Keller v. Electronic Arts Inc. et al

Filing 876

ORDER by Judge Claudia Wilken DENYING ( #856 , #857 , #858 ) MOTIONS TO DISMISS. (ndr, COURT STAFF) (Filed on 10/25/2013)

1
2

IN THE UNITED STATES DISTRICT COURT

3

FOR THE NORTHERN DISTRICT OF CALIFORNIA

4
5
6

No. C 09-1967 CW
IN RE NCAA STUDENT-ATHLETE
NAME & LIKENESS LICENSING
LITIGATION

ORDER DENYING
MOTIONS TO DISMISS
(Docket Nos. 856,
857, 858)

7
8

________________________________/

9

United States District Court
For the Northern District of California

10

Plaintiffs, a group of current and former college athletes,

11

pursue this putative class action against Defendant National

12

Collegiate Athletic Association (NCAA).

13

claims against Collegiate Licensing Company (CLC) and Electronic

14

Arts Inc. (EA) as well, but recently agreed to settle those

15

claims.

16

against the NCAA.

They initially brought

Accordingly, this order only addresses Plaintiffs’ claims

17

The NCAA moves to dismiss the antitrust claims from

18

Plaintiffs’ Third Amended Consolidated Class Action Complaint

19

(3CAC).

20

argument, the Court denies the NCAA’s motion to dismiss.
BACKGROUND

21
22

After considering the parties’ submissions and oral

Plaintiffs are twenty-five current and former student-

23

athletes who played for NCAA men’s football or basketball teams

24

between 1953 and the present.

25

All played at the Division I level, the highest level of

26

collegiate athletic competition,

Docket No. 832, 3CAC ¶¶ 25-233.

1

and many went on to play

27
1

28

Prior to 1973, Division I was known as the “University Division.”
In college football, the division was later subdivided into two

1

professionally, as well.

2

Plaintiffs (Right-of-Publicity Plaintiffs) allege that the NCAA

3

misappropriated their names, images, and likenesses in violation

4

of their statutory and common law rights of publicity.

5

twenty-one Plaintiffs (Antitrust Plaintiffs) allege that the NCAA

6

violated federal antitrust law by conspiring with EA and CLC to

7

restrain competition in the market for the commercial use of their

8

names, images, and likenesses.

9

latter set of claims, which arise under the Sherman Antitrust Act,

United States District Court
For the Northern District of California

10

Id.

In the present case, four of the

The other

This order addresses only the

15 U.S.C. § 1 et seq.

11

Antitrust Plaintiffs2 initiated the first of these

12

consolidated actions in 2009 and filed a Second Amended

13

Consolidated Class Action Complaint (2CAC) in May 2011.

14

No. 327, 2CAC.

15

unincorporated association of universities and regional sports

16

conferences, which governs collegiate athletics, required student-

17

athletes to sign various release forms as a condition of their

18

eligibility to compete.

19

“require[d] each of them to relinquish all rights in perpetuity to

20

the commercial use of their images, including after they graduate

21

and are no longer subject to NCAA regulations.”

22

2CAC alleged that the NCAA relied on these “purposefully

23

misleading” forms, along with its own bylaws, to sell or license

24

student-athletes’ names, images, and likenesses to third parties

Docket

Their 2CAC alleged that the NCAA, an

According to Plaintiffs, those forms

Id. ¶ 21.

The

25
26
27
28

subdivisions now known as the “Division I Football Bowl Subdivision” and
the “Division I Football Championship Subdivision.” For the sake of
simplicity, this order refers to all of these divisions as “Division I.”
2 All subsequent references to “Plaintiffs” in this order allude
specifically to the twenty-one Antitrust Plaintiffs and not to the four
Right-of-Publicity Plaintiffs, whose claims are not at issue here.

2

1

such as EA and CLC.

2

these names, images, and likenesses by publishing NCAA-branded

3

videogames that feature player-avatars modeled after real student-

4

athletes.

5

the NCAA in its licensing agreements with EA and other producers

6

of NCAA-branded merchandise.

Id.

EA allegedly profited from the use of

Id. ¶¶ 168, 173.

CLC, meanwhile, allegedly represented

Id. ¶¶ 16, 341.

7

The 2CAC alleged that the NCAA enlisted these companies in “a

8

price-fixing conspiracy and a group boycott / refusal to deal that

9

[] unlawfully foreclosed [student-athletes] from receiving

United States District Court
For the Northern District of California

10

compensation in connection with the commercial exploitation of

11

their images, likenesses and/or names following their cessation of

12

intercollegiate athletic competition.”

13

sought both injunctive and compensatory relief.

14

Plaintiffs requested a permanent injunction ending the alleged

15

group boycott and monetary damages compensating them for the

16

nonconsensual, commercial use of their names, images, and

17

likenesses.

18

Id. ¶ 9.

Their complaint
In particular,

In September 2012, Plaintiffs moved to certify a class to

19

pursue their antitrust claims.

20

filed as Docket No. 651), Class Cert. Mot.

21

relied on a theory of antitrust liability that had not been

22

clearly plead in their 2CAC.

23

critical respects from the theory plead in their complaint.

