U.S. District Judge Claudia Wilken all but said Monday that she will not grant final approval to a proposed settlement of three athlete-compensation antitrust cases against the NCAA and the Power Five conferences unless the parties make changes to the agreement.
In a rapid-fire conclusion to the hearing, Wilken told the parties: ‘See what you can do about all these issues. Basically, I think it’s a good settlement — don’t quote me on that — but it is worth pursuing (how) to fix” the issues she raised.
This appears to create a situation similar to what occurred at the preliminary-hearing stage, when Wilken also sought changes. The parties made some slight revisions, and Wilken granted initial approval.
The presumptive agreement’s pillars are the payment of $2.8 billion in damages by the NCAA and the conferences that would go to current and former athletes — and their lawyers — over 10 years, and Division I schools would be able to start paying athletes directly for use of their name, image and likeness (NIL) starting July 1, subject to a per-school cap that would increase over time and be based on a percentage of certain athletics revenues.
However, during a daylong hearing in Oakland, California, Wilken raised concerns about a variety of issues connected to those two deal points, including:
●Team-by-team roster limits that would go into effect, in combination with the end of the NCAA’s current system of team-by-team scholarship limits. Wilken appears to want the roster limits phased in so current athletes would not immediately lose roster spots.
●The due-process legality of an arrangement under which future college athletes would be bound by the terms of the agreement, which is set up to run for 10 years, although athletes in each new class would have the opportunity to raise objections in court.
●The justification for a setup under which athletes’ name, image and likeness deals with entities other than their school that have a value of more than $600 would be subject to a review process to assess their legitimacy within the marketplace and such a deal with an athlete advances what is being termed by the NCAA and the conferences as “a valid business purpose.”
Lawyers for the principals hastily agreed to confer about next steps and to report in one week to Wilken, who suggested that to “fix everything,” the parties would “need to do some redrafting.”
Wilken heard from lawyers representing the principals and from more than a dozen parties who are objecting to the settlements. Representing the plaintiffs are Steve Berman and Jeff Kessler. They are the attorneys who led the Alston case against the NCAA that eventually resulted in a unanimous Supreme Court ruling in favor of the athletes. Representing the NCAA and the conferences is Rakesh Kilaru, an outside attorney based in Washington, D.C.
Read what happened in Monday’s hearing and what Judge Wilken wants addressed:
Hearing concludes. Wilken all but says she will not grant final approval without changes
In a rapid-fire conlusion to today’s hearing, Judge Wilken told the parties: ‘See what you can do about all these issues. Basically, I think it’s a good settlement ‒ don’t quote me on that ‒ but it is worth pursuing (how) to fix them.’
With Wilken concerned about the building’s impending closure for the day, the principals and the objectors’ lawyers agreed that the principals would get back to Wilken in a week with word of how they can address the issues raised. From there, the objectors would have one day to respond to any new changes to the deal.
Wilken’s concerns with rules around athlete NIL deals with third parties
Judge Wilken says she needs a ‘pro-competitve justification’ for the proposed system under the settlement that would set up a more stringent evaluation by the NCAA and conferences of the athletes’ NIL deals that are worth more than $600. That is, how would this promote competition for athletes’ NIL services and how would it not hurt athletes.
Kilaru says these evaluations are necessary to prevent circumvention of the schools’ annual cap on direct NIL payments to athletes and that it’s part of the overall agreement.
Wilken reponds: ‘Each thing (in the agreement) needs to be reasonable.’
Judge Wilken keeps pounding concerns about future college athletes’ rights
Judge Wilken asks NCAA lawyer Rakesh Kilaru about due process issues for future college athletes.
He rejects her idea of having the possibility of different rules for different class-years of athletes.
‘We need a 10-year agreement,’ he says. ‘There’s got to be the same rules for everyone. We need the 10 years. (Without that), there won’t be stability, there won’t be a deal.’
Wilken responds: ‘Go over it again with your people. … There are rules. … It may be technical, but there are rules’ in the law concerning due process.
Judge Wilken’s idea on dealing with roster limits
Judge Wilken returns to the issue of roster limits, saying: ‘My idea is this grandfathering.’ (That is, allowing current athletes to keep their roster spots.) ‘It’s not that many people. It’s not that much money.’ She added that it would be a ‘goodwill’ move that would resolve a lot of ‘sturm und drang.’
Wilken suggests that NCAA/conferences lawyer Rakesh Kilaru respond: ‘I’ll talk to my client and get back to you.’
Kilaru, instead, pushes back.
