How the O’Bannon Case Reached the Supreme Court?
Former UCLA basketball star Ed O’Bannon’s lawsuit against the NCAA centers on student-athlete’s rights to publicity and potential NCAA’s antitrust violations. O’Bannon’s legal team argues that by setting a maximum on student-athlete compensation (e.g., scholarships, living stipends) and not allowing student-athletes to profit from their name, image, and likeness (“NIL”), the NCAA restricts trade and limits market competition. Two federal courts agreed with O’Bannon, but the Ninth Circuit Court of Appeals upheld amateurism—the concept that student-athletes should not be paid in order to preserve the current student-first, athlete-second system. O'Bannon v. Nat'l Collegiate Athletic Ass'n, 802 F.3d 1049, 1079 (9th Cir. 2015), cert. denied (Mar. 14, 2016), cert. denied (May 13, 2016). The denial by the Supreme Court was expected as the Court accepts only approximately 1% of cases for review and is currently ideologically deadlocked due to a vacant seat on the Court.
At present, universities are banned from compensating athletes in excess of the full cost of attendance, yet courts view the NCAA’s current market limits as an improper restraint on trade. The Ninth Circuit will now hear O’Bannon again in hopes of resolving this paradox.
Wrong Method for Reform?
The O’Bannon case failed to fully challenge the concept that payments to student-athletes would harm consumer demand for college sports. O’Bannon's lawsuit originally argued that current and former student-athletes should be compensated for their NIL. The case then evolved into an antitrust claim. This allows for the possibility that the Supreme Court could hear a case on related substantive antitrust issues if brought in a more straightforward manner.
Alternative Legal Challenges to the NCAA Model
Two cases currently before lower courts are more direct challenges to the NCAA’s right to cap compensation for student-athletes. In March 2014, former University of West Virginia football player Shawne Alston filed a class action against the NCAA alleging that the Association violated antitrust laws by limiting compensation to only athletic scholarships. Also in 2014, attorney Jeffrey Kessler filed a lawsuit on behalf of a former Clemson University football player Martin Jenkins. The Jenkins suit focuses on unlimited compensation and, arguably, is now the strongest threat to the NCAA’s current amateurism model. The Jenkins and Alston lawsuits, if successful, would fundamentally change the current structure of college athletics by forcing athletic departments to move towards a free market model similar to that used in professional sports.
O’Bannon’s victory in the Ninth Circuit can be used by Jenkins’ attorneys as precedent. Conversely, the NCAA’s attorneys may use the O’Bannon decision to stress the judicial reluctance to imposing sweeping changes to amateurism. In the O’Bannon case, the NCAA presented a study that found that 69% of fans of college athletics would cease supporting their teams if the student-athletes were paid. Some experts question the study’s conclusion, pointing out that universities began to pay the full cost of attendance (not only a scholarship amount) while paying stipends for miscellaneous student expenses. These stipends, some over $5,000 a year per student-athlete, did not noticeably decrease fan interest in college sports.
Almost immediately after the O’Bannon decision by the Supreme Court, a former University of Southern California football player, Lamar Dawson, filed a class action lawsuit against the NCAA and the PAC‑12 Conference. Unlike suits by other former student-athletes, Dawson argues student-athletes satisfy the definition of “employees” under federal and California state wage and hour laws, which the NCAA and PAC-12 allegedly violated by not properly compensating student-athletes for regular and overtime work. The suit seeks unpaid regular wages, unpaid overtime wages, and damages.
What to Expect Next
If the Alton or Jenkins cases are successful, student-athletes, theoretically, could unionize and negotiate their own compensation. A laissez-faire market could emerge where universities compete to offer the best educational advantages, health benefits, and money for athletes. This would exacerbate funding challenges experienced by most athletic departments, most recently the University of California-Berkeley. A possible, albeit unlikely, option is for the NFL and NBA players’ unions to insert themselves into advocating for the rights of student-athletes on the basis of the unions’ right to bargain on the behalf of future members.
In the near future, expect the NCAA to maintain the general status quo while delaying the aforementioned litigation for as long as possible. This will give the NCAA the continued opportunity to gradually reform prior to the Supreme Court potentially fundamentally disrupting the entire college athletics system. Changes in the legal status of student-athletes are all but certain, and with this change will come new legal and business challenges to universities, athletic departments, athletic administrators, and coaches.