- Lester Munson, Legal Analyst
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Four days before the fourth anniversary of Ed O'Bannon's quest for compensation for college athletes, the NCAA finally admitted it may have a problem, and the O'Bannon team replied with its own dramatic action that turned a distant cloud on the NCAA horizon into a killer storm that could transform the organization.
What a week. In a surprise move, the NCAA ended its relationship with game maker Electronic Arts, a clear signal that it is worried about the O'Bannon claim that former college players are entitled to payment for EA's use of their images. The NCAA wanted to put a cap on its potential losses. Then, within hours, O'Bannon's lawyers opened a new front of attack by adding six current football players to their legal roster, a move that could result in players taking a share of billions in NCAA television money.
NCAA officials were quick to claim that their decision to toss EA overboard was business as usual and did not signal anything of importance, suggesting that the action was based on "the current business climate" and the "costs of litigation." Yeah, right. It was based more on the current litigation climate and the costs of a loss in court.
Until the decision to dump EA this week, the NCAA faced the possibility, if not the probability, of endless payments to athletes whose moves, images and uniform numbers were featured in EA games. Each year's edition was an addition to the damages that would be awarded to players, if the players were successful.
To reduce the O'Bannon losses to a finite amount, the NCAA told EA that it was over. There would be no more "NCAA Football" or NCAA anything in EA games. The NCAA persists in it assertions that it is legally invulnerable to the O'Bannon attack, but the EA decision could easily be a first step in a process that will lead to settlement of the O'Bannon claim with payments to athletes whose images have been used during the past several years.
With the end of the EA games, the NCAA's total revenue from EA contracts can be determined and would be the starting point for negotiating a settlement. If the NCAA took in, say, $100 million from EA games during the last five years (that's the limit on player claims), then it's a matter of agreeing on the players' share and finding a way to pay the settlement.
They'll never admit it at NCAA headquarters in Indianapolis, but there is little doubt that the O'Bannon litigation and the possibility of a settlement prompted the EA decision.
Even as the NCAA was for the first time acknowledging the possibility of a major loss to O'Bannon and the other players, the plaintiffs' attorneys changed everything with their addition of six current players to their roster.
With current players now included in the lawsuit, the NCAA faces the prospect of a serious threat to its television income. The O'Bannon lawyers hinted at the prospect in a hearing on July 5 before U.S. District Judge Claudia Wilken when they suggested that current players would open the "injunctive" phase of the litigation.
Until the addition of current players, the O'Bannon group had been seeking only "damages," a payment of money for the use of their images. Current players have what lawyers and judges call "standing" to demand a piece of current income. Because they are playing now, the current players have the right to argue that they are entitled to a share of current NCAA revenue, including television revenue.
It's a long way from adding six names to a lawsuit to a transformation of the NCAA and the payment of student-athletes, but the door is now open. The NCAA will offer arguments and engage in the usual pretrial maneuvers. Its attorneys may suggest that the O'Bannon team must include current basketball players before they can make a claim on the NCAA's largest source of income.
But the path for the current players is clear. Their lawyers are not tipping their strategy, but the current players have the right to ask for an injunction, a court order to stop the NCAA from doing what it is now doing -- limiting student-athletes to their scholarships. The injunction would be based on the idea that the NCAA's limits on payments to student-athletes are a form of price-fixing and a violation of the nation's antitrust laws. Any injunction would eliminate the limits on payments to student-athletes and allow an open and competitive market, a market that could easily result in payments to players.
The NCAA's decision on EA and the addition of current players came as Judge Wilken considers whether to grant the O'Bannon group class-action status. Even if the judge rules against the players on a class action (there are problems for the players), the developments this week raised the stakes in the litigation.
The players would continue their pursuit of the NCAA even without class-action status. Each player would pursue an individual claim. If the players succeed in their claims (a likely scenario), then those successes would be the basis for more and more claims by more and more players.
Legal doctrines known as "res judicata" and "collateral estoppel" would then become major leverage for the players. If one player was successful, then res judicata and collateral estoppel would mean that all players will be successful without the need to try the case over again. It's the legal procedure that allowed NFL players, for example, to achieve free agency after antitrust battles in the early '90s.
It's rare that anything in the pretrial litigation process happens quickly and dramatically, but that is what happened this week with the NCAA's decision on EA and the addition of current players to the lawsuit. The lawsuit that marks its fourth anniversary on Sunday is a very different lawsuit than it was only a few days before.