Ed O'Bannon vs. the NCAA: Explaining the major decision coming June 20

College athletics could be turned upside down by a federal judge on June 20. Here's why.

By Patrick Vint May 6, 2013, 10:00am EDT

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Big Ten commissioner Jim Delany says there should be "no compromise on it" and has threatened to take his multi-billion dollar conference into Division III if his side were to lose it (he's since walked that back). Grantland's estimable Charles Pierce calls it a meteor aimed at collegiate athletics. The Daily Show is snarkily sniping at the NCAA over it.

But as the calendar turns to May 2013, where does Ed O'Bannon's case against the NCAA stand?

The overview

In re: NCAA Student-Athlete Name & Likeness Licensing Litigation (a/k/a O'Bannon v. NCAA) is an antitrust lawsuit brought by former UCLA Bruins basketball player Ed O'Bannon against the NCAA for using the likeness of past and present players in a variety of products, including the EA Sports college video games. The strange case name is due to the fact that the O'Bannon case was consolidated with one filed by former Nebraska quarterback Sam Keller, in which Keller alleged that EA Sports was using his likeness and that of his former teammates in its video games.

O'Bannon alleges that the waiver the NCAA requires athletes to sign forking over their names and images for use by the organization is a "contract of adhesion," or a contract signed without negotiation. When the NCAA and EA Sports create a game with O'Bannon's likeness, the former player alleges, they are conspiring to set the value of his likeness at zero, when that likeness could potentially draw more from another game developer on the open market.

There are plenty of primers on the case as a whole available for review, including our own Robert Wheel's summary from January and a more in-depth overview from John Infante and company last year.

The class action

The plaintiffs have brought their suit as a class action, which would allow them to litigate the suit in the shoes of other aggrieved parties, namely other players. Their damages, in and of themselves, are relatively small. O'Bannon made an appearance in an NCAA video game as part of a legendary team. Keller alleges his likeness was used in NCAA Football games. Neither was likely to get rich on the sale of that likeness to another company.

But the entirety of NCAA players, as a whole, would be an entirely different ballgame. Rather than having each person go through his or her own separate litigation and incur thousands of dollars in costs and fees for their small cuts of the pie, the class action would allow them to be adjudicated in aggregate, all represented by O'Bannon, the other few named plaintiffs, and their attorneys.

Class certification -- that is, the Federal Court approving the class's scope and affirming that it meets the specific legal guidelines for a class -- has been the primary fight since the action was commenced. If the NCAA successfully fights class certification, the lawsuits would go away for less than the NCAA spends on Miami bankruptcy attorneys. If the class is certified, the NCAA would be faced with the difficult decision to either cave on the entire business model of "amateurism" in a settlement or go to trial and potentially face a crippling award of damages.

The January order

Originally, the lawsuits had been brought solely by former student-athletes like Keller, O'Bannon, and Oscar Robertson. The lawsuit completely changed course in August, when the plaintiffs amended their claims to include current players (saying that any damages due to them could be held in trust until their eligibility had run out). Despite the NCAA's vehement arguments against this change in tack, U.S. District Court of Northern California Judge Claudia Wilken, the judge overseeing the matter, issued a ruling in January allowing all players to be included as potential class action plaintiffs.

That decision altered the entire case for one obvious reason: The plaintiffs had been working under a four-year statute of limitations for damages. In other words, the former players could only collect damages incurred within four years of the commencement of the lawsuit. Former players don't turn up in NCAA video games or on team jerseys all that often. Current players -- or at least their uniform number, height, weight, and hometown information -- do, meaning the NCAA's potential damage payout increased exponentially overnight.

There was a second ruling in Judge Wilken's January order that could have even greater impact: The case extended to live broadcasts. That means the NCAA, individual conferences, and television networks could be potential parties and liable for antitrust damages. Given that antitrust decisions are subject to treble damages -- you take the verdict from the jury and triple it, essentially -- a bad result could now bankrupt the NCAA and/or the conferences.

The June hearing

After the January decision, Judge Wilken allowed the parties to file additional papers arguing for or against certification, with a hearing set for June 20 to decide the issue. The NCAA filed a brief opposing class certification in March, and the plaintiffs replied last week. During Thursday's NFL Draft, the NCAA released a statement about the plaintiff's brief and sounded extremely confident in winning. The important passage from that statement was this:

The plaintiffs even concede the NCAA is correct on most points, but ask the court to ignore the dramatic differences among student-athletes and across sports, across colleges and universities, across conferences, across state laws, and across available financial resources and to create an entirely new model and order the implementation of unions for select college student-athletes.

