Judge Claudia Wilken issued her much-anticipated order on class certification in O'Bannon v. NCAA Friday. The ruling was a split decision: While the players were able to certify a class, allowing their lawsuit to go forward, the lawsuit has been significantly reduced in scope. Here is what it means for the parties and the future of college athletics.
What was decided
The class certification ruling was widely considered the most important decision so far in the O'Bannon case. If class certification was allowed, the O'Bannon plaintiffs would be allowed to pursue damages and injunctive relief for past and current players for the NCAA's use of their likenesses. A denial of that class certification would require each student-athlete to bring his own claim against the NCAA for damages or relief.
The players had publicly pushed for a broad class, including former and current student-athletes whose likenesses had been allegedly used in game footage, video games, and other items. The NCAA blanketly denied the existence of a class. As a result, neither side spent much time discussing an important distinction in the players' argument: That the class for purposes of injunctive relief -- a decision requiring the NCAA to allow players to enter into group licensing arrangements for use of their likenesses in television broadcasts and videogames -- was different than the class for past damages. The proposed class for injunctive relief included current and former FBS football and Division I men's basketball players, while the damages class was limited to former players in order to avoid "pay for play" complications.
This distinction, while largely ignored in the aftermath of June's argument, was the key to Judge Wilken's decision. In her opinion, Wilken granted class action status to the injunction class, but denied that status to the damages class. That decision was based not on the players' top argument or the NCAA's top defense, but on a different hole in the players' case: Early entrance into the pros.
As part of the class certification process, the players had to show that they could identify members of the class who were actually harmed by the NCAA's activities. On its face, this seemed fairly simple: Get a roster for every FBS football team and Division I basketball team from July 2005 to the present. The players would provide those names, along with a report of their expert witness (here, Dr. Roger Noll, a Stanford professor) identifying the value of those rights, and the problem would be theoretically solved.
Wilken's decision arose from a problem in Dr. Noll's report. One of the primary bases of Dr. Noll's damages determination is the role of the NCAA's rules in a player's decision to turn pro before graduation. Noll cites a number of players who joined the pro ranks early and opines -- with a firm bit of common sense -- that some of them left early because of financial problems. If those financial problems were alleviated in part by payment for likeness usage, the argument continues, many of those players could have stayed in school and graduated. Judge Wilken summarized the expert's argument as follows:
Dr. Noll examined the experiences of more than one hundred Division I basketball players who left college early between 2008 and 2010 to seek out opportunities to play professionally. He concluded that many of these players "plausibly would have stayed in college" if they had been permitted to participate in a competitive group licensing market, because the financial costs of staying in school would have been lower.
Therein lies the problem: Football and basketball programs work under strict scholarship limits, scholarship limits that are not being challenged in this case. If a change in NCAA rules would have kept more players in school and out of the professional leagues, those players would have held onto scholarships that were otherwise given to other incoming collegiate players. How can we identify which players would have stayed in school? And how can we identify which recruits would not have received scholarships had those players stayed? As Judge Wilken found, it was an impossible task:
Dr. Noll also notes that if these athletes had stayed in college -- as they might have done if not for the alleged restraints on competition in the group licensing market -- they would have displaced other student-athletes on their respective teams. Those displaced athletes would have either been forced to play for other Division I teams or simply lost the opportunity to play Division I basketball altogether....Indeed, many of these individuals -- all of whom are putative members of the Damages Subclass -- may have even benefitted from the challenged restraints by earning roster spots that would have otherwise gone to more talented student-athletes.
Because identifying which players would have stayed in school is impossible, and identifying those players who would not have had a chance to play would also be impossible, class certification for damages was denied.
Where the NCAA won
While the case will continue, the NCAA got one huge win: The billion-dollar damage award is off the table. The players are now limited to pursuing a change in NCAA regulations to allow for group licensing, and injunctive relief will not include any past damages. The model for college athletics, where the NCAA and the conferences receive hundreds of millions of dollars in television rights to keep for themselves, is still at risk. Those hundreds of millions of dollars already in the bank are not. No matter what the sides are saying, it's a huge win for the NCAA.
Where the players won
The players weren't knocked out of the case, as many had feared. Both the current and former players involved in the case, and current and former student-athletes who are simply members of the certified group, can continue their push for change.
The players also got a key insight into the court's reasoning on a crucial issue, and a green light for one key change in the college licensing system. The NCAA's primary challenge to class certification was based on commonality of damages. The NCAA argued that star players would be paid more than benchwarmers, leading to a differentiation of damages that would preclude a class action. The players countered by asking solely for "group licensing" agreements, essentially a players' union that could negotiate rights on behalf of all players and distribute those proceeds equally, as the professional players' unions have done.
Because there is no monetary payment from the NCAA to the players in the event that an injunction is granted, the issue of different damages between players was largely diffused by Judge Wilken's decision. However, in getting to that decision, the judge adopted the players' argument. At issue going forward will be group licensing rights, despite the fact that there is no "group" currently in place.
If the players were to win, they would hold the right to license their likeness as a group. Such rights can be exercised in one of two ways: Having every player sign an agreement, which is cumbersome at best, or having those players join a union and give that union the right to negotiate on their behalf. A collegiate players' union opens the door to changes far beyond the scope of the lawsuit, and could be the enduring legacy of the O'Bannon case.
What happens next
Neither side has indicated any interest in appealing Judge Wilken's decision, so we should now finally see the parties start to argue the actual substance of the NCAA's licensing rules. The elimination of the damages class severely reduces the chances of a settlement. An agreement to end the case would require a change in NCAA regulations that both the NCAA and its member institutions will fiercely resist. The risk of a big verdict is off the table, and the players are not likely to walk away for a nominal payout. Trial is scheduled in June 2014, and there is not much left to stand in its way.
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