October 7, 2013

CHE on O’Bannon Settlement Talks

By Michael Moffitt

From this morning’s online Chronicle of Higher Education.

Story here.

MM

 

O’Bannon Lawyers Signal Openness to Settlement Talks With NCAA
By Brad Wolverton

The plaintiffs’ lawyers in a federal antitrust lawsuit involving the rights of college athletes say they are open to settlement discussions with the National Collegiate Athletic Association, a potential sign of compromise in the closely watched case.

Lawyers for Ed O’Bannon, the former UCLA standout who is suing the NCAA over perceived injustices in its system, say they have sent signals to NCAA lawyers suggesting a willingness to resolve the case before trial. But in a statement to The Chronicle, Donald M. Remy, the NCAA’s top lawyer, said that the plaintiffs had “not reached out to the NCAA” about a possible settlement and any such assertion was “patently false.”

Mr. O’Bannon and a potential class of current and former players have argued that the NCAA, through its antiquated system of amateurism, illegally prevents athletes from earning their fair share of the money the NCAA brings in from commercial products, including video games and other merchandise. The plaintiffs are also laying claim to potentially hundreds of millions of dollars in television revenue. The NCAA has vigorously denied the claims, and last month vowed to fight the case to the Supreme Court, if necessary.

The judge in the case, which is being heard in the U.S. District Court for the Northern District of California, is considering whether to certify the plaintiffs as a class. A trial date has been set for next summer.

The lawsuit has sparked widespread debate about whether players should be paid. But Michael D. Hausfeld, the lead lawyer for the plaintiffs, said that the suit’s unstated function is to change the relationship between players, their colleges, and the NCAA.

To do that, he told The Chronicle, the association would not need to pay players explicitly.

“You don’t have to say, ‘I’m paying you,’” he said. “It’s not the NCAA paying; it’s the licensee giving a share of their revenue” to players.

‘A Union Is Not Necessary’
Legal experts say the two sides could resolve their biggest differences by focusing less on payments to players—which NCAA colleges have said they are unwilling to provide—and instead examining new ways of providing benefits to players. Such ideas could include improved health care, increased scholarship aid, and more opportunities for athletes to complete their education.

Those proposals would not undercut the NCAA’s amateur ideals, said Matt Mitten, a law professor and director of the National Sports Law Institute at Marquette University.

“If the plaintiffs were willing to consider something other than, ‘Hey, here’s a pool of money effectively used to compensate athletes for their playing services,’ arguably that’s consistent with furthering the educational aspect of intercollegiate athletics,” he said.

Mr. Hausfeld said his team would be open to any changes that would provide players with a more equitable role in big-time sports.

“We’ve cited what a nonrestrictive market would look like,” he said, but he would not describe specific examples of what players might be seeking. If the NCAA agreed to sit down, he said, the two sides could find out where they might have common ground. (His willingness to discuss a settlement, he added, was not indicative of any deviation from the plaintiffs’ “absolute resolve” to continue with the litigation, if necessary.)

For the plaintiffs, any settlement would probably need to provide increased rights to players, including more due-process protections involving alleged NCAA violations, fewer restrictions on transfers, and more negotiating power.

“A union is not necessary, but an association of students is,” Mr. Hausfeld said. “The NCAA claims to have student-athlete representation within the organization. … But how can you have a legitimate independent voice if you’re being controlled by the very association that supposedly represents you?”

In recent weeks, many leading athletics officials have suggested that colleges were open to considering new ways of supporting athletes, but they oppose unionization. Such efforts, they believe, would lead to attempts to treat athletes as employees.

“There’s a huge disparity between looking at the scholarship model and revisiting what student-athletes receive to the leap that the lawyers in this suit go to,” said one official, who asked not to be identified because of the sensitivity of the matter.

For its part, the NCAA has consistently defended its position on amateurism and shown no signs of backing down in the lawsuit. In an interview last month with USA Today, Mr. Remy, the NCAA lawyer, said the association was “not prepared to compromise on the case.”

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Comments

  • Jillian Dickson-Igl says:

    I think this article highlights quite a few important points within the area of negotiation and the sports industry. The NCAA has long stood strong on their position of amateurism, and the benefits that they perceive that the student athletes obtain by not tapping into the vast market endorsement deals. Due to the public interest in the topic, there are misrepresentations about both parties’ intents and therefore it is further complicating the negotiation process between the two parties. This situation demonstrates how the role of the media plays into a parties perceptions of one another and only is furthering tension between the negotiations with one another. It will be interesting to see how this all pans out in the end, and what effect it may have on the sports industry.

  • Lauren Rosenbaum says:

    This case seems to present the advantages and disadvantages of settlement. While settlement can lead to a more beneficial outcome to the parties involved, it may be a disadvantage to the public because this case will not create precedent. If the intent of the parties is to pursue the case to the Supreme Court if settlement fails, there is potential for the case to establish an important legal standard concerning the actions of the NCAA. However, litigation is a risky option, which may ultimately lead to an unfavorable outcome for NCAA student-athletes. Overall, settlement may not be the most beneficial manner of resolving this dispute for the public.

  • Ryan Ybarra says:

    Like the other commenters have said, this is a situation where an out of court ADR process could be both helpful as well as harmful. This case/issue will likely shape the future of college athletics in this country and define what college amateurism truly is. On the one hand, it seems that such an important issue should be played out in front of the public so there are clear principles established by the court regarding the conduct of the NCAA, universities, and student athletes. These principles and the rules regarding conduct towards student athletes by universities could become less clear if everything was established behind closed doors in a settlement process. On the other hand, this is clearly a highly contested issue in which both sides appear to be far off from what the other side sees as an ideal solution to the problem. Perhaps if both sides were able to sit down in a room with the other there would be an understanding of one another’s side and the potential for settlement. At the very minimum a clearer picture of the potential results of a trial may be seen each party. Either way, this issue appears to be destined to decide the fate of amateur athletics in this country for the future.

  • Kevin Teal says:

    Although the NCAA has maintained its stance that it is not planning to enter into settlement talks, the best option for both sides might be an ADR process, rather than a court trial. A process such as negotiation or mediation would probably result in a ruling that encompasses aspects sought by both parties. While a settlement has since been reached between EA Sports, a video game producer, Collegiate Licensing Company, and the plaintiffs in the sum of $40 million, it is not entirely evident that the plaintiffs simply want a one-time lump sum payment as the ultimate result. There are billions of dollars to be made through both men’s collegiate basketball and football, so a court ruling to provide those in the current plaintiff group, since the class action status was denied, with some cut of that would definitely be a benefit, but does very little to aid future student-athletes. A change in the current situation to benefit past, current, and future student-athletes seems to be one of the goals of the current lawsuit. Therefore, a court ruling might not be able to be tailored to achieve that goal. Instead, if the parties were the ones who negotiated or mediated to a resolution, both sides might be able to concede certain items without feeling as though they are giving everything up. A structured settlement, in which the NCAA and the plaintiffs could agree to some type of revenue sharing, might be more beneficial than a court ruling for one side and providing a payment or lack thereof. It is understandable why litigation is a viable route to take, because it does provide a precedent for any future student-athletes, who were not allowed to partake in this lawsuit, to base a future claim upon. But it is likely that a mutually agreed upon settlement through some ADR process would allow for a more advantageous solution for both current and potential future plaintiffs. It will be interesting to see if the NCAA changes its stance on negotiations prior to the June 2014 scheduled trial date.

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