Putative class actions in California and New Jersey are testing whether college sports organizations are big businesses whose limits on payments to amateur athletes violate antitrust laws.
A suit filed on Monday in federal court in Trenton alleges the National Collegiate Athletic Association and five major athletic conferences are exploiting student athletes by capping their compensation while reaping billions of dollars per year from their performance.
The case follows a suit filed March 5 in San Francisco, which likewise complains that the same defendants are generating revenue from student athletes and have colluded to depress artificially the value of their services.
In addition to the NCAA, the plaintiffs have sued the Atlantic Coast, Big 12, Big 10, Pacific 12 and Southeastern conferences.
In the New Jersey case, the plaintiffs are Martin Jenkins, a Clemson University football player, Johnathan Moore, who played basketball at the University of Pittsburgh before transferring to Rutgers University last year, Kevin Perry, who plays football for University of Texas-El Paso, and William Tyndall, a University of California, Berkeley football player.
Represented by Jeffrey Kessler of Winston & Strawn in New York, they are suing on behalf of two separate classes of football and basketball players who currently play for Division I teams under athletic scholarships. Perry allegedly is a member of both classes because he was recruited for basketball too.
The complaint says the defendants “earn billions of dollars in revenues each year through the hard work, sweat, and sometimes broken bodies of top-tier college football and men’s basketball athletes” but instead of allowing member institutions to compete for their services, “have entered into what amounts to cartel agreements with the avowed purpose and effect of placing a ceiling” on what they can be paid, states the complaint. “This class action is necessary to end the NCAA’s unlawful cartel, which is inconsistent with the most fundamental principles of antitrust law.”
The plaintiffs contrast the full “grant-in-aid,” or athletic scholarships, they are allowed to receive with the revenues generated by their schools’ respective athletic programs in 2012: $70 million at Clemson; $64 million at Rutgers, $27 million at UTEP; and $71 million at Berkeley.
Their complaint refers to an NCAA history of antitrust violations, citing successful lawsuits against it over such issues as a cap on part-time coaches’ salaries and an effort to harm the National Invitational Tournament, which was in competition with the NCAA Tournament.
The plaintiffs are asking for a declaration that rules prohibiting, capping or limiting remuneration to class members for their athletic services violate Section 1 of the Sherman Act.
Those restraints allegedly amount to an “anticompetitive, horizontal agreement among competitors to fix artificially” what student athletes are paid for their services and “an unlawful group boycott” of any schools or players who refuse to go along with the illegal price fixing.
The plaintiffs want the court to enjoin the rules and also enjoin the defendants from restraining member colleges from negotiating, offering or paying compensation to class member.
No damages are sought for the class, only the four named plaintiffs who want treble damages for their losses resulting from the antitrust violations.
The California case was brought by Shawne Alston, a former player for the West Virginia University football team, who graduated in 2012.
Alston seeks to represent a class of former rather than current Division 1 football players who received athletic scholarships.
Alston is asking for damages on behalf of the entire class not just himself.
The damages sought are not what student athletes could earn on the free market but the difference between the actual cost of attending college and the size of the athletic scholarships, which often allegedly fall short by thousands of dollars per year.
For example, Alston claims he had to take out a $5,500 loan in 2012 to cover the difference between his grant-in-aid and the roughly $40,000 per year cost. During that same time period, he allegedly led the team in touchdowns and helped it reach a top ten national ranking.
Without the restrictions, schools would compete for star athletes like Alston and at least pay the full cost of their attendance, says the complaint.
Alston’s lawyer, Steve Berman of Hagens Berman Sobol Shapiro in Seattle calls it an “important and ground-breaking” case that the firm has been working on for about eight months.
He says he plans to ask the U.S. Judicial Panel on Multi-District Litigation to transfer the New Jersey “copycat suit” to California.
The Alston suit is assigned to U.S. District Judge Claudia Wilken, who is also handling a pair of other suits against the NCAA over its profiting from athlete likenesses and images in video games.
“Here we have a judge who has been grappling with many of these issues that are similar,” says Berman.
Kessler calls New Jersey “an appropriate and good forum” and says the California cases are different and don’t warrant being heard together with the New Jersey ones.
His case is assigned to District Judge Freda Wolfson.
NCAA attorney Robert Wierenga of Schiff Hardin in Ann Arbor referred a request for comment to his client, which declined comment through spokeswoman Meghan Durham.
None of the defense counsel for the conferences returned calls: Scott Cooper of Proskauer Rose in Los Angeles for Pacific 12; Nathan Chase Jr., of Robinson Bradshaw & Hinson in Charlotte, NC, for Southeastern; Charles Coleman III of Holland & Knight in San Francisco, for Atlantic Coast; Andrew Rosenman of Mayer Brown in Chicago, for the Big Ten; and Leane Capps of Polsinelli in Dallas, for the Big 12.