O’Bannon case could be a game changer
It’s a legal opinion that could have significant impact on the way the business of college athletics is conducted. At the very least, it should make the financial books, contracts and business deals of the NCAA, its conferences and individual schools public, in some cases, for the first time.
U.S. District Court Judge Claudia Wilken denied the NCAA’s request Monday to dismiss a 2009 class-action lawsuit led by former UCLA basketball star Ed O’Bannon over the use of former players’ likenesses in everything from video games to memorabilia to television rebroadcasts.
In green-lighting the case, O’Bannon’s attorneys can now begin the discovery process that may unlock how the business operates, which could have impact beyond this case. O’Bannon is one of several former athletes arguing that his one-year scholarship agreements never granted the NCAA use of his name and likeness in perpetuity.
“The key to this order is that it opens the door to the discovery process, and we soon can begin collecting evidence from the NCAA [and its member schools and conferences], taking depositions, and uncovering everything that it wanted to hide and keep from the public’s and athletes’ view,” said Jon King, partner at Hausfeld LLP, one of the firms handling the class-action suit.
“This is a truly historic day – to our knowledge, no one has ever gotten behind the scenes to examine how student-athletes’ current and future rights in their images are divided up and sold,” King said.
“As Supreme Court Justice Brandeis once stated, ‘Sunshine is the best disinfectant,’ and we’re about to let the sunshine in.”
The NCAA released a statement: “The court’s … rulings at this preliminary stage of the cases do not diminish the N.C.A.A.’s confidence that we will ultimately prevail on all of the claims.” In its motion to dismiss, the Association defended both its business practices and that of partner Collegiate Licensing Company. It also sought to move jurisdiction from the historically activist Northern District of California to Indiana, where the organization’s headquarters are located.
Wilken dismissed nearly all of the NCAA’s claims and determined O’Bannon had presented enough of an argument to continue to pursue anti-trust arguments.
“Accordingly, under a rule of reason analysis, O’Bannon pleads facts to make out a prima facie case that Defendants’ conduct constitutes an unreasonable restraint of trade,” Wilken wrote in her opinion.
O’Bannon is arguing not that current student-athletes should be compensated, but that the NCAA doesn’t have the right to continue to profit off an athlete once he or she stops playing.
O’Bannon, now a car salesman in suburban Las Vegas, was moved to take action when he saw a friend’s child playing a video game featuring classic college teams. O’Bannon was the star of UCLA’s 1995 NCAA championship team.
“They literally played me on a video game,” O’Bannon told Yahoo! Sports last summer. “You could play the ’95 Bruins. It didn’t have my name, but it had my number, left handed, it looked like me. It was everything but the name.
“My friend kind of looked at me and said, ‘You know what’s sad about this whole thing? You’re not getting paid for it.’ I was just like, ‘Wow, you’re right.’ It just kind of weighed on me.”
O’Bannon ended up talking to Sonny Vaccaro, the former sneaker executive and long-time adversary of the NCAA. Vaccaro put O’Bannon together with Hausfeld LLP, a major class-action firm that in the past has won complicated cases such as securing reparations for Holocaust survivors from Swiss banks. Hausfeld has since teamed up with other large firms, brought in additional lead plaintiffs and is in the process of linking this case with a similar one from former Arizona State quarterback Sam Keller.
The case could lead to former student-athletes getting a cut of the multi-billion dollar college sports revenue pool and dramatically impact the way college athletics operates.
Consider a famous play such as Christian Laettner’s buzzer-beating 3-pointer that lifted Duke past Kentucky in the 1992 NCAA tournament. The footage has been sold by the NCAA to be used in commercial advertisements for nearly two decades. In most cases, neither Laettner, nor any other player in the footage, has been paid. The O’Bannon lawsuit could cause the NCAA to retroactively compensate everyone in the highlight (the UK players guarding Laettner, the bench players, celebrating Duke teammates, etc.) for a cut of the revenue advertisements using that footage generated. Then there’s memorabilia, classic sports television rebroadcasts, in-house ads and so on.
And that’s one play. Then there’s Bryce Drew’s 3-pointer and Doug Flutie’s Hail Mary and Tyus Edney’s coast-to-coast drive and so on. It’s not farfetched to presume the NCAA, should it lose, could be forced to pay a huge sum.
College athletics is already dealing with the financial strain of surging costs, dwindling donations and a financially underperforming Division I-A football postseason. Fewer than two dozen athletic departments are financially self-sufficient. The rest need a combined $800 million in subsidies from student fees and general university funds, which are often taxpayer supported, according to USA Today.
Both an initial penalty payout and then having to share future revenue with former players would exacerbate those problems.
The O’Bannon case is not expected to be ruled on any time soon – and appeals would likely occur regardless of the decision. However, the opportunity for lawyers to depose college sports executives and subpoena financial records, contracts and business arrangements with third parties makes this a historic day.
“In denying the NCAA’s motion to dismiss, the case has taken a major step toward exposing the abuse of power exercised by the NCAA over former student athletes,” Michael Hausfeld of Hausfeld LLP said.
What Hausfeld finds and how he uses it in this case could change the future college athletics.