He says ‘independent of the settlement,’ a coach could cut an athlete at any point and could renege on a roster-spot commitment to a high school recruit, as long as an athletic scholarship commitment is honored.
Kilaru continues that roster limits are part of the overall settlement, and the issue before Wilken today is whether the ‘overall setttlement is reasonable.’ He adds that the roster limits, in combination with the lifting of all scholarship limits increases competition and opportunity for athletes ‒ it’s a benefit for them. He adds that the roster limits were not reached arbitrarily but were based on the total number of athletes who actually participate in competitions in the various sports over the course of a season.
In addition he said the roster-limits issue affects ‘a small number of folks’ compared to the ‘hundreds of thousands’ covered by the settlement.
Judge Wilken pressing lawyers about claims of future college athletes
Judge Wilken is asking questions about how future college athletes’ interests would be represented under the 10-year settlement being proposed. Plaintiffs’ lawyer Jeff Kessler explains that incoming athletes annually would be presented with a notice of an opportunity to raise objections with a court and they would be advised to consult with a lawyer or a parent. This would allow athletes and/or a judge to respond to changes in circumstances in college sports, Kessler said, and this would mean future athletes’ rights are not being bargained away at present.
‘We think this is totally consistent with due process,’ Kessler says.
Judge Wilken still seems reluctant on this issue and whether there are legal precedents.
‘I understand the question,’ Kessler says. He thinks the annual review would cover the problem.
As this discussion continues, Rakesh Kilaru ‒ attorney for the NCAA and the conferences ‒ reiterates that future college athletes will be able to come before a court in the same way that current and former athletes have been able to come before the court today with objections.
‘I think it’s going to be difficult for them to say, ‘That’s a problem,’,’ because of the benefits that would be provided, Kilaru said.
Wilken still wants to know what happens if she or another judge decides that a future objector has a sufficient problem to merit a change in the agreement.
Kessler says a judge would then be allowed to terminate the settlement.
Judge Wilken asks about approving one settlement while leaving others
Judge Wilken is interested in approving parts of the universal, multi-case settlements ‒ but NCAA lawyer Rakesh Kilaru says NCAA and the conferences will not be interested in a partial settlement. They want full approval or not.
Scheduled presentations done; now questions from Judge Wilken
All of the scheduled presentations by lawyers for the principals and objectors are complete. We now move to a part of the hearing in which Judge Wilken will be asking questions.
What’s the role of the College Football Playoff in settlement?
A lawyer repesenting Florida State quarteback Thomas Castellanos as an objector raised questions about the role of the entity operating as the College Football Playoff’s role in the settlement. The argument is that it is not clear in the proposed settlement whether the CFP is being released from liability. Judge Wilken says she will ask the principals’ lawyers about this.
Remember, the CFP operates separately from the NCAA. The NCAA has some oversight of ‒ but no role in ‒ the operation of the Bowl Subdivision football’s postseason. The NCAA does not collect any of the revenue from the CFP or from bowl games.
Possible impediment to Judge Wilken’s final approval
Another objector group’s lawyer, Andrew Ellis, started making a presentation, and Judge Wilken immediately re-directed him toward the issues of the legality of the settlement as it pertains to future college athletes, since the proposed settlement would be in place for 10 years.
Wilken: ‘Can you have a class of future people who aren’t known yet? Can you release claims for things that haven’t occurred yet?’
Ellis responds that, in his view, the only way to achieve this would be for there to be a separate set of lawyers working to represent those interests, rather than the curremt situation in which the plaintiffs’ lawyers are representing current college athletes, former college athletes and future college athletes.
If Wilken accepts this view, it would be a major impediment to her granting final approval.
Hearing breaks for lunch
The hearing is going into a pre-planned lunch break that is scheduled to last an hour.
When the hearing resumes, Judge Wilken is first set to hear from three more lawyers representing objectors. It appears that she will then give lawyers for the principals some rebuttal time and follow that by having more detailed questions for the lawyers.
Judge Wilken again skeptical of Title IX argument
Objectors’ lawyer Leigh Ernst Friestedt is representing four female athletes, including lacrossse star Charlotte North.
She argued against how little of the damages would go to women, but Judge Wilken again says: ‘We can’t solve all these problems retrospectively. It’s too bad, but …’
The argument from the objectors here is that had schools been allowed to make NIL payments to athletes, absent the NCAA’s restrictions, those payments would have been subject to Title IX’s gender-equity requirements.
