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Volume 21 No. 34

In Depth

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Imagine a world in which college conferences could establish rules so their schools could bid on the best football and basketball players coming out of high school.

Or a world in which college athletes could earn added benefits, such as lifetime medical insurance or scholarships to graduate school after competing for their university.

Those are two alternatives on the table if student athletes win a case in Oakland federal court challenging NCAA limits on athletic scholarships as a violation of antitrust law. And after four years of legal wrangling, the trial that has the potential to change the shape of college athletics and what it means to be a student athlete is at hand.

Next month, U.S. District Court Judge Claudia Wilken will hear arguments on whether to allow the NCAA to continue to cap the benefits given to college’s biggest star athletes — football players and male and female basketball players at the nation’s Division I schools.

If Wilken rules against the NCAA and 11 college conferences, she will hear arguments on what injunction should be entered against the NCAA. One calls for the conferences to decide what schools can offer, while an alternative would allow additional, and perhaps significant, benefits for student athletes.

“This case has the potential to radically reform big-time commercialized college sports,” said Stephen Ross, director of the Penn State Institute for Sports Law, Policy, and Research. “This case is incredibly important to everyone in intercollegiate athletics.”

Glenn Wong, executive director of the Sports Law & Business Program of the Sandra Day O’Connor College of Law at Arizona State, noted that while the O’Bannon v. NCAA case and the case of Northwestern football players attempting to unionize seemed to draw more media attention, this case could be far more important. If the players win, it could be the most significant college sports case in more than 30 years.

First Look podcast, with NCAA discussion at the 11:00 mark:

“Should the players ultimately prevail in this case — and it may take years before that is finally decided — it would be the most impactful legal development in college sports since NCAA v. Board of Regents,” Wong said. That 1984 decision fueled the growth of college sports media, conference realignment and the profitability of men’s basketball and football.

“Practically, a ruling in favor of the plaintiffs will likely spur further competition for talent amongst the schools, similar to the increased competition in the television rights market that ensued after Board of Regents,” Wong said.

The Case

The official name of this case is far from sexy. “In Re: National Collegiate Athletic Association Athletic Grant-in-Aid Cap Antitrust Litigation” doesn’t exactly roll off the tongue.

It’s not about a program with more than 100 years of history, like the Northwestern football program. And it doesn’t have a star name plaintiff like Ed O’Bannon, who led UCLA to a national basketball championship in 1995.

Bench trial set for Sept. 4:

What to expect in Oakland

The trial that could change college sports will be held over 10 days in September in an Oakland courtroom, but like much else with this case, even the timing isn’t simple.  
The trial will run for four days starting on Sept. 4, four days for the week of Sept. 17, with one day off for Yom Kippur, and two more days on Sept. 24 and Sept. 25. Each side will get 22.5 hours each to present their case. 
This trial was originally set to begin on Dec. 3 but was changed because of trial schedules for the lawyers. The NCAA had made a motion to delay it until 2019, but lawyers for the student-athlete plaintiffs argued against that, saying that it had already been four years since their clients filed suit. 
Judge Claudia Wilken, in a hearing on May 22, ruled in favor of the plaintiffs, despite pleas from the defendants’ lawyers. 
Many of the documents have been filed under seal, so it is not clear who the witnesses are that each side will call, but it is expected that economists, former student athletes and college and/or NCAA executives will testify. 
The NCAA and conferences have asked for protective orders to seal confidential business information. Wilken is asking for much of the testimony in writing, so it’s not clear if dollar figures — such as how much revenue college football and basketball generate — will be revealed in the courtroom. 
But financials will be at issue. At a pretrial conference in July, Wilken told the lawyers in the case how she wanted them to present information, including financial statements. 
“I don’t know how long those things are. But I’m guessing a financial statement from the NCAA is really long and has a lot of stuff in it that I don’t need to know about and don’t want to read,” Wilken told the attorneys in the case in the July 19 pretrial conference. “Again, if you can come up with a stipulation that says, ‘The NCAA is worth X dollars’ and the categories that you think I need to know about. … you don’t need to fight about what they are.” — L.M.

