Keller v. Electronic Arts Inc. et al

Filing 455

ORDER by Judge Claudia Wilken DENYING ELECTRONIC ARTS INC.S #366 MOTION FOR JUDGMENT ON THE PLEADINGS. (ndr, COURT STAFF) (Filed on 5/16/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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IN RE NCAA STUDENT-ATHLETE
NAME & LIKENESS LICENSING
LITIGATION.

No. C 09-1967 CW
ORDER DENYING
ELECTRONIC ARTS
INC.’S MOTION FOR
JUDGMENT ON THE
PLEADINGS
(Docket No. 366)

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Defendant Electronic Arts Inc. (EA) moves for judgment on the

United States District Court
For the Northern District of California

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pleadings for the claims asserted against it in the Second

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Consolidated Amended Complaint (2CAC).

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O’Bannon, Jr., Harry Flournoy, Alex Gilbert, Sam Jacobson, Thad

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Jaracz, David Lattin, Patrick Maynor, Tyrone Prothro, Damien

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Rhodes, Eric Riley, Bob Tallent, and Danny Wimprine (collectively,

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Antitrust Plaintiffs) oppose the motion.

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parties’ papers and their arguments at the hearing on the motion,

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the Court DENIES EA’s motion.

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Plaintiffs Edward C.

Having considered the

BACKGROUND
Because the Court’s Orders of May 2, 2011 and July 28, 2011

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describe the factual allegations and procedural history of the

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case in detail, the Court does not repeat them here in their

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entirety.

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Antitrust Plaintiffs in these consolidated cases bring claims

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based on an alleged conspiracy among EA, Defendants Collegiate

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Licensing Company (CLC) and National Collegiate Athletic

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Association (NCAA) to restrain trade in violation of section one

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of the Sherman Act.

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Lamarr Watkins, and Bryon Bishop (collectively, Publicity

Plaintiffs Samuel Keller, Bryan Cummings,

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Plaintiffs) bring claims based on Defendants’ alleged violations

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of their statutory and common law rights of publicity.

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Plaintiffs’ claims are not at issue here, nor are any of the

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claims against CLC or the NCAA.

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Publicity

In its May 2, 2011 Order, the Court granted EA’s motion to

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dismiss Antitrust Plaintiffs’ Sherman Act and related common law

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claims for failure to state a claim for which relief can be

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granted.

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Complaint (CAC) had not sufficiently alleged a factual basis for

The Court found that Plaintiffs’ Consolidated Amended

United States District Court
For the Northern District of California

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either of two Sherman Act claims asserted against EA.

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granted Plaintiffs leave to amend to plead facts demonstrating

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EA’s agreement to engage in the alleged conspiracies.

The Court

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On May 16, 2011, Plaintiffs filed the 2CAC, adding

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allegations regarding EA’s involvement in the purported

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conspiracy, many of which are summarized in the Court’s July 28,

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2011 Order, including that EA is the only NCAA licensee which uses

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images of current or former players, and that, in its licensing

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agreements with CLC, EA has expressly agreed to abide by the

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NCAA’s rules prohibiting student-athlete compensation, and has

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“agreed to extend its agreement with the NCAA, prohibiting

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compensation to student-athletes, to former student-athletes.”

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2CAC ¶¶ 373, 400.

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On May 31, 2011, EA filed a motion to dismiss the antitrust
claims asserted against it in the 2CAC.
On July 28, 2011, the Court denied EA’s motion to dismiss.

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The Court stated that “many of Plaintiffs’ new allegations do not

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suggest anything more than EA’s commercial efforts to obtain new

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rights and use its existing rights,” but that “Plaintiffs have
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added a significant additional allegation: that in addition to

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agreeing to abide by NCAA’s rules prohibiting compensation of

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current student-athletes, EA also agreed not to offer compensation

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to former student-athletes.”

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at 6.

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compensate former student-athletes for use of their images,

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likenesses and names, going beyond the requirements of NCAA’s

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rules and policies, satisfies the requirement that Antitrust

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Plaintiffs plead the existence of a price-fixing agreement

Order Denying EA’s Motion to Dismiss

The Court found that this “allegation that EA agreed not to

United States District Court
For the Northern District of California

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involving EA,” because it shows that “EA was not merely doing

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business in the context of the NCAA’s amateurism policies” and

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instead “suggests that EA was actively participating to ensure

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that former student-athletes would not receive any compensation

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for use of their images, likenesses and names.”

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(internal quotations and citations omitted).

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found, “This allegation sufficiently suggests EA’s agreement to

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participate in the claimed group boycott conspiracy.”

