NCAA NIL Arguments in Key Athlete Pay Hearing Grilled by Judge
The potential class-action status of athletes in a case centering on paying NCAA players for broadcast revenue took center stage in a contentious federal courtroom hearing on Thursday in Oakland, Calif.
The NCAA should be worried by how the hearing played out.
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Jeffrey Kessler and Steve Berman—lead attorneys for Arizona State swimmer Grant House, former Oregon and current TCU basketball player Sedona Prince and former Illinois football player Tymir Oliver—argued they ought to represent many thousands of current and former college athletes who were denied NIL before 2021 and who have been excluded from a share of so-called “BNIL,” or broadcast revenue.
Meanwhile, attorney Rakesh Kilaru insisted on behalf of the NCAA and Power Five conferences that the three players’ claims concern individualized matters, such as how much money a player should receive in NIL, and fail to address necessary counterfactuals, such as assuming the same group of athletes would have competed for Power Five schools had the NCAA allowed NIL. He maintained the case brought by the players is too ill-suited for a class action.
The hearing for In Re College Athlete NIL Litigation was before U.S. District Judge Claudia Wilken, who previously presided over successful class action lawsuits brought by Ed O’Bannon and Shawne Alston regarding the use of college players’ likenesses in video games, broadcasts and other media (O’Bannon) and restraints on compensating college athletes for education-related expenses (Alston).
Like O’Bannon and Alston, this case raises antitrust claims. The NCAA and Power Five conferences are accused of conspiring through NCAA rule-making to deny athletes of NIL opportunities until 2021. Athletes could not use their right of publicity, which forbids the commercial use of another person’s identity without their consent, unless they were prepared to forfeit their NCAA eligibility and scholarships. Another allegation is that these parties continue to deny college athletes a share of TV revenue and revenue from video games that could have been made.
Certification is a crucial part of litigation, especially in a market as large as Division I college sports. The decision to certify will determine whether House, Prince and Oliver represent thousands of plaintiffs or only themselves, and thus whether the case could potentially lead to a judgment for the defendants—the NCAA and the Power Five conferences—to pay billions of dollars or a far more modest figure.
The players propose classes for football and men’s basketball players, women’s basketball players, players in other sports starting in 2016 and all D-I athletes who competed or will compete from June 15, 2020 (when the complaint was filed), to the date of judgment in the case, which is set to go to trial on Jan. 27, 2025. According to court records, these three classes would collectively include more than 14,500 college athletes.
Wilken has discretion to certify the proposed classes, certify them in modified form or deny them. Wilken’s decision hinges on her application of Rule 23 of the Federal Rules of Civil Procedure. Certification would be appropriate if, among other things, there are questions of law or fact common to the class; the claims of House, Prince and Oliver are typical of other athletes who would be in the class; and the trio would ably protect the interests of the class.
Although Wilken said early in the hearing that she “did not have a lot of questions about class certification,” because the parties had already submitted written briefs (which Sportico previously analyzed), she would ask quite a few questions as the three attorneys engaged in oral argument.
Kilaru insisted that the fundamental flaw of the players’ case is the “substitution effect,” which Wilken seemed to find perplexing and unconvincing.
Kilaru explained that if NIL had been allowed prior to 2021, college athletes would have varied in what they earned—since NIL is individualistic—and some would have remained in school rather than turned pro. “You have to look at every individual student athlete to know” what they’d earn, he maintained. Kilaru also referenced the hypothetical star quarterback recruit who would not see his lesser-known teammates earning the same as him to be fair.
Kilaru further claimed that under the players’ proposed math for broadcast NIL, some college athletes could earn as much as $400,000 if they stayed in college for four years, an amount that might have convinced some to stay. He also argued there is data showing that some college players are staying in school because they can earn NIL.
Wilken rejected some of Kilaru’s logic, stating “you can’t unwrap facts” that actually happened. “Someone might have broken their leg in the first grade and not been able to play football,” she observed, but the law doesn’t accommodate engaging in alternative histories that are impossible to verify, since they never occurred. Wilken suggested the counterfactual problem is one the NCAA created, since NCAA rules prevented pay. Berman chimed in, saying that there isn’t much evidence pro prospects are staying in school longer to earn NIL when pro leagues could pay them so much more.
For his part, Kessler pushed back on the notion that the players are so individualized they can’t be in the same class. “You can be Tom Brady or the lowest player in the NFL,” noted Kessler, who previously litigated for Brady in the Deflategate case, and every player still gets an “equal share” of video game money and other categories of licensing revenue. This goes to the heart of group licensing, which he believes college players ought to engage in.
Kessler also rejected the star QB hypothetical as belied by NCAA rules not being challenged in the case. He noted that a college can’t pay a recruit more to be in a video game or to be on TV, because that would amount to pay-for-play, which he said he would be “delighted” to see the NCAA allow but is irrelevant to this case.
Wilken seemed particularly troubled by Kilaru’s incorporation of Title IX. He said the world the players “have posited can’t exist” because of Title IX, a point reflecting that if college athletes were paid to be on TV, a disproportionate share would go to men.
Wilken replied, “Maybe schools could become creative and share revenue with female athletes.” She would later say perhaps conferences and schools should have an obligation to promote women athletes more so they can attract more lucrative TV deals.
Wilken’s commentary was reminiscent of a recent hearing before the U.S. Court of Appeals for the Third Circuit in Johnson v. NCAA, where an appellate panel told the NCAA in so many words it’s not a convincing legal defense to say that it’s too hard to comply with labor law and Title IX at the same time—like all businesses, the NCAA must comply with all laws.
Wilken’s points seemed particularly relevant for Prince, whose 2021 TikTok video showing the disparate conditions of the women’s NCAA basketball tournament, as compared to their male counterparts, sparked an external NCAA review. Prince has become an outspoken advocate for female athletes and, in her own words, “the NCAA’s worst nightmare.”
Wilken also countered an observation by Kilaru that professional athletes aren’t paid separate amounts for broadcasting NIL. While that’s true, Wilken observed, she said it was because pro athletes are pro athletes: Their salaries already reflect the fact that players receive a share of revenue generated by league activity, including TV and video game deals.
Wilken’s decision on certification will be through a written order, released most likely in a matter of weeks. It could be appealed by either side to the U.S. Court of Appeals for the Ninth Circuit. Although appellate courts often reject appeals until there is a final judgment at the trial court level, parties can try. Any appeal could require an extension of the trial date, though Wilken opined during Thursday’s hearing the date already seems too far off.
As a sign of the increasing public and media interest in the NCAA’s antitrust fate, the public Zoom broadcast of the Thursday’s repeatedly hit its maximum capacity, at points causing difficulty for some of the lawyers in the case to join. Three years into the litigation, the pendulum of public sentiment has continued to swing towards the notion that college athletes should be allowed to earn money from their athletic abilities while in school.
Last month, a Sportico/Harris Poll survey found that 74% of Americans supported college athlete NIL rights, as compared to 62% who were in favor of them back in November 2020. Indeed, the current debate has rapidly evolved to whether schools should be able to directly pay their athletes to compete, either through a revenue-sharing model or as employees.