The lead plaintiffs in this case are lesser-known athletes — football players Martin Jenkins, who played cornerback at Clemson from 2010 to 2014, and Shawne Alston, a running back at West Virginia from 2009 to 2013. In fact, this case was once two cases. Jenkins, represented by famed sports
attorney Jeffrey Kessler, filed his lawsuit in New Jersey in 2014. That same year, Alston, represented by heavy-hitter class-action
attorneys Steve Berman and Bruce Simon, filed against the NCAA in California.

Both cases challenged the NCAA’s limit on athletic scholarships as an antitrust violation, but Alston asked for monetary damages, while Jenkins did not. After a series of motions and court hearings, the two cases were combined into one and sent to the courtroom of Wilken, who also heard the O’Bannon case.

The O’Bannon lawsuit was first filed in 2009, challenging rules preventing players from being paid for the use of their names, images and likenesses. Wilken ruled in favor of the student-athlete plaintiffs in August 2014. In 2015, the 9th U.S. Circuit Court of Appeals upheld Wilken’s decision that the NCAA’s rules were anti-competitive, but said that there were some “procompetitive” justifications for the rules, namely that they promoted amateurism and allowed athletes to be integrated into the student body. The 9th Circuit struck down Wilken’s remedy of paying players while they are in school up to $5,000 for the use of their names, images and likenesses, saying that payment threatened the NCAA’s amateurism model.

In the time since the O’Bannon ruling and when the Jenkins and Alston cases were filed, the NCAA changed its rules allowing schools to pay players the full cost of attendance, a higher amount of money than the traditional sports scholarship.

Last year, the NCAA settled the damages portion of the Alston case, agreeing to pay 43,000 current and former student athletes $208.7 million, representing the difference between the scholarships they had received and the full cost of attendance. Wilken approved that settlement last November.

What comes next month is the athletes’ request for an injunction stopping the NCAA from capping scholarship value.

Wong noted that while the damages were a significant amount of money, it’s the injunction that the sports law world is watching: “The upcoming trial on injunctive relief may completely change the way the NCAA’s member schools do business with respect to athlete compensation.”

Different Than O'Bannon

Simon, who also was involved in the O’Bannon case as a counsel to the plaintiffs, said this case differs in many ways.

“That case challenged NCAA rules prohibiting college athletes from receiving money for the use of their names, images and likenesses — for example, their appearance in a video game,” Simon said. “This trial deals with the larger question of why the NCAA should be able to cap athletic scholarships in the first place.”

Sonny Vaccaro, a retired shoe executive who was a confidant to many top amateur and professional basketball players, sees this case as the second step after O’Bannon. Vaccaro acted as an unpaid adviser to the plaintiffs’ attorneys in the O’Bannon case and helped get O’Bannon to sign on as the lead plaintiff.

“What O’Bannon did is give the athletes courage to sue the NCAA,” said Vaccaro, a vocal critic of the NCAA’s rules and what he sees as a holier-than-thou attitude about the concept of “amateurism.”

“What the NCAA [officials] have done all of their lives is talk about the purity of what they are doing,” Vaccaro said, scoffing. “There have been more scandals in the NCAA than there have been on Wall Street.”

The Issues

The NCAA is represented by Beth Wilkinson, and the 11 conference defendants — the AAC, ACC, Big 12, Big Ten, Conference USA, MAC, Mountain West, Pac-12, SEC, Sun Belt and WAC — are represented by Proskauer partner Bart Williams. They argued that the case should be thrown out, essentially because the 9th Circuit addressed the same issues in the appeal of O’Bannon. But in her ruling denying summary judgment to both sides, Wilken noted that different rules were being challenged in this case.

Some of the rules were present at the time of O’Bannon, but were not challenged or addressed by Wilken or the appeals court. And the scope of some of those rules have expanded since then. For example, students could previously receive meals incidental to participation in athletics but now may receive unlimited meals and snacks.

Wilken also ruled in that summary judgment that the NCAA’s “restraints produce significant anticompetitive effects within the relevant market.” But the NCAA will be allowed to continue with the current system if it were to “come forward with evidence of the restraints’ procompetitive effects.”

That procompetitive justification essentially involves Wilken answering “yes” to these two questions:

Are college football and college basketball popular in America because the players are amateurs?

Do the NCAA rules prohibiting football and basketball players from receiving compensation allow them to be part of the student body at their university?