Former Washington football player also critical of settlement
Ben Burr-Kirven, who was an All-American linebacker at Washington, followed Dunne and was critical about damages, as well.
He said his damages award would be significantly lower than those of players who had less renown and lessser accomplishments on the field. He said the damages methodology is not clear and/or illogical.
He alleged that the plaintiffs’ lawyers ‘want to get their fees and move on.’ He said, they need to ‘go back and do the work.’
Olivia Dunne, viral LSU gymnast, speaks
The LSU gymast, appearing remotely via Zoom, describes herself, in part, as ‘a businesswoman.’
She then proceeded a deliver a blistering critique of the settlement, saying that the amount of damages she would be awarded under the settlement ‘doesn’t come close to recognizing the value I lost.’
She called this ‘not just a personal detail, but a warning sign.’
She said she attempted to get this fixed through the portal that gives information to athletes about their damages payments, but had no success.
She also had concerns about submitting that information due to her deals’ non-disclosure requirements.
‘I knew the numbers were wrong. I had the proof,’ she said.
She said the plaintiffs’ lawyers who are overseeing damages distributions are ‘receiving hundreds of millions’ in fees and costs from the settlement (as much as $775 million over 10 years, based on their filings with the court) ‘and they don’t know the data being received.’
High school athlete: ‘No one can explain why roster limits are good’
Gracelyn Laudermilch, a high school runner from Pennsylvania, says she is appearing today without an attorney because there is no one repesenting her interests in the settlement.
As she wrote in her filed objection, she says she had made a decision among several colleges, informed the coach and then was told there would not be a sport for her. She did not identify the school.
‘No one can explain why roster limits are good for anyone,’ she says.
Addressing Wilken she says, emotionally: ‘Our futures are in your hands.’
The first athlete to speak: Utah swimmer
Utah swimmer Gannon Flynn speaking about roster limits says that because of proposed roster limits, athletes already are being told to ‘transfer or quit outright.’
He calls the proposed limits ‘cruel.’
Citing participation data collected by the U.S. Department of Education, Flynn says that more than 5,300 athletes will lose their roster spots under the proposed roster limits.
He says this is not taking into account teams that could get dropped ‒ and he cites recent decisions by Cal Poly to drop swimming and Virginia to drop diving.
What’s at stake today
Here is what’s at stake in today’s hearing:
An arranagement that would include nearly $2.8 billion in damages that would go to current and former athletes — and their lawyers — over 10 years. The arrangement also would allow Division I schools to start paying athletes directly for use of their name, image and likeness (NIL) starting July 1, subject to a per-school cap that would increase over time and be based on a percentage of certain athletics revenues.
The proposed allocation of the damages would heavily favor football and men’s basketball players because of modeling done by an economics expert for the plaintiffs who determined that those athletes had the greatest value in the marketplace while the NCAA had restrictions on athlete NIL activities.
This will be challenged by objectors today, based on Title IX, the federal gender equity law. Among other reasons, the objectors say that since this money would have come from the schools, it is subject to Title IX requirements.
However, those two elements would be just part of a comprehensive reshaping of college sports that would occur under the settlement.
Among other changes:
●NCAA leaders would seek to engineer rules changes eliminating longstanding, sport-by-sport scholarship limits and replacing them with a new set of roster-size limits. In the first academic year after final approval of the settlement, the roster limit in football, for example, would be 105. Some FBS programs have had many more than that. Rosters in other sports at some schools also stand to be reduced. This is likely to be a target of objectors today.
●While athletes would continue to have the ability to make NIL deals with entities other than their schools, the settlement would allow the NCAA and the power conferences to institute rules designed to give the power conferences — through a new entity they are creating — greater enforcement oversight of those arrangements. This, too, is likely to come up today.
We are underway
All lawyers and objectors have made appearances and Judge Wilken has taken the bench.
No ruling today
Judge Wilken says she will not be ruling from the bench today. This is not a surprise.
What will be addressed today
Judge Wilken runs down issues she will be considering today and beyond in her decision to approve.
And the list is lengthy: Claims of future college athletes, third-party NIL agreements, roster limits (although Wilken says there ‘may be a workaround to this problem’), an existing cap on payments being replaced by another cap.
She says she does not see see this as a Title IX case or as being the correct vehicle for determining whether there should be a collective bargaining agreement for college athletes.
Plaintiffs talk about risk of no settlement
Plaintiffs’ lawyer Steve Berman says that more than 88,000 athletes have submitted claims ‒ about 30% of those eligible.