This is not the NCAA's first class action rodeo. In 2004, former Washington Huskies walk-on Andy Carroll filed a class action suit against the NCAA, alleging that scholarship limits acted as a restraint on trade that prevented him and other walk-ons from receiving scholarships to play collegiate sports. Carroll alleged that Washington coaches told him he would have received a scholarship had there not been an NCAA-imposed limit, forcing him to pay the tuition, room and board that otherwise would have been given to him.

Carroll's attempts to certify a class were eventually denied when a judge found that the potential class members were substantially different, in that there was no way of determining which athletes would actually receive scholarships had there been no limitations. It is this claim -- that the proposed O'Bannon class members are substantially different in their entitlement to, and amount of, damages -- that lies at the heart of the NCAA's efforts to stop class certification and effectively terminate the O'Bannon case.

The NCAA again used this argument against class certification in a more recent claim. In White v. NCAA, former Stanford football player Jason White and three other former BCS-conference athletes filed a class action claim against the NCAA, challenging the NCAA's cap on grant-in-aid scholarships as a restraint on trade. As it had in Carroll, the NCAA claimed that the potential members of the class action were too dissimilar to maintain a single class.

The class in White, however, included two key differences. First, it was limited to players in sports and conferences in which the NCAA makes its money: Football and men's basketball in the major and high mid-major conferences. Second, it included a claim that all players could make: That the grant-in-aid scholarship cap did not allow for full cost of attendance. As the presiding judge explained in certifying the class:

Plaintiffs argue that demand for student-athletes, coupled with the ability of student-athletes to generate substantial revenues for their institutions, demonstrates that all or nearly all of the student athletes in the proposed class would receive far more than the COA if schools had unfettered discretion to award athletics-based financial aid. Stated in terms of economics, Plaintiffs argue that even the marginal player commands a value greater than his COA. If true, then the NCAA's charge of intra-class conflict is impotent. Each class member would deserve damages based on the difference between his GlA amount and his COA. The Court sees no actual conflict of interest which at this time would preclude class certification.

This is why O'Bannon's central allegation -- that the NCAA and its partners collaborated to set the value of players' likenesses at zero, while reaping tens of millions of dollars in contracts with a video game company that literally advertises that "if it's in the game, it's in the game" -- is so important. The NCAA's contracts and the contents of the games in question are proof of some value in player likenesses. Even if that is a nominal amount -- as it may be for O'Bannon and Keller -- there is still a value greater than zero dollars.

So why is the NCAA so confident?

Good question. So far, the NCAA has gotten its lunch handed to it in this case.

The court denied an initial motion to dismiss the entire case, a tactic the NCAA used to snuff out an earlier suit brought by a Rice football player regarding one-year scholarships before class certification could even begin. And the court granted the plaintiffs' attempt to expand the suit in January.

After both of those events, and repeatedly throughout the intervening period of time, the NCAA has released a series of defiant statements. Perhaps they believe they are in the right. Perhaps they are putting on a brave face. But Donald Remy's prepared statement from Thursday dismissing the plaintiffs' claims as erroneous and false is par for the course.

The aftermath

If the NCAA wins on June 20 and class certification is denied, it might not be the end of the road for the likeness claims.

A denial of class certification would not terminate the claims of O'Bannon, Keller, Robertson, or the other former players who joined the case, and those claims could either settle out of court or proceed to trial. If they were to make it to the courtroom, we could get a determination of whether the NCAA is, in fact, licensing player likenesses in violation of antitrust laws, and a victory for O'Bannon and company could mean a cascade of new lawsuits. Minor players likely do not have enough damages to bring a suit, but some -- looking at you, Johnny Football -- might.

If the NCAA loses and the class is certified, the entire model of collegiate athletics is in danger, as detailed elsewhere.

Damages could be in the hundreds of millions of dollars and lead to the final dismantling of the organization. On the other hand, a positive verdict on the merits is the best result the NCAA could hope to obtain, as it would affirm its own business model. This is why Delany is so sure there won't be a settlement. June 20 may not be judgment day, but it's the first big step toward that judgment in months.