'NCAA Student-Athlete' Litigation: Out of Bounds?

, New York Law Journal

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Shepard Goldfein
Shepard Goldfein

Breaking with numerous cases spanning several decades, a California federal judge denied the NCAA's motion to dismiss a class action alleging that the NCAA's eligibility and amateurism rules violate the antitrust laws in In re NCAA Student-Athlete Name and Likeness Licensing Litigation.1 Although the Supreme Court in NCAA v. Board of Regents characterized NCAA amateurism restrictions as "justifiable means of fostering competition" necessary "to preserve the character and quality of the [NCAA's] 'product,'"2 U.S. District Judge Claudia Wilken left intact the antitrust claim of 21 current and former Division I basketball and football players. For now, then, the NCAA will have to continue to defend its rules under antitrust laws.

Plaintiffs are 25 current and former Division I athletes, of which 21 are antitrust plaintiffs. Their theory of harm is as follows: As a condition of eligibility to compete in NCAA amateur athletics, plaintiffs were required to sign release forms that prohibited them from accepting compensation in exchange for their publicity rights. Absent that release, plaintiffs argued, they would be free to exploit these rights for commercial gain. Plaintiffs further alleged that group licensors such as Electronic Arts Inc. (EA) and the Collegiate Licensing Company (CLC)—the would-be purchasers of student-athlete publicity rights—support and adhere to the NCAA's rules, which allow licensors to exploit the student-athletes' publicity rights without providing compensation. According to plaintiffs, this results in a "price fixing conspiracy and a group boycott/refusal to deal" between the NCAA, EA and CLC that restrains trade in an alleged "group licensing" market.

The NCAA moved to dismiss the case based on three arguments. First, the Copyright Act, 17 U.S.C. §§ 101 et seq., preempts any antitrust claims plaintiffs might otherwise enjoy regarding their rights of publicity. Second, there is no antitrust market for such group licenses because the California Civil Code and the First Amendment protect broadcaster rights to use student-athletes' names, images and likenesses during sports broadcasts without obtaining the consent of or providing compensation to athletes. Finally, the NCAA's amateurism rules are per se pro-competitive under Board of Regents and its progeny.

Judge Wilken made quick work of dismissing the NCAA's copyright preemption argument. The court held that the rights plaintiffs assert in this case are "fundamentally different" than those rights the Copyright Act preempts, and as a matter of law, the Copyright Act cannot preempt antitrust claims.

The NCAA's second argument was that in the context of sports broadcasts there is no market for group licenses, and without such a market, the alleged coordinated behavior cannot restrain trade. The NCAA contended there is no market for group licenses because the First Amendment and the California Civil Code limit the publicity rights plaintiffs can claim against a broadcaster during sports broadcasts. If broadcasters are free to use an individual's publicity rights without compensating that individual, there is no market for group licenses. And, without a group licensing market, the plaintiffs failed to identify a relevant market in which trade was restrained.

The court took issue with two aspects of this argument. The California Civil Code does, as the NCAA argued, provide that an individual has no publicity right in the "use of [his or her] name, voice, signature, photograph, or likeness in connection with any news, public affairs, or sports broadcast or account."3 However, because plaintiffs allege harm in a national market, it was not enough that California law precludes plaintiffs from exploiting publicity rights; the NCAA needed to show student-athletes were precluded from asserting publicity rights in every state in order to prove that a group licensing market for sports broadcasting does not exist.

This led the court to a discussion of the First Amendment and its second problem with the NCAA's argument. While the First Amendment does limit publicity rights, it does not do so as explicitly as California law. The First Amendment protects the use of footage for a "newsworthy" purpose, but not for a "strictly" or "purely commercial" purpose.4 An example, cited by the court, is the difference between an original broadcast of a golfer's hole-in-one (which would likely enjoy protection) and a subsequent unauthorized reproduction (which likely would not).5

The court used this distinction to help explain its concerns about the NCAA's position. In the court's view, an athlete's publicity rights in video games, for example, are used more commercially than the same rights are used in broadcast footage (and especially live broadcast footage). As a result, the uses would likely be evaluated differently. After teeing up these issues, however, the court simply claimed that the boundary between commercial and noncommercial speech "has yet to be clearly delineated" and declined to decide anything on the commercial speech issue, choosing not even to weigh in on live game footage. Even more perplexing, the court essentially rewarded the plaintiffs for "provid[ing] only general descriptions" and "scant details" about each of the categories of footage. Because the plaintiffs failed to provide this detail, the court could not determine whether any broadcast categories were primarily commercial, thereby allowing all types of footage to survive to the summary judgment stage.

Amateurism

But the cornerstone of the NCAA's motion to dismiss, and the argument most critical going forward, is its argument that amateurism and eligibility rules are per se pro-competitive in light of Board of Regents. Unlike the other two arguments, the Board of Regents argument goes beyond the group licensing context and presses arguments about the necessary steps the NCAA must be permitted to take under the antitrust laws to protect the "revered tradition of amateurism in college sports."6

The NCAA's argument begins (and, one could argue, should end) with Board of Regents. Although ruling against the NCAA's television broadcasting scheme, the Regents court made a number of specific observations about intercollegiate athletics. The court stated that college sports is "an industry in which horizontal restraints on competition are essential if the product is to be available at all."7 It added, "[i]n order to preserve the character and quality of the [NCAA's] 'product,' athletes must not be paid, must be required to attend class and the like."8 Although not essential to the immediate holding of the case, the NCAA takes the position that this does not make the language dicta.

Before Board of Regents reached the Supreme Court, the U.S. Court of Appeals for the Tenth Circuit had found the football television plan per se unlawful. The Supreme Court's argument that, in general, the majority of the NCAA's rules are pro-competitive represents a key finding which allowed the court to hold that NCAA restraints cannot be condemned as per se unlawful.9

Further, in the three decades following Board of Regents, the NCAA has consistently prevailed in cases where it has argued that amateurism bylaws—including bylaws that prohibit compensation—are pro-competitive as a matter of law. One such case is Agnew v. NCAA, decided in 2012, which found "when an NCAA bylaw is clearly meant to help maintain the revered tradition of amateurism in college sports or the preservation of the student-athlete in higher education, the bylaw will be presumed pro-competitive, since we must give the NCAA ample latitude to play that role."10

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