NIL CLE Outline

Beverly Hills Bar Association’s CLE NIL Madness: What The Heck Is Going On? Presentation Outline March 15, 2024
© 2024 Mark Farbman. All Rights Reserved
For education and instructional purposes only. Not legal advice. No attorney/client relationship intended nor established.

​​The NCAA and Name, Image and Likeness (NIL)
The National Collegiate Athletic Association (NCAA) is the non-government private sports governing organization that has over 360 Division I member colleges and universities.  Alston v. NCAA, an antitrust U.S. Supreme Court opinion that rules the removal of NCAA restriction on academic related payments for players. In response to Alston and pressure from member universities, the NCAA adopted a change to their student athlete handbook allowing third party name, image and likeness (NIL) money endorsement deals for student athletes (NCAA Manuel, 2023). In addition, no NIL offer to a prospect player (either a high school senior or a transfer) can be made by a University, Booster Club, or Collective prior to a prospect player committing to a University. On 1/10/2023, the NCAA adopted additional NIL rules for voluntary registration for NIL service suppliers, required NIL disclosure requirements by students, standardized NIL contracts, and NIL education for student players (NCAA Rules, 2023).  A federal judge granted a preliminary injunction on 2/23/2023 banning these NCAA’s NIL recruiting restrictions (see Tennessee and Virginia v. NCAA).

The NCAA and the Origin of the “Student Athlete” Term

The term “Student-Athlete” is a circa 1957 invention of the NCAA by its first executive Walter Byers in consultation with the organization’s legal department to avoid the classification of college athletes as college employees (Byers, 1997; Clarke, 2021, Slothower, 2014). This non employee status avoids paying workers compensation claims for injured athletes.
The Student-Athlete background story is Ray Dennison was playing right guard for the Fort Lewis A&M Aggies against Trinidad Junior College on September 24, 1955. He attended college on the GI Bill and was persuaded by his football coach to join the football team after the coach got him an on campus job to replace his work at a nearby gas station.
Dennsion, 26, married and father of three children of a son, 4, and two daughters ages 3 and 18 months. Denison was defending the opening kick return. As Dennison went for a tackle, Trinidad’s ball carrier knee slammed into Dennsion’s helmet. The impact fractured the top of Dennison’s skull and shattered the base of his skull against the top of his spine. He was taken by ambulance to the Trindad hospital and he went into a coma and died.
His widow filed a claim for death benefits with the Colorado Industrial Commission under the Workers’ Compensation Act. The Commision approved the claim and was affirmed by the district court. Fort Lewis with the State Compensation Insurance Fund, appealed to the Colorado Supreme Court. The Court reversed the District Court and ruled that Dennsion was not a college employee and denied the death benefits.​​ The opinion uses the NCAA’s new term “student-athlete” and states “since the evidence does not disclose any contractual obligations to play football, then the employer-employee relationship does not exist.” Fort Lewis “was not in the football business” the Court said.

NLRB (National Labor Relationship Board) 

Jennifer Abruzzo, NLRB General Counsel, issues a nonbinding memorandum on September 29, 2021 (NLRB Memo, 2021) It states the NCAA “student athlete” term is a misclassifying by employer academic institutions on college players who are employees to lead the players to belief that they are not entitled to the National Labor Relations Act (“Act) protection to form a union and then engage in collective bargaining for wages and benefits. NLRB’s jurisdiction is private entities (Private Colleges and Universities ) and not state insitutions (State Colleges and Universities). The Memo states that pursuing a joint employer theory of liability against private institution, athletic conference with public institutions and private instiutions (ie SEC, Big Ten, ACC), and NCAA would be justified since the NCAA and athletic conference that have established eligibility standards and to enter the pursuant for college players to enter the workforce (athletic team)(NLRB Memo fn 34, p. 9). The Act broadly defines an employee as “any employee,” subject to few enumerated exceptions that do not include university employees, football players, or students.

