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NCAA stumbles in 3rd Circuit arguments on pay for college athletes

The athletes aren't seeking market compensation, their lawyer assured appellate judges, estimating that they would be happy with "pocket money" of about $2,000 a month.

PHILADELPHIA (CN) — Current and former college athletes from Division I schools who are suing the NCAA over its failure to pay them an hourly wage made some headway with their case at oral arguments Wednesday before the Third Circuit.

“This is a very specific case that involves student athletes who dedicate a tremendous amount of their time and are completely controlled, to the serious detriment of their academic development,” said Wigdor attorney Michael Willemin who represents the athletes led by Villanova's Ralph “Trey” Johnson.

Willemin noted that the NCAA's control over student players includes everything from whether they can gamble, disparage another school or even pursue a major whose classes might conflict with practice times. Students who miss practice get fired, the lawyer added.

Steven Katz of the law firm Constangy Brooks argued before the appellate panel in Philadelphia for the NCAA and for the schools like Villanova, Duke and the University of Oregon that are named as defendants. He warned that sending the case to trial would create “a minefield of unforeseen consequences.”

U.S. Circuit Judge Theodore McKee didn’t appear to be swayed, however, by the high stakes.

“If the athletes win, it would clearly create some real issues. That doesn't mean they’re wrong, it just means that built into what we have today — in this modern universe of a billion-dollar college sports activity — there are some real problems,” the Clinton employee told the NCAA lawyer. 

As a nonprofit organization, the NCAA makes its financial statements public. Those records show that last year alone marketing, sports merchandise and TV contracts brought in $870 million. Coaches, college administrators and sports facilities all rake in millions from the enterprise. By considering the players as amateurs, however, the NCAA does not pay athletes on an hourly basis in the same way that other campus employers compensate their student workers.

Willemin said the payment model that they are seeking would be similar to how those in work-study programs are paid, and that this would be appropriate since many of the players average more than 30 hours per week for time spent on their sports.

U.S. Circuit Judge Felipe Restrepo, an Obama appointee, asked the attorney if he thought such a thing as amateurism existed in this context.

“They’re employees,” Willemin responded, saying that with its strict rules “the NCAA has turned the idea of student athletes on its head.”

Restrepo, in turn, asked Katz about the economics of the suit.

“How do the economic realities — across the board, all the sports at all the D-1 universities — how does that play into how we should come out?” Retrepo said.

“Economic reality is not simply a matter of whether the activity generates money, because it’s a slippery slope from that idea to the idea that employment status somehow turns on profitability,” Katz said.

“If the plaintiffs’ analysis is correct, where does it end?” Katz asked.

He maintained that Division I athletes are amateurs by virtue of the fact that they play with no expectation of pay.

Willemin, the athletes’ lawyer, said that this isn't supported by Supreme Court precedent.

“The Supreme Court has routinely held that you cannot waive your right to the minimum wage under the Fair Labor Standards Act,” Willemin said.

“The court held that, if an exception to the FLSA were carved out for employees willing to testify that they performed work voluntarily, employers might be able to use superior bargaining power to coerce employees to make such assertions or to waive their protections under the act, and the Supreme Court said they can't do that,” he explained.


U.S. Circuit Judge David Porter pointed out that student athletes have never been considered employees since the enactment of the Fair Labor Standards Act in 1938. 

“Why should we change it now?" the Trump appointee questioned.

“One of the factors is the economics of college athletes, which has changed drastically,” said Willemin, adding that what’s being decided before the circuit is merely whether this complaint states enough facts as to whether someone could come to the conclusion that his clients are employees.

The NCAA is appealing after a federal judge in Philadelphia rejected its motion to dismiss. On the basis of how much revenue that athletic programs generate for schools every year, U.S. District Judge John Padova likewise declined to consider them “extracurricular activities.”

Willemin told the appeals court Wednesday that his clients are not pushing for major payments, just pocket money, perhaps equivalent to around $2,000 per month, which would add up to about $10,000 per school year if their sports span five months.

‘’We are not seeking market compensation,” the attorney clarified. “If we prevail on this, there is a statutory right to the minimum wage. So if we prevail in this case, whether it's $7.25, whether it's $10, depending on the state you're in, all employees will be paid that minimum wage.”

McKee pushed the lawyer to consider a hypothetical that removes the industry's profitability, as that factor has been central to the athletes' case.

“Let’s assume we lived in a fantasy world where the Rose Bowl was on TV and nobody watched it," he said. "March Madness was called March Waste of Time — you’re saying that your argument would be the same?”

Willemin demurred, calling it premature to probe such issues before discovery.

“No one is forcing the NCAA to exert the degree of control it exerts on its athletes,” Willemin said, saying it would be a simple thing for the NCAA to ease up, if athletes are deemed employees, so that the rules would not come into play. The lawyer offered an example where a student who wants to miss a part of practice to take an elective is able to do so with no punitive impact on their sports commitment.

McKee then turned to the opposing attorney, telling Katz: “I don’t know how these folks are not employees.”

The NCAA's lawyer emphasized in response that athletes do earn scholarships and room and board advantages, essentially as payment.

“For the same reason student athletes at high schools have no expectations of compensation, and no one would even suggest that they should be classified as employees,” Katz continued Wednesday, pushing opposing counsel to quip back

“I missed the Rose Bowl of Binghamton High versus Algonquin High somehow. That wasn’t on my calendar,” McKee said.

Porter questioned Wednesday if the athletes might be “playing not working,” when they show up for their sports.

“Play and work, I don’t think in any shape or form are mutually exclusive,” said Willemin.

If the Third Circuit rules in favor of the plaintiffs, other questions may soon come before courts about what employment law protections should be available for student athletes. This type of ruling would also mark a split with the Seventh and Ninth Circuits, making it more likely the Supreme Court would take up an appeal.

The NCAA has faced numerous challenges to its amateurism model in recent years, including a unanimous U.S. Supreme Court decision from 2021 that removed the limit on how much cash colleges can pay student-athletes to play, allowing them to negotiate past the limits of full tuition, room, board as part of their recruitment. This case did not ask directly, however, whether college athletes are employees and therefore entitled to direct pay.

Those on the side of the NCAA in the case have argued against payment for student athletes on the grounds that it would make coaches the bosses of players, and comparing athletes to students who work for free in campus theater groups or orchestras. The players have argued back that the time of student athletes is controlled in a way that student-led groups like these are often not. The other reason, as NCAA president Mark Emmert testified in 2014, is the sheer cost of paying college athletes for their time.

The National Labor Relations Board has recently said it will investigate an unfair labor practice complaint surrounding the work of University of Southern California football and basketball players.

Student athletes have been challenging fair labor practices within college sports since 2014 when a class of Northwestern University football players moved to unionize

Since July 2021, college athletes have been able to use their name, image or likeness to earn money in the industry. 

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