Current NIL Litigation Landscape
House v. NCAA. House v. NCAA represents a pivotal moment in the legal landscape of college athletics, with the potential to redefine the economic dynamics between student-athletes and the institutions they represent. See House v. Nat’l Collegiate Athletic Ass’n, 545 F. Supp. 3d 804 (N.D. Cal. 2021). The case is a class action lawsuit initiated by Arizona State University swimmer Grant House in the Northern District of California before Judge Claudia Wilken, a jurist with a history of influential rulings in NCAA-related cases. The plaintiffs argue that the NCAA’s restrictions on compensation for athletes’ NIL rights violate federal antitrust laws, and they seek significant financial reparations and structural changes to the NCAA’s policies.
The plaintiffs assert that the NCAA’s NIL restrictions constitute an unlawful restraint of trade under the Sherman Act, arguing that these restrictions suppress the market value of student-athletes and prevent them from capitalizing on their NIL during their collegiate careers. The lawsuit seeks over $4 billion in damages, representing the financial opportunities allegedly lost by student-athletes due to the restrictive policies. The plaintiffs also advocate for a revenue-sharing model, particularly focusing on the substantial revenues generated from television contracts for major college sports events.
The NCAA maintains that its NIL policies are essential to preserving the amateur status of college athletes, which they argue is a cornerstone of collegiate sports. The organization contends that allowing unrestricted NIL compensation would blur the lines between amateur and professional sports. They claim that without these rules, wealthier schools could dominate recruitment by offering more lucrative NIL deals and upset the competitive balance among member institutions, thereby undermining the integrity of college athletics.
The House v. NCAA case gains particular significance in light of the Supreme Court’s unanimous decision in National Collegiate Athletic Ass’n v. Alston, 594 U.S. 69 (2021). In Alston, the Court ruled that the NCAA could not limit education-related benefits for student-athletes, and Justice Kavanaugh suggested in his concurring opinion that the NCAA’s broader compensation restrictions might also violate antitrust laws.
Recent developments indicate that a settlement is likely in House v. NCAA. The NCAA and several power conferences are poised to settle the lawsuit with a $2.8 billion agreement that includes revenue-sharing provisions. This landmark settlement could compensate past athletes and establish a framework for future revenue sharing starting as early as fall 2025. The agreement also anticipates expanded roster sizes and potential changes to scholarship limits, which could lead to further legal challenges, especially concerning Title IX compliance.
This settlement could accelerate the shift toward treating student-athletes as professionals, especially in revenue-generating sports like football and basketball. The settlement and ongoing regulatory adjustments underscore the need for a comprehensive framework governing NIL compensation, with calls for federal legislation to establish uniform standards and protect against antitrust claims. A victory for the plaintiffs in House could embolden further legal challenges to other NCAA regulations, potentially setting a precedent for additional lawsuits targeting the organization’s control over athlete compensation, scholarships, and other benefits.
State-led antitrust lawsuits. The recent wave of state-led antitrust lawsuits challenges the NCAA’s restrictive NIL compensation policies, asserting violations of federal antitrust laws.
The primary state-led antitrust lawsuit is spearheaded by the attorneys general of Tennessee and Virginia. Tennessee v. Nat’l Collegiate Athletic Ass’n, No. 3:24-CV-00033-DCLC-DCP (E.D. Tenn. Feb. 23, 2024). This lawsuit, filed in the Eastern District of Tennessee, targets the NCAA’s NIL compensation rules, particularly those that restrict NIL opportunities for student-athletes during the recruitment process. The case emerged in the context of broader scrutiny and criticism of the NCAA’s regulatory framework following the lifting of its NIL ban in 2021.
The plaintiffs argue that the NCAA’s NIL restrictions constitute an unlawful restraint of trade under the Sherman Act. They claim that these restrictions suppress the free market for student-athletes’ NIL rights, depriving them of fair compensation and opportunities. For example, banning NIL compensation as a recruitment inducement unfairly limits the ability of student-athletes to maximize their economic potential during a critical period in their careers.
As in the House case, the NCAA defends its NIL policies by arguing that they are essential to preserving the amateur status of college athletes and maintaining a competitive balance among member institutions. Without these restrictions, wealthier schools could dominate recruitment, leading to an imbalance in collegiate sports. The NCAA asserts that its member schools collectively establish and support the rules governing NIL compensation and that these rules are necessary to protect student-athletes from exploitation and ensure a level playing field across institutions.
U.S. District Judge Clifton Corker granted a preliminary injunction in favor of the plaintiffs, barring the NCAA from enforcing its NIL-recruitment ban. Judge Corker emphasized that the NCAA’s stance likely violates antitrust law and that the states are likely to prevail in the long run because maintaining a competitive balance through trade restraints is precisely the type of conduct the Sherman Act seeks to prevent.
