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Ed O’Bannon v. NCAA: The First Domino to Fall?

Published onAug 26, 2014
Ed O’Bannon v. NCAA: The First Domino to Fall?

Each spring, college basketball fans everywhere enjoy watching March Madness, the end-of-the-season tournament. In most ways, Ed O’Bannon is just like every other die-hard basketball fan, even though he is a former All-American UCLA basketball player and former NBA player. Unlike most basketball fans, however, during the 2009 tournament Mr. O’Bannon was shocked to see his likeness portrayed in a National Collegiate Athletic Association (NCAA) program. The NCAA profited from portraying O’Bannon without offering him compensation or even the opportunity to offer his consent.

Five years and over $30 million in legal fees later, this case is waiting on a ruling by U.S. District Judge Claudia Wilken to end a 108-prohibition year ban on student-athletes to license their names and likeness. Earlier in the case, O’Bannon and the other plaintiffs dropped their individual claims against the NCAA for $3.2 billion in personal damages to obtain a bench trial and seek an injunction preventing the NCAA from “profiting from the use of former college player likenesses in various forms of media and marketing.”

The Ed O’Bannon v. NCAA case is the closest student athletes have come to gaining the ability to market themselves. If O’Bannon wins, the NCAA as we know it would cease to exist.  A win for O’Bannon would create the precedent that student athletes should have the ability to market themselves instead of the NCAA and its members deciding for the players. This is likely to slowly expand to all NCAA sports, thus destroying the NCAA as we know it today: like a line of dominos falling over one after another, after the first sport is forced to change its rules, the rest will follow suit. 

The Ed O’Bannon v. NCAA case is complex, and ultimately comes down to the intricacies of antitrust law. Judge Wilken must rule on three contested issues: (1) what is the market as defined by antitrust law; (2) whether that market is being harmed by NCAA polices; and, (3) assuming that there is an applicable market affected by NCAA policies, whether or not there is a less restrictive way to regulate the market while simultaneously maintaining the current benefits.

In a post-trial brief, O’Bannon argues that the NCAA’s rules harm two markets: “(1) the higher education services market . . . and (2) the collegiate licensing market.” O’Bannon defines the educations service market as the market where Division I universities and colleges compete with each other to recruit the best players for their teams.  He further defines the collegiate licensing market as the market to use a Division I football or basketball player’s name, image, or likeness such as “live game broadcasts, archival footage, and video games.

The NCAA argues in their post-trial brief that O’Bannon did not properly establish the market. According to the NCAA, a proper market under an antitrust claim is a monopsony market, or a market with only one buyer. The markets that O’Bannon identified are monopolies, or markets with a single seller. O’Bannon attempted at the end of the trial to claim that the markets are both a monopsony and monopoly, but the NCAA argued that not only did O’Bannon never made that claim in their complaint, but also that his expert never used the term monopsony. Therefore, according to the NCAA, O’Bannon “cannot pursue (a monopsony) claim for the first time after trial,” and the analysis of the case should stop there.

Defining the market has proven to be the toughest obstacle for O’Bannon, demonstrating the nuances of antitrust law. According to Michael Carrier, a professor at Rutgers Law School, the NCAA’s best hope for a win is to prove that the markets O’Bannon claimed were affected by the NCAA are not the type of market protected under antitrust law. The success or failure of the NCAA on this issue will be determined by how precisely Judge Wilken defines the market. If Judge Wilken holds strictly to antitrust law when defining the market, and assuming that O’Bannon did not satisfy that standard, the NCAA will most likely win the case. However, if Judge Wilken does determine that either market is protected under antitrust law, Mr. Carrier argued that O’Bannon will have an advantage over the NCAA on subsequent issues, and therefore will likely win the case.