24

Docket No. 554 (subsequently reTheir motion, however,

The new theory deviated in three

First, Plaintiffs narrowed their proposed class definition

25

from a class of student-athletes whose names, images, or

26

likenesses were used for a wide range of commercial purposes --

27

including in videogames, apparel, highlight films, and other NCAA-

28

branded merchandise -- to a smaller class of student-athletes
3

1

whose names, images, and likenesses were featured specifically “in

2

game footage or in videogames.”

3

Id. at 1-2.

Second, Plaintiffs altered their damages theory by placing

4

greater emphasis on the revenue that the NCAA derives from the use

5

of student-athletes’ names and images in live television

6

broadcasts.

7

Plaintiffs had focused primarily on revenue derived from the

8

commercial use of their names, images, and likenesses in archival

9

game footage -- as well as videogames and other merchandise -- but

Before filing their class certification motion,

United States District Court
For the Northern District of California

10

not live game broadcasts.

11

in February 2012, Plaintiffs expressly stated that they did not

12

“claim rights to be compensated for appearing in live broadcasts

13

or playing on the field.”

14

15:21-:22 (emphasis added).3

15

the revenue generated from the sale of live broadcasting rights,

16

2CAC ¶ 169, its discussion of broadcast-related revenue focused

17

primarily on the sale of archival footage to advertisers,

18

television networks, and fans, see id. ¶¶ 53, 119, 294, 306, 334-

19

64, 420-27 (alleging that former student-athletes’ names and

20

images are featured without their consent in “‘stock footage’ sold

21

to corporate advertisers,” “rebroadcasts of ‘classic’ games,” and

22

“DVD game and highlight film[s]”).

23

In fact, during discovery proceedings

Docket No. 420, 2/8/2013 Hrg. Tr.
While their 2CAC referred briefly to

Third and finally, the motion for class certification

24

identified two new markets where Defendants had allegedly

25

restrained competition: (1) the “Division I college education

26
27
28

3

See also 2/8/2013 Hrg. Tr. 14:21-:22 (“[Plaintiffs’ Counsel]:
. . . I will agree that our claims do not emanate from the live
broadcasts.”).

4

1

market” where colleges and universities compete to recruit the

2

best student-athletes; and (2) the “market for the acquisition of

3

group licensing rights for the use of student-athletes’ names,

4

images and likenesses in the broadcasts or rebroadcasts of

5

Division I basketball and football games and in videogames

6

featuring Division I basketball and football.”

7

at 18.

8

general “collegiate licensing market in the United States,

9

including licensing rights to current and former players’ images

Class Cert. Mot.

Previously, Plaintiffs had only alleged harm to the

United States District Court
For the Northern District of California

10

and likenesses,” without reference to any specific “group

11

licensing” market.

12

conflate the demand for student-athletes’ names, images, and

13

likenesses in the collegiate licensing market with the demand for

14

student-athletes among schools in the “Division I college

15

education market.”

16

motion made clear that these were two distinct markets.

2CAC ¶ 306.

Id. ¶ 312.

Furthermore, the 2CAC appeared to

Plaintiffs’ class certification

17

Citing the various changes to Plaintiffs’ theory of the case,

18

Defendants moved in October 2012 to strike the class certification

19

motion.

20

to strike but granted Defendants leave to file supplemental briefs

21

opposing class certification so that they could address the

22

changes to Plaintiffs’ antitrust theory.

23

Denying Defs.’ Mot. Strike, at 1-2.

24

Defendants had an adequate opportunity to respond to Plaintiffs’

25

new theory, the Court stated that it would also construe any

26

arguments raised in Defendants’ motion to strike as part of their

27

opposition to Plaintiffs’ class certification motion.

Docket No. 639, Mot. Strike.

28
5

The Court denied the motion

Docket No. 673, Order

To further ensure that

Id. at 1.

1

The Court heard oral argument on class certification in June

2

2013.

3

opportunities to attack Plaintiffs’ new antitrust allegations, see

4

Docket Nos. 639, 648, 677, 680, 794, 789, at the hearing they

5

nevertheless argued that they had not received adequate notice of

6

Plaintiffs’ theory and that Plaintiffs should be required to file

7

a new complaint.

8

their complaint “the minimum amount necessary” to incorporate the

9

new allegations raised in their class certification motion.

Although Defendants had already been granted several

The Court therefore directed Plaintiffs to amend

United States District Court
For the Northern District of California

10

Docket No. 830, Order Granting Pls. Leave to Amend.

11

also permitted Plaintiffs to add a current student-athlete to the

12

complaint.

13

The Court

Id.

On July 19, 2013, Plaintiffs filed their 3CAC.

The 3CAC

14

maintains Plaintiffs’ basic price-fixing and group boycott claims

15

while adding the new allegations raised in their class

16

certification motion.4

17

responded to these new allegations in their joint motion to strike

18

and in various class certification briefs, see Docket Nos. 639,

19

648, 677, 680, 794, 789, they nonetheless sought leave to move

20

again for dismissal of the new complaint.

21

The Court granted their request on September 10, 2013 and set an

22

expedited schedule for briefing the motions to dismiss.