Unionization and employment status. In a landmark decision, a National Labor Relations Board (NLRB) official ruled that Dartmouth College men’s basketball players are employees of the school, allowing them to unionize. Trs. of Dartmouth Coll., NLRB Case No. 01-RC-325633 (2024). This ruling was based on the argument that the college exerts substantial control over the athletes, similar to an employer-employee relationship. For example, Dartmouth dictates their schedules, training, and other aspects of their lives. This decision could encourage similar unionization efforts at other private institutions, particularly those with high-profile athletic programs. While the ruling is a significant victory for the Dartmouth players, the broader applicability of the ruling to other institutions remains uncertain, depending on the specific circumstances and control exerted by those schools.
The NLRB filed a formal complaint against the University of Southern California (USC), the Pac-12 Conference, and the NCAA, alleging that they misclassify college athletes as “student-athletes” rather than employees. Univ. of S. Cal., No. 31-CA-290326 (NLRB 2023 filed Feb. 28, 2022). The complaint argues that this misclassification deprives athletes of their rights under the National Labor Relations Act. If successful, this case could mandate the reclassification of athletes at USC and other private institutions, granting them employee status and associated rights, such as collective bargaining and labor protections.
Title IX implications. The University of Oregon is currently embroiled in a significant Title IX lawsuit filed by 32 female athletes, which underscores ongoing issues of gender inequality in the context of NIL compensation. The plaintiffs, members of the varsity beach volleyball team and the club rowing team, allege that the university has failed to provide equal treatment, benefits, and opportunities compared with those of their male counterparts. Specifically, the plaintiffs highlight severe disparities in facilities, scholarships, and NIL support. For instance, the beach volleyball team practices in inadequate public park conditions, lacks dedicated facilities, and receives no scholarships despite NCAA rules permitting six full athletic scholarships. The lawsuit seeks not only correction of these alleged violations but also unspecified damages.
Potential Areas of Future Litigation
NCAA policies beyond NIL. Future litigation may target other NCAA policies, such as scholarship limitations, transfer rules, and restrictions on outside employment. These policies, like the NIL restrictions, could be argued to unlawfully limit the economic opportunities of student-athletes and violate antitrust laws. Cases similar to House v. NCAA could emerge, questioning the legality of any NCAA rules perceived as restraining trade and hindering the free market for athlete services.
Broadcast and media rights. Lawsuits may arise seeking a share of the substantial revenues generated from media rights deals for televised games and events. Plaintiffs could argue that athletes deserve compensation for their contributions to these lucrative broadcasts, aligning with the revenue-sharing models seen in professional sports.
Employment status and benefits. With growing momentum toward recognizing college athletes as employees, future litigation could push for broader employment rights and benefits. This includes access to health insurance, retirement plans, and other protections typically afforded to employees. Legal actions could challenge the classification of athletes as amateurs, arguing for their recognition as employees under federal labor laws, which would significantly alter the financial and operational structure of collegiate athletics.
Unionization efforts. Building on the Dartmouth case, athletes at other institutions may seek to unionize, particularly at private universities where NLRB jurisdiction applies. Successful unionization efforts could lead to collective bargaining agreements that secure better compensation and working conditions for athletes. Future litigation might address the rights of athletes to form unions and engage in collective bargaining, challenging any institutional or NCAA policies that obstruct these efforts.
Preparing for Future Challenges
Comprehensive compliance programs. Institutions must develop comprehensive compliance programs to navigate the complex legal requirements surrounding NIL compensation. This includes creating clear policies, providing training and resources to athletes and staff, and establishing oversight mechanisms to ensure adherence to federal, state, and institutional regulations. Regular audits and assessments should be conducted to identify potential compliance gaps and address them promptly.
Equity and inclusion initiatives. Ensuring gender equity and compliance with Title IX is a critical component of risk management. Institutions should implement initiatives to promote equal opportunities for male and female athletes in NIL activities, providing support and resources to all athletes regardless of gender. Proactive measures to address disparities in NIL compensation and opportunities will help prevent Title IX-related lawsuits and promote a culture of fairness and inclusion.
Education and support for athletes. Providing education and support for athletes is vital to help them navigate the complexities of NIL opportunities. This includes offering workshops on financial literacy, contract negotiation, and legal rights, as well as access to professional advisors. Empowering athletes with the knowledge and resources to make informed decisions will reduce the risk of exploitation and ensure they maximize their NIL potential.
Conclusion
Preparing for future legal challenges in the NIL landscape requires a proactive and multifaceted approach. By staying informed of evolving legal standards and developing comprehensive compliance and risk management strategies, attorneys and institutions can navigate the complexities of NIL compensation and ensure fair and equitable treatment of student-athletes. As the field continues to evolve, being prepared for future legal challenges will be essential to maintaining the integrity and sustainability of collegiate athletics.