“I don’t think there’s any dispute here that everyone at the NCAA and the conferences understands that people criticize the NCAA for the rules and whether they should be, you know, prohibiting pay, and all those things,” Wilkinson, lead attorney for the NCAA, said at the pretrial conference for the case. “That’s not anything that there’s any dispute about in this case; that everyone, all the defendants are on notice about those issues. This case is about whether there’s an antitrust violation here.”

After Wilken decides the questions of whether the system serves the procompetitive questions involving amateurism and integration of athletes into the student body, she will then move on to the questions of whether there is a better way to create a procompetitive system.

The two alternatives being proposed by the student-athlete plaintiffs include one in which the conferences, not the NCAA, set the rules. Another allows for student athletes to be offered additional benefits.

At Stake

Under one proposed alternative, the NCAA could continue to prohibit cash compensation to athletes, but could not prevent other kinds of benefits to be offered to student athletes, such as lifelong health benefits, trust funds for academic achievement, or scholarships for graduate school.

Under the other proposal by the student-athlete plaintiffs, the conferences would set their own rules on what they could offer student athletes.

The second alternative is the one that is causing the most excitement or apprehension depending on which side of the table one sits.

In the pretrial conference last month, Wilken asked whether the plaintiffs were proposing a system in which some players on a team would get paid more or if all of them would be paid the same.

“The conferences will decide,” Kessler answered. “If a conference decided that they wanted to have everyone paid the same thing on the team, no problem. We should leave those decisions up to the conferences.”

Matt Mitten, executive director of the National Sports Law Institute at Marquette University, said if the student-athlete plaintiffs win on this new system, it could worsen the competitive balance problem among college conferences because the more powerful conferences could potentially offer more to highly rated high school student athletes.

“What has already happened is there is this significant disparity of economic resources there,” Mitten said. “You even see it within conferences. If the antitrust case is successful, I think it’s going to exacerbate the disparity between the haves and the have-nots.”

NCAA critic and student-athlete advocate Vaccaro sees it differently. He noted that players in sports other than football and basketball that don’t generate large revenue for the schools are given partial scholarships. The best players, he said, will continue to go to the best schools, with the best coaches and the best training facilities that are being funded by television networks and other revenue. “It will be the same,” he said.

Kessler, who has fought many battles on behalf of professional athletes during his decades as an attorney for unions and players, said that a new system will bring more competition and that is a good thing.

“If we win this case, there will be a better system for the players, a better system for the schools and a better system for college games,” Kessler said. “Because what history shows is that more competition is not only fairer, it is more popular and it helps the sport thrive.” 

Repping the student-athlete plaintiffs


 

Steve Berman

Berman has obtained some of the largest legal settlements in history. Acting as a special assistant attorney general for 13 states, he obtained a $206 billion settlement, the largest in history, in prosecuting actions against the tobacco industry in 1998. He co-founded his firm Hagens Berman in 1993, and has won multimillion-dollar settlements from major corporations including Visa, Mastercard, Enron, JP Morgan, Boeing and Charles Schwab. In 2003, Berman and his family endowed the Kathy and Steve Berman Environmental Law Clinic at the University of Washington School of Law. 

Jeffrey Kessler

Inside the sports world, this lawsuit against the NCAA has been commonly referred to as “the Kessler case.” Part of the reason could be the tortuous path the litigation has taken and the clunky official name of the case.

The other reason may be that Kessler, who has been the thorn in the sides of professional leagues for decades by representing players and players associations, has set his sights on the NCAA. He has been outside counsel for the NFL Players Association and the National Basketball Players Association and represented many high-profile players, including Patriots quarterback Tom Brady, in different disciplinary matters against the leagues.

Kessler has litigated some of the most famous sports antitrust cases in history, including McNeil v. the NFL, the 1992 landmark antitrust jury trial considered a major step in the establishment of free agency in the NFL. 

Bruce Simon

Simon, a partner in Pearson, Simon & Warshaw, is a plaintiff’s attorney specializing in class-action and antitrust litigation. 

In 2015, Simon was co-lead counsel on a case that alleged 12 major banks fixed prices in a market for credit default swaps, which resulted in a $1.865 billion settlement, one of the largest antitrust settlements in history. He also brought a case against the makers of flat-screen TVs, which resulted in an $87 million verdict in San Francisco federal court. Simon was named the 2018 Antitrust Lawyer of the Year by the Antitrust, UCL and Privacy Section of the California Lawyers Association.

