NCAA Facing Its Own Erin Brockovich

If you're a sports fan with a legal bent, add this to your Memorial Day weekend reading list: The March 10 complaint in Case No. C 09-01967 CW, United States District Court, Northern District of California, Oakland Division.

It's 157 pages of straight-forward material that references some of college basketball's greatest moments and personalities over the last 50 years: Texas Western's 1966 upset of Kentucky, the Magic Johnson-Larry Bird championship game of 1979, Michigan's "Fab Five" teams of the early '90s, and UCLA's stirring title run in 1995, led by forward Ed O'Bannon.

It's also a damning criticism of the NCAA and a warning shot for a potential class-action lawsuit that may very well overhaul college sports in America.

For all the attention given this week to the Supreme Court's rejection of the NFL's attempt to gain broader anti-trust protection, that lawsuit was, at its core, a dispute about the NFL's merchandising and licensing practices. The pending lawsuit brought against the NCAA, however -- a merger of two different but related cases brought by O'Bannon, the ex-UCLA star, and Sam Keller, a former Arizona State and Nebraska quarterback -- are direct attacks on the NCAA's business and the very definition of "amateur" in an era when college athletics have become a multi-billion dollar juggernaut.

The key issue of the lawsuit is this: Should the NCAA compensate former players for the right to sell products -- like video games, highlight videos and jerseys -- that use their likeness, image, names and other intellectual property? The NCAA, naturally, believes it should not, arguing that it does not actually profit from players' likenesses, and furthermore that all college athletes sign a form that forfeits their right to receive payment from the NCAA or its business partners.

On the other side, of course, are athletes such as O'Bannon, Keller and a growing list of others, including former Michigan and NBA center Eric Riley and Alex Gilbert, who played alongside Bird at Indiana State, who have never seen a penny as the NCAA has morphed into a behemoth that generates huge sums -- reportedly $4 billion annually -- from licensing and media deals. O'Bannon was the lead plaintiff in a case that focused on the NCAA's use of former players' images and likenesses to sell DVDs, "classic" photos and jerseys, while Keller's suit was focused primarily on the video game industry, and in particular how Electronic Arts, the video game titan, utilizes players' likenesses in their games.

The players' cause got a huge boost in February when a federal judge in Northern California denied the NCAA's request to dismiss the case. Soon after, the O'Bannon and Keller cases were combined, and the next big issue will be whether the court will certify the case as a class-action lawsuit. It's a massive decision: Because of the potential for a gargantuan payout in a class-action suit, the NCAA is not expected to fight if the case is certified, and would instead pursue a settlement, which would still likely be a considerable amount. On the flip-side, if the suit is not certified, it's unlikely that each of the athletes would pursue their cases individually.

The key issue of the lawsuit is this: Should the NCAA compensate former players for the right to sell products -- like video games, highlight videos and jerseys -- that use their likeness, image, names and other intellectual property?
The case is now before Judge Vaughn Walker, the chief jurist for the San Francisco-Oakland Federal Court system, who's no stranger to high-profile litigation. He's currently presiding over the challenge to Proposition 8, the anti-gay marriage bill that passed in California in 2008, and also oversaw the wine industry tilt between Kendall Jackson and Gallo about bottle labels.

If he decides to certify the O'Bannon/Keller case as a class action, "the stakes for the NCAA increase exponentially," says John King, a partner at Washington, DC-based Hausfeld LLP, which is one of two firms serving as co-lead counsel for the the players. The other is Hagens Berman Sobol Shapiro, a Seattle firm that filed Keller's suit and specializes in class-actions and "multi-party, large-scale complex litigation," according to its website.

The first case-management conference on the NCAA litigation is scheduled to take place July 6, but in an interview this week with FanHouse, King revealed that more athletes – including several "high-profile names" -- will soon be joining the suit, though he did not specify when their names would be made public. "The waiting game is helping us because it allows us to harness the growing momentum and awareness of this suit. Various players and organizations are contacting us and throwing their support behind us," he said.

One current football player at a top-flight school, University of Oregon tight end David Paulson, recently added his voice to the debate with a column on cnbc.com that criticized the NCAA's unwillingness to share revenue with former college athletes. "Once a player graduates he should be able to negotiate with the NCAA about the use of his name and likeness," wrote Paulson, a 6-foot-4 junior who caught 13 passes and played in all of the Ducks' games last season.

Paulson told FanHouse he learned about the lawsuit in a project for his sports-business law class and decided on a whim to send in the column. "I had never done anything like this before and was very surprised to be chosen," he said in an e-mail, adding that "most of the readers seemed to enjoy the post."

One of the key points of contention in the case will be the legality and enforceability of a document, the "3a form," that all college athletes are required to complete prior to every season. It stipulates, among other things, that athletes allow their schools to utilize their name, image and likeness for promotional use and for-profit endeavors.

While there are slight differences in wording from school to school, in general they all read like the following University of Arizona form from 2009, which gave the school rights to images of athletes "forever and throughout the universe, and to license others to use them, in any manner and in any and all media now known or hereafter discovered, for commercial purposes."

The section about likeness and image rights is typically buried in a thick document that players often sign hurriedly during "a cattle-call situation," without the benefit of counsel or any explanation from coaches, according to King. "We think this release form is no accident and was developed [by the NCAA] to get what they need legally but be intentionally vague," according to King.

Neither the NCAA nor a representative from Miller, Canfield, Paddock and Stone, its Ann Arbor, Mich.-based law firm, returned calls seeking comment.

The "commercial purposes" mentioned on the consent form include DVD sales, video games, and advertising, as well as re-broadcasts of "classic" games on regional sports channels and college sports broadcasters such as the Big Ten Network, ESPNU and CBS College Sports. In the broadband age, the NCAA and many schools have moved aggressively to digitize and repackage archival content – from photos to old radio and TV broadcasts – to sell to alumni or license to production companies and broadcasters.

Taking a page from pro sports leagues, which charge premium rates for their content – the NFL charges $8,500 a minute for NFL Films footage, for example – the NCAA has struck agreements with a handful of companies to monetize its video and photo archives. This year, among other initiatives, it debuted the "NCAA Vault," an archive of on-demand video clips that features footage from every NCAA men's basketball tournament game since 2000. Clips can be customized by year, team and player, and the archive is maintained by Thought Equity Motion, a New York stock-footage firm that manages the media assets of CBS, BBC, HBO and National Geographic, among others.

For at least the rest of 2010, the "Vault" will be housed within the NCAA website, and basketball clips can be downloaded and published by individual users for free. But going forward, its content will be shopped to "Sports Illustrated, ESPN, USA Today, and anyone else ... to create a licensing deal with the NCAA," according to a recent interview with Dan Weiner, Thought Equity's vice-president of marketing and products.

Unlike the pro sports leagues, which give a portion of their licensing and media revenue to their respective players' unions, the NCAA keeps all the money for itself and its member institutions. The players don't object to the NCAA using technology to make more money, according to King – they just believe they're owed a fair share, particularly since they're no longer students or amateurs. "We are completely for bringing all this material forward, there's an incredible demand for it," says King. "It's just a question of compensation."