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As a result, the Court found that Antitrust Plaintiffs had

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sufficiently alleged that EA agreed to participate in the alleged

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antitrust conspiracies with NCAA and CLC for both Sherman Act

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claims.

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Id. at 7

The Court similarly

With the instant motion, EA has requested that the Court take

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judicial notice of its license agreements with CLC.

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not oppose judicial notice.

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Id. at 8.

Plaintiffs do

The agreements state in part,

Licensee recognizes that any person who has collegiate
athletic eligibility cannot have his or her name and/or
likeness utilized on any commercial product without the
express written permission of the Institution.
Therefore, in conducting licensed activity under this
Agreement, Licensee shall not encourage or participate
in any activity that would cause an athlete or an
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Institution to violate any rule of the National
Collegiate Athletic Association (NCAA) or other
governing body. Moreover, Licensee acknowledges and
agrees that no license or right is being granted
hereunder to utilize the name, face or likeness of any
past or current athlete of any Institution.

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Request for Judicial Notice (RJN), Exs. A at 6-7, B at 7, C at 6,

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D at 6.

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LEGAL STANDARD

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A motion for judgment on the pleadings, like a motion to

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dismiss for failure to state a claim, addresses the sufficiency of

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a pleading.

Judgment on the pleadings may be granted when the

United States District Court
For the Northern District of California

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moving party clearly establishes on the face of the pleadings that

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no material issue of fact remains to be resolved and that the

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moving party is entitled to judgment as a matter of law.

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Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550

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(9th Cir. 1989).

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of the pleadings, exhibits attached to the pleadings, Durning v.

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First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987), and facts

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which may be judicially noticed, Heliotrope Gen., Inc. v. Ford

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Motor Co., 189 F.3d 971, 981 n.18 (9th Cir. 1999).

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motion to dismiss, the Court may consider documents “whose

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contents are alleged in a complaint and whose authenticity no

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party questions, but which are not physically attached to the

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pleading.”

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overruled on other grounds by Galbraith v. County of Santa Clara,

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307 F.3d 1119 (9th Cir. 2002) (motion to dismiss); Dent v. Cox

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Commc’n Las Vegas, Inc., 502 F.3d 1141, 1143 (9th Cir. 2007)

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(motion for judgment on the pleadings).

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Hal

The court may consider, in addition to the face

As with a

Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994),

In testing the sufficiency of a pleading, the well-plead
allegations of the non-moving party are accepted as true, while
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any allegations of the moving party which have been denied are

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assumed to be false.

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However, the court need not accept conclusory allegations.

W.

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Mining Counsel v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).

The

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court must view the facts presented in the pleadings in the light

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most favorable to the non-moving party, drawing all reasonable

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inferences in that party’s favor, General Conference Corp. of

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Seventh Day Adventists v. Seventh-Day Adventist Congregational

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Church, 887 F.2d 228, 230 (9th Cir. 1989), but need not accept or

Hal Roach Studios, 896 F.2d at 1550.

United States District Court
For the Northern District of California

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make unreasonable inferences or unwarranted deductions of fact,

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McKinney v. De Bord, 507 F.2d 501, 504 (9th Cir. 1974).

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DISCUSSION
Plaintiffs challenge whether Defendants may properly bring a

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motion for judgment on the pleadings and argue that the instant

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motion is in fact for reconsideration of the Court’s July 28, 2011

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Order.

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facts in order to move for judgment on the pleadings after having

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brought a motion to dismiss.

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and distinct arguments that were not before the Court at the time

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it ruled on EA’s earlier motions.

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considered the text of the licensing agreements between EA and CLC

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in conjunction with CLC’s motion to dismiss in the May 2, 2011

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Order, these contracts were not submitted or discussed by either

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party in connection with EA’s motion addressed in the May 2, 2011

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Order.

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Court will consider the merits of the motion.

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Defendants need not provide intervening case law or new

In the instant motion, EA makes new

While it is true that the Court

Thus, EA’s motion is not procedurally improper, and the

Plaintiffs allege two § 1 claims that rest on conspiracies
purportedly joined by EA: (1) a price-fixing conspiracy to set at
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zero dollars the price paid to Antitrust Plaintiffs and putative

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class members for use of their images, likenesses and names; and

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(2) a “group boycott/refusal to deal” conspiracy for use of their

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images, likenesses and names.

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In this motion, EA contends that the Court found previously

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that Antitrust Plaintiffs sufficiently alleged that EA had joined

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in these conspiracies, based solely on their assertion that, in

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its licensing agreements with CLC, EA expressly agreed not to

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compensate former student-athletes for the use of their images,

United States District Court
For the Northern District of California

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likenesses and names.