Repping the NCAA, conferences

 

 

Beth Wilkinson

To say Wilkinson is a formidable woman would be an understatement. The daughter of a Navy submarine captain, Wilkinson was a captain in the Army before attending law school. A graduate of Princeton and the University of Virginia School of Law, Wilkinson was an assistant U.S. attorney and prosecuted some of the government’s most high-profile cases, including those against former Panamanian military leader Manuel Noriega and Oklahoma City bomber Timothy McVeigh.

She is known for the closing argument in the McVeigh case, convincing a jury to give him the death penalty. “Look into the eyes of a coward and tell him you will have courage,” Wilkinson told the jury in that 1997 case, according to news reports. “Tell him he is no patriot. He is a traitor and deserves to die.”

She has won numerous honors, including the U.S. Attorney General’s Exceptional Service Award.

She was a partner at powerful law firm Paul Weiss, prior to becoming a founding partner of her own firm, Wilkinson Walsh & Eskovitz.

The reason the antitrust trial against the NCAA is being heard in September, rather than December as U.S. District Judge Claudia Wilken originally ordered, is because Wilkinson is representing FedEx in a case brought against the shipping company by the state of New York alleging it illegally shipped contraband cigarettes to the state. 

Bart Williams

Proskauer partner Williams has represented high-profile individuals, including former Disney President Michael Ovitz, former Paramount Pictures CEO Brad Grey and talk show host “Dr. Phil” McGraw, in major litigation. He also  has defended major corporations, including Johnson & Johnson in a 2017 case that alleged its baby powder caused ovarian cancer, and Wells Fargo in a case alleging mismanagement of pension funds in 2013. He is also a former assistant U.S. attorney in Los Angeles who prosecuted fraud, racketeering and money laundering cases.

A former student athlete, Williams played four years on the Yale varsity basketball team and received the George McReynolds Award as the team’s Most Valuable Defensive Player his senior year.

Presiding

 

 

Judge Claudia Wilken

Wilken is the senior district judge for the Oakland Courthouse of the U.S. District Court of the Northern District of California. She was appointed to her position by President Bill Clinton in 1993, after serving as a U.S. magistrate judge for 10 years. She previously was a staff attorney in the federal public defender’s office and an adjunct professor at the Boalt Hall School of Law at the University of California, Berkeley. She was the trial judge that ruled in favor of student-athlete plaintiffs in O’Bannon v. the NCAA in 2014.



NCAA v. Board of Regents of the University of Oklahoma, et al. (1984)

Case file: Until the board of regents of the University of Georgia and the University of Oklahoma successfully challenged the NCAA’s television rights policy, the NCAA controlled and negotiated those rights for all NCAA schools. Schools had a cap on the number of times their games could be nationally televised and every member school received a share of the revenue. The U.S. Supreme Court ruled that such a policy violated the Sherman Antitrust Act, and helped pave the way for the creation of the non-NCAA controlled College Football Association.

Jason White, et al. v. NCAA (2008)

Case file: Jason White, a former football player at Stanford, led a class-action lawsuit that challenged the NCAA’s restrictions on the monetary value of athletic scholarships. The suit argued that the formula, which consisted of tuition, mandatory fees, room, board, and required books, equalled less than the actual cost of attending college, as it did not include numerous other miscellaneous expenses. Under the settlement, schools were permitted to purchase health insurance for athletes. The NCAA also set up a $10 million fund from which past athletes could claim up to $500 for “career development expenses” and another $2,500 for “educational expenses.”

Edward O’Bannon, et al. v. NCAA; Electronic Arts; Collegiate Licensing Co. (2014)

Photo: getty images

Case file: In July 2009, former UCLA basketball player Ed O’Bannon filed a suit over former players’ rights to compensation for use of their likenesses. The NCAA was found to have violated antitrust law by preventing players from licensing their public images. EA and CLC agreed to a $40 million settlement in the class-action lawsuits brought against them. The decision meant that as many as 100,000 current and former athletes who appeared in EA Sports basketball and football video games since 2003 could receive up to $4,000 each. Future student athletes were denied the possibility of deferred cash payments and received an injunction that bars the NCAA from using the names, images and likenesses of collegiate men’s football and basketball players without providing them with compensation.