Dartmouth Men’s Basketball v. NLRB

The NLRB Region 1 makes a February 5, 2024 decision that Dartmouth College men’s basketball varisty players are university employees (NLRB Dartmouth, 2024; Lederman, 2014; NY Times, 2024). Under the Act, the NLRB will conduct a secret ballot election among the unit employees (basketball players) on whether they should be represented for the purpose of collective bargaining by Service Employees International Union who have already represented other Dartmouth employees since 1966 (). In the decision, it was noted that all of the Ivy Schools are private schools and therefore the NLRB action would not interfere with stability in labor relations due to the variety of state labor laws. Distinguishing from the Northwestern University decision that Northwestern was the only private school in the 18 university member Big Ten Conference.  There the Board said that “asserting jurisdiction would not promote stability in labor relations due to the variety of state labor law that would apply to football teams at state-run institutions”  (Trustees Dartmouth College, 2024, p. 15). The joint employer theory was not applied. Union officials and Darmouth’s players testimony told the NLRB that Dartmouth discouraged players from taking classes that interfered with practice times, controlled the players summer workouts, requiring players to sign handbooks and other documents, practicing times, scheduling road trips with meal and sleep times at the coach’s staff discreation. The decision stated that the basketball players perform work which benefits Dartmouth that generates alumni engagement, donations, and publicity to promote high school interest to apply to Dartmouth even though the program is not profitable and does not provide athletic scholarships, the players do receive the benefits that include early read for a preferred admission process: various athletic clothing, shoes, accessories worth about $3,000 per player; home game tickets worth $1,200.00; travel, lodging and meals for away games; and athletic support which include academic support, career development, counseling, sports nutrition, leadership and mental performance, strength and conditioning, sports medicine and wellness services.
The decision can be appealed to the NLRB in Washington, DC and a subsequent appeal to a federal appellate court. Then potentially a subsequent petition to the US Supreme Court.

U of Southern California, Pac 12, and NCAA v. NLRB 

NLRB Region 31 (LA, CA) complaint filed 5/18/2023 and an amended complaint filed 9/15/2023 (NLRB USC, 2023; Evans, L. 2024a; Evans, 2024b; Ramsey, K. 2024; Yahoo Sports, 2023; NY Times, 2023, Niedzwiadek, 2024). The lawsuit alleges that the University of Southern California (USC and joint employer with PAC-10 and NCAA)(UCLA dropped as defendant party since it is a public institution), PAC-10 (located in San Francisco, CA)(as a joint employer with USC and NCAA), and NCAA (located in Indiana)(Joint employer with USC and Pac-10) seeks to cease and desists the parties from misclassifying the Players (mens football and basketball and women’s basketball student players) as non employees “student-athletes”; and reclassify the players as employees in their handbooks, rules, and notify the players. The action does not seek unionization. NLRB (Washington, DC Executive Secretary Office) filed a letter on 10/23/2023 that NCAA, PAC-10, and USC motion to dismiss was filed late and will not be considered. Testimony in January by an associate AD and a deputy AD in hearings is an attempt by NLRB to establish USC control over the football players. “Team expectations” and “punished by coaches as accountability,” dispute if there is a team player handbook yet a USC link to a 2021-2022 student-athlete handbook (favor USC) versus “team rules” clip-card for players road trips per diem meal (favor NLRB). Joint Employer: USC’s move to Big Ten is “working hard to mitigate any [well-being] impact” on players’ future cross country trips on planes indicates the commercial nature of college sports (favor NLRB). Formal player testimony of spending 50-60 hours/week during football season and 30-40 hours/week during off season, controls what a player can post on social media and speech to media (favor NLRB). Final ruling timeframe by administrative judge not determined.

