OAKLAND, Calif. (CN) – A federal judge refused on Friday to dismiss an antitrust class action challenging the National Collegiate Athletic Association’s cap on scholarship money to college athletes.
Under the cap, Division I college football and basketball players may receive cash compensation up to the cost of attendance, “untethered” to educational expenses.
The athletes say the NCAA and its conferences violate federal antitrust law by imposing the cap and that schools would offer more generous scholarships to attract players without it.
The cap also unfairly bars them from earning money playing sports, from which the NCAA receives multibillion-dollar payments from TV networks and advertisers, they say.
At oral argument earlier this week, U.S. District Judge Claudia Wilken for the Northern District of California indicated that she would dismiss the suit based on O’Bannon v. NCAA, in which the Ninth Circuit held last September that member schools need not compensate athletes above the cost of attendance.
“It was tried and it’s the law,” Wilken said at the hearing. “If I were to rule as I think I probably will have to, an injunction couldn’t include payment higher than the cost of attendance untethered to educational expenses.”
But plaintiffs’ counsel Jeffrey Kessler told Wilken that the players were also challenging rules prohibiting compensation for education-related expenses in addition to the cap on cash compensation. Kessler argued the students are seeking education-related compensation like tuition reimbursement for graduate school and work-study payments, which they had not addressed in their complaint.
Kessler told Wilken the plaintiffs would amend their complaint to include the new claims.
“As long as you provide for [compensation] tethered to educational objectives, it will not dispose our case,” Kessler said.
That seemed to sway Wilken, who said in her 6-page ruling on Friday that “the Ninth Circuit’s decision in O’Bannon limits the types of relief plaintiffs may seek but it does not provide a basis upon which a judgment on the merits can be rendered.”
“O’Bannon simply forecloses one type of relief plaintiffs previously sought: cash compensation untethered to educational expenses,” she added.
“We are very pleased with this ruling by the court, which permits the case to move forward at full speed,” Kessler said in an email. “The next steps are the completion of discovery and then a trial, where we hope to empower the schools and conferences to provide the increased benefits that these great athletes deserve.”
NCAA attorney Jeffrey Mishkin criticized the plaintiffs’ claims for education-related compensation as “micromanaging” in an area where the Ninth Circuit had given the NCAA flexibility.
“This isn’t about small issues of what is and isn’t an appropriate educational expense,” Mishkin told Wilken. “These small incremental issues are not for an antitrust court to decide.”
Kessler is with Winston & Strawn, and Mishkin is with Skadden, Arps, Slate, Meagher & Flom, both of New York.
Mishkin could not be reached for comment late Friday.
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