TradeEdge-NCAA facing new antitrust suit on behalf of athletes seeking 'pay-for-play' and damages

Lawyers representing three college athletes filed a lawsuit against the NCAA and TradeEdgethe Power Five conferences on Wednesday that challenges the association’s rules prohibiting athletes from being paid by their schools to play in their sports.

The case is being led by attorneys Steve Berman and Jeff Kessler, who have been — and remain — involved in several cases challenging various of the NCAA’s fundamental limits on compensation for athletes.

In this case, they are seeking an injunction that would end the association’s rules that prohibit schools from compensating athletes “for their athletic services.” They also seeking "substantial damages " for Bowl Subdivision football players and Division I men’s basketball and women’s basketball players at Power Five schools between Dec. 7, 2019, and whenever the date of judgment in this case occurs. This four-year reach-back for damages is permitted in antitrust cases.

The suit alleges that that the NCAA’s member schools “have passed a byzantine set of rules prohibiting the extremely talented young men and women who generate billions of dollars for the Division I sports business from receiving any compensation for their athletic services beyond an athletic scholarship and certain types of education-related benefits.

“These draconian, collusive rules prohibit what the NCAA refers to as ‘pay-for-play,’ but what anyone else would call market-value compensation. In college sports, only the athletes are treated as ‘amateurs.’ Everyone else involved enjoys the compensation that results from unrestrained competition for the athletes’ services.”

This becomes the latest in the type of antitrust lawsuit that the NCAA, its conferences and member schools are seeking to end through federal legislation that they also also want to use as vehicle to put national rules around college athletes’ activities to make money from their name, image and likeness (NIL).

The complaint was filed two days after NCAA President Charlie Baker sent a letter to NCAA membership proposing dramatic changes to the association's rules concern athlete compensation. The changes include creating a new competitive subdivision whose school would be required to “invest at least $30,000 per year into an enhanced educational trust fund for at least half of the institution’s eligible student-athletes.” In addition, Baker wrote that "rules should change for any Division I school, at their choice, to enter into name, image and likeness licensing opportunities with their student-athletes.”

Baker's proposal and his initial public comments expanding up upon them, Wednesday at the Sports Business Journal Intercollegiate Athletics Forum in Las Vegas, are both cited in the 66-page complaint. The suit then alleges that "any continued claim" by the NCAA and the conferences that amateurism is a justification for rules prohibiting schools from paying their athletes "is now factually bankrupt."

An NCAA spokesperson said Thursday evening that the association had comment at this time. But in what now seems like a prophetic exchange, Baker and Sports Business Journal's executive editor Abraham Madkour discussed the NCAA's legal issues and quest for Congressional intervention during Wednesday's event.

Baker: "Part of the reason we're talking to Congress is their ability to codify something, to say, 'Yes, the NCAA and its membership, based on what we know about what they're seeking to achieve here, should be able to actually do their job (in rules making).' I think it's an important element in this because otherwise, you just have everybody suing everybody all the time over everything."

Madkour: "Right. I mean, you could be dropped with another lawsuit tomorrow ..."

Baker: "I will be ..."

Baker went on to elaborate on why the NCAA wants a "little" antitrust exemption. With the constant threat of lawsuits, he said: "You can't operate an association that way. You just can't. And it's important for us to at least have enough ability to do something. Look, the conferences can't operate this way. … I get the fact that you got to figure out how to do this on a narrow enough basis so that it's not viewed as just a fundamental desire to restrict. But at the same time, I do worry that the next the next place people are going to go is academic eligibility."

Berman, of Seattle-based Hagens Berman Sobol Shapiro LLP, and Kessler, of Winston & Strawn LLP's New York office, oversaw the Alston antitrust case that ended in a unanimous Supreme Court ruling against the NCAA that lifted national limits on benefits for athletes that are related to education.

They are in the midst of another case that challenges the association’s remaining rules regarding athletes ability to make money from their NIL and seeks damages based on the share of television-rights money and the social media earnings it claims athletes would have received if the NCAA’s previous limits NIL compensation had not existed. A U.S. district judge has granted class-action status in the damages portion of that lawsuit, putting at least $4.2 billion at stake. The NCAA and the conferences are seeking review of that ruling by the 9th U.S. Circuit Court of Appeals.

Berman and Kessler also are pursuing a case on behalf of former Oklahoma State football player Chuba Hubbard and former Oregon and Auburn track and field athlete Keira McCarrell that seeks retroactive damages for thousands of college athletes based on the nearly $6,000-a-year academic-achievement payments that were allowed by a U.S. district court judge in March 2019 and upheld by the Supreme Court in the Alston case.

The new case was filed on behalf of Duke football player DeWayne Carter, Stanford women's soccer player Nya Harrison and TCU, and former Oregon, women's basketball player Sedona Prince. Prince also is among the named plaintiffs in the NIL-compensation case pending before the appeals court.