In a contentious hearing Thursday, U.S. District Judge Claudia Wilken expressed significant concerns about core aspects of a multibillion-dollar settlement to resolve the House, Carter and Hubbard antitrust litigations. By the hearing’s conclusion, Wilken declined to grant preliminary approval for the time being, but said if the parties can address the issues over the next few weeks, they might still reach a deal.
Both sides, however, signaled that they may not be able to reach an agreement that satisfies their clients and the judge.
Wilken urged attorneys for the parties to “go back to the drawing board” on how the settlement would—Wilken believes—take away potential NIL opportunities for college athletes and downgrade the NIL market. Remember, Wilken was the judge who sided with Ed O’Bannon in his historic NIL case against the NCAA.
Wilken also wondered why the parties were attempting to distinguish “pay-for-play” as a prohibited form of payment when the settlement explicitly calls for colleges to pay athletes for media rights, ticket sales sponsorships and NIL.
Wilken was especially troubled by the settlement’s new system for NIL and how it handles boosters and collectives. Sportico previously described the new system envisioned by the settlement. In short, it attempts to ensure that NIL payments are legitimately about the commercial use of athlete’s right of publicity for endorsement, sponsorship, influencing or other promotion. The new system would supposedly better distinguish real NIL deals from those that are labeled NIL but, in fact, are recruiting inducements to attend or remain at a college.
To accomplish that goal of identifying legitimate NIL deals, the settlement would obligate athletes and schools to share information with a new entity, under the NCAA’s auspices, about NIL deals that exceed $600 and also subject NIL deals to fair market value analysis. The logic: A deal that vastly exceeds fair market value would be suspicious and potentially reflect a recruiting inducement. One problem is that fair market value is notoriously difficult to assess in the NIL space. The process would also be akin to arbitration and allow athletes to contest adverse judgments.
Wilken is unpersuaded that this new system could realistically distinguish, as the judge put it, “real NIL” versus “pay-for-play.” She worried trying to accomplish that goal under the new framework could deprive athletes of NIL opportunities, making them worse off by the settlement. Players’ attorney Jeffrey Kessler protested, saying the settlement treats rules for “collectives” differently from “rules for Nike or a car dealer or some other brand.” He added it’s important to distinguish “third-party NIL” from “collectives.”
But Wilken wondered why the settlement doesn’t refer to the word “collective” if it is so important and said she didn’t “see” the distinction Kessler was trying to make when the settlement didn’t capture his point. The judge also wondered why the settlement’s depiction of NIL differs from NCAA NIL guidelines, a discrepancy that implied the attorneys for the players and those for the NCAA are perhaps not in agreement about key details.
Kessler continued to spar with Wilken, suggesting she was failing to appreciate the settlement’s nuanced handling of NIL. He said third-party payments by collectives won’t be reduced, repeatedly saying “we have to compare the world before the settlement and after the settlement” with the “after” being a robust world for collectives. Wilken wasn’t convinced, since the settlement isn’t worded as Kessler described it. She said she’s found that “taking things away from people is usually not that popular.”
NCAA attorney Rakesh Kilaru attempted to clarify the debate by saying the settlement doesn’t change any rules, because “play for play is prohibited” and has long been barred under NCAA rules. He stressed that, as before, improper inducements for pay-for-play by boosters are subject to NCAA penalties. “We think and maintain,” Kilaru said, “that third-party payments that are not true for NIL are banned.”
But Wilken wasn’t so sure. She implied Kilaru wasn’t talking about the reality of the situation, namely that while pay-for-play payments disguised as NIL are nominally banned, she suggested that ban is not enforced and enforcing it would lead to diminished opportunities for college athletes.
Wilken also expressed worry about a hypothetical person—“a 6-year-old playing kickball on asphalt” who, if they eventually become a college athlete a dozen years from now, will be subject to the settlement. Kessler and Kilaru insisted the athlete would have a voice on settlement terms since new class representatives would be added as the years go on. Kessler also argued that college sports will be better for the 6-year-old with the settlement than without, since the settlement offers “an incredibly improved system with billions of dollars of compensation, no scholarship limits and not having to wait to bring their own antitrust cases,” which would require many years of litigation.
But attorney Garrett Broshuis, who is representing athletes objecting to the settlement and who are part of litigation in Colorado, offered a more critical take. He said “the train has already left the station” for the 6-year-old, since they would have “no input” by the time they matriculated to college. Broshuis also argued the settlement, which features a $22 million annual cap on what colleges can pay the players, is attempting to function as a labor agreement in the absence of a college athlete union (which would necessitate the recognition of college athletes as employees, which the NCAA opposes). Wilken also appeared supportive of Broshuis’ viewpoints when he said the settlement would lead to “policing” of NIL opportunities.
The subject of unequal treatment of women athletes also surfaced during the hearing. Football players are expected to get about 75% of the settlement’s proceeds, while around 20% would go to men’s and women’s basketball players and just 5% for other athletes.
Attorney Steven Molo, who is representing crew athletes who seek to block the settlement, clarified that his clients are not raising a Title IX claim against the settlement. He instead described the objection more about sex discrimination. “We’re saying the settlement is discriminatory toward women,” Molo said, arguing that the denial of NIL opportunities for college athletes until 2021 disproportionately harmed women athletes.
Wilken was less persuaded by this concern. She agreed with Molo that the “history of past discrimination of women” is undeniable generally and in sports, but stressed sex-discrimination impacts are not an accepted method of assigning liability under antitrust law. Kessler, who represented USWNT players in their equal pay case against U.S. Soccer, said he was “deeply sympathetic to sex-discrimination claims” but underscored the settlement is about antitrust violations. Those claims, he said, are valued based on denial of revenue to athletes, which mostly benefits male athletes even if that reflects historical discrimination against women.
Wilken also criticized the attorneys for certain details about their proposed method of notifying athletes—including through postcards and a website—of their rights should she grant preliminary approval. She suggested the class definitions are confusingly, if not obtusely, worded, as it’s not (in her view) clear why the classes mix and match power conference schools and all Division I schools. Wilken also said damages need to be stated in plain English that a non-lawyer lay person can understand. Wilken repeatedly said the term “lost opportunities” is awkward since it “makes it sound like” an athlete “asked an athletic director” about being paid and was told no when that (obviously) never happened, since everyone knew pay-for-play was disallowed.
Wilken also questioned language about the statement regarding the date an athlete is “initially eligible to compete.” The date impacts the eligibility and value of an athlete’s potential claims in the settlement. She noted that athletes might be told they are eligible at different points, and yet a standard date is needed for a class action. She urged the attorneys to clarify. Wilken also said the “press releases” about the settlement have often done a “better job” defining key terms than the legal filings.
”You need to make it clear,” Wilken observed, “that not everyone is going to be paid $1 million.”
Whether the parties can reach a deal remains to be seen. Kilaru repeatedly told Wilken that his client agreed to a deal as is and is not necessarily willing to move forward with another deal, which presumably would necessitate making more concessions on NIL in order to satisfy Wilken. He also said the NCAA isn’t interested in settling only one of the cases—they’ll either settle all three or none. If the parties can’t agree on a new deal, Wilken would lift her stay on the three cases and the litigation would resume.
And college sports, which is still grappling with athletes as employee legal challenges, would return to a heavily litigious environment for years to come.
Buckle up.
(This story has been updated in the 11th paragraph to clarify that U.S. District Judge Claudia Wilken was skeptical of NCAA attorney Rakesh Kilaru’s argument.)
