(This is a guest post by Garth, an Ohio State law grad and a future member of the MotSaG writing staff. Because of the breadth of this post, it will run in two parts. Part one runs today (Friday) while Part Two will run Monday)
In competitive achievement, Ed O’Bannon and Curt Flood are miles apart. Playing for the high flying St. Louis Cardinals baseball team in the 1960-70s, Flood won multiple gold gloves, managed to hit over .300 numerous times and at the time of his retirement was among the leaders in baseball history in terms of games played in centerfield. Ed O’Bannon on the other hand fizzled out in the NBA after only two years and then began a foreign basketball odyssey spanning several years. Ed O’Bannon did however enjoy a successful college career, leading UCLA back to the promised land with a 1995 NCAA title.
Flood failed in his own attempt to convince the US Supreme Court to reverse its own determination that major league baseball was exempt from federal antitrust laws. Flood had hoped such a reversal would then permit him to argue that the antitrust laws prohibited the application of baseball’s reserve clause (a standard provision in a player contract that essentially made a player property of one team for as long as the team wanted). However, in losing a case that could have dramatically improved his financial worth, Flood mobilized players to such an extent that within three years an arbitrator decided the reserve clause only applied for one year, not the playing career of a player. This decision, actually on behalf of pitchers Andy Messersmith and Dave McNally, ushered in free agency. Now Ed O’Bannon attempts a legal challenge that, if successful, will do less as a practical matter for his personal net worth, but which could set off even more profound changes for the world of collegiate athletics.
The O’Bannon Case
In a nutshell, O’Bannon has sought to be compensated, first for the use of his likeness in video games as a member of the 1995 National Champion Bruins. The defendants include the NCAA and EA Sports, a video game maker. O’Bannon has since expanded his claim against the NCAA to claim a share in the proceeds from other sources including from television contracts with networks that broadcast games in which he appeared (the plaintiffs recently dropped claims for items such as jersey sales—for now anyway). There are numerous legal theories, but basically the claim is one of antitrust: that by virtue of its size and power, the defendants, most notably the NCAA, monopolistically and illegally deprived O’Bannon of his right to be compensated for the value of his efforts in the marketplace.
But this case is not just between Mr. O’Bannon and the defendants. Since the first case was filed, it has been merged with similar cases and other former famous collegiate athletes have been added as plaintiffs—Bill Russell for example. Then, the plaintiffs have made it clear they intend to add current collegiate athletes to the mix.
The Class Action Spector—The Real Story
Law in America is often not as much about who is right and who is wrong as it is about the opportunities afforded by the legal system to use brute force to achieve a desired outcome. A claim for a share of the increasingly enormous television contracts for NCAA football and basketball is potentially enormous. By adding many potential plaintiffs, the opportunity for a huge potential aggregate payment is potentially painful to the defendants. Also, by implicating the federal antitrust laws, the looming shadow of triple (treble) damages is particularly daunting.
So the stakes are high. But, in the world of big dollars they are not so high that they cannot be managed by these defendants. It takes resources and time to bring a lawsuit—so although the potential plaintiffs are many, the chance to fight and parry and manage toward individual settlements that can be minimized in the aggregate can be an appealing strategy to the defendants.
That is, unless all possible plaintiffs—including those who otherwise would not lift a finger to bring their own claim—can be brought together as one big group and represented en masse in a class action lawsuit. If that is possible, then the defendants face the prospect of a trial before a jury, which can never be counted on predictably and which could return an enormous victory for the plaintiffs which again would tripled by treble damages.
It is important to take a moment to realize just what a class action means in real life practical terms. This is about power and money, and nothing puts those two on a collision course like class action lawsuits, which are the holy grail for plaintiff lawyers (and make a pretty penny in the process, thank you, for the lawyers who defend them). While no one can dispute the legitimate value of certain class action lawsuits, many class actions yield nothing but $10 discounts for future purchases by customers who might have been victimized—settlements so benign that they actually represent discount coupons to leverage future sales of product—effectively marketing coups for the defendants. But even in such cases the lawyers can get millions of dollars as part of the court approved class action settlement. So though there might not be great value to a particular case, the process of a class action lawsuit attracts lawyers who nominally prosecute minor claims for defendants when what they are really looking for is to wax the system for their own huge financial reward. Even in cases where treble damages are not possible—few class actions go to trial—the sheer in terrorem risk of a potential jury trial often forces a settlement that does little for plaintiffs but enriches the lawyers.
Now imagine the legal feeding frenzy if billions of dollars are at stake as in the eventual O’Bannon case. The individual awards to athletes are likely to be smallish really on an individual basis, though the aggregate dollars have to be intimidating to the defendants. But the payoffs to the lawyers, which are on the other hand smallish in the aggregate but enormous to the lawyers, really are what give life to this type of case–a life that really depends on achieving class action status. So the value of having this case turn into a class action is probably as much lawyer driven as it is plaintiff drive—and it is that underlying effect that has the potential to turn college athletics on its head.
It is not inconceivable, of course, that the NCAA could take an uncertain antitrust claim to a jury—the NFL did so when sued by the USFL. In that case the NFL gambled and “lost,” although the award was for one dollar. With treble damages and interest, the NFL paid $3.76 in total—but the point is, the jury held for the plaintiff on the law—the NCAA might not feel it could get so similarly lucky on the damage issue.
It’s Go Time
The O’Bannon case is now at a critical juncture. On June 20, 2013, the sides presented arguments on whether the potential plaintiffs could be certified as a class to justify a class action lawsuit. To be certified as a class, the plaintiffs must demonstrate several things, including that all members of the class have essentially the same legal arguments and issues and that all claims are “typical.” Both of these showings seem questionable, but it is difficult to predict the outcome. Different courts approach these requirements differently, especially with regard to the typicality requirement. Some courts look to whether the underlying event giving rise to the claim is typical, while others look to see if the damages are relatively the same. If it is the latter, can one really insist for example, that the television value of Johnny Manzell is the same as that of a reserve linebacker who never makes it into a game? But it is not clear how this requirement would be applied in this case—for example, does every plaintiff have to receive the same dollar amount, or could one plaintiff receive a certain percentage of his conference’s television payment while another received a similar percentage of a different television payment to that player’s conference.
If the plaintiffs completely prevail so that current players are included in the class, the brute force opportunity for the plaintiffs to win at trial becomes so imposing and so potentially destructive to the current big college sports/economic model that the NCAA may be forced to settle in a way that could drastically change the college sports landscape. For example, the NCAA could agree to pay 50% of television proceeds to past and current players. This would wreak havoc on athletic department budgets that are already overstrained in most cases. Presumably the number of sports supported by colleges would be dramatically reduced. Also, because the marque conferences receive the highest television contracts, the competitive divide between the football haves and have nots could be greatly exacerbated.
On the other hand, if the class is not certified, the NCAA could much more easily manage and defend the individual cases that do arise. In between, the judge could certify the former players, but not the current players—a circumstance which also provides time and maneuverability for the NCAA.
The 63 year old federal judge hearing the matter in Oakland, Claudia Wilken, is an experienced jurist who has dealt with the complexity of sports, business and education matters. In a hearing in her courtroom on June 20, 2013, Judge Wilken did not particularly tip her hand as to how she might rule, though she did indicate she could imagine approving the class action but having a jury determine whether the awards are the same for each member of the class. If the jury determines that the awards would not be uniform, the class would be decertified—a result that, like the USFL verdict could be a hollow victory for the plaintiffs.
(So now that you know what’s happening, check back with us on Monday for the important issue: How does this effect Ohio State?)