Luke Hancock et al. v. NCAA (current)

Luke Hancock, Tim Henderson and Gorgui Dieng
Photo: getty images

Case file: Former Louisville basketball players Luke Hancock, Gorgui Dieng, Stephan van Treese, Tim Henderson and Michael Marra all played for the Cardinals for at least one year from 2011 to 2014, and all five players were on the team that won the national title in 2013. The NCAA last year stripped the school of that championship and 123 wins in the wake of a recruiting scandal. The plaintiffs seek a judicial declaration that they are completely innocent of any wrongdoing and demand monetary damages for loss of economic opportunity and compensatory damages.

Akeem Daniels
Photo: getty images

When a little-known, diminutive running back from Northern Illinois sued daily fantasy operators FanDuel and DraftKings two years ago, alleging that the companies unlawfully profited from the use of his name and statistics in their games, a federal judge quite predictably dismissed the case.

 

To those who have followed the evolution of the fantasy business even casually, it seemed to be a matter long settled.

Fantasy game providers have been free to operate without licenses from sports leagues or players associations since 2006, the product of a watershed decision that declared the stats produced during sporting events to be in the public domain, and thus exempt from the requirement of league or player approval.

And yet earlier this summer, the Indiana Supreme Court considered a question with the potential to unsettle that.

Reviewing an appeal by the aforementioned player, Akeem Daniels, who now is joined in the class-action lawsuit by two other former college players, a federal judge asked the Indiana justices to use state right of publicity laws to determine the following:

“Whether online fantasy-sports operators that condition entry on payment, and distribute cash prizes, need the consent of players whose names, pictures, and statistics are used in the contests, in advertising the contests, or both.”

If the justices find that they do not, it seems likely that the appeals court will let the lower court’s dismissal stand. But if Indiana’s highest court rules that fantasy sports operators do need a player’s consent to use his name or likeness — or clarifies the circumstances under which they do — that could lead the appeals court to send the players’ case back for a new hearing. There, a court could revisit a host of issues around not only fantasy sports but another emerging enterprise that shares many of its characteristics.

“I’ve been telling a lot of people that this case is very important, particularly as it relates to gambling,” said Jon Oram, a partner in the sports practice at law firm Proskauer. “There are all these various technology ventures springing up. And it all really goes to the question of what you can and can’t do without a license. The law seems to really be ever-evolving in this area. And I think the courts have had a very difficult time in trying to fit sports into the rubric of publicity rights and copyright and our other intellectual property laws.

“It’s an interesting time for us lawyers, because there are a lot of questions that are not susceptible to easy answers.

Evolution of publicity rights

The first time the concept of a “right of publicity” showed up in U.S. law came in a sports case.

In 1953, baseball card company Bowman sued up-and-coming rival Topps when the latter produced trading cards of baseball players that Bowman had signed to contracts that it believed to be exclusive. The lower court ruled for Topps, finding that the right to privacy that protected the players’ names and likenesses did not transfer to the companies that signed them to contracts. While Bowman could sue the players, it could not prevail against Topps.

But in an important reversal, the appeals court found for Bowman. Along with a right to privacy, the players had another, previously unexplored “right of publicity,” the court said. Rather than hinging on the protection of privacy, and the ability to collect a fee for waiving it, the court crafted the new right to acknowledge that famous people could actively trade on the use of their names and likenesses in commercial endeavors.

That three-word phrase — right of publicity — would form the bedrock of 65 years of evolving case law, applied first to trading cards, but later to other areas that affected athletes, including table games, video games, fantasy games and, perhaps next, sports betting.

Like right of privacy, right of publicity is a matter for state law, which means the way it is handled can vary based on jurisdiction. California courts consider publicity rights cases differently from New York courts, or Indiana courts for example. Though heard in federal court, a case typically reverts to the laws of the state in which it was brought.

That’s why the question in play landed with the Supreme Court of Indiana.

Like others of its ilk, Daniels’ case against FanDuel and DraftKings will come down to whether the athletes’ right of publicity trumps the fantasy providers’ First Amendment right to publish information that, in recent cases, has been ruled to be in the public domain. States vary in how their laws guide the courts to determine that.

In Indiana, those using name or likeness can do so under either of two exceptions: That the material has “newsworthy value” or that it is the “reporting of an event of general or public interest.”

