Has the NCAA found the Ed O'Bannon lawsuit's fatal flaw?

The players clear another hurdle, but a Monday filing threatens to bring the entire case down.

By Patrick Vint Oct 29, 2013, 10:00am EDT

Just as a Friday ruling in the O'Bannon case opened the door to a crucial victory for the players, a motion filed Monday by the NCAA threatens to close it for good.

Friday's ruling: The players' antitrust claim can proceed

At its heart, the players' claim against the NCAA is based in antitrust law. The Sherman Antitrust Act is a 123-year-old piece of legislation that prohibits "restraints of trade."

The standard for showing a violation of the Sherman Act is fairly high: the players must show that there was a contract or conspiracy to unreasonably restrain trade, and that the contract or conspiracy did, in fact, impair commerce.

The players' antitrust claim was summarized by Judge Claudia Wilken in Friday's ruling:

Division I football and basketball programs routinely compete to recruit the best athletes. In order to attract the top talent, these programs offer recruits a variety of non-monetary privileges and incentives such as scholarships, access to state-of-the-art training facilities, and -- at the most elite programs -- the opportunity to compete on a national stage. NCAA rules, however, forbid these programs from offering monetary compensation to any recruit for his athletic labor or for the commercial use of his name, image, or likeness. Plaintiffs allege that this prohibition restrains competition in the market for Division I student-athletes and "results in lower compensation [for the student-athletes] than would otherwise prevail in a more competitive market."

As Judge Wilken points out, these are not the first players to ever bring an antitrust claim against the NCAA for prohibiting payments to players. In fact, a similar case made it to the Supreme Court in 1984.

In NCAA v. Board of Regents, the NCAA had adopted a policy limiting the number of televised football games. That policy also limited the number of times a particular program could appear on television in a given year, in order to improve live attendance. The NCAA also negotiated television contracts with ABC and CBS according to these terms. The defendants in the case, including the Oklahoma Board of Regents, negotiated their own television contract with NBC that would allow for more television appearances than the NCAA regulations allowed. The NCAA threatened to sanction any program that disobeyed its order, and the universities brought an antitrust claim.

In finding the NCAA's scheme in violation of the Sherman Act, the Supreme Court granted the NCAA significant leeway in antitrust circumstances. Effectively, the Supreme Court said that, because the NCAA sells collegiate athletic competition, it is allowed to fix rules regarding that competition, including both the rules of the competition and the regulations related to the "academic tradition" of intercollegiate athletics.

Last month, the NCAA used this Supreme Court decision as the basis of a motion to dismiss the players' antitrust claims. A motion to dismiss is a preliminary motion -- yes, even though this case is four years old, preliminary tactics are still being used -- where most of the NCAA's arguments, like those for the benefit of their rules and regulations, cannot be considered by the judge. If it was to prevail, the NCAA would have to show that the players' contract claims are without merit on their face. Judge Wilken did not find that the NCAA met this burden and denied the motion.

Judge Wilken's rejection of the motion is positive news for the players -- it's another win in a long line of procedural wins for O'Bannon and company -- and it could set the stage for the all-important class certification, but it is hardly shocking.

Monday's motion: the NCAA again attacks 'commonality,' only with the players' help

The NCAA filed yet another motion Monday, one that could change the course of the case significantly.

Back in June, the parties argued over certification of the players as a "class" for class action purposes. The decision, which is still pending and expected in coming weeks, is crucial to the players' case. If Judge Wilken denies the class certification, each player would have to bring his or her own case against the NCAA to collect damages. Presumably, many players would decline to incur the expense and hassle of suing the NCAA over a few thousand dollars. If the class certification is granted, the players currently involved in the lawsuit could effectively stand in for all players harmed by the NCAA's alleged actions.

In order to allow the class to be certified, Judge Wilken needed to find that NCAA athletes were sufficiently similar in many defined respects, including damages. In other words, the court would have to determine that each player, from Heisman Trophy winners to benchwarming freshmen, suffered roughly the same amount of damage for the NCAA's actions. The NCAA attacked this aspect of class certification repeatedly in June's hearing, and Judge Wilken indicated some skepticism. She proposed a way around it, though:

Judge suggests if a jury did not accept plaintiffs' plan of equal revenue for every athlete, the class would have to be decertified.
— Stewart Mandel (@slmandel) June 20, 2013

Unless the facts of a case are indisputable, they are to be determined by a jury. Wilken's potential solution was to allow certification to go forward and let the jury hear the facts related to common damages. If the jury found that damages would be roughly equal, the class action would remain in effect. If it did not, she would decertify the class after the trial, a particularly cruel fate.

Such a model could well contradict the players' claims of common damages.

But all of that is moot if the facts regarding common damages are indisputable, and the NCAA is saying that they are. In its motion filed Monday, the NCAA claims that economist Daniel Rascher -- the expert purportedly chosen by the players to testify as to the economic impact of the NCAA's actions on players -- has proposed a model of damages that adopts higher payments to star athletes over the benchwarmers. Such a model could well contradict the players' claims of common damages. And if the players' own expert witness cannot find common damages between the players, evidence of differentiation in damages may, in fact, be indisputable.

Much of the evidence related to Rascher's reports and testimony was filed under seal, so we are left to rely on the NCAA's characterization of that evidence until the players respond. But if the NCAA is correct, it could be a severe blow to the chances of class certification and, with it, the players' case in general.