A scene from Electronic Arts’ video game NCAA Football14. The NCAA is suing EA and Atlanta-based Collegiate Licensing Co. in Fulton Superior Court. (Handout)
Lawyers representing thousands of former college athletes waiting for a federal court in California to approve a settlement worth a reported $40 million have accused the National Collegiate Athletic Association of trying to scuttle the deal by bringing a separate suit in Atlanta.
The deal on the table would resolve the athletes’ claims that a video game maker and an Atlanta-based licensing company reaped hundreds of millions of dollars by using the likenesses of college players without compensating them.
The proposed settlement between the players and the games manufacturer, Electronic Arts Inc. (EA), and Collegiate Licensing Co. (CLC) would end more than four years of litigation. The NCAA is a co-defendant in the case, but it is not a party to the settlement.
In November, the NCAA sued EA and CLC in Fulton County Superior Court, claiming they violated contractual obligations to indemnify the NCAA against any legal claims it might face from its role in licensing the video games.
Represented by Leah Ward Sears, the former chief justice of the Georgia Supreme Court, and her associate at Schiff Hardin, Samuel Almon, the NCAA said its co-defendants engaged in “self dealing” by working out a settlement while refusing to divulge any details to the NCAA.
On Dec. 24, W. Pitts Carr and Alex Weatherby of Atlanta’s W. Pitts Carr & Associates and Michael Hausfeld of Washington—one of the lead lawyers representing the class of athletes in the California suit—filed an amicus petition in the Atlanta litigation on behalf of the plaintiff athletes. They challenged the NCAA’s assertions and questioned its motives in bringing its suit.
“The NCAA is explicit about its intent to derail the settlement process,” the petition said. “The NCAA’s Complaint goes so far as to request that the Court enter an injunction prohibiting [Electronic Arts and Collegiate Licensing] from petitioning the California Court to approve the settlement agreement.”
“Rather than addressing its opposition to the settlement in the California Litigation,” the petition said, “the NCAA elected to come 2,000 miles and file this action in order to disrupt the settlement proceedings. In doing so, the NCAA has neglected to inform this Court of key evidence made public in the California Litigation. The Class Plaintiffs file this petition for Amicus Curiae in order to provide the Court with crucial information that contradicts the NCAA’s claims.”
In an interview, Carr termed the NCAA’s decision to file suit in Atlanta “bizarre,” given that the underlying litigation has been unfolding in California since May 2009.
“Why not file a cross-claim [in California]?” he asked. “We’re very puzzled.”
Sears referred queries concerning the Fulton suit to the office of NCAA General Counsel Don Remy. A reply from NCAA Media Relations Director Stacey Osburn said there would be no comment.
Kilpatrick Stockton partner R. Charles Henn, who is one of several Kilpatrick lawyers representing Collegiate Licensing in the California litigation, said he was not authorized to discuss the case.
Bondurant Mixson & Elmore partner Jeffrey Bramlett, who filed a notice for Electronic Arts in the local suit, did not respond to requests for comment.
The California litigation began in May 2009 when Sam Keller, a former starting quarterback for Arizona State University and the University of Nebraska, filed a putative class action in the Northern District of California against the NCAA, Electronic Arts and Collegiate Licensing. The suit described Electronic Arts as a “multibillion-dollar interactive entertainment software company that produces the NCAA Football, NCAA Basketball and NCAA March Madness videogame franchises,” which posted $3.67 billion in revenues in 2008.
The Collegiate Licensing Co. is “the nation’s leading collegiate trademark, licensing, and marketing company,” representing “nearly 200 colleges, universities, bowl games, and athletic conferences, including the NCAA,” Keller’s complaint said.
The NCAA was described as “an unincorporated association that acts as the governing body of college sport” generating “hundreds of millions in royalties, broadcast rights and other licensing fees each year.” The annual revenue for the NCAA in fiscal year 2007-08 were $614 million, it said.
The suit, Keller v. Electronic Arts, No. 4:09-cv-01967, accused Electronic Arts of violating the students athletes’ publicity rights by featuring easily recognizable likenesses of player-avatars in its simulated matchups, including statistics, jersey numbers, school history and physical characteristics identical to those of actual players. The NCAA and Collegiate Licensing, which contracted with Electronic Arts, were accused of conspiring to allow the use of the players’ likenesses without their permission and without paying for their usage.
Several similar suits followed in California and elsewhere, including another California suit filed by former UCLA basketball player Ed O’Bannon, who alleged that the NCAA conspired with Electronic Arts and Collegiate Licensing to violate federal antitrust laws by restraining the players’ ability to market their names, images and likenesses.
The NCAA, according to court filings, required athletes to sign forms relinquishing “all rights in perpetuity to the commercial use of their images, including after they graduate and are no longer subject to NCAA regulations.”
The California suits were consolidated into In re: NCAA Student Athlete Name & Likeness, which currently lists 25 named plaintiffs who played NCAA Division I men’s football and basketball between 1953 and the present.
The suits sought damages for those athletes whose likenesses have already been used in the video games, and an injunction barring the NCAA from restraining competition for marketing rights for student-athletes’ names and likeness rights in the future.
On Sept. 26—the same day Electronic Arts announced it would discontinue its NCAA football game—Electronic Arts and Collegiate Licensing filed a notice with the court that they had reached a confidential settlement with the plaintiffs. Subsequent press reports indicated the parties had agreed to a $40 million payout, a sum plaintiffs’ attorney Hausfeld confirmed to The New York Times the following day.
On Nov. 4 the NCAA filed suit in Fulton County, claiming that Electronic Arts is “contractually obligated to indemnify the NCAA” for any potential liability it may bear in the California case, and for attorney fees it has or will incur defending the players’ claims “regardless of whether the NCAA is held liable to any third party regarding those claims.”
Collegiate Licensing breached its contract with the NCAA by “failing adequately to supervise [Electronic Arts]‘ contractual obligation to maintain liability insurance as a licensee” and by “failing to provide the NCAA with access to documents and records that the NCAA is entitled to inspect.”
Collegiate Licensing “also breached fiduciary duties it owes to the NCAA as the NCAA’s agent, including through self-dealing in settlement negotiations without the NCAA’s knowledge, authorization or participation,” it said.
The proposed settlement, it said, is believed to include a bar order that will eliminate both of the NCAA’s former co-defendants’ “prior contractual duties” to the NCAA, causing it “financial and irreparable harm.”
On Nov. 8, U.S. District Judge Claudia Wilken in California denied class certification to a “subclass” of athletes whose images or names were included in game footage or video games and who would be eligible for monetary damages. But she allowed the antitrust claims to proceed on a class basis, certifying an “injunctive relief class” of several thousand members, including all current or former student Division I football and basketball players “whose images, likenesses and/or names may be, or have been, included in game footage or in videogames licensed or sold by Defendants, their co-conspirators, or their licensees after the conclusion of the athlete’s participation in intercollegiate athletics.”
The ruling allows individual players to pursue monetary claims, while the class may “pursue an injunction barring the NCAA from prohibiting current and former student-athletes from entering into group licensing deals for the use of their names, images, and likenesses in videogames and game broadcasts.”
A hearing on the NCAA’s most recent summary judgment motion in the California litigation is slated for next month.
The Fulton County case is National Collegiate Athletic Association v. Collegiate Licensing Company, No. 2013CV238557.