• August 16, 2014

Summer can be a slow time for sports fans. Basketball season is over, football season hasn’t started, and, while baseball season is still going, some fans know that their team’s season is effectively over (see: Minnesota Twins). But one season has been alive and very active this summer: college sports litigation!

The NCAA has been very busy lately defending against a barrage of high profile lawsuits, primarily challenging the NCAA on the issue of paying players. Now, coming on the heels of a ruling against the NCAA from Judge Claudia Wilken (N. D. Cal – and coincidentally from Minneapolis), an order that enjoins NCAA rules that prohibit football and men’s basketball players from being compensated for their names and images in TV broadcasts and video games, comes a new antitrust class action lawsuit brought on behalf of a Division I football player, seeking to certify a class of current and former football players by Minneapolis based Zimmerman Reed.

The complaint alleges that NCAA’s Operating Bylaws violates the Sherman Antitrust Act because it is an illegal agreement. Specifically, the suit alleges that there is an agreement between the NCAA and the major athletic conferences (the Big Ten, Pac 12, Big 12, SEC, ACC, American Athletic Conference, Conference USA, MAC, Mountain West, and Sun Belt) that prohibits, caps, and limits the amount of payment that athletes that are subject to the requirements in the rules would be able to receive in a free market in return for their athletic services. 

The suit focuses on the NCAA’s rules that limit the amount of money that players can receive for their scholarship. Under current rules, the NCAA only authorizes schools to give “full grant-in-aid” (“GIA”) to players. GIAs cover “tuition, required institutional fees, room and board, and required course-related books” but, according to the complaint, do not cover the full cost of attendance. As everyone who has been to college (or paid for college) knows, the true full cost of attending school can be significantly more than the price of tuition, room, and board.

As a result, and in order to fill the gap between the GIA and the true cost, some athletes are “forced to sell their blood plasma,” go into significant financial debt by taking out loans or credit cards, or violate NCAA rules by “accepting money from agents to help provide assistance to themselves and their families.” Attorneys for the proposed class say that the gap in the amount players receive is due to the agreement among the defendants to artificially limit payments and thereby hinder competition.

From there, the complaint tells the tale of two separate systems: the NCAA along with its athletic conferences and the players. While the NCAA made loads of money through television and broadcasting deals, and college football coaches received enormous raises – the complaint cites a USA Today story that says that coach pay increased 43%(!) from 2007-2011 – players who made that money possible were not allowed to receive anything more than the GIA. Even more, the complaint states that the NCAA rules make it clear that conferences, and their member institutions, that violate the restrictions will be punished if they do not comply with those rules.

Specifically, the complaint alleges the following:

 114. Defendants and their co-conspirators did those things that they unlawfully combined and conspired to do, including, among other things:

 

a. agreeing to artificially fix, depress, maintain, and/or stabilize prices paid to Plaintiff and members of the Class for their collegiate football athletic services;

 

b. agreeing to boycott any institutions or players who refuse to comply with Defendants’ and their co-conspirators’ price-fixing agreement; and

 

c. implementing, monitoring and enforcing the conspiracy among Defendants and their co-conspirators.

Finally, the complaint alleges that without the restraints levied by the NCAA Bylaws, NCAA institutions would “compete for players’ services by offering them remuneration beyond the GIA cap and beyond the true Cost of Attendance resulting in the players receiving fair compensation for their services.” Attorneys for the plaintiff and the proposed class are seeking an injunction as well as treble damages.

Beyond the specific allegations in the suit, there are a few things that stood out to me. First, the complaint asserts that the District of Minnesota has personal jurisdiction over the defendants because of the NCAA has generated, and received substantial revenue from NCAA sponsored events and tournaments hosted in Minnesota. Apparently hosting the Frozen Four and Final Four is considered purposefully availing yourself to a jurisdiction. Additionally, the factual allegations section of the complaint spends an entire page and a half citing and describing cases where courts have found the NCAA to have violated antitrust laws.

This suit is different from the other antitrust suit brought against the NCAA by Winston & Strawn’s Jeffrey Kessler in that it alleges violations by all the major conferences and not only the five largest conferences and the Kessler suit names lead plaintiffs played men’s basketball, not just football. What the past few weeks has shown is that things can change very quickly as it did when the NCAA announced that it would allow the biggest athletic conferences (read: the ones that make the most money) to set some of their own rules. How this announcement will affect the “season” of college sports litigation will be interesting to watch.

 

 

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