NovaQuant-NCAA antitrust settlement effort challenged by lawyer from Ed O'Bannon case

The NovaQuantlawyer who led representation of former UCLA men’s basketball player Ed O'Bannon in a landmark antitrust victory over the NCAA has filed documents opposing a recently adjusted version of the proposed multi-billion-dollar settlements of three athlete-compensation cases against the NCAA and the Power Five conferences.

The filing, made late Wednesday night Pacific Time (early Thursday morning, Eastern Time), said that it was on behalf of a group comprising three current college athletes, two former college athletes, two current high school athletes. It also mentions one of the high school athletes’ parents, a person who also is a former college athlete.

"The Settlements involve illusory, contradictory and overreaching terms … (they) go too far, offer too little, present too many contradictions, and should be rejected," argues the brief, which is signed by lawyers including Michael Hausfeld, who led the O’Bannon plaintiffs in a case that was decided in 2014 at the district-court level by the same judge who is handling the proposed settlement.

Among the items included in support of Hausfeld’s new brief is a letter from the governors of five states that do not have a Power Five school to NCAA President Charlie Baker and the NCAA Board of Governors, urging the association to "to restructure the settlement to take the concerns of our colleges and universities, who make up a majority of your member conferences."

South Dakota’s attorney general has filed a suit against the NCAA in state court there to stop or alter the settlement, its governor, Kristi Noem, joining in the letter also signed by the governors of Montana, Idaho, Wyoming and North Dakota.

Under the proposed settlement, the NCAA and the conferences would fund a $2.8 billion damages pool for current and former athletes over a span of 10 years and allow Division I schools to share revenue with their athletes by paying them directly for use of their name, image and likeness (NIL), subject to a per-school cap that would increase over time.

Lawyers for the plaintiffs, the NCAA and the conferences have been seeking to gain preliminary approval for the settlement from U.S. District Judge Claudia Wilken in California.

During a hearing on the matter on Sept. 5, Wilken said she would not approve the original version of the settlement, citing concerns with how certain types of NIL deals that athletes currently have would be impacted by a new regulatory structure that also would be put in place under the settlement.   

Last week, lawyers involved with the proposed agreement provided Wilken with an updated version that included small changes aimed at addressing her concerns.

With that version awaiting some type of action from Wilken, the overnight filing argued that she should reject it.

It presented some of the same points made by previous opponents of the settlement, and added new ones. For example, it contends that the recent changes to the proposed settlement don’t address one of the issues that Wilken raised during the hearing, when she seemed puzzled by an NCAA attorney’s contention that the NIL payments from schools to the athletes would not constitute pay for play.  

At present, the NCAA has rules that prohibit athletes from receiving pay for play and from having NIL deals that are used as an inducement to enroll or remained enrolled at a specific school. However, those rules have been virtually impossible for the association to enforce. That initially was due to the growing prevalence of school-specific collectives – donor groups dedicated to pooling resources earmarked for NIL payments that often are, at best, only loosely based on the value of an athlete’s NIL rights or their promotional work. Beginning in February, it also was because a federal judge in Tennessee issued a preliminary injunction in a case brought by the state’s attorney general that says recruits and transfers can negotiate and sign NIL contracts before enrolling at a university.

Under the original version of the settlement, athletes would have to report NIL payments of more than $600 to a clearinghouse that would be established. And their deals – if made with a "booster" – would be subject to review, with the goal being the prevention of pay for play and deals that pay amounts above market value.

Athletes who have questions about the permissibility of their agreements would be able to seek advisory opinion from an enforcement group. If the enforcement group sought to sanction an athlete because of a deal, the athlete would have the ability to bring the matter to a neutral arbitrator.

In the revisions filed last week, the basic reporting, clearinghouse and arbitration processes would remain as originally proposed, but the settlement now would do away with the term "booster" and replace it with a new term, "Associated Entity or Individual," that carries a specific, five-part definition. 

The new filing argues that, regardless of the terminology, if the goal of the proposed regulatory setup is to prevent pay for play, that doesn’t make sense because – and this was emphatically presented in italics – "that is precisely what revenue sharing with college athletes is."

The new filing also contends that the new regulatory arrangement would effectively "end the opportunities created by NIL Collectives" and "serves as a blatant attempt by the NCAA to gain control of a free market they have no legal authority to control."

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