Joint Employer Doctrine:

Applied in disputes regarding NLRB, the Fair Labor Standard Act (FLSA, minimum wage), and Title VII. When two or more entities, according to common law principles, share control of the same employee.  Employer control factors to consider are power to pay salary, insurance, record keeping, supervision, hire, fire, or otherwise control daily of employees (Felder v. USTA, 27 F.4th 834, US Ct. App. 2nd Cir. (2022)(USTA denied Felder his credentials before he could start working as a temp. security guard, like NLRB’s established eligibility standards noted in NLRB section) quoted in Gregory Pappas v. XP Controle, 1:19-cv-1137-GHW, US Dist Ct., SD NY (2023)).
The US Dept. of Labor rescinds Trump joint employer March 2020 rule under the FLSA effective September 2021 (Weiss, 2021; Federal Register, 2021). This was a response to the September 2020, the Federal District Court of Southern District of New York’s ruling that vacated most of the March 2020 rule since it violated the FLSA’s board definition of joint employment. New York v. Scalia (2020). The Labor Department has no plans to replace the March 2020 rule’s joint employer guidelines.The final does not address joint employment under other federal statutes, for example, the NLRA.

House v. NCAA (past NIL restriction)

After the 2021 Supreme Court decision in Alston v. NCAA (an antitrust case that removed NCAA restriction on academic related payments for players), Northern District of California antitrust class action asked for 1.5 billion (the court could triple to 4.5 billion) in damages (Washington Post, 2024; ESPN, 2024; Arcieri, K., 2023). Previous NCAA restrictions on NIL rights unfairly deprive top Division I student-players from a share of television and NIL social media revenues. Judge Claudia Wilken’s previous ruling in NCAA cases favoring college players for their NIL rights. Plaintiffs are Arizona State swimmer Grant House and University of Oregon basketball player Sedona Prince. The trial is set for January 2025.
Fontenot v. NCAA and the Power Five conferences of SEC, Pac-12, Big Ten, Big 12, and ACC
In the U.S. District Court of Colorado seeking class action status filed November 2023 (Warwick, B., 2023; Scarcella, M. 2023a). Seeking part of the college football television revenue worth billions of dollars earned by NCAA and the Power Five conferences. Plaintiff Alex Fontenot was a tailback for the U. of Colorado Buffaloes football team between 2017 and 2022.

Hubbard v. NCAA (denial of educational related stipends)
Antitrust case that seeks damages for college players who were denied education related stipends following the Alston decision (Washington Post, 2024). The plaintiffs include Chua Hubbard, former Oklahoma State football player and Keira McCarrell, former Auburn track player. Plaintiffs seek class action status and triple damages for all current and formal DI athletes from 2018 to present.
Johnson v. NCAA (FLSA -Minimum Hourly Wage)
Waiting for 3rd Circuit of Appeals interlocutory appeal ruling after a February 2023 hearing on whether college athletes are employees under FLSA (Fair Labor Standard Act) normal tests to determine employee status (Murphy, 2024; Hughes, 2023; Washington Post, 2024). The Plaintiffs Trey Johnson is a former Villanova football player and other DI players from Duke and University of Oregon (“players”) filed the lawsuit in Federal District Court PA (Philadelphia). Players argue that they are employees under FLSA and seeking hourly wages similar to students earn in work-study college programs because of the NCAA’s control over players. The NCAA argues that players are not employees because of appellate court precedent, the Department of Labor’s handbook states that college athletes are not employees, and players’ universities have significant control and not the NCAA. The Johnson District Court (3rd Cir.) used the Enterprise test and determined college players are employees. The NCAA argues that prior appellate decisions that certain college students are not employees. They are Berger (7th Circuit), Dawson (9th Circuit), and Glatt (2nd & 11th Circuits, using a primary beneficiary test to determine if college interns are employees).

FLSA -Fair Labor Standards Act (1938)

FLSA -Fair Labor Standards Act of 1938, establishes minimum wage, overtime eligibility, record keeping, and child labor standards from full time and part time employees (FLSA, 1938). The current federal minimum wage is $7.25. States may set a higher minimum wage rate.