At the end of the trial, Judge Wilken expressed some difficulty distinguishing the market and subsequent product in O’Bannon’s claim. This expressed difficulty may indicate that Judge Wilken is of the opinion that the markets O’Bannon identified do not fit into the types of markets protected under antitrust law. If Judge Wilken finds that there is a qualified market under antitrust law, however, then she must decide whether that market has been harmed. O’Bannon argues that the NCAA’s policies harm both markets in five distinct ways:

  1. Limits competition for college athletes.

  2. Increases the price of school for athletes.

  3. Facilitates early exit by some athletes.

  4. Limits consumer choice by restricting the number and quality of licensed products.

  5. Spurs inefficient substitution, such as excessive expenses on recruiting, salaries and facilities.

To counter these allegations, the NCAA attempted to show that their policies have not affected the quantity or quality of output in any product market, and therefore no harm occurred. The NCAA relied heavily on one of its economic experts, Lauren Stiroh. During Miss. Stiroh’s testimony, she claimed that for “an antitrust violation to occur, there must be an effect on the market that eventually impacts consumers.” However, Judge Wilken stated during trial that Miss. Stiroh’s theories are “actually wrong.” Because Judge Wilken essentially threw out the NCAA’s argument, it seems highly likely that O’Bannon can show that one if not both of the markets are being harmed by the NCAA.

Finally, if Judge Wilken determines that there is a market under antitrust law and that the NCAA is harming that market, then the last issue is whether the benefits, as described in the NCAA’s defense, outweigh the harms listed by O’Bannon and determined by the court. The NCAA argues that the ban on “paying players” increases competition, and that lifting the ban would harm competition between schools. Testimony from NCAA President Mark Emmert and Vice President Mark Lewis indicate that the NCAA believes that if student-athletes were paid, then many schools would drop out of Division I athletics and thereby drastically decrease competition.

O’Bannon argues that not only did the NCAA not provide any evidence to support its pro-competition stance, but also that university officials directly refuted the NCAA’s claim. University of South Carolina President Harris Pastides stated that if the USC dropped out of Division I athletics under his direction, he feels certain that his school would replace him immediately.

Judge Wilken’s response to this issue also foreshadowed her eventual ruling. Judge Wilken heavily discussed the possibility of “less restrictive alternative” that could maintain the benefits of the NCAA policies and goals while also allowing player some amount of freedom to market their name and likeness. Among the possibilities, she listed:

“. . . allowing colleges to put student-athlete NIL (name, image and likeness) revenue toward a total cost of education, which would potentially include longer-term scholarships that would allow former athletes to return and complete their education; equitably-shared group broadcast licensing revenues; revenues held in trust until athletes are no longer eligible to play; and a system that would call for revenue sharing among student-athletes across colleges, to ensure that competitive balance was not unduly altered and that less wealthy “loser” schools also benefited.”

From her suggestions, it appears that Judge Wilken believes there are several possible alternatives to the blanket ban that could benefit both parties.

Finding a policy that is both equally beneficial to the original party (NCAA) and less restrictive to the challenging party (O’Bannon) is the purpose of antitrust law. While O’Bannon may not have fully met the burden under the law to establish a market, Judge Wilken seems intent on providing a fair ruling and may not be as strict as she could be by allowing a market to be established. By establishing a market, Judge Wilken would be able to sign an injunction that could benefit all parties. If Judge Wilken rules for O’Bannon, we can expect subsequent changes in other NCAA sports that will mirror the changes dictated by Judge Wilken.

However, even if Judge Wilken rules for the NCAA, we can still expect the NCAA to change in the near future. As an attorney specializing in sports law stated, “ultimately [O’Bannon v. NCAA] doesn’t matter. . . . The NCAA as we know it is dead. It’s just a matter of who and what, individually or collectively delivers the kill shot.” For the NCAA, this case ultimately does not matter. As a line of dominos arranged in a circle will fall no matter where you start, the NCAA will fall no matter which case it loses first. Whether the NCAA loses this case or one of the several other cases already lining up, the result will be the same: the NCAA as we know it will cease to exist.

Kyle is a second year law student at Wake Forest University School of Law. He graduated from the University of Florida with a B.A. in Philosophy and a minor in business administration. Upon graduation, Kyle intends to practice in the area of business litigation.

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