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conclusively refuted by the actual terms of the licensing

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agreements.

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EA argues now that these allegations are

Contrary to EA’s characterization, the Court’s prior orders

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did not reduce the antitrust claims against it to “a single

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allegation.”

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for a violation of § 1 of the Sherman Act, a plaintiff must plead,

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among other things, facts suggesting the existence of “a contract,

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combination or conspiracy among two or more persons or distinct

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business entities” that was intended to impose an unreasonable

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restraint of trade.

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1047 (9th Cir. 2008) (citing Les Shockley Racing Inc. v. Nat’l Hot

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Rod Ass’n, 884 F.2d 504, 507 (9th Cir. 1989)).

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of parallel commercial activities “gets the complaint close to

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stating a claim,” the allegations must include some “further

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circumstance pointing toward a meeting of the minds” with regard

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to concerted, anticompetitive conduct to be sufficient.

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518 F.3d at 1048 (quoting Bell Atl. Corp. v. Twombly, 550 U.S.

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544, 557 (2007)); see also Kline v. Coldwell, Banker & Co., 508

As the Court has previously noted, to state a claim

Kendall v. Visa U.S.A., Inc., 518 F.3d 1042,

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While a statement

Kendall,

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F.2d 226, 232 (9th Cir. 1974) (“Nor will proof of parallel

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business behavior alone conclusively establish agreement.”).

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While the Court previously found that Antitrust Plaintiffs’

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allegations regarding the licensing agreements provided the

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crucial additional circumstance that demonstrated that Defendants’

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parallel conduct was the result of a “meeting of the minds,” this

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does not mean that the allegations of parallel business conduct

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between EA and the other Defendants are not also among the facts

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suggesting the existence of a conspiracy.

United States District Court
For the Northern District of California

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Reading Antitrust Plaintiffs’ allegations about the

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agreements in the context of their overall complaint, rather than

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in isolation, the Court finds, drawing all reasonable inferences

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in favor of Antitrust Plaintiffs, as the non-movants, that the

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actual terms of the licensing agreements do not refute Antitrust

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Plaintiffs’ allegations.

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allege that Defendants required student-athletes to sign NCAA Form

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08-3a, or a form similar to it, each year prior to participating

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in intercollegiate athletics events, in accordance with NCAA

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bylaws, and that in this form, student-athletes were required to

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give NCAA and third parties acting on its behalf the right to use

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their name or image.

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Defendants have interpreted these forms as existing in perpetuity

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and allowing them to enter licensing agreements to distribute

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products containing student-athletes’ images, likenesses and names

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without payment to the student-athletes, even after the student-

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athletes have ended their collegiate athletic careers.

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In their complaint, Antitrust Plaintiffs

Antitrust Plaintiffs further allege

In the licensing agreements, EA agrees that it will “not
encourage or participate in any activity that would cause an
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athlete or an Institution to violate” the NCAA’s rules.

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term, the agreement does not distinguish between former and

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current student-athletes, even though, in the next sentence, it

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acknowledges that both may be encompassed within the word

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“athlete.”

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allegations, on a motion for judgment on the pleadings, these

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terms can fairly be read to evidence a “meeting of the minds”

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between EA and the other Defendants not to compensate former

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student-athletes, where such a contract would interfere with the

In this

In the context of Antitrust Plaintiffs’ other

United States District Court
For the Northern District of California

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student-athletes’ existing agreements with the NCAA.

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meeting of the minds is further supported by the other terms in

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the licensing agreements.

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written approval from CLC and, through it, the NCAA of all

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licensed products, which would include the video games that are

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alleged to contain former student-athletes’ likenesses.

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the agreements give broad authority to the CLC and NCAA to inspect

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EA’s financial records related to the products, allowing them to

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see that payments were almost never made to former student-

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athletes.

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Such a

For example, the agreements require

Further,

EA argues that Antitrust Plaintiffs’ allegations that some

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former student-athletes have licensed their collegiate likenesses

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are inconsistent with their theories of anticompetitive conduct.

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The Court has previously rejected this argument.

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Granting EA’s Mot. to Dismiss and Denying CLC’s and NCAA’s Mots.

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to Dismiss, Docket No. 325, at 14.

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this ruling.

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See, e.g., Order

EA offers no reason to alter

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CONCLUSION
For the reasons set forth above, the Court DENIES EA’s motion
for judgment on the pleadings (Docket No. 366).
IT IS SO ORDERED.

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Dated: 5/16/2012

CLAUDIA WILKEN
United States District Judge

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United States District Court
For the Northern District of California

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