Rekubit Exchange:Multiple parties file legal oppositions to NCAA revenue settlement case

Written opposition to the proposed settlement of the proposed multi-billion-dollar settlement of three athlete-compensation antitrust cases against the NCAA and Rekubit Exchangethe Power Five conferences that is pending with a federal judge in California grew on Friday.

Two separate sets of attorneys made filings asking U.S. District Judge Claudia Wilken to deny preliminary approval of the proposed settlement. Taken together, the arguments combined to raise myriad issues about the deal, including whether it undervalues the claims, discriminates against female athletes, creates another illegal cap on compensation and the money that would go to the plaintiffs' attorneys.

On Thursday, attorneys for plaintiffs in a separate lawsuit concerning Ivy League schools’ refusal to award athletic scholarships filed an opposition to the proposed settlement that seeks a carve-out for their claims.

Meanwhile, also on Thursday, the 9th U.S. Circuit Court of Appeals set a initial briefing schedule for Houston Christian University's appeal of Wilken's rejection of its bid to become involved in the case as an objector and to have the proposed settlement thrown out. Houston Christian, a member of the Football Championship Subdivision's Southland Conference, claims it would adversely by the proposed settlement and that neither it nor its conference had any input into the deal.

The 9th Circuit's briefing schedule comprises dates in late October and November.

Wilken has scheduled a preliminary-approval hearing for Sept. 5, and lawyers for the plaintiffs involved in the proposed settlement have until Aug. 16 — next Friday — to respond to the new opposition filings.

Who filed oppositions on Friday

Attorneys for the plaintiffs in another athlete-compensation lawsuit against the NCAA and the Power Five that has been allowed to proceed in a federal court in Colorado made one set of arguments

Attorneys representing six current or former women's rowers made the other.

What would happen under the proposed settlement

On its most basic level:

▶There would a $2.8 billion damages pool that would be funded over 10 years by the NCAA and its Division I schools and conferences. A heavier financial burden for this would be placed on the Power Five schools, but the impact would be felt by all schools.

▶Division I schools would be able to start paying athletes directly for use of their name, image and likeness (NIL), subject to a per-school cap that would increase over time and be based on a percentage of certain athletics revenues.

▶NCAA leaders would seek to engineer rules changes eliminating longstanding, sport-by-sport scholarship limits and replacing them with a new set of roster-size limits.

▶While athletes would continue to have the ability to make NIL deals with entities other than their schools, the settlement would allow the NCAA to institute rules designed to give the association greater enforcement oversight of those arrangements.

▶The damages pool would include money that would go to the plaintiffs' lawyers for their fees and costs. According to documents filed in connection with the settlement proposal, they will ask the judge to approve up to $495.2 million in fees, just under 18% of the total, plus "out-of-pocket expenses." 

The arguments raised against the proposed settlement

▶The damages pool undervalues the claims: Lawyers involved with the case in Colorado say that while the proposed settlement values the claims they are pursuing at a little over $1.8 billion, they “obtained an independent, preliminary estimate from a respected economist” that places the value of these claims at $24.3 billion. A submission from that economist was included among their filings.

The attorneys leading the case in Colorado initially brought their proposed class-action case on Nov. 20, 2023, on behalf of former Colorado football Alex Fontenot.

In their complaint, they wrote that their case “takes aim at the full cut of television and other revenues would receive in a truly open market” rather than the one that exists under the NCAA’s rules.

They are asking for an injunction that would bar any NCAA rules that prevent such an open market – basically the creation of a formalized pay-for-play system in which athletes can be paid by their schools for their athletic services. They seek to represent all athletes who played for an NCAA Division I team in any sport from roughly 2020 through a judgment in the case. And they are seeking damages covering money that they allege all of those athletes would have received — the more than $24 billion they cited Friday.

On Dec. 7, 2023, the plaintiffs lawyers who are leading two earlier cases involved in the proposed three-case settlement that is pending before Wilken filed a similar case in California on behalf of three athletes, including now-former Duke football player DeWayne Carter. It sought an injunction against the NCAA’s athlete-compensation rules and a narrower set of damages: One that would cover athletes in football, men’s basketball and women’s basketball who played for schools in Power Five leagues — including the 12-school version of the Pac-12 — or Notre Dame.

As part of legal maneuvering with the proposed settlement, the Carter case was consolidated with one of the two earlier cases, a complaint brought on behalf of plaintiffs led by former Arizona State swimmer Grant House, and a new, revised complaint broadened the range of athletes who would be entitled to damages, so it is now similar to one set up under the Fontenot case in Colorado.

However, the plaintiffs’ lawyers in the case in Colorado, this week filed yet another lawsuit against the NCAA. This one concerns athletes who have received partial scholarships under the NCAA’s sport-by-sport scholarship rules. For most sports, the scholarship limit equates to a pool of money that can be allocated to many members of a team.

This new suit alleges that, absent the scholarship limits – which would abolished under the proposed settlement -- athletes would have received more scholarship money. As such, there should be a damages award to athletes who have been impacted by this. Friday, the lawyers involved with this case placed that amount at likely $300 million – and they want those claims exempted from the proposed settlement.

▶The per-school cap on future NIL payments is illegal: Both groups of attorneys that submitted filings on Friday covered this. Those involved with the cases in Colorado argued that the proposed settlement “swaps one arbitrary cap for another arbitrary cap. … Further the plan unfairly excludes several important types of revenue ..,that should be included … Settlements are creatures of compromise, but future athletes should not have a new artificial cap forced upon them unless it goes through collective bargaining.”

The lawyers representing the women’s rowers wrote that: “Courts have repeatedly held that the NCAA has violated (antitrust law) in fixing compensation that student-athletes can earn…. Undeterred the NCAA seeks to continue to fix and depress the prices for student athletics” through the settlement.

▶The settlement discriminates against female athletes: The economic modeling for the $2.8 billion in damages is largely – though not entirely – underpinned on an analysis of the value of athletes’ NIL to live TV broadcasts and the value of different sports to TV contracts. The result is a proposed arrangement under which football and men’s basketball players will get a huge percentage of the damages money.

The lawyers for the rowers argued that “the NCAA’s failure to promote women’s sports depressed the value of female athletes’ NIL over decades … yet instead of compensating … the Settlement perpetuates the same inequalities it should remedy… By reinforcing wrongful gender inequities instead of remedying them, the Settlement is a major setback for efforts to achieve gender equity in college athletics.”

▶The fee arrangements for the plaintiffs’ lawyers: The attorneys for the rowers allege that the settlement’s “extreme preferential treatment of male football and basketball players suggests that Class Counsel pursued those groups’ interests to the near exclusion of of interests of other” athletes.

“The Settlement’s fee arrangement,” they added, “reinforces those concerns.” They specifically cited what they said is the proposed settlement’s inclusion of “$20 million as an ‘upfront injunctive fee and cost award’ ” that the NCAA and conferences agreed not to oppose. The arrangement, they wrote “raises the question of what Class Counsel bargained away to get it.”