Antitrust Law Daily Wrap Up, TOP STORY—N.D. Cal.: College athletes granted summary judgment on antitrust claims against NCAA; Damages claims proceed to trial, (Apr 14, 2014)

By Linda O’Brien, J.D., LL.M.

Current and former college athletes were entitled to summary judgment on their antitrust claims against the National Collegiate Athletic Association over its prohibition on student-athlete compensation for the use of their names, images, and likenesses in television broadcasts and video games, the federal district court in Oakland, California has ruled. The Association’s motion for summary judgment was denied, and the damages claims of the college athletes were set for trial (In re NCAA Student-Athlete Name & Likeness Licensing Litigation, April 11, 2014, Wilken, C.).

A group of current and former college athletes who played on men’s football or basketball teams filed suit against the National Collegiate Athletic Association (NCAA), alleging that the NCAA violated federal antitrust law by conspiring with licensing companies to restrain competition in the market for the commercial use of their names, images, and likenesses in television broadcasts and NCAA brand video games. In November 2013, the court certified a class of current and former student-athletes seeking injunctive relief against the NCAA but declined to certify a class of current and former student-athletes seeking damages for the use of their names, images, and likenesses. Subsequently, the plaintiffs and the NCAA moved for summary judgment.

The court found that the plaintiffs sufficiently established that the NCAA prohibition on student-athlete compensation for the use of their names, images, and likenesses produced significant anticompetitive effects within the relevant markets. To establish a violation of the Sherman Act, the plaintiff must show that the NCAA’s prohibition on student-athlete compensation for the use of their names, images, and likenesses harms competition in the two markets they identified - the college education market and the group licensing market.

The plaintiffs’ expert evidence was sufficient to support an inference that the NCAA restrictions had an anticompetitive effect in the college education market by preventing colleges from recruiting top student-athletes with offers of compensation from broadcast and video game likenesses, according to the court. To establish the existence of a group licensing market, the plaintiffs showed that, absent the NCAA restraint on student-athlete pay, student-athletes would have cognizable rights of publicity in the use of their names, images, and likenesses in game broadcasts and archival game footage. Their expert analysis also showed sufficiently plausible evidence of anticompetitive effects in the group licensing market in that broadcasters and video game developers were prevented from freely competing for group licenses to use student-athlete names, images, and likenesses.

In rejecting the NCAA’s argument that the plaintiffs failed to identify any NCAA laws prohibiting former student-athletes from licensing their names, images, and likenesses, the court noted that there was adequate evidence that the NCAA continues to license former student-athletes’ names, images, and likenesses without their consent, long after they stopped competing in college. Student-athletes were prevented from selling licenses for the use of their names, images, and likenesses at the time when those licenses were most valuable. Former student-athletes have lost their bargaining power in the group licensing market since the NCAA had already sold the broadcasting and recording rights for the games in which they played.

The NCAA identified five potential procompetitive justifications for its rules prohibiting student-athletes from receiving compensation for the use of their names, images, and likenesses: (1) the preservation of amateurism in college sports; (2) the promotion of competitive balance among college teams; (3) the integration of education and athletics; (4) increased support of women’s sports; and (5) greater output of college football and basketball. The plaintiffs presented sufficient evidence that four of the NCAA’s justifications for the prohibition on compensation served no procompetitive purpose. The plaintiffs presented expert evidence that the popularity of college sports was not tied to NCAA efforts to promote amateurism and that there were less restrictive means to maintain competitive balance among college teams. The court also found that the integration of education and athletes and greater financial support to women’s sports were not procompetitive justifications. However, the plaintiffs and NCAA presented evidence to create a material factual dispute as to whether the increased output benefits were legitimately procompetitive.

Finally, the plaintiffs were allowed to proceed to trial on their individual damages claims. The court noted that, at trial, the plaintiffs must establish a continuing antitrust violation by some overt act after July 2005 in furtherance of its unlawful conduct, identify which plaintiffs will be asserting damages claims, and the identify the specific uses of their names, images, and likenesses that serve as the basis for their damages claims.

The case is No. C 09-1967 CW.

Attorneys: Shana E. Scarlett (Hagens Berman Sobol Shapiro LLP) for Samuel Michael Keller. Robert James (Slaughter Keker & Van Nest LLP) for Electronic Arts Inc. Glenn Douglas (Pomerantz Munger Tolles & Olson), Juan Carlos Araneda (Meckler Bulger Tilson Marick & Pearson LLP), and Robert James Wierenga (Schiff Hardin LLP) for National Collegiate Athletic Association. Amber Melia (Trincado King & Spalding LLP) for Collegiate Licensing Co.

Companies: Electronic Arts Inc.; National Collegiate Athletic Association; Collegiate Licensing Co.

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