While those sound almost identical, attorneys for the athletes have argued that the use of the words “newsworthy” and “reporting” indicate that the exceptions were meant for the traditional distribution of information as done by news organizations and book publishers, not the commercial use of stats and player images by companies operating daily fantasy games and soon to be taking bets in the states that allow it.

In their brief in support of the college players, the NFL Players Association and other players unions questioned whether Indiana legislators meant for the exemption to extend beyond traditional news outlets.

“Just because you put out a box score doesn’t make you a news organization,” said Casey Schwab, vice president of business and legal affairs for the NFLPA. “Just because EA scrolls scores across the bottom of a video game, that doesn’t make EA ESPN.”

Were the Indiana Supreme Court to offer guidance that leads the appeals court to rule against FanDuel and DraftKings, it would be a 180-degree turn on a case that was resolved through an appeals court decision that seemed to leave little room for re-evaluation, at least on the question of the use of names and stats in traditional fantasy games.

You had the convergence of the right of publicity cases where there is protection and the data cases where there really isn’t. Fantasy sports was really the first time where those two converged. People were looking at it and asking, ‘Is this an apple or is it an orange?’ And the judges are constrained by the laws that they’re looking at as opposed to trying to predict where technology is headed.
Jon Oram
Partner, Proskauer

In CDM v. MLBAM, a fantasy operator with mom-and-pop roots sued MLB when the league refused to renew a license that the company had held for about a decade. Seeing the increasingly popular pastime as a new revenue stream thanks to the emergence of online play, MLB had decided to bring the games in-house.

Relying on 25-year-old case law that dealt with stats-based tabletop games that typically used cards and dice (see story, left), MLBAM and the MLB Players Association argued that the league controlled the data used to create the games and that the unauthorized use of names and statistics violated the publicity rights of the players.

In a decision that surprised the industry, a federal court in Missouri sided with the fantasy provider. Then, a federal appeals court concurred, issuing a ruling so clear in its message, it made it sound unfathomable that a court could see it any other way.

“It would be strange law,” Judge Morris Arnold wrote, “that a person would not have a First Amendment right to use information that is available to everyone.”

“You had the convergence of the right of publicity cases where there is protection and the data cases where there really isn’t,” Oram said. “Fantasy sports was really the first time where those two converged. People were looking at it and asking, ‘Is this an apple or is it an orange?’ And the judges are constrained by the laws that they’re looking at as opposed to trying to predict where technology is headed.

“I think the courts looked at it and said, ‘This looks more to me like data than like protecting somebody’s image.’ So that was essentially the path they chose.”

Before you assume that means that FanDuel and DraftKings are in the clear, consider that not only are there some differences between the daily fantasy sites and the games that CDM ran, but also the 180-degree turn that the court took when it ruled against MLB.

“All of a sudden, judges looked at these games and said, ‘Wait a minute. What we’ve essentially done here is digitize the old newspaper box score,’” said Ahmad Nassar, a former NFL union lawyer who is now president of NFLPA licensing arm Players Inc. “Newspapers don’t need a license to publish the box scores. Those are stats. That’s newsworthy. This is all protected under the First Amendment. Let’s move on with our lives.

“That quickly unraveled any licensing, both at the league level and at the players associations — not just right of publicity, but also federal trademark, copyright and intellectual property as it relates to team and league marks. And that’s pretty much the state of the fantasy world today.

“But that wasn’t the end of the story.”

What comes next?

At their core, popular video games such the “Madden NFL” series, “NBA2K” and “MLB The Show” are quite similar to the tabletop games that came before them. Game makers use stats to create simulation that allows fans to reproduce, or reimagine, sports as they are played in an actual season.

Of course, video games play out quite vividly on screens rather than in the imaginations of the players. But one could argue that the core premise — the simulation of a sport based on actual players and their stats — is the same.

Fantasy case law evolved from tabletop case law.

And yet the courts have issued markedly different rulings on publicity rights cases involving video games than they did in the watershed CDM v. MLBAM fantasy case.

Clearly, they see some distinctions.

The two cases that thus far have carried the water on the use of player names and likenesses in sports video games are almost identical.

The named plaintiffs, former Arizona State and Nebraska quarterback Sam Keller and former Rutgers quarterback Ryan Hart, sued EA — Keller in California, Hart in New Jersey — charging that the game maker violated their respective rights of publicity when it included them in its once-popular NCAA football series without paying them or acquiring permission.

