$2.5 billion NCAA settlement to be renegotiated over roster limits

A federal judge in Oakland declined to approve settlement of the $2.5 billion lawsuit by student athletes against the NCAA that would bring sweeping changes to college sports.

U.S. District Judge Claudia Wilken ordered renegotiation of the terms, citing fairness concerns raised by some of the 54 objectors to the deal on athletes' rights to profit from their names, images and likenesses. The main issue is their claim that the settlement terms would force thousands of athletes to be cut from college teams.

Wilken ordered the NCAA and attorneys for more than 360,000 athletes to renegotiate terms related to limits on team rosters.

Class counsel said the judge still overruled most objections. They said her ruling was beneficial to the settlement's ultimate approval.

Wilken cited the objectors' belief that the proposed roster limits violated antitrust law and would force thousands of athletes to immediately be cut.

The proposed settlement called for smaller teams than they currently have to streamline payments directly from schools to athletes for use of their names, images and likenesses.

"The parties admit in their supplemental brief that some class members 'may ultimately have lost roster spots as a result of the settlement,' but they argue that the court should nevertheless approve the settlement agreement because those class members will be able to compete for scholarships and other benefits," Wilken wrote. "The parties argue that prior cases endorse this principle. The court is not persuaded. ... None of them addresses the question of whether a settlement agreement that involves injunctive relief for a Rule 23(b)(2) class can be approved where it has been shown that its immediate implementation will cause harm to some members of the Rule 23(b)(2) class."

The parties were given 14 days to mediate.

Steve Berman, one of the plaintiffs' attorneys who is managing partner at Hagens Berman Sobol Shapiro LLP in Seattle, said in an email Thursday, "First for perspective. The judge has said she is okay with everything but athletes losing roster spots in the first year. That means she overruled the many other objections that were raised by the objectors and rejected their attempts to be appointed as new lead counsel. The judge's direction has hopefully given us the leverage we need to get this one last issue fixed."

Known as the "House" case, the certified class action challenged the NCAA's bar on athletes being compensated for the commercial use of their names, images and likenesses, or NIL. The objectors initially asked the court to deny approval on grounds such as gender or race discrimination and anticompetitive conduct. In re: College Athlete NIL Litigation, 4:20-cv-03919 (N.D. Cal. filed June 15, 2020).

Wilken on Wednesday paused final approval of a related $200 million settlement that was lightly discussed by the parties at the final fairness hearing. According to her order, she would have granted final approval for the related settlement but the parties asked her to hold off until the House case is resolved.

The $200 million settlement between the NCAA and 286,000 athletes is led by NFL running back Chuba Hubbard. It challenged the NCAA's cap on academic achievement awards that universities could give athletes. Hubbard et al v. National Collegiate Athletic Association et al., 4:23-cv-01593 (N.D. Cal. filed April 4, 2023).

Jeffrey Kessler, co-executive chairman of Winston & Strawn LLP in New York City and one of the lead attorneys for the plaintiffs, said in an email Thursday, "We are very gratified that Judge Wilken has indicated that she has overruled almost all of the objections to the settlement. The last remaining issue is the need to address the adverse impact of roster limits on some of the injunctive relief class members.

"We are actively negotiating with the NCAA and the Conferences to agree upon a change to address this issue, and we are optimistic that they will do so. If not, Judge Wilken has made it clear that we will be going back to trial. Either way, we will fight to obtain justice for the class members."

Both lawsuits were settled in July and claim that the NCAA and its five major member conferences -- the Pac-12 Conference, the Southeastern Conference, the Atlantic Coast Conference, the Big Ten Conference and the Big 12 Conference -- systemically violated antitrust laws by regulating athlete compensation for decades.

Lead attorneys for the NCAA and its conferences, Rakesh N. Kilaru of Wilkinson Stekloff LLP and Jacob K. Danzinger of ArentFox Schiff LLP, could not be reached for comment Thursday but have routinely defended the settlement as fair.

In an April 15 opposition letter to final approval, a group of attorneys representing objectors detailed the objections to roster caps. "Defendants can't explain how these caps improve competitive balance or output. The same is true for the caps on the broadcast revenue share that perpetuate price-fixing. Their statement at the hearing was incoherent."

Steven F. Molo, founding partner at MoloLamken LLP and one of the lead attorneys for some objectors, reacted to Judge Wilken's ruling in a news release Thursday. "We're grateful the Court understood the pain the proposed settlement has been inflicting on many student athletes who've dedicated themselves to their sports," Molo said. "The tremendous unfairness of the arbitrary roster limits must be addressed."

Other attorneys who filed the opposition letter could not be reached for comment Thursday. They are: Steven F. Molo, Alexandra C. Eynon of MoloLamken LLP; William J. Cooper of Conrad | Metlitzky | Kane LLP; and Arthur H. Bryant of Clarkson Law Firm PC.