Future of the NCAA (Part III)

(In Part I we looked at Enforcement, and in Part II the BCS schools separating from the NCAA and conference realignment.  In this final post in the series we look at the various legal challenges the NCAA currently faces, and their potential long-term impact.)

In 1984, the United States Supreme Court in NCAA v. Board of Regents ruled that the NCAA violated federal antitrust law by controlling and restraining the television rights of its member institutions, and that those universities and colleges were free to negotiate their own television rights agreements.  Needless to say that case has been transformative.  What was a “game of the week” each fall Saturday has since become a smorgasbord of televised games to be enjoyed virtually any day of the week.  This has spurred unprecedented financial windfalls to participating schools and conferences, and shaped the college athletics landscape we have today.

O’Bannon v. NCAA could be this generation’s Board of Regents.  In O’Bannon, former UCLA basketball player Ed O’Bannon and other former NCAA student-athletes filed suit claiming the NCAA and its licensing partners violated antitrust law by not compensating them for the use of their “likeness” in video games, video archive programming  (i.e. old games shown on ESPN Classic) and other similar endeavors.  If you’ve ever played college football or basketball video games you know many of the players strongly resemble actual players, both in terms of physical characteristics as well as the number on the back of the jersey.  This is an example of what the plaintiffs refer to when they use the term “likeness,” and this is what they are complaining about and seeking compensation for.  The case began only with former student-athletes seeking damages beginning from the time they finished school and thereafter; however, current student-athletes were (somewhat controversially) recently added to the group of plaintiffs in order to claim damages for the time they are in school as well.  There have been several preliminary hearings, and things have not gone well for the NCAA thus far.  The case is on track to go before the judge for class certification this summer, with the trial to take place sometime in early 2014.

If the NCAA were to lose, the ramifications would be immense.  First there is the financial component, which could be tens of millions in damages or some say hundreds of millions.  There is also the complete reversal of decades of policy in which compensating student-athletes for anything related to their athletic ability outside of a scholarship has been forbidden.  Changes to both rules and structure would certainly need to be put in place moving forward in what would be a new era of NCAA athletics.  On the PR front, the hits have already begun, and will continue to come throughout the pretrial process.  We’re starting to see documents released which are, at best, embarrassing to the NCAA.  You can be sure more documents will become public as the case continues on, and each new day increases the odds of a crippling revelation.

If O’Bannon wasn’t enough, the NCAA is facing several other legal challenges as well.  You thought the USC / Reggie Bush affair was all over?  Think again.  Former assistant football coach Todd McNair is in the middle of a defamation suit against the NCAA for the way it conducted its investigation into he and the USC football program.  Mr. McNair claims the NCAA maliciously disregarded the truth and used false information to come to its conclusions and penalties, and as a result his career and future earnings as a coach were unjustly diminished.  In November, a judge ruled against the NCAA’s motion to dismiss the case, and in his opinion blasted the NCAA for an investigation he called “malicious,” and NCAA staff members who were “over the top.”

A similar case involves former State University of New York at Buffalo men’s basketball coach Tom Cohane.  Though less publicized, Cohane has the potential to markedly change how NCAA investigations are conducted going forward.  Mr. Cohane sued the NCAA claiming defamation and a violation of his due process rights under the Fourteenth Amendment, alleging the NCAA knowingly used information provided by the university that was false and coerced, in order to tie him to the violations.  Student-athletes have since given sworn statements that they were threatened and pressured to point the finger at Mr. Cohane, even though they never saw him do anything wrong.  The litigation then went on a complicated but potentially significant procedural journey to determine whether the NCAA could be considered a “state-actor,” a necessary step for Mr. Cohane to claim Fourteenth Amendment due process protections.  The 2nd Circuit Court of Appeals said since (if the facts were proved) the NCAA essentially acted along side the (undeniably state actor) public university to investigate and discipline Mr. Cohane, it could be considered a state-actor in this circumstance.

What does all this mean?  Until now, this issue had clearly been settled by the United States Supreme Court in Tarkanian v. NCAA, when it said the NCAA is not a state-actor and therefore does not have to afford due process rights to those it investigates and punishes.  This flexibility has allowed the NCAA to be more aggressive with its investigations and have a lower burden of proof in order to impose penalties.  But now with Cohane, an example may exist whereby due process rights would have to be provided, and higher burdens of proof would have to be met.  The distinction between the two cases boils down to the level of cooperation between the university and the NCAA during the investigation.  In Tarkanian, the university and its coach Jerry Tarkanian were denying all the allegations, and fighting together with the NCAA as their common adversary.  Therefore the Court said the NCAA was not a state-actor in that instance.  In Cohane, however, the university was acknowledging the violations against Mr. Cohane and allegedly working with the NCAA in “joint activity” to make sure the allegations stuck to him so he could be fired for cause.  So in that case the 2nd Circuit says the NCAA could be a state-actor. (The NCAA appealed the 2nd Circuit’s decision, but the Supreme Court declined to hear the case).  This is a case to watch through its completion, as it could dramatically change how both the NCAA and universities conduct investigations in the future, and the level of due process afforded individuals who find themselves in the middle of them.

All that and we haven’t even touched Miami or Penn State.  Looking back on this series of posts, it’s overwhelming to think about what the the NCAA faces in the coming months and years.  My view is the NCAA’s back is against the wall, and it must reinvent itself or it will become obsolete, if it isn’t already.

Follow Daniel on Twitter at @DanielHare.

Posted on February 22, 2013, in Antitrust and tagged , , , , , , . Bookmark the permalink. Leave a Comment.

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