The US Dept. of Labor issued a final ruling on independent contractor classification under the FLSA on 01/10/2024 (FLSA Final Rule, 2024).The final rule provides guidance on six economic reality factors that determine economic dependence between a worker and potential employer. The factors are not assigned a predetermined weight and each factor is given full consideration: 1) opportunity for profit or loss depending on managerial skill; 2) investments by the worker and the potential employer; 3) the degree of permanence of the work relationship; 4) the nature and degree of control; 5) the extent to which the work performed is an integral part of the potential employer’s business; and 6) skill and initiative. Additional factors may also be considered if they are relevant to the overall question of economic dependence.

Bewley and Bewley v. NCAA (denial of amateur status to play Div I basketball)

In the U.S. District, Northern District of Illinois filed November 2023. The two twin brothers Matthew and Ryan who are 19 are challenging the NCAA’s decision to deny amateur status to play for Chicago State University’s basketball team (Scarcella, 2023b). The complaint cites antitrust violations by the NCAA for characterization of NIL compensation from an elite basketball academy in Georgia before they enrolled at Georgia State in 2023. The NCAA determined that the compensation exceeded “actual and necessary” expenses and the academy team was a professional team. The brothers prior to college enrollment accepted athletic scholarships from Chicago State. The plaintiffs are seeking injunctive relief and monetary damages for lost NIL endorsement opportunities and future harm of not being drafted by a professional basketball team.

Carter, Prince, and Harrison v. NCAA

Plaintiffs Duke Football player DeWayne Carter, TCU basketball player Sedona Price, and Stanford soccer player Nya Harrison filed an antitrust lawsuit against the NCAA in December 2023 in Federal District Court in California (Murphy, 2023; DeCock, 2023). The lawsuit seeks to bar the NCAA rules that prohibit athletic compensation.

32 College Athletes v. U of Oregon (Title IX)

Thirty two women players from the University of Oregon’s beach volleyball and club rowers filed a federal complaint for alleged violations of Title IX compliance in November 2023 (NBC News, 2023; Christovich, 2023). The lawsuit states that Oregon spends only 25% of its annual athletic budget a year on women who make up 49% of the student athlete population. In addition, Oregon provides male student athletes more than the female athletes by $4.5 million for the past five years according to the lawsuit. Oregon provides male student athletes with better equipment and facilities than the women student athletes according to the lawsuit. Furthermore, Oregon provides its male student athletes NIL-related training, opportunities, and income compared to the female student athletes the lawsuit states. The lawsuit does not name as co-defendants Opendorse and Division Street the two NIL collective and marketplace of Oregon sports teams. Note that the State of Oregon does not recognize the right of publicity in common law or by statute.

Ohio et al v. NCAA
Attorney Generals from Colorado, Illinois, New York, North Carolina, Ohio, Tennessee, and West Virginia are seeking TRO (hearing in December 2023) and injunctive relief on the NCAA’s transfer restriction rules (DeCock, 2023; Washington Post, 2024). The plaintiffs state that the NCAA’s one-year transfer delay eligibilty rule for certain athletes violates antitrust law.

Tennessee and Virginia v. NCAA
Attorney Generals from Tennessee and Virginia filed in the Federal District of Eastern Tennessee on 1/31/2024. This was the day after the news reported that the U. of Tennessee was under a NCAA investigation for recruiting violations (Murphy, 2024; Washington Post, 2024; Baer, 2024). The lawsuit seeks for all prospective students in the U.S. TRO and permanent injunctive relief against the NCAA’s NIL rule that prohibits a booster, collective, or college to discuss or offer a NIL deal prior to a high school student or transfer from another college committing to a university. The letter of intent period for 2023-2024 is 02/7/2024 to 04/1/2024 for Div. I football. The TRO injunction relief was denied prior to the 2/7/2024 start date. On 2/24/2024 the judge granted a primary injunction halting the NCAA’s NIL restrictions since the NIL restrictions “likely violates federal antitrust law.” The injunction remains in effect at least until the end of trial. The NCAA may appeal the injunction. Prospective High school and transfer students are allowed to directly negotiate and sign contracts before they commit to a college.

