Cracks in the Armor: Recent Legal Challenges to Professional and Collegiate Sports Governance Associations

Transcription

1 September 16, 2016 Cracks in the Armor: Recent Legal Challenges to Professional and Collegiate Sports Governance Associations Glenn M. Wong Distinguished Professor of Practice Website: Glenn M. Wong

2 The Exponential Growth of Revenues in the NCAA Top 3 NCAA School Revenues 2015 Top 3 NHL Franchise Revenues 2015 Texas A&M $192,608,876 New York Rangers $229,000,000 Texas $183,521,028 Montreal Canadiens $219,000,000 Ohio State $167,166,065 Toronto Maple Leafs $192,000,000 In , the Power 5 Conferences combined for $2.1b in revenue, up nearly $520m from Conference Payout per school 1 : SEC $32.7m; Big Ten $32.4m; ACC $27m; Pac-12 $25.1m; Big 12 $23.3m Conference Revenue streams 1 : ACC: Bowl Games, $98m; NCAA Tournament, $21m; TV deals, $212m; Total: $311m SEC: Bowl Games, $112m; NCAA Tournament, $17m; TV deals, $347m; Total: $476m Big Ten: Bowl Games, $86m; NCAA Tournament, $21m; TV deals $279m; Total: $386m Big 12: Bowl Games $72m; NCAA Tournament, $19m;TV deals, $162m; Total: $253m Pac-12: Bowl Games, $81m; NCAA Tournament, $11m; TV deals, $215m; Total: $307m In 2012, ESPN agreed to 12-year $5.64 billion contract to broadcast the College Football Playoff ($470 million annually) 2 In 2016, five years into the 14-year, $10.8 billion agreement to televise the NCAA Men s College Basketball Tournament, CBS and Turner Sports extended the agreement for an additional 8-years, $8.8 billion 2 Sources: 1 CBS Sports, 2 ESPN

3 O Bannon v. NCAA Plaintiffs in the O Bannon Case: Class action claim by former Division I men's football and basketball student-athletes Includes current Division I men s basketball and football studentathletes in the class U.S. District Court Judge Claudia Wilken partially certified the class Injunction class = certified former players, as a class, can seek change for current student-athletes Damages class = NOT certified former players, as a class, cannot seek damages for past actions of the NCAA 3

4 O Bannon v. NCAA Plaintiff s Legal Theory: The plaintiffs sued on a Sherman Antitrust Act theory, challenging NCAA rules that bar student-athletes from receiving a share of the revenue that the NCAA and its member schools earn from the sale of licenses to use of the student-athletes names, images, and likenesses in video games, live game telecasts, and other footage 4

5 District Court Judge Wilkens Permanent Injunction Order August 8, 2014 NCAA is restrained from agreeing to: a. Prohibit deferred compensation in an amount of $5,000 per year or less for the licensing or use of prospective, current, or former D1 MBB or FBS players names, images, and likenesses through a trust fund payable upon expiration of athletic eligibility or graduation, whichever comes first b. Prohibit the inclusion of compensation for the licensing or use of prospective, current, or former D1 MBB and FBS players names, images, and likenesses in the award of a full grant-in-aid, up to the full cost of attending the respective NCAA member school, as defined in 20 U.S.C. 1087ll and calculated by each school s financial aid office applying the same standards, policies, and procedures for all students

6 O Bannon v. NCAA October 1, 2015: 9 th Circuit Court Ruling by Circuit Judge Jay S. Bybee and Sr. District, Judge Gordon J. Quist with partial concurrence and partial dissent by Chief Judge Sidney R. Thomas Upheld - NCAA in violation of Sherman Antitrust Act Upheld - requirement that NCAA permit its schools to provide up to the cost of attendance Reversed - $5,000 trust fund arrangement Current Status: March 16, 2016: O Bannon Plaintiffs file writ of certiorari to the United States Supreme Court to petition Court to hear case April 13, 2016: U.S. Supreme Court grants NCAA writ of certiorari extension until May 18, 2016 to file writ of certiorari and response to O Bannon s May 16, 2016: NCAA filed writ of certiorari to the United States Supreme Court to petition Court to hear case and files opposition to O Bannon s writ of certiorari July 20, 2016: Writs of certiorari were distributed to United States Supreme Court Justices for conference on September 26, 2016

