When The NCAA Ran Out Of Lucky Charms
March 17 is St. Patrick’s Day, a time for carousing and all-around good fun. It’s also the day on which the Ninth Circuit will hear the NCAA’s appeal in the O’Bannon litigation, perhaps the most important piece of sports litigation in the last thirty years. [Disclosure: I am one of the counsel for O’Bannon and the class in this case]. Originally brought in 2009 under antitrust theories which alleged price fixing of college Grant-in-Aids, O’Bannon is really human rights litigation challenging the “field hand” status of college athletes forced to work for nothing while universities, operating under the umbrella of the NCAA, profited from the free labor of the young football and basketball players.
The suit alleged a conspiracy between the NCAA, Electronic Arts, Inc. (the video game manufacturer) and CLC, Inc. (the licensing arm of most University members of the NCAA) to fix the value of the names, images and likenesses of the athletes at zero. Eventually, the scope of the suit was expanded from videogames and photos to the live broadcast and eventual rebroadcast of those games on television. After many twists and turns—over nearly five years of contentious litigation, during which the court denied the motion for certification of a damages class—the case went to trial on a class-wide injunctive theory. After three weeks of testimony in front of Judge Claudia Wilken in Oakland, California, the court ruled that individual universities must be free to offer athletes the full cost of their attendance for school plus up to $5,000 per year for the use of their names, images and likenesses without interference from NCAA Rules and Regulations.
While many issues will be confronted by the Ninth Circuit in this appeal, including issues of First Amendment rights, the scope of commercial speech, and copyright law, the key factor upon which the NCAA is relying is Board of Regents v. NCAA, a Supreme Court case decided in 1982, where, in dicta, it was implied that the NCAA, as a joint venture, is immune from antitrust scrutiny. How the Ninth Circuit will ultimately decide O’Bannon is anyone’s guess but, for certain, it will be decided soon. Judge Wilken’s injunction goes into effect in August, 2015, and the Ninth Circuit has agreed to hear the appeal on an expedited basis. Of particular note is that the same panel which heard the appeal in Keller v. Electronic Arts, an earlier subset of the O’Bannon litigation which ruled 2-1 in favor of plaintiffs’ position that rights of publicity exist in athletes’ names, images and likenesses, has reached out to hear the O’Bannon appeal. In his dissent in Keller, Chief Judge Thomas, who supported the Electronic Arts position on transformative use, had these comments about the NCAA:
The issue of whether this structure is fair to the student athlete is beyond the scope of this appeal, but forms a significant backdrop to the discussion. The NCAA received revenues of $871.6 million in fiscal year 2011–12, with 81% of the money coming from television and marketing fees. However, few college athletes will ever receive any professional compensation. The NCAA reports that in 2011, there were 67,887 college football players. Of those, 15,086 were senior players, and only 255 athletes were drafted for a professional team. Thus, only 1.7% of seniors received any subsequent professional economic compensation for their athletic endeavors. . . .
And participation in college football can come at a terrible cost. The NCAA reports that, during a recent five-year period, college football players suffered 41,000 injuries, including 23 non-fatal catastrophic injuries and 11 fatalities from indirect catastrophic injuries . . . .
Finally, as a qualitative matter, the publicity rights of college athletes are remarkably restricted. This consideration is critical because the “right to exploit commercially one’s celebrity is primarily an economic right.” Gionfriddo v. Major League Baseball, 114 Cal. Rptr. 2d 307, 318 (Cal. Ct. App. 2001). NCAA rules prohibit athletes from benefitting economically from any success on the field. (citations omitted). Before being allowed to compete each year, all Division I NCAA athletes must sign a contract stating that they understand the prohibition on licensing and affirming that they have not violated any amateurism rules. In short, even if an athlete wished to license his image to EA, the athlete could not do so without destroying amateur status. Thus, an individual college athlete’s right of publicity is extraordinarily circumscribed and, in practical reality, non-existent.
If the panel feels the same way about the NCAA as Chief Judge Thomas, March 17 will prove to be a very happy St. Paddy’s day for Mr. O’Bannon.