In its defense, EA based its argument on a “transformative test” developed in California, saying that while it admitted using the players’ names and likeness without permission, it did so using renderings created by artists, and in the larger context of a game that incorporated hundreds of players. Those factors, EA argued, “transformed” Keller’s identity into something new, which was protected by the First Amendment.

While the lower court agreed with EA, the appeals court did not, saying that while EA had transformed the players’ identity, it did not do so sufficiently to trump the players’ publicity rights.

In New Jersey, the appellate court found in favor of Hart, applying the same transformative test used in the Keller case because it found New Jersey right of publicity laws to be “strikingly similar” to California’s.

Now that we’re in this world where we’ve got sports betting coming down the pike, where is that going to fit in? Does that open up the fantasy line of cases again? Fantasy isn’t really betting. And betting isn’t really video games. So where does betting fit in?
Ahmad Nassar
President, Players Inc.

EA and the NCAA reached a $60 million class-action settlement with players used in its college games, which it stopped producing in 2014.

“Hart and Keller were two cases that really represented existential threats to our business because they took the fantasy logic of First Amendment protection and applied it to video games, where EA is still the single biggest licensee for the NFL Players Association,” said Nassar, who worked on briefs the NFLPA and other player unions filed in support of Hart and Keller. “We said, ‘Listen, this is
different.’ Even if you buy into the logic of digitizing a box score from a newspaper, what’s happening in a video game is very different.”

The courts have for the most part sided with players when it comes to video games and game operators when it comes to fantasy. But where will they land with what comes next?

At the firm O’Melveny, sports practice group co-chair Irwin Raij recently launched a committee of lawyers from various disciplines to consider prickly issues that might be lurking behind the commercial promise of sports betting.

“I created a task force at the firm because I think it’s much deeper than saying: ‘We’re going to have gambling. Yay! Everybody’s going to make money,’” Raij said. “There’s a complex set of issues that are pretty interwoven at times.

“This Indiana case that’s currently pending actually has the ability to address broader points than what was involved in Motorola. So you could have two courts with different opinions. And where does that lead you?”

Any time appeals courts disagree on a matter it could end up in front of the U.S. Supreme Court. Motorola, as it is widely known, is a frequently cited 1997 case in which the court ruled that a data stream from an NBA game was not the same as a broadcast, and thus could not be protected by copyright.

It was the first major sports case to deal with the impact of digital technology.

Considering the vastly evolved landscape of products — from tabletop games to video games to fantasy games to betting — and the ever-changing world of digital media, some suggest it’s time to look at it all with fresh eyes.

“Now that we’re in this world where we’ve got sports betting coming down the pike, where is that going to fit in?” Nassar asked. “Does that open up the fantasy line of cases again? Fantasy isn’t really betting. And betting isn’t really video games. So where does betting fit in?

“We’re about to bring up this right of publicity issue in a totally different context for the third time in 10 or 15 years. We just want to make sure it doesn’t undermine the players.” 

Photo: getty images

When Sports Illustrated published a commemorative issue celebrating Michael Jordan's induction into the Basketball Hall of Fame in 2009, it traded Chicago grocery chain Jewel-Osco a free full-page ad in exchange for distribution in its stores.

 

Jewel-Osco used the page to create a congratulatory ad, which featured a photo of Jordan’s sneakers, distinguished by his iconic No. 23. Beneath text that hailed Jordan as a “fellow Chicagoan who was ‘just around the corner’ for so many years” Jewel ran both its logo and its slogan: “Good things are just around the corner.”

 

Jordan sued, claiming violation of the Illinois right of publicity law.

 

At the center of the dispute was the degree to which the congratulatory ad was commercial speech, and thus not entitled to the same level of First Amendment protection as other speech. 

The district court ruled against Jordan, finding that in order to be sufficiently commercial the ad had to propose a commercial transaction. “Readers would be at a loss to explain what they have been invited to buy,” the judge wrote.

 

But in 2014, a federal appeals court reversed that ruling, finding that the grocer’s ad was meant to engender “goodwill for the Jewel-Osco brand by exploiting public affection for Jordan at an auspicious moment in his career.” It also said that because the store sold groceries, it was clear what it wanted readers to buy.