References:

Arcieri, K. (2023). College Athletes Secure Class Status in NCAA Antitrust Suit. bloomberglaw.com. https://news.bloomberglaw.com/antitrust/college-athletes-win-class-action-status-in-ncaa-antitrust-suit
Baer, J (2024). NCAA can no longer enforce NIL rules after federal judge grants injunction. yahoosports.com. https://sports.yahoo.com/ncaa-loses-ability-enforce-nil-231404730.html
Byers, W. (1997). Unsportsmanlike Conduct: Exploiting College Athletes. U of Michigan Press. https://doi.org/10.3998/mpub.14486
Christovich, A. (2023). New Lawsuit Could Decide Whether NIL Is Subject To Title IX. frontofficesports.com. https://frontofficesports.com/new-lawsuit-could-decide-whether-nil-is-subject-to-title-ix/
Clarke, L. (2021). The NCAA coined the term ‘student-athlete’ in the 1950’s. Its time might be up. Washington Post. https://www.washingtonpost.com/sports/2021/10/27/ncaa-student-athlete-1950s/
DeCock, L. (2023). Duke’s Carter about to become a household name for lawsuit against NCAA. newsoberserver.com. https://www.newsobserver.com/sports/spt-columns-blogs/luke-decock/article282960063.html
ESPN (2024). NCAA changes: NLRB, lawsuits and mounting legal challenges. espn.com. https://www.espn.com/college-sports/story/_/id/39485414/nlrb-lawsuits-mounting-legal-challenges
Evans, L. (2024a). USC athletic department employees’ testimony adds key points to NLRB’s case against USC. Orange Co. Register. https://www.ocregister.com/2024/01/28/usc-athletic-department-employees-testimony-adds-key-points-to-nlrbs-case-against-usc/
Evans, L. (2024b). How the NLRB’s case against USC and the NCAA could fix college compensation. https://www.ocregister.com/2024/02/02/how-the-nlrbs-case-against-usc-and-the-ncaa-could-fix-college-athlete-compensation/
Federal Register (2021). Rescission of Joint Employer Status Under the FLSA Rule. Dept. of Labor. https://www.federalregister.gov/documents/2021/07/30/2021-15316/rescission-of-joint-employer-status-under-the-fair-labor-standards-act-rule
FLSA (1938). Fair Labor Standards Act. U.S. Dept. Labor. https://www.dol.gov/agencies/whd/flsa
FLSA Final Rule (2024). Employee or Independent Contractor Classification Under the FLSA, Final Rule. U.S. Dept of Labor, Wage and Hour Division. https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking
Hughes, L. (2023). Why Student-Athletes Will Not Prevail in Johnson v. NCAA. conductdetrimental.com.  https://www.conductdetrimental.com/post/why-student-athletes-will-not-prevail-in-johnson-v-ncaa
Lederman, D. (2024) Dartmouth Basketball Players Are Employees, NLRB Rules. www.insidehighered. https://www.insidehighered.com/news/students/athletics/2024/02/06/dartmouth-basketball-players-are-employees-can-unionize-nlrb
Murphy, D. (2023). Athletes sue NCAA, Power 5 for not getting paid. espn.com. https://www.espn.com/college-sports/story/_/id/39064621/athletes-sue-ncaa-power-5-not-getting-paid
NBC News (2023). 32 female University of Oregon athletes file Title IX lawsuit against the school. nbcnews.com. https://www.nbcnews.com/news/sports/32-female-university-oregon-athletes-file-title-ix-lawsuit-school-rcna127691
NCAA Manuel (2022). 2022-2023 NCAA Division I Manual , NCAA Pub. https://www.ncaapublications.com/p-4657-2022-2023-ncaa-division-i-manual.aspx
NCAA Rules (2023). Division I Council approves NIL disclosure and transparency rules. ncaa.org. https://www.ncaa.org/news/2024/1/10/media-center-division-i-council-approves-nil-disclosure-and-transparency-rules.aspx
