NCAA Antitrust Class Action Seeks to Lift Compensation Caps

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March Madness brings the highest ratings that many NCAA men’s basketball players will get on television, yet that same visibility has also led to the filing of a new antitrust class action lawsuit, alleging that men’s basketball and football players do not receive the compensation they could if the members of the National Collegiate Athletic Association did not operate in alleged collusion to depress what players are paid.

“The main objective is to strike down permanently the restrictions that prevent athletes in Division I basketball and the top tier of college football from being fairly compensated for the billions of dollars in revenues that they help generate,” Kessler told ESPN. “In no other business — and college sports is big business — would it ever be suggested that the people who are providing the essential services work for free. Only in big-time college sports is that line drawn.”

The lead plaintiffs in the NCAA antitrust class action lawsuit are current Division 1 athletes who play basketball or football in one of the various five “Power Conferences” including the Atlantic Coast, Big 12, Big Ten, Pac-12 and Southeastern, which dominate the Football Bowl Subdivision (FBS) and whose teams are also highly competitive in NCAA men’s basketball.

The class action lawsuit notes that each of the NCAA member institutions cannot help but abide by the rules because of guidelines indicating that any payments above and beyond the grants-in-aid, or athletic scholarships will result in penalties including boycotts and other matters. The five power conferences include similar bylaws. This is a violation of the Sherman Antitrust Act as it serves no competitive purpose, according to the players in the class action lawsuit.

However, unlike the more famous O’Bannon case, this group of players is not seeking a specific percentage of revenue, which in that case focused on video game likenesses and TV deals. Rather, the class action lawsuit simply seeks to lift the compensation cap for Division 1 players. Not only is alleged collusion a “perpetual horizontal price-fixing agreement,” it does not offer “any pro-competitive purpose … [and] less restrict rules can be implemented to achieve any purported pro-competitive objectives.”

The lead plaintiff, since class actions require the claims to be typical, serves as an example for the problems seen by the lawyers for the players. Martin Jenkins is a defensive back for the Clemson Tigers and was highly recruited prior to enrolling there. He still has one year of eligibility and an athletic scholarship offered for the 2014-2015 school year. However, he alleges that as a result of Clemson’s 2012 athletic revenue of $70 million, it seems reasonable that he would be able to achieve compensation higher than the grant-in-aid, were it not for the alleged violations of the Sherman Antitrust Act by the NCAA and the power conferences.

The plaintiffs are represented by class action lawyers Jeffrey L. Kessler, David G. Feher, David L. Greenspan, Timothy M. Nevius, Joseph A. Litman, James S. Richter and Melissa Steedle Bogad of Winston & Strawn LLP.

The NCAA Antitrust Class Action Lawsuit is Martin Jenkins et al. v. National Collegiate Athletic Association, et al., Case No. 14-cv-01678, U.S. District Court, District of New Jersey.

UPDATE: On Mar. 10, 2016, student athletes asked a California federal judge to intervene in discovery in a class action lawsuit challenging the National Collegiate Athletic Association’s rules that restrict colleges from compensating student athletes beyond their attendance costs.

UPDATE 2: On Mar. 14, 2016, the NCAA told a California federal judge that they have not been withholding documents in the multidistrict litigation over alleged antitrust violations. The NCAA conferences said the student-athlete Class that filed the memorandum made assertions that were “flatly inaccurate.”

UPDATE 3: On Aug. 5, 2016, Judge Wilken denied a motion for judgment on the pleadings submitted by the NCAA and other defendants. The judge rejected the NCAA’s argument that a related appeals court decision foreclosed Jenkins from bringing his own claims.