Class action suit against NCAA clears two hurdles

Updated: October 30, 2006, 1:22 PM ET
By Tom Farrey | ESPN The Magazine

Getting an athletic scholarship could mean getting a "full ride" if a couple of recent federal court decisions are any indication.

Currently, an athletic scholarship -- called a "grant-in-aid" by the NCAA -- can pay for tuition, room, board and required books. Not covered are incidentals, transportation, supplementary books and other expenses that cost another $2,500 a year on average. The plaintiffs in the class-action suit White vs. NCAA that was filed in February argue that schools should be allowed to cover all expenses up to the official cost of attendance.

Those plaintiffs, major college basketball and football players, accuse the NCAA of violating antitrust law by restricting the amount of aid that member schools can offer to players in those revenue-producing sports.

Last month, U.S. District Court Judge R. Gary Klausner denied the NCAA's motion to dismiss the case. In that ruling, he noted that attorneys for the players had adequately alleged that "the [grant-in-aid] cap ... [forces] student-athletes to bear a greater portion of the cost of attendance than they would have borne if the GIA cap had not been in place."

Last Friday, Klausner sided with the players again, certifying the class of plaintiffs, an important hurdle in any class-action suit. One important part of that process involves the court's recognition that the specific parties in the suit adequately represent the interests of the class.

Klausner rejected the NCAA's argument that the more than 20,000 athletes who constitute the class do not have enough in common to sue together as a unit. The group includes all current and former NCAA Division I-A football players and men's Division I basketball players (in the major and "mid-major" conferences) who received scholarships at any time between February 2002 and the present. Athletes in other sports, which typically do not make money for a university, are not included in the class.

A trial is scheduled for next June.

"We are disappointed in the court's ruling but it is not unexpected," NCAA spokesman Erik Christianson said in a statement to ESPN.com. "We take comfort in the judge's promise to re-examine his decision later when we can bring the true facts before him."

The suit does not list a damage amount but is structured in a way that suggests the NCAA pay a heavy price should the court find that the association acted illegally in its capping of scholarship costs. Though the numbers are approximate and are subject to change, the affected athletes appear to have been shorted an estimated $117 million, an aggregate figure that represents the gap between the grant-in-aid and the official cost of attendance over the past four years. Damages get tripled under antitrust law, pushing the potential penalty to $351 million.

"We're very pleased that the court certified the class and we're looking forward to preparing the case for trial," said Stephen E. Morrissey, Los Angeles-based attorney for Susman Godfrey, the antitrust firm representing the players.

Legal experts say they wouldn't be surprised if the NCAA attempts to settle the case before trial, in part to avoid a court decision that ultimately could turn its economic model on its ear. By classifying the compensation that athletes receive for their services as a grant-in-aid, and its athletes as amateurs, the NCAA has so far avoided the open bidding for players common in other spectator sports enterprises such as the NFL and NBA. It has also prevented the bidding that goes on among colleges for other highly coveted students, such as science prodigies, who in some cases have received cash payments that go beyond the cost of attending a school.

"If the NCAA cannot legally restrict a scholarship to the GIA level, conceivably there's no basis for any limitation at all," said Dennis Cross, an antitrust attorney who won $54.5 million from the NCAA in a 1999 settlement after the federal courts ruled that the association could not cap the salaries of part-time basketball coaches. "I don't know how anyone can say the GIA cap is illegal but the cost-of-attendance cap is legal. If some McDonald's All-American came out of high school and wanted to make the case that Duke should be able to give him whatever it wants, I don't know how you not end up in a bidding war."

Yet, the White vs. NCAA lawsuit does not ask for anything more than cost-of-attendance scholarships, which, ironically, NCAA president Myles Brand has expressed support for in the past. Any lawsuit directly challenging the labor model of college sports, with its notions about amateurism, would have to be filed separately by an athlete not in the current class of plaintiffs.

The NCAA has invoked concern about the potential downstream impact, however speculative, of an unfavorable judicial decision.

"The plaintiffs' latest court filings confirm that this case is all about their desire for pay-for-play," Christianson said. "The NCAA, on the other hand, is concerned about allowing all student-athletes, women as well as men, in non-revenue sports or in the very few programs that make money, to have the financial means to attend college while playing their sport."

Such an argument could be a tough sell with Klausner. Data submitted by colleges to the U.S. Department of Education show that nearly all of the top 60 football and top 75 basketball programs are profitable, some wildly so, with schools using those surpluses to pay for coaches' and administrators' salaries, recruiting, marketing and other expenses across sports. In his decision, the judge pointed out that the cost of all scholarships in all sports swallows less than 16 percent of athletic department revenues.

Division I-A football players, the form of scholarships, get 12 percent of the revenue their programs generate, according to data submitted by the plaintiffs. Basketball players get 5.9 percent. These percentages are "extremely low when compared with the professional sports markets that Division I athletes may eventually enter," Klausner wrote, noting that NBA and NFL players receive between 55 and 65 percent of league revenues.

Representing the class in the lawsuit are Stanford's Jason White and UCLA's Brian Polak, both former football players, and former University of San Francisco basketball player Jovan Harris.

Tom Farrey is a senior writer with ESPN The Magazine and ESPN.com.

Tom Farrey | email

Writer, Reporter

ALSO SEE