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9th Circuit Tackles NCAA’s ‘Pay-For-Play’ Case

SAN FRANCISCO (CN) - In its fight for the reversal of a district court's historic ruling allowing student athletes to be compensated from broadcast revenue, the NCAA hung its legal hat on the argument that as the governing body for college athletics it has broad authority to protect amateurism in college sports by regulating student-athlete pay.

"If this were a challenge just flat out to a rule that said you aren't paying the full amount of the reasonable expenses of attending college, and the full amount is not consistent with the principle of amateurism, we would have a different case," NCAA attorney Seth Waxman told a 3-judge panel of the 9th Circuit on Tuesday. "But this is a situation in which a judge has said no, the athletes must be allowed to share in the specific commercial revenue stream that derives from their participation in sports, and that is not what amateurs do. It's what professionals do."

Waxman, a former U.S. solicitor general, added, "What constitutes reasonable expenses is a decision for the NCAA, an association of 1,100 educational institutions to make, not a federal antitrust judge to decide."

The idea that U.S. District Judge Claudia Wilken overstepped her authority by imposing an injunction that prohibits the NCAA from enforcing rules that student-athletes cannot be for the use of their names, images and likenesses was a common refrain for Waxman.

"It can't be the role of an antitrust court to essentially redefine the rules of eligibility that define the amateur nature of athletics," he said. "In no amateur sport, in no amateur league that exists are athletes permitted to be paid to play. The notion that an antitrust court could say 'I don't see how that violates the rules of amateurism,' it just doesn't compute."

In its appeal of Wilken's 2014 ruling, the NCAA has leaned on the 1984 Supreme Court case Oklahoma v. Board of Regents, which said that the NCAA "needs ample latitude" in maintaining amateurism, including not paying student-athletes.

NCAA believes Wilken erred by not following Board of Regents in her landmark ruling that said the NCAA's rules limiting what student-athletes can receive from schools "unreasonably restrain trade in the market for educational athletic opportunities for Division I colleges and universities."

Wilken explained her move, writing that "the college sports industry has changed substantially in the thirty years since Board of Regents was decided."

Her ruling allows for scholarships covering the full cost of college attendance, and permits deferred name, image and likeness payments of no less than $5,000 a year for every year a student athlete plays.

Led by former UCLA basketball star Ed O'Bannon, 20 student athletes sued the NCAA in a 2009 class action for the right to a share in the television broadcast revenue for their names, images and likenesses. A two-week bench trial was held in June.

On Tuesday, O'Bannon's lawyer Michael Hausfeld said the NCAA misinterpreted its key case. "They're trying to extrapolate that Board of Regents has somehow established an impregnable determination that no rule in anyway encompassing the rubric of amateurism can be challenged, and that's not what Board of Regents stands for."


He added, "What the NCAA argues in this case is by merely invoking the talismanic word of amateurism, that this court cannot form a judgment, because that judgment has already been made."

Tuesday's panel comprised the same judges that ruled against video game maker Electronic Arts in a right-of-publicity class action brought by former Nebraska and Arizona State quarterback Sam Keller for using his image and likeness to increase profits for its NCAA-branded football and basketball videogames.

With Chief Judge Sidney Thomas dissenting, the court ruled 2-1 that EA cannot hide behind First Amendment protections for artistic creations, since it seeks "avatars" of players that are as lifelike as possible. Judge Jay Bybee and Senior U.S. District Judge Gordon Quist from the Western District of Michigan were in the majority.

The U.S. Supreme Court declined to take up that case last year.

"At the end of the day we're talking about the value of the name-image-likeness of the players. Explain why you think the names, images, and likenesses have value in the antitrust sense?" Thomas asked Hausfeld Tuesday.

"The names, images, and likenesses of the athletes have value because there are commercial enterprises that are wiling to pay for them and because the NCAA commercializes them," Hausfeld replied.

Thomas continued, "I think you'll agree in terms of broadcasts, no court has recognized property rights in the names, images and likenesses, true?"

Hausfeld assented but added, "In all instances, every contract involving a live broadcast includes the request by the broadcaster to receive the rights of the names, images, and likenesses."

"Right now those rights have not been acknowledged by any court," Thomas said. "Let me get down to videogames and obviously with our Keller decision that has opened the pathway for compensation, but can you give me the likelihood given the uncontested rules and force of the NCAA that has value in the current market or reasonably foreseeable market?"

"That one, your honor, really is easy. It's a yes," Hausfeld replied. "The head of EA said if I could get the names I'd publish the game and the only reason they're not publishing the game is because the NCAA withdrew it because it didn't want the athletes to have a share of that."

The attorney also poked holes at the "amorphous, ethereal definition of what amateurism is," saying the NCAA has not applied its definition consistently.

"Is there really a core consistent principle of amateurism? There is, but it's not a rule," Hausfeld said. "The record reveals the NCAA has revised its rules governing athlete compensation numerous times over the years. Why? Because pay has no meaning other than what the NCAA says it is, so you can't be in violation of a rule or not because you never know what the rule is because the rule is only what they say it is."

Bybee remarked on the blurry line of pay-for-play in college sports, noting that a scholarship that covers the full cost of education seems above board, but a $5,000 payment for name, image and likeness crosses into dubious territory.

"It seems to me there's a reasonable rule to be drawn that the cost of attendance bears some relation to the goods and services you're receiving at a university and therefore doesn't violate a theoretical notion of amateurism," Bybee said. "Once we get to the question of putting $5,000 per year in trust for athletes that would be a cash award at the end of their time at the university, it looks like we've crossed the line. Even though the line wasn't clearly drawn, at least it crosses some theoretical line about pay-for-play."

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