Tuesday, July 3, 2018
Ninth Circuit Affirms $46 Million Award Against NCAA
Attorney Fees and Costs Stem From Successful Action Challenging Commercial Licensing Of Names and Likenesses of College Players, With No Share of Proceeds to Them
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals has affirmed a $41 million attorney fee award against the National Collegiate Athletic Association, plus $5.1 million in costs, in connection with an action in which former and current college football and basketball players established that the ban on them receiving money for publicity rights was an unlawful restraint of trade.
That award was made by District Court Judge Claudia Wilken of the Northern District of California pursuant to the Clayton Act, which provides—in 15 U.S.C. §26—that in an action to enjoin antitrust violations “in which the plaintiff substantially prevails, the court shall award the cost of suit, including a reasonable attorney’s fee, to such plaintiff.”
The class action was brought in 2009 by Ed O’Bannon, who had been an All-American basketball player at UCLA (later a professional, now a car salesman in Nevada). He was spurred to sue the NCAA after seeing his likeness, which he did not authorize, in a videogame.
NCAA and its member schools licensed “names, images and likenesses” (“NILs”) of its players to commercial outfits, for fees, but the players were not allowed to share in the proceeds because compensation to college athletes was viewed, under NCAA rules, as incompatible with their amateur statuses.
O’Bannon claimed that barring college athletes from receiving pay for their NILs was violative of §1 of the Sherman Antitrust Act which forbids “[e]very contract, combination..., or conspiracy, in restraint of trade or commerce.”
Affirmed, in Part
He won in the District Court on Aug. 8, 2014, and Wilken’s decision was, for the most part, affirmed by the Ninth Circuit on Sept. 30, 2015. The U.S. Supreme Court denied certiorari on Oct. 3, 2016.
Friday’s memorandum opinion declares:
“The district court entered judgment against the NCAA for violating the Sherman Act and permanently enjoined it from prohibiting its member schools from compensating the plaintiff class for the use of their NILs by awarding grants-in-aid up to the full cost of attendance. The plaintiffs did not prevail on every issue, but their enforceable judgment materially altered the legal relationship of the parties and clearly demonstrates success on a significant issue. The prospective injunctive relief obtained in this class action directly benefits the certified class and can be enforced by the class. Neither the named plaintiffs nor any other individual class member must prove they will personally receive a direct or material benefit for plaintiffs to be entitled to attorneys’ fees. The plaintiffs substantially prevailed in their antitrust action seeking injunctive relief, and accordingly are entitled to attorneys’ fees under §26.”
Wilken not only held that athletes could receive scholarships that included cost-of-living expenses, not normally a part of scholarships—which was affirmed by the Ninth Circuit—but also that colleges could, instead, place $5,000-a-year in trust for their athletes. The latter proviso, the Ninth Circuit ordered, was to be vacated.
Judge Jay Bybee said in the circuit’s 2015 opinion that Wilken “clearly erred in finding it a viable alterative to allow students to receive NIL cash payments untethered to their education expenses.”
In contesting the attorney-fee award, the NCAA stressed that O’Bannon’s action was not wholly successful. In oral argument in Pasadena on Feb. 15, its counsel, Michigan attorney Gregory L. Curtner, maintained that it is established by case law that “[i]f you seek a bundle, and you get a pittance, that must be reflected in a subsequent fee award.”
He asserted that while Wilken’s decision was “reversed in substantial part,” Wilken improperly made an “all-or-nothing, winner-take-all” award giving the plaintiffs nearly all that they sought.
Friday’s opinion points out that where there is partial success, time spend on unsuccessful claims must be disregarded, and was, and the level of success must be assessed. It quotes Wilken as saying that even with the partial reversal, “the finding of liability and the remaining injunctive relief are together an excellent result.”
The opinion rejects the contention that Wilken took an “all or nothing” approach, saying she weighed the factors and “simply reached a conclusion the NCAA docs not like: that the award of injunctive relief against the NCAA in an antitrust action brought by private parties is an ‘excellent result.’ ”
“The district court’s focus on the plaintiffs’ success in achieving injunctive relief, as opposed to their failure to win damages, was entirely appropriate, as the basis for the fee request was §26. Under §26, attorneys’ fees are mandatory in antitrust cases achieving injunctive relief under a private attorney general theory.”
The precise award was $40,794,245.89 in attorney fees and $1,540,195.58 in costs.
The case is O’Bannon v. NCAA, No. 16-15803.
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