He also says that a risk of not settling or the settlement being rejected is that Congress will act to give the defendants immunity from what he says would be $10 billion in risk from the House case and billions more from the other cases that would be part of a settlement.
Berman says that Sen. Ted Cruz (R-Texas) is prepared to introduce a bill that would provide this immunity. However, Cruz has not gone beyond a discussion draft that would provide more limited protection for schools.
Plaintiffs make case about support for settlement
Plaintiffs’ lawyer Jeff Kessler adds to Berman’s report on claims from athletes, saying that more than 30,000 more athletes have updated address information, so he says a total of more than 118,000 athletes have expressed support. ‘There is huge support for this settlement’ in the college sports community. He says this is the largest amount of participation in a settlement that he has seen in his lengthy career as an antitrust litigator.
Judge’s questions about future
Judge Wilken, as she did during preliminary approval hearing, raises concern about appropriateness of the settlement setting terms for future college athletes and the ability of those athletes to raise objections ‒ or, as she put it ‘the 10-year-old playing kickball on the asphalt who would not be aware’ of the settlement.
Judge’s skepticism about roster limits
NCAA lawayer Rakesh Kilaru, arguing in favor of the settlement, extols the virtues of scholarship limits being eliminated in favor of roster limits. Wilken cuts him off and says: ‘That’s small comfort (to) the ones who don’t get the roster spot or the scholarship.’ She expresses particular concern for athletes who have made school choices based on having roster spots available, ‘and then being told unceremoniously they wouldn’t have one.’
Kilaru says it’s the settlement as a whole that’s at issues. He says ‘you wouldn’t have the revenue sharing’ thorugh school NIL deals with athletes without the roster limits.
Judge asks about phase-in for roster limits
As NCAA lawyer Kilaru continues talking about merits of no scholarship limit vs. roster limts, Wilken asks whether there ‘could be an interregnum period’ and could be phased in until current athletes graduate. Kilaru responds that is not part of the settlement deal that required not only negotiation with plaintiffs but to get the schools to agree to it.
Objectors begin making their cases
Steve Molo, a lawyer for a group of objectors, says he is not here to ‘blow up the settlement, but it needs to be fair.’ And he argues it isn’t, with regard to the start of roster limits.
In a free market, he says, schools should have as many players as they want.
Wilken: ‘Why?’ Isn’t there a competitive advantage problem?
Molo: We haven’t seen that effect so far.
Wilken: Do you want scholarship limits or roster limits?
Molo: ‘I want neither.’
Wilken again raises the prospect of a phase-in. But she says the issues isn’t athlete disappointment ‒ but rather whether the roster limit is an antitrust violation as it pertains to current athletes, as opposed to future athletes who would know these rules.
Title IX arguments and cap arguments not getting traction
Molo tries to make case for Title IX being applicable to the damages distibution and the idea that one salary cap would be replaced by another with schools’ NIL payments to athletes being limited to 22% of certain revenues.
Wilken says the new cap proposed by the settlement needs to be judged based on the balance of risks and rewards of the settlement compared to continued litigation.
Judge Wilken having trouble following next objection
Up next for the objectors is a group represented by Michael Hausfeld, who was the lead attorney for plaintiffs in the Ed O’Bannon litigation ‒ another case overseen at the district court level by Judge Wilken.
Hausfeld also makes an argument against the cap that would be placed on schools’ NIL/revenue-sharing payments to athletes. He is also attempting to make an argument against the rules that the NCAA and conferences plan to impose regarding their evaluation of the appropriate market value of NIL deals with non-school entities. These are the deals that currently are being made through collectives.
Wilken says she is having trouble following his point, however.
Another objector on roster limits
Attorney Laura Reathaford, who notes that she is representing her daughter’s objection to the settlement, says of the roster limits: ‘This is a harm argument.’ She says injunctions such as the one that would set the stage for the NCAA’s rules going forward on roster limits should ‘prevent harm. This injunction is creating harm.’
Judge Wilken remarks that in a case covering 390,000 people it’s difficult to have a situation where no one is getting harmed.
Reathaford argues ‘that is completely not allowed,’ and cites several prior cases that she says backs up her contention.
Wilken asks for a solution.
Reathaford says she likes the ‘grandfathering’ idea that Wilken has mentioned earlier in the hearing.
Judge Wilken calls for recess
Judge Wilken takes 10-minute recess. She says that when hearing resumes, she will be calling the athletes who are objecting and appearing today on their own, without a lawyer. Among these athletes is Livvy Dunne, an LSU gymnast and renown social-media influencer.