Niedzwiadek, N. (2024). NLRB orders union election for Dartmouth men’s basketball team. politico.com. https://www.politico.com/news/2024/02/05/nlrb-union-election-dartmouth-00139737
NLRB Dartmouth (2024). Trustees of Dartmouth College, Employer and Service Employees International Union, Local 560, Petitioner. https://www.nlrb.gov/case/01-RC-325633
NLRB Memo (2021). Statutory Rights of Players at Academic Institutions (Student-Athletes) Under The National Labor Relations Act. Office of the General Counsel, Jennifer Abruzzo. https://www.nlrb.gov/news-outreach/news-story/nlrb-general-counsel-jennifer-abruzzo-issues-memo-on-employee-status-of
NLRB USC (2023). U. of S. Ca, PAC-12 Conf., NCAA Joint Employers; Nat. Col. Play. Assoc. Amended Complaint. https://www.nlrb.gov/case/31-CA-290326
NY Times (2023). At What Point Should College Athletes Be Considered Employee?. NY Times. https://www.nytimes.com/2023/12/23/us/college-athletes-employees-nlrb-hearing.html
NY Times (2024). Dartmouth Players Are Employees Who Can Unionize, U.S. Official Says. NY Times. https://www.nytimes.com/2024/02/05/business/dartmouth-basketball-nlrb-union.html#:~:text=A%20federal%20official%20said%20Monday,sports%20program%20in%20the%20country.
Ramsey, K. (2024). NLRB Could Make College Athletes Employees. businessofcollegesports.com. https://businessofcollegesports.com/legal/national-labor-relations-board-could-make-college-athletes-employees/
Scarcella, M. (2023a). NCAA faces new lawsuit over athletics drive for compensation. reuters.com. https://www.reuters.com/legal/litigation/ncaa-faces-new-lawsuit-over-athletes-drive-compensation-2023-11-21/
Scarcella, M. (2023b). NCAA hit antitrust lawsuit in US court over ‘amateurism rules. reuters.com. https://www.reuters.com/legal/litigation/ncaa-hit-with-antitrust-lawsuit-us-court-over-amateurism-rules-2023-11-02/
Slothower, C. (2014). Fort Lewis’ first ‘student-athlete.’ Durango Herald. https://www.durangoherald.com/articles/fort-lewis-first-student-athlete/
Warwick, B. (2023). Former CU football player files lawsuit against NCAA seeking television revenue split for players. cbsnews.com. https://www.cbsnews.com/colorado/news/cu-football-alex-fontenot-lawsuit-television-revenue-split/#
Washington Post (2024). How Many Legal Challenges is the NCAA facing? It is a lot and the impact could be big. Washington Post. https://www.washingtonpost.com/sports/2024/02/06/ncaa-lawsuits/fba6c8f6-c54c-11ee-bbc9-9b5ca9b20779_story.html
Weis, P. (2021). U.S. Department of Labor Rescinds Trump-Era Joint Employer Rule. paulweiss.com. https://www.paulweiss.com/practices/litigation/employment-workplace-investigations-trade-secrets/publications/us-department-of-labor-rescinds-trump-era-joint-employer-rule?id=40684
Yahoo Sports (2023). NLRB Rejects USC ‘Student-Athlete’ Motion to Dismiss After Late Filing. sports.yahoo.com. https://sports.yahoo.com/usc-defends-student-athlete-media-140000233.html
Case Law:
Alston v. NCAA, 141 S.Ct. 2141 (2021). https://scholar.google.com/scholar_case?case=18386472160721780784&q=alston+v.+ncaa&hl=en&as_sdt=3,34
Felder v. USTA, 27 F.4th 834, US Ct. App. 2nd Cir. (2022). https://casetext.com/case/felder-v-united-states-tennis-assn
New York v. Scalia, 490 F. Supp. 3d. 748 (S.D.N.Y. 2020). https://casetext.com/case/new-york-v-scalia-2
Gregory Pappas v. XP Controle, 1:19-cv-1137-GHW, US Dist Ct., SD NY (2023). https://scholar.google.com/scholar_case?case=1990579325349568367&q=Gregory+Pappas+v.+XP+Controle&hl=en&as_sdt=3,34