard. Wilken’s approval is not guaranteed.

Secondly, separate from the array of antitrust lawsuits are ongoing proceedings in two consequential cases being weighed by the National Labor Relations Board – outcomes that could open the door to an employment model and collective bargaining for at least some athletes.

And lastly, it is unclear to what extent the House settlement protects the NCAA from further legal challenges from athletes who have not yet stepped foot on campuses. Leading stakeholders continue to aggressively lobby Congress for at least limited antitrust protection and codification that college athletes are not university employees.

This much is certain: It has been a dizzying period of unprecedented disruption in the college sports ecosystem.

How much is changing before our eyes, and how those changes spark further advances or unintended consequences has been difficult for those in the administrative class to gauge, much less for garden variety fans.

And so, in the aftermath of the agreement on House settlement terms – a seismic development – here is the most updated snapshot of ongoing legal threats facing the NCAA:

House v. NCAA 

What’s the latest?: On May 23, the NCAA and power conferences agreed to settlement terms with plaintiffs’ attorneys. Those terms will likely be submitted to Judge Wilken early next month. Athletes in the damages classes will then be given the opportunity to opt-out of the settlement. After that, Wilken can approve the historic agreement, which is not a guarantee. The earliest a revenue-sharing model can be implemented in college sports is fall 2025.

What to know: If the settlement is approved, schools, at their discretion, can share as much as $22 million annually to athletes over a 10-year period. That so-called cap will increase about 4% each of the first three years as revenues in college sports continue to rise, Steve Berman, co-lead counsel for plaintiffs, told On3.

In addition, the NCAA and all 32 Division I conferences will pay some $2.8 billion to thousands of athletes in retroactive NIL pay over the 10-year period. Of the $2.8 billion, some $1.6 billion will be paid by the 32 conferences. Power Five conferences will be left with roughly 40% of that bill, while the other 27 leagues will be left with 60% despite not being named defendants in the case.

The settlement also includes a mechanism for future college athletes to opt-out of the agreement if they choose. This element will not prevent an athlete from challenging the settlement in court. Still, it is designed to reduce the likelihood of another large-scale class-action suit that could pose an existential threat to the NCAA.

A settlement was widely anticipated before the scheduled trial date in January 2025 because, had the NCAA gone that trial route, it could have resulted in a $4.2 billion bill and, perhaps, the death knell for the NCAA as we know it.

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 will 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.

Several consequential questions loom: Where does Title IX fit into a revenue-sharing world? How many schools will opt-in to a revenue-sharing model and how will they choose to disperse dollars among male and female athletes? What are the ways in which schools will circumvent the cap in order to put additional dollars into the pockets of their marquee athletes?

Carter v. NCAA 

What’s the latest?: If approved, the settlement for the House case will also encompass and end proceedings in the Carter case. In settlement documents shared with leading college sports stakeholders – a copy of which was obtained by On3 – the NCAA said it believed that damages in the Carter case could have eclipsed that of the House case, a contention the NCAA stressed as it looked for the industry’s administrative class to coalesce around the settlement terms. 

What to know: The antitrust class-action lawsuit against the NCAA and Power Five conferences requested 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 has sought treble damages for the compensation athletes would have received absent what the complaint calls the NCAA’s unlawful restraints.

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 named plaintiffs are Duke football player Dewayne Carter, Stanford soccer player Nya Harrison and TCU basketball player Sedona Prince.

“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.”

Hubbard v. NCAA 

What’s the latest?: If approved, the settlement for the House case would encompass and end proceedings in the Hubbard case. Hubbard is another potential billion-dollar damages case against the NCAA. 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. 

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 NCAA has argued 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.”

Fontenot v. NCAA

What’s the latest?: On May 23 – the day when the NCAA and power conferences approved settlement terms in the House case – all eyes were on a Colorado courtroom, awaiting a judge’s decision that would determine whether a fourth case, Fontenot v. NCAA, would also be folded into the House settlement. That is what the NCAA had been pushing for.

But Judge Charlotte N. Sweeney had other ideas. 

She ruled that Fontenot will remain in Colorado, rather than move to Northern California, and proceed outside of the House settlement. So at least for now, this is another major case that is ongoing. The question is whether any athletes will opt-out of the House settlement to join the Fontenot case.

What to know: The plaintiffs’ attorneys in the House case have no concerns that athletes will opt-out of the House settlement in the wake of the judge’s ruling regarding the Fontenot case.

“None,” Berman, co-lead counsel for the plaintiffs in the House case, told On3. “It’s only continuing on a short-term basis. Judge made it clear that if there is a settlement going forward she won’t allow the case to continue. She can’t, as a basic bedrock rule, of law allow a case to go forward that’s been released by another judge.  So that case is alive for a nanosecond.

“So an athlete who opts out forgoes all of this and has to decide can they do better?” Berman added. “And must do so on an individual basis and not as a class. That’s a huge risk to take and a hugely expensive case to litigate. I think it would be irresponsible to advise an athlete to opt out in the hopes of getting more money.”

Here’s the crux of the case: 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. The complaint alleges that NCAA conferences and member schools “are raking in billions in television and other revenue without sharing a dime of it with the athletes.”

“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 case is similar to the Carter case, which alleges that the NCAA is in violation of antitrust law by prohibiting athletes from receiving pay-for-play compensation. 

Plaintiffs’ attorneys wrote in a court document filed in late May that, given reported details of settlement terms in the House case, it seems likely that one or more of the named plaintiffs will opt out of any such settlement to continue to litigate their claims in the Fontenot case.

“And based on skepticism expressed in press reports, plaintiffs expect that many other athletes will opt out as well and could seek to join this case to seek better and fairer terms for athletes … ,” the filing stated. “This case can – and should – move forward in this Court. And it can do so without any concern of inconsistent rulings or duplicative discovery because no discovery or rulings will be taking place in Carter.”

Johnson v. NCAA

What’s the latest?: A three-judge panel is currently weighing – and has been weighing for more than a year – whether federal district court Judge John Padova applied the correct standard when he denied the NCAA’s initial motion to dismiss the case.

What to know: 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. 

The case was originally filed in the U.S. Eastern District Court of Pennsylvania in November 2019. In  February 2023, 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.

Tennessee and Virginia v. NCAA 

What’s the latest?: On Feb. 23 – in a ruling that rocked 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.

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 his membership that all investigations involving third-party NIL collectives were paused.

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.

What to know: 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.

Here’s how the case originated: 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.”

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.

“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.”

NATIONAL LABOR RELATIONS BOARD CASES

USC the Pac-12 Conference and NCAA

What’s the latest?: 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.

Parties have until July 31 to submit written arguments before the record closes.

What to know: Administrative Law Judge Eleanor Laws is presiding over the case, which 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 more than a year. 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 the latest?: The NLRB national board is weighing whether it will formally review a regional director’s Feb. 5 decision that Dartmouth’s men’s basketball players are employees of the college.

Regardless of whether the review with the NLRB board is granted, Dartmouth could turn to a federal court for an appeal. This could be a lengthy review process that could ultimately land in the U.S. Supreme Court.

This case 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, the Boston-based NLRB regional director, issued the landmark ruling on Feb. 5, one that is still echoing throughout college sports. 

What to know: In early March, the Dartmouth players voted to unionize. The Ivy League – a non-party that has an interest in the case’s outcome – also formally stated its request for the NLRB board to review sthe Feb. 5 decision.

As expected, the question of how much control Dartmouth exerts over athletes played heavily in Sacks’ Feb. 5 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 case came to life 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.