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NCAA Sued by Athletes Over Names, Images, Social Media Deals (2)

June 15, 2020, 4:58 PM; Updated: June 15, 2020, 10:39 PM

The National Collegiate Athletic Association and its top conferences were hit with a proposed antitrust class action in California federal court Monday claiming they’re profiteering off of students’ names, images, and likenesses.

“The hard work of college athletes has translated into billion-dollar television deals, multi-million dollar coaching salaries, extravagant facilities, and lucrative commercial licensing and sponsorship agreements,” the lawsuit says.

“Although student-athletes produce the product that fuels this industry,” it adds, “these same young men and women receive only a tiny fraction of the revenues they generate, while continuing to face severe penalties for failing to abide by a labyrinth of rules.”

In addition to the NCAA, the complaint targets its “Power Five” conferences: the Pac-12, Big Ten, Big Twelve, Southeastern Conference, and Atlantic Coast Conference. It was filed in the U.S. District Court for the Northern District of California by Arizona State University swimmer Grant House and University of Oregon basketball player Sedona Prince.

The suit accuses the NCAA and conferences of colluding “to create an anti-competitive market” in which college athletes are “powerless to realize the commercial value of their own NILs,” even as leagues, teams, coaches, and their corporate sponsors get millions each year from likeness deals and “social media blitzes.”

It alleges “an overarching conspiracy to fix the amount that student-athletes may be paid” for their NILs “at zero.”

While the NCAA strictly enforces athlete violations of its “draconian” rules, “it has failed since its inception to effectively and consistently police its rules against exploitative outside influences,” according to the complaint.

“Notably absent from NCAA bylaws is any proscription or limitation on the amount of money that large corporate interests can pour into college sports and university athletic programs, and companies take advantage of the opportunity to derive immense profits,” the suit says.

Moreover, students playing sports that don’t offer lucrative professional opportunities have a limited time to cash in on their fame through social media sponsorships, and the league and conferences are effectively usurping that chance, according to the complaint.

It cites recent rulings by a federal judge and the U.S. Court of Appeals for the Ninth Circuit striking down caps on education-related compensation for college athletes, as well as a California law that would let them get paid for endorsements.

The suit also refers to an earlier class action that ruled against some of the NIL restrictions. The league’s subsequent reform pledges have been “vague, indefinite, and noncommittal,” according to the complaint.

“The NCAA has yet to make any actual rule changes,” the suit says.

Cause of Action: Section 1 of the Sherman Act; unjust enrichment.

Relief: Treble damages, an injunction, invalidation of NCAA bylaws restricting NIL compensation, costs, and fees.

Potential Class Size: An injunction-seeking class of Division I athletes who have competed in the past four years; a sub-class seeking social-media related damages on behalf of athletes playing for any of the Power Five conferences.

Response: A Pac-12 spokesman said it was reviewing the complaint but couldn’t comment on pending litigation. The NCAA said that it is reviewing the lawsuit but didn’t have a comment. The Big Twelve, SEC, and ACC didn’t immediately respond to requests for comment Monday. The Big Ten couldn’t be reached.

Attorneys: The plaintiffs are represented by Hagens Berman Sobol Shapiro LLP.

The case is House v. Nat’l Collegiate Athletic Ass’n, N.D. Cal., NO. 20-cv-3919, complaint filed 6/15/20.

(Updates 16th paragraph to add the NCAA's response.)

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com; Meghashyam Mali at mmali@bloombergindustry.com

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