Thursday, February 11, 2010

NCAA Fails to Obtain Dismissal of Ex-College Basketball Player’s Antitrust Claims

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Edward O’Bannon, a member of the University of California, Los Angeles men’s basketball team in the early 1990s, can proceed with antitrust claims against the National Collegiate Athletic Association (NCAA) and its “licensing arm” for excluding him and other college athletes from the licensing market, the federal district court in Oakland decided on February 8.

In the same decision, the court dismissed the similar but “truncated” antitrust claims of Craig Newsome, a member of Arizona State University football team from 1993 to 1994.

Use of Images

Under NCAA rules, student athletes are not compensated for the use of their images in NCAA licensed products. O’Bannon asserted that the actions of the NCAA and its licensing arm excluded him and other former student athletes from the collegiate licensing market. He claimed that, because the NCAA had rights to images of him from his collegiate career, the association, along with its co-conspirators, fix the price for the use of his image at “zero.”

O’Bannon pointed to a 2007 agreement between the NCAA and Thought Equity Motion, Inc. to offer “classic” college basketball games online that would allow the use of his image without compensation paid to him.

Conspiracy to Fix Prices, Boycott

O’Bannon sufficiently alleged a conspiracy to fix the price of former student athletes’ images at zero and to boycott former student athletes in the collegiate licensing market. The athlete pleaded sufficient facts to make out a prima facie case that the challenged conduct constituted a conspiracy to unreasonably restrain trade in the U.S. “collegiate licensing market,” under a rule of reason analysis.

A claim that the conduct restrained trade under a per se rule of illegality could not be pursued, however, because the allegations did not suggest the existence of a horizontal agreement to fix prices or to engage in a group boycott, according to the court.

The athlete alleged that NCAA rules enabled the association to enter into licensing agreements with companies that distribute products containing student athletes’ images. Student athletes allegedly did not consent to these agreements and did not receive compensation for the use of their images.

As a result, O’Bannon alleged, the NCAA’s actions excluded him and other former student athletes from the collegiate licensing market.

Newsome’s truncated complaint was dismissed, however, because it did not contain sufficient allegations to make out a prima facie case under a rule of reason analysis. Among other things, the football player did not plead a relevant market, the court explained.

Statute of Limitations

Although the complaint was filed more than a decade after O’Bannon played college basketball, the statute of limitations did not bar his antitrust claims, the court ruled. The 2007 agreement between the NCAA and a company to offer “classic” college basketball games online supported an inference that O’Bannon’s image was included in that agreement.

Text of the February 8, 2010, decision in Edward O’Bannon v. National Collegiate Athletic Assn., No. C09-1967 CW, appears at 2010-1 Trade Cases ¶76,899.

Right of Publicity Action

In a separate case before the same judge, former Arizona State and Nebraska quarterback Samuel Michael Keller brought a class action complaint, asserting that Electronic Arts and the NCAA violated his right of publicity by using his likeness without consent in video games.

The court rejected EA’s and NCAA’s motions to dismiss Keller’s California right of publicity, civil conspiracy, and unfair competition law claims.

The February 8, 2010 opinion in Keller v. Electronic Arts, Inc., No. C 09-1967 CW, is reported at CCH Advertising Law Guide ¶63,760.

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