 

“The notion that an advertisement counts as ‘commercial’ only if it makes an appeal to purchase a particular product makes no sense today,” the court wrote, “and we doubt that it ever did.”

 

With the case sent back to the lower court, the two parties soon settled for an undisclosed amount.

 

“It’s difficult now as an adviser to brands that want to do this sort of thing,” said Ahmad Nassar, a former NFL union lawyer who is now president of the NFLPA’s licensing arm, Players Inc. “When the Warriors win the NBA championship, everybody in the Bay Area wants to congratulate them, including companies. And they look at the Jewel-Osco thing and say, ‘Wait, how does this work?’ I don’t think that’s really the ideal construct. Everybody would be better served if there were more of a uniform set of ground rules.” .

Photo: Getty images

Long before the advent of fantasy or video games, fans endeavored to simulate their favorite sports using dice and cards created using statistics from previous seasons. All of them featured the actual teams and stars of the day.

 

The companies that produced those table-top games chugged along behind modest profits. Because they didn’t use team logos or player photos on their packaging, they assumed they could operate without licenses from the leagues.

In 1967, the MLB Players Association challenged that assumption, notifying game makers that they would be barred from use of the players’ names unless they paid a license fee of 5 percent of gross sales, or a minimum of $2,500.

Most of the larger game makers accepted those terms. But one small Minnesota-based company, operated by brothers Kent and Keith Henricksen under the label Negamco, refused. When Negamco continued to produce its game based on the 1967 and ’68 seasons, the MLBPA sued, choosing Minnesota Twins outfielder Ted Uhlaender (above) as the named plaintiff in a class composed of all players included in the games.

In the first case to test a player’s right of publicity in the context of a game played by fans, the lawyers for the players argued that Negamco had used their names for profit without permission.

Ruling in favor of the players, the district court found that Negamco’s use of their names violated their right of publicity, even though the game company did not use their photographs or imply that any of them endorsed the product. Importantly, the judge also found that the public nature of the stats didn’t negate their right to control the use of the players’ names.

Uhlaender served as a valuable precedent as the MLBPA built out its licensing business and a more expansive read on the right of publicity as applied to athletes.

It held firmly until the landmark fantasy case of 2006, when MLB and its union failed to convince judges that the same rationale used for table-top games should apply to fantasy sports providers.

Photo: getty images

When 18 former and current U.S. Olympic athletes sued Samsung for using their names and likenesses without permission in a Facebook app during the 2012 Summer Games, the circumstances of their claim landed somewhere between those of previous cases that involved games and those that involved advertising.

 

Samsung’s Olympic Genome Project was a novel contest that allowed users to find commonalities such as shared hometowns and favorite songs between themselves, their friends and a collection of more than 8,000 athletes, earning points and the chance to win prizes as they did so.

As a U.S. Olympic Committee sponsor, Samsung had rights to use USOC marks. But it did not secure permission from the athletes. Included in an A-list lineup of Olympians joining lead plaintiff Mark Spitz (above) were diver Greg Louganis; sprinter Jackie Joyner-Kersee; and swimmers Dara Torres, Amanda Beard and Janet Evans.

While the Genome Project could be played similarly to a game, the basis of the athletes’ case was more similar to those brought by Michael Jordan and others who successfully sued brands for using them in ads without permission. Spitz and the others said Samsung used their names, images and achievements in an effort to “link” to consumers, creating an impression that they endorsed Samsung “products and business.”

In this case, a federal district judge ruled against the athletes, dismissing their claim when it found that the contest was not commercial speech, and therefore was fully protected by the First Amendment. It did not find the use of Samsung’s logo on the app sufficient to outweigh the elements of public interest, facts about Olympians which already resided in the public domain.

While that might seem on the surface to walk back some of the right of publicity protections athletes secured in the Jordan case, the attorney who represented Samsung said he does not view it that away.

“I just see an ongoing struggle to find a line,” said Simon Frankel, chair of the intellectual property rights practice group at Covington. “You’ve got all these variables. You’ve got different state laws and different media and you’ve got new technology. You see … the court struggling to find a line between what should stay with the celebrity and belong to them and what ought to belong to the public.

These cases, because of the differences of state law and also because of the standards for whether something is permissible under the First Amendment, have been very fact specific. And the result is that you may not always get broad rules out of them that provide clear guidance for the future in circumstances that aren’t the same.”