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Student-Athletes Sue NCAA Over Endorsements, Social Media Revenue

A federal judge is entertaining another student-athlete led antitrust class action against the National Collegiate Athletic Association, this time over endorsement deals, autographs and social media revenue.

OAKLAND, Calif. (CN) — A federal judge is entertaining another student-athlete led antitrust class action against the National Collegiate Athletic Association, this time over endorsement deals, autographs and social media revenue.

In June 2020, Arizona State swimmer Grant House and Oregon women’s basketball player Sedona Prince sued the NCAA and the Power Five conferences over rules prohibiting them from receiving any compensation for marketing themselves through third-party deals and sponsorships.

Former Illinois defensive lineman Tymir Oliver filed a separate class action raising the same claims in July.

At a hearing Wednesday, the NCAA asked U.S. District Judge Claudia Wilken to toss the student-athletes claims, asserting that they are merely rehashing old legal arguments settled in class actions brought years ago by former UCLA star Ed O’Bannon and former West Virginia football player Shawne Alston.

Back in 2014, Wilken found the NCAA had violated federal antitrust law with amateurism rules denying major college basketball and football players compensation for the use of their names, images and likenesses. 

The case went to the Ninth Circuit Court of Appeal, which upheld Wilken on the antitrust violation but struck down her proposal that colleges should pay athletes deferred compensation of up to $5,000 per year. The U.S. Supreme Court declined to take up the case.

Five years later, Wilken again ruled in favor of college athletes, finding the NCAA’s restrictions on education-related benefits also violated federal antitrust laws by restraining trade in the market for a college education combined with the market for the players’ athletic services. 

Her decision was affirmed by the Ninth Circuit in May.

In its motion to dismiss, the NCAA decried the latest challenges as a “third bite at the same apple.”

NCAA attorney Rakesh Kilaru said Alston was only allowed to go forward because it challenged a broader set of rules than the O’Bannon case from 2014. But here, nothing has changed. 

“It's the same set of rules that have been at issue in front of this court again and again,” he said. “All these claims get at the same thing which is the amount of money student athletes can receive.”

Not so, class attorney Steve Berman argued Wednesday. Berman also represented the O’Bannon and Alston classes.

O’Bannon focused on live game broadcasts, footage and video games. In this case we have very important rights that weren't even touched on in the O’Bannon case and that's social media rights,” Berman said.

“I wonder if that’s because it hadn't really burst on to the scene yet. This whole influencer, brand monetization hadn't started at that point,” Wilken observed.

“That's right. The restraints impermissibly restrict social media rights,” Berman said. 

House, for example, is featured on Arizona State’s social media page, which brings in money for the school, but cannot monetize his own personal social media accounts. 

“The same thing for Ms. Prince,” he said.

The players are also trying to upend rules barring endorsement deals with third parties.

Though the NCAA has begun dismantling its rules on endorsements, rule changes to allow Division I athletes to earn money from such deals will not be final until January 2021.

“In a world free from restraints, schools would compete for the labor of students. They would say ‘Come to University of Oregon, we have a deal with Nike and a deal with Fox Sports and we're giving football players 10 grand each if they come to Oregon.”

But Kilaru urged Wilken to hold off on allowing the cases to proceed while the NCAA and Congress hash out rule changes that could resolve the players’ claims.

“It would be backwards to say that because there is some consideration to potential  rule changes by both the NCAA and Congress that that's a reason for an antitrust court to jump into the fray and address a challenge to the rules as they sit now,” he said.

But the players, it seems, would prefer to achieve their ends through the courts. 

"The lawsuit has a deterrent effect, that the NCAA knows we're out here,” Berman said.

“We think having our case go forward even though the NCAA hasn't decided anything is the right course at this point."

Wilken did not say how she would rule, but has allowed the parties to proceed with document discovery. A trial date, she said would be long in coming. 

“The earliest we could try the case is October 2023, and that's aggressive and not very realistic.”

Follow @MariaDinzeo
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