Photo Credit: Eric Prisbell, Why the House antitrust case is high stakes for the NCAA, ON3, (Sept. 19, 2023), https://www.on3.com/nil/news/why-the-house-antitrust-lawsuit-is-high-stakes-for-the-ncaa-nil-title-ix/.
Authored by: Barry Hall Billings
Will they be paid? This question about player compensation has buzzed around the world of college athletics for years. The clear answer desired has a possibility of being given this year. This answer begins with a holding in NCAA v. Alston where the U.S. Supreme Court unanimously ruled that the NCAA’s restrictions on education-related benefits for athletes violated antitrust law.[1] Moreover, Justice Brett Kavanaugh’s concurring opinion in Alston further signaled judicial skepticism toward the NCAA’s amateurism model, stating that “the NCAA’s business model would be flatly illegal in almost any other industry in America.”[2]
In 2020, Grant House and a group of student athletes filed a putative class action against the NCAA claiming that the NCAA’s rules violate antitrust law by banning players from benefiting from their name, image, and likeness. [3] Specifically, House and fellow plaintiffs asserted claims for (1) conspiracy to fix prices in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1; (2) group boycott or refusal to deal in violation of Section 1 of the Sherman Act; and (3) unjust enrichment.[4] The NCAA’s reasoning for not allowing the player’s use of his own name, image, and likeness has always been to ensure that student athletes are student athletes to preserve the consumer demand for college sports as a distinct product from professional sports.[5]
The NCAA subsequently moved to dismiss House’s claims as they argued (1) the complaint should be barred under the doctrine of stare decisis in light of O’Bannon v. National Collegiate Athletic Ass’n,[6] and (2) the claims of the “Group-Licensing Damages Sub-Class” fail because the sub-class of plaintiffs did not have any publicity rights for the broadcasts, and even if they did, they did not allege an injury to the “Group Licensing Market” that was adjudicated in O’Bannon.[7]
The court held that the plaintiffs had sufficiently alleged that the NCAA’s restrictions on name, image, and likeness compensation constituted the unreasonable restraint of trade under the Sherman Antitrust Act.[8] The court found the allegations were plausible, which emphasized that the NCAA’s rules impose an non-competitive cap on athlete compensation without a legitimate justification.[9] The court further held that the NCAA’s rules could not be exempt from antitrust laws simply because they were tied to amateurism.[10] They reasoned that the NCAA’s business model increasingly resembled that of a professional or commercial enterprise.[11] By Judge Wilken denying the motion to dismiss, the case was also able to proceed as a class action, meaning House could represent all current and former Division I athletes who were denied name, image, and likeness compensation due to NCAA rules.[12]
After Judge Claudia Wilken denied the NCAA’s motion to dismiss,[13] a series of hearings and motions were filed. After over four years, the NCAA finally decided to settle this case for good.[14] In making this settlement, the NCAA agreed to pay out roughly $2.576 billion in back pay to “[a]ll student-athletes who compete on, competed on, or will compete on a Division I athletic team at any time between June 15, 2020 through the end of the Injunctive Relief Settlement Term.”[15] While this amount has been agreed upon, the fairness hearing is set to be heard in the Northern District of California before Judge Wilken to “determine whether to approve certification of the Settlement Classes . . . whether the proposed Settlement of the Lawsuit on the terms and conditions provided for in the Amended Settlement Agreement is fair, reasonable, and adequate to the Settlement Classes and should be approved by the Court,” and whether a final judgment for the approved amount should be entered.[16]
This amount will be paid out over a 10-year period.[17] Moreover, approximately 81% of the damages pool will be paid to Power Five football (SEC, Big-10, Big-12, ACC, and PAC-12, men’s basketball and women’s basketball student-athletes who were on a roster and received athletics aid from June 15, 2016 thru September 15, 2024.[18] The remaining 19% of the damages pool will be available to all student-athletes who can demonstrate that they lost third-party NIL (including video game) opportunities during the class period.[19] Students in the sports other than football, men’s basketball, and women’s basketball, and those who received a partial or full GIA during the 2019-2020 to 2024-2025 school years are eligible to submit a claim for these lost NIL opportunities.[20]
The settlement in House v. NCAA is in a position to create a precedent that will shape the future of NIL litigation in several ways. First, the case highlights the judicial importance and societal recognition that college athletes are the core piece of a multi-billion dollar industry and are deserving of fair compensation for their contributions.[21] By addressing the antitrust implications of NIL restrictions, this case could influence other former athletes to challenge NCAA policies under both antitrust and labor laws.[22] Second, the settlement could change the trend and promote federal legislation governing NIL compensation.[23] Currently, there is not a uniform federal standard and a vast array of conflicting state laws is the current standard, which has created much confusion and inequities for athletes and institutions alike.[24] If the settlement is approved and it includes a revenue-sharing model or other significant concessions, Congress could potentially be pressured to enact comprehensive NIL legislation.[25] Finally, this settlementis likely to influence the outcome of related cases, such as Johnson v. NCAA.[26] If the settlement in House results in significant financial benefits for athletes, it could be used to strengthen the plaintiffs’ case that they are employees, which would further undermine the NCAA’s amateurism defense.[27]
[1] See generally Nat’l Collegiate Athletic Ass’n v. Alston, 594 U.S. 69 (2021).
[2] Id. at 109 (Kavanaugh, J., concurring).
[3] House v. Nat’l Collegiate Athletic Ass’n, 545 F. Supp. 3d 804, 808 (N.D. Cal 2021)
[4] Id. at 810.
[5] See NCAA Bylaws §12.01.2 (revised Aug. 9, 2024).
[6] 802 F.3d 1049 (9th Cir. 2015).
[7] House, 545 F. Supp. 3d at 811.
[8] Id. at 816.
[9] Id.
[10] Id. at 817
[11] Id.
[12] Id.
[13] House, 545 F. Supp. 3dat 820.
[14] In re Coll. Athlete NIL Litig., No. 4:20-CV-03919-CW, 2024 WL 5360139, at *1 (N.D. Cal. Oct. 7, 2024).
[15] Id. at *2.
[16] Id. at *1.
[17] Jason Greco, House vs. NCAA Settlement, Utah Utes, (October 16, 2024), https://utahutes.com/sports/2024/10/16/house-vs-ncaa-settlement.aspx.
[18] Id.
[19] Id.
[20] Id.
[21] Dan Edelman, The Future of College Athlete Compensation, 45 J. Coll. & Univ. L. 123, 130 (2023).
[22] Id.
[23] Dan Murphy, Congress Urged to Act on NIL as State Laws Proliferate, ESPN (Jan. 12, 2024), https://www.espn.com.
[24] Id.
[25] Id.
[26] See Johnson v. Nat’l Collegiate Athletic Ass’n, 108 F.4th 163 (2024).
[27] Id.
American Journal of Trial Advocacy 