NCAA athletes allowed to pursue $1B compensation case

The National Collegiate Athletic Association must face claims by tens of thousands of current and former students testing the limits on how much compensation they can get for years of playing basketball and football.

Friday’s ruling by a federal judge allows about 21,000 students who played on teams from 2010 through 2015 to proceed with a case seeking damages of more than $1 billion. The students seek to be reimbursed for the difference between capped scholarships they received and the actual cost of school attendance, a gap estimated to be $3,000 to $4,000 a year for each.

The decision by U.S. District Judge Claudia Wilken in Oakland, California, comes almost a year after a federal appeals court backed a practice among college conferences of limiting student-athlete compensation to stipends of as much as $7,000. Prior to last August, NCAA rules permitted payments to players only for tuition, room, board, books and fees.

The judge rejected a request for dismissal of the claims without addressing the merits of the two separate lawsuits. But if the students ultimately win, they may be entitled to coverage for a range of expenses including graduate school tuition, health benefits or insurance, plaintiff lawyer Jeff Kessler said in court on Wednesday. The revised rules would not allow the athletes to be paid to play sports, in keeping with their amateur status.

“We are pleased with the ruling as it’s totally on-point with where we are going — we aren’t trying to get the athletes cash," Steve Berman, another plaintiff lawyer, said Friday in an email. “But in a world without the NCAA and schools’ price fixing agreement, they would compete with each other to offer athletes more educational benefits to get them to attend their schools.”

NCAA spokeswoman Michelle Hosick and attorney Anthony Dreyer didn’t immediately respond to email and phone messages seeking comment on the ruling.

O’Bannon trial

The cases before Wilken follow a trial she held in 2014 in a lawsuit by ex-University of California at Los Angeles basketball player Ed O’Bannon, who challenged the treatment of students as amateurs as college basketball and football evolved into multibillion-dollar businesses. He argued that NCAA operates an illegal price-fixing cartel that excludes players from contracts among member schools, broadcasters and other businesses that earn revenue from using athletes’ names, images and likenesses.

Wilken sided with O’Bannon that the NCAA’s rules violated antitrust law, but the U.S. Court of Appeals in San Francisco later said she went too far in ordering the NCAA to provide publicity rights payments of at least $5,000 a year for football and basketball players. O’Bannon’s lawyers have petitioned the U.S. Supreme Court for review.

NCAA lawyers argue that the athletes’ latest cases are flawed because they fail to identify specific collegiate rules that bar the kind of non-cash compensation they seek. Claims that the NCAA and its schools are prohibited from offering graduate tuition and health benefits are untrue, Dreyer said during Wednesday’s hearing.

‘Single word’

“The main issue we’ve understood is that they say this is a different case than O’Bannon," he said. “But there is not a single word in the complaint that they have identified as an NCAA rule that limits the ability to provide any form of benefit that is tethered to the cost of education, but is not currently permitted.”

Wilken rejected that argument in her ruling. She said that while last year’s appeals court ruling forecloses students from seeking cash compensation “untethered to educational expenses,” it doesn’t bar the claims the former and current students are pursuing now.

The athletes who competed from 2010 to 2015 are seeking damages of as much as $378 million, Berman said. Any award they win in court would be tripled under U.S. antitrust law.

The case seeking damages is In re NCAA Athletic Grant-in-Aid Cap Antitrust Litigation, 14-cv-02758, U.S. District Court, Northern District of California (Oakland). The other case is Jenkins v. NCAA, 14-cv-2758, U.S. District Court, Northern District of California (Oakland).