The pending settlement between the NCAA and current and former D-I athletes represented by the House, Carter and Hubbard antitrust litigations took another step toward the finish line Monday when the parties, through attorneys for the athletes, filed a motion for final approval and a response to objections. U.S. District Judge Claudia Wilken will review the filings before a much-anticipated fairness hearing scheduled for April 7.
The motion argues that the response by class members to the settlement “has been overwhelmingly positive.” The motion states that out of nearly 390,000 class members, only 3,433 class members (about 0.88%) opted out and only 73 (about 0.019%) filed objections. As class counsel tell it, it is “not surprising” that the class members’ response has been “overwhelmingly positive” especially since they say it will open up “more than $20 billion in new compensation and benefits.” The motion further maintains the objections largely reflect a “misunderstanding of the settlement’s terms,” and stresses the settlement does not provide the NCAA or its members with antitrust immunity.
Monday’s filing attempts to extinguish, or at least soften, concerns raised by some class members deciding to opt out and some class members objecting to the settlement’s terms. Under federal law, the parties do not need to persuade Wilken that the settlement is perfect or ideal for all involved. Instead, the bar is lower: The settlement must be fair, reasonable and adequate. To that point, the motion emphasizes that “the law strongly favors the settlement of class action lawsuits.”
The fact that the athletes might have received greater compensation if they went to trial and won (and if that win withstood appeals) is not a reason for Wilken to reject the settlement. A settlement is a contract that reflects a give-and-take for both sides to cut a deal during the pretrial litigation stage. Instead of taking their chances in a trial and on appeal, the parties compromise.
Wilken’s analysis will weigh how the settlement impacts class members and whether it adequately addresses the underlying antitrust concerns raised in the three cases. Those concerns reflect allegations that rules adopted by the NCAA and its members restrain economic opportunities for college athletes and limit how individual member schools and conferences compete for athletes.
If approved by Wilken in its current form, the settlement would pay, over a 10-year-period, damages of about $2.8 billion to D-I athletes dating back about eight years. The damages would reflect lost NIL, video game and broadcasting opportunities on account of eligibility rules.
The settlement would also require significant rule changes for conferences and colleges. Colleges that opt into a new structure will be able to share up to 22% of the average power conference athletic media, ticket and sponsorship revenue to their athletes, with $21 million expected to be the initial annual cap. This pay will be in addition to athletic scholarships (which cover tuition, housing, health resources etc.) and other aid that is expected to amount to about 50% of athletic revenue going to athletes. Athletes will be able to supplement it through NIL deals with third parties, though deals in excess of $600 will be subject to independent review to ensure they reflect fair market value (and thus are not cloaking pay-for-play deals). Another major change would be the elimination of scholarship limits and the inclusion of roster limits, which is expected to provide additional scholarship money for athletes.
The scope of objections is far-reaching, though whether they dissuade Wilken from approving is a more debatable issue. Objections include: D-I athletes should receive much more money, including because some of them arguably have employment-like relationships with their schools; the “salary cap” (as termed by Department of Justice under then-Attorney General Merrick Garland) of $21 million, though less onerous than a $0 cap, is still an antitrust problem because it wasn’t negotiated with a players’ union and undermines a free market; the swapping of scholarship caps for roster limits will benefit some class members but harm others whose roster spots are eliminated; state laws and bills, including those related to NIL and revenue sharing, conflict with settlement terms; fair market value analysis will suppress the value of NIL deals; Title IX will be violated by settlement terms that provide more money and resources to male athletes than female athletes; and by limiting settlement recovery to full grant-in-aid players, preferred walk-ons and walk-ons are denied compensation despite sometimes playing as much as scholarship teammates and being marketed as much by their schools.
Wilken will consider those (and other) arguments, but antitrust class action settlements are usually approved. The motion filed Monday addresses these arguments by maintaining they are off base. For instance, with respect to roster limits, the motion suggests that relatively few athletes will lose positions versus alleged “enormous benefits of the settlement” for the class as a whole. “The move to roster limits,” the motion asserts, “was part of the overall settlement compromise, and any negative effects are dwarfed by the extraordinary benefits provided by the settlement to the Settlement Classes as a whole.” As to objections regarding Title IX and employment law, the motion stresses that the settlement does not extinguish those (and other) claims.
To that point, Wilken might reason that objections that rely on other areas of law or that raise the possibility of subsequent litigation fall outside the focus of her review. Wilken also was presented with those objections, albeit in less developed forms, last fall when, after initially raising concerns, she eventually granted preliminary approval. As the trial judge for O’Bannon, Alston and House litigations, Wilken is arguably as knowledgeable about the issues as any judge in America.
Wilken could take weeks following the fairness hearing to decide on whether to approve the settlement. If Wilken rejects the settlement, the three cases return to the docket. She could also demand changes before granting final approval. Her approval won’t mean the end of the litigation as it can be appealed to the U.S. Court of Appeals for the Ninth Circuit. In the event of an appeal, the monetary relief portion of the settlement could be stayed, though the injunctive relief portion—the changing of rules—would likely move forward.
The settlement should also not be confused as a panacea to the NCAA’s legal challenges. Players who opt out of the settlement can continue the antitrust litigation, and last month 67 opt-outs did so by initiating a new lawsuit (Hill et al. v. NCAA). There are also legal efforts, including Johnson v. NCAA, for college athletes to gain recognition as employees and Title IX and player eligibility challenges will continue as well.
