If NIL Lawsuit Is Deemed Class Action, It Could Cost NCAA More Than $1 Billion

For the National Collegiate Athletic Commission, its mission is clear. The embattled governing body for the most-popular and commercially-successful intercollegiate sports programs must defend against an attempt by the plaintiffs in House v. NCAA to certify the classes of athletes they claim to represent. If the NCAA fails in this effort to block class certification, then the plaintiffs will be primed to chase an amount in damages that the NCAA believes could reach upwards of $1.4 billion. Keep in mind, though, that House v. NCAA is an antitrust action, meaning that the damages actually awarded may end up trebled to an amount in excess of $3 billion.

The plaintiffs in House v. NCAA include former college swimmer Grant House (Arizona State), women’s basketball player Sedona Prince (Oregon) and football player Tymir Oliver (Illinois). The antitrust action seeks compensation in the form of backpay to the plaintiffs resulting from them being deprived the commercial use of their name, image and likeness by NCAA amateurism regulations prior to July 1, 2021. In their complaint, the plaintiffs in House assert that the NCAA’s membership horizontally-restrained the market for college athlete NIL, whilst at the same time they exploited athlete NIL in both media rights and sponsorship deals that brought in billions of dollars for the NCAA and its membership.

Class certification is a process by which the court decides whether the plaintiffs in the case are permitted to represent a larger class of people. Class certification in this case is a very big deal because if the classes identified in the plaintiffs’ pleadings are certified, then the damages will grow in scale so as to include the harm caused to all the athletes included within the identified classes. If the classes are not certified, the plaintiffs can still pursue their own claims for damages; all of which, however, will fall well below the billion dollar mark.

In House, the plaintiffs identify a class of Division I athletes who have competed within a time period from June 15, 2020 (when the complaint was filed) to January 27, 2025 (when the case is set to be decided). The plaintiffs also identify three damage classes that cover football, men’s and women’s basketball and additional sports. The claims from the three sport-focused classes extend back to include athletes from 2016 onward. Lastly, the complaint includes a subclass of plaintiffs seeking damages for the use of their NIL in broadcast deals.

To block class action certification, the NCAA will need to demonstrate that the plaintiffs failed to satisfy the prerequisites found within Rule 23 of the Federal Rules of Civil Procedure (F.R.C.P.). Rule 23 requires the plaintiffs to prove the existence of a cognizable class of persons who have legal interests in common. Furthermore, Rule 23 requires the plaintiffs named in the case to represent the interests of all who are included within the putative class of plaintiffs.

In a 50-page opposition to class certification, the NCAA asserted that the classes of plaintiffs proffered are too diverse in interests because substantial differences exist among them in terms of the players’ respective NIL value. In support of this position, the NCAA noted in its brief that some college athletes before 2021 had built millions of dollars worth of economic value into their NIL, whereas the NIL value for most other college athletes was negligible to nonexistent. The reality is that NIL value may vary across sports because some (e.g. college football) have contests that are regularly broadcast to millions whereas others (e.g. college baseball) are televised much less frequently. NIL value may also vary for athletes from school to school as some programs are higher profile and therefore provide more media attention for their athletes. Additionally, the NCAA is correct in recognizing that athletes who play the same sport and are on the same team can have significantly different dollar values for their NIL.

This begs the question, how have courts interpreted Rule 23 in regards to the standard for commonality? Or better yet, h0w much in common do courts think the plaintiffs should share in order for them to properly form a class for the purpose of a class action lawsuit?

Rule 23 of the F.R.C.P. makes clear that the class of plaintiffs must have common questions of fact or law. For certification, however, courts have required more than just questions in common, but also the capacity for the class action to generate common answers that resolve the controversy for all members of the class.

In its opposition to certification, the NCAA recognized differences among the prospective class members in terms of their respective NIL value. However, there exists a common grievance among all the class members that is capable of resolution through trial. Specifically, the classes referenced in the plaintiffs’ complaint were all prohibited by NCAA regulation from profiting from the commercial use of their NIL prior to July 1, 2021.

If anything, the in-group and between-group differences in economic value among the plaintiffs seem more like a matter for valuation of damages than a set of substantive differences that disrupt commonality. A potential stumbling block for the NCAA’s opposition involves court decisions holding that problems in assigning damages can be overcome and therefore do not operate as a barrier to certification. Courts have also held that damages can be determined on a class-wide basis.

Still, the NCAA maintains that the differences in NIL value produce substantial differences in economic interests that will create conflict among class members and that should prohibit class certification. Intensifying the fight over certification is the very real possibility that the NCAA will lose this case on the merits when it goes to trial. The NCAA is still reeling from loses in both O’Bannon v. NCAA and NCAA v. Alston, the most-recent antitrust actions to challenge NCAA amateurism rules that restrict college athlete compensation, including compensation for the commercial use of their NIL.

The latter of the two, Alston, reached the Supreme Court and limited the NCAA’s authority to restrain athlete compensation to only that which is not “tethered to education” (i.e. education-related expenses). In a concurring opinion within Alston, Justice Kavanaugh cautioned the NCAA against appearing before the Court again and in doing so he dismissed the reasoning that previous court decisions relied on in justifying the NCAA’s NIL restrictions and other caps on athlete compensation. For decades, the NCAA relied on a judicial presumption that its amateurism rules were necessary to the preservation of consumer interest in college sports. Justice Kavanaugh, however, was not convinced by what he identified as a “circular” argument.

Mere weeks after the Court’s resolution of Alston, the NCAA lifted its NIL restraints. The Court’s reasoning in Alston, however, likely was not the driver for the NCAA’s decision to deregulate college athlete NIL use. In the period of time between the resolutions of O’Bannon and Alston, dozens of states passed NIL legislation to permit college athletes to profit from the use of their NIL. The NCAA removed its NIL rules the day before the activation of the first of such state laws (Florida’s).

With the second year of the NIL era nearing its end, there exists little doubt that consumers remain interested in the NCAA’s intercollegiate sport products. Accordingly, there also appears to be little in the way of legal justification left for the NCAA to defend against the plaintiffs’ antitrust claims in House. Judge Wilken, the same judge from both O’Bannon and Alston, is presiding over the case and she has already denied a motion from the NCAA’s to dismiss the claims in House. The next motion to decide is the class certification issue, and this is a showdown the NCAA cannot afford to lose.

After all, several billion dollars may be on the line.