7 Jenkins v. NCAA (GIA) Plaintiffs: Current and Former Student-Athletes Defendants: NCAA and Power 5 Conferences Date Filed : March 17, 2014 Legal Theories: Antitrust - Lawsuit alleges the NCAA and Power 5 conferences are price-fixing by creating artificial restraints in the form of scholarship caps Seeking: Injunction to prevent enforcement of NCAA rules that limit the amount of scholarship money a player can receive Represented by attorney Jeffrey Kessler

8 Alston v. NCAA Plaintiff: Shawne Alston Former West Virginia football player Defendants: NCAA, ACC, Big 10, Big 12, Pac-12, SEC Date Filed: March 5, 2014 Legal Theories: Antitrust Allege that the NCAA and the Power Five conferences violated antitrust laws by agreeing to cap the value of an athletic scholarship below the actual cost of attending school and far below what the free market would produce. Seeking: Injunction to prevent NCAA and conferences from capping the value of a scholarship below the cost of attendance Damages in the amount of the difference between the value of a scholarship and the cost of attendance

9 Update on Jenkins and Alston June 4, 2014: Jenkins and Alston were consolidated in the the Northern District of California The Five Judge Panel cited efficiency of discovery and prevention of inconsistent pre-court rulings over class certification as reasoning December 7, 2015: Judge Wilken approved class certification May 16, 2016: NCAA and Conferences asked Judge Wilken to dismiss lawsuits NCAA claims that the 9 th Circuit Court of Appeals ruling in O Bannon v. NCAA requires that the Jenkins and Alston cases be decided in the NCAA s favor without further action O Bannon ruling precludes Jenkins and Alston from being tried in the 9 th Circuit August 5, 2016: Judge Wilken rejects NCAA s request to dismiss lawsuits Judge Wilken opined that the plaintiffs in these two cases also challenge rules prohibiting the provision of other benefits and in-kind compensation as well as cash compensation and therefore could not be dismissed These cases are currently in the discovery phase and the plaintiffs are in the process of serving subpoenas to various institutions requesting information such as number of scholarships and financial aid information. August 12, 2016: U.S. Magistrate Judge Nathanael M. Cousins approved motions to compel the Pac 12, Big Ten, Big 12, SEC, and ACC to provide plaintiffs with financial records, including television contracts Every conference except the Big Ten made an agreement with the plaintiffs to provide some financial information, the Judge stated that the Big Ten had until August 25, 2016 to do the same

10 Northwestern University College Athletes Players Association Ramogi Huma, President Kain Colter, former Northwestern QB Issue: Are football studentathletes at Northwestern University employees within the definition of the National Labor Relations Act?

11 Regional Director Decision (Page 1) I. ISSUES The Petitioner contends that football players ( players ) receiving grant-in-aid scholarships ( scholarship ) from the Employer are employees within the meaning of the Act, and therefore are entitled to choose whether or not to be represented for the purposes of collectivebargaining. The Employer, on the other hand, asserts that its football players receiving grant-in-aid scholarships are not employees under the Act. It further asserts that these players are more akin to graduate students in Brown University, 342 NLRB 483 (2004), whom the Board found not to be employees under the Act. II. DECISION AND DIRECTION OF ELECTION For the reasons discussed in detail below, I find that players receiving scholarships from the Employer are employees under Section 2(3) of the Act. Accordingly, IT IS HEREBY ORDERED that an election be conducted under the direction of the Regional Director for Region 13 in the following appropriate bargaining unit: Eligible to vote are all football players receiving football grant-in-aid scholarship and not having exhausted their playing eligibility employed by the Employer located at 1501 Central Street, Evanston, Illinois, but excluding office clerical employees and guards, professional employees and supervisors as defined in the Act.

12 NLRB Decision August 16, 2015: National Labor Relations Board dismissed Northwestern University football players who sought employee status and unionization Ruling: NLRB declined to exert its jurisdiction Novelty of the petition Asserting jurisdiction would not effectuate the policies of the NLRA to promote stability in labor relations