23

No. 855, Order Resolving Miscellaneous Mots., at 3-5.

24

CLC did not request leave to file a motion to dismiss, the Court

25

permitted it to file one anyway in the interest of fairness.

Although EA and NCAA had previously

Docket Nos. 834, 838.

Docket

Although

Id.

26
4

27
28

The 3CAC also added six current NCAA football players to the
complaint as class representatives. 3CAC ¶¶ 3, 212-36. One of these
players, however, voluntarily dismissed his claims on July 30, 2013.
Docket No. 835.

6

1

The Court explained that while it was “reluctant to delay this

2

case further,” it nevertheless found itself “compelled to allow an

3

additional round of motions . . . due to Defendants’ insistence on

4

pursuing all available procedural steps, and the untimely changes

5

in Plaintiffs’ theory of the case.”

6

each moved to dismiss shortly thereafter.

7

858.

8
9

Id. at 1.

EA, CLC, and NCAA

Docket Nos. 856, 857,

In September 2013, while those motions were still pending, EA
and CLC agreed to a settlement with Plaintiffs.

They filed a

United States District Court
For the Northern District of California

10

stipulation stating that they had resolved “all claims asserted by

11

all Plaintiffs in this matter against EA and CLC.”

12

861, Stipulation, at 1.

13

denied without prejudice as moot.

14

that the “settlement does not affect Plaintiffs’ claims against

15

Defendant National Collegiate Athletic Association.”

Accordingly, their motions to dismiss are

16
17

Docket No.

The stipulation noted, however,

Id.

DISCUSSION
I.

NCAA’s Motion to Dismiss

18

A.

19

A complaint must contain a “short and plain statement of the

Legal Standard

20

claim showing that the pleader is entitled to relief.”

21

Civ. P. 8(a).

22

state a claim, dismissal is appropriate only when the complaint

23

does not give the defendant fair notice of a legally cognizable

24

claim and the grounds on which it rests.

25

Twombly, 550 U.S. 544, 555 (2007).

26

complaint is sufficient to state a claim, the court will take all

27

material allegations as true and construe them in the light most

28

favorable to the plaintiff.

Fed. R.

On a motion under Rule 12(b)(6) for failure to

Bell Atl. Corp. v.

In considering whether the

NL Indus., Inc. v. Kaplan, 792 F.2d
7

1

896, 898 (9th Cir. 1986).

2

to legal conclusions; “threadbare recitals of the elements of a

3

cause of action, supported by mere conclusory statements,” are not

4

taken as true.

5

(citing Twombly, 550 U.S. at 555).

However, this principle is inapplicable

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

6

B.

7

The NCAA argues that Plaintiffs’ antitrust claims should be

Analysis

8

dismissed for three reasons.

9

claims are “nothing more than a challenge to the NCAA’s rules on

First, it contends that Plaintiffs’

United States District Court
For the Northern District of California

10

amateurism” and therefore must be dismissed under NCAA v. Board of

11

Regents, 468 U.S. 85, 102 (1984).

12

Second, it argues that these claims must be dismissed because,

13

under both state and federal law, student-athletes “have no

14

protectable name, image or likeness right in sports broadcasts.”

15

Id. at 3.

16

§§ 101 et seq., preempts any rights of publicity that Plaintiffs

17

would otherwise enjoy.

18

these arguments provides grounds for dismissing Plaintiffs’ claims

19

at this stage.

20
21

NCAA Mot. Dismiss at 5.

Finally, it argues that the Copyright Act, 17 U.S.C.

1.

As explained more fully below, none of

NCAA v. Board of Regents

To state a claim under § 1 of the Sherman Act, a plaintiff

22

must allege “‘(1) that there was a contract, combination, or

23

conspiracy; (2) that the agreement unreasonably restrained trade

24

under either a per se rule of illegality or a rule of reason

25

analysis; and (3) that the restraint affected interstate

26

commerce.’”

Tanaka v. Univ. of S. Cal., 252 F.3d 1059, 1062 (9th

27
28
8

1

Cir. 2001) (citations omitted).5

2

NCAA’s current rules and licensing agreements operate together to

3

restrain competition in two distinct but related national markets:

4

the “college education” market and the “group licensing” market

5

for student-athletes’ names, likenesses, and images.

6

Here, Plaintiffs allege that the

3CAC ¶ 391.

The NCAA denies that it unreasonably restrains competition in

7

these markets and argues that the Supreme Court has explicitly

8

endorsed its rules prohibiting student-athlete compensation.

9

support, it cites Board of Regents, 468 U.S. at 91-94, which

For

United States District Court
For the Northern District of California

10

involved an antitrust challenge to an NCAA rule capping the total

11

number of football games that Division I schools were allowed to

12

televise each season.

13

“limit[] the total amount of televised intercollegiate football”

14

in order to “reduce, insofar as possible, the adverse effects of

15

live television upon football game attendance.”

16

Court held that this plan violated § 1 of the Sherman Act.

17

106 (“The anticompetitive consequences of this arrangement are

18

apparent.”).

19

in a competitive market are foreclosed by the NCAA’s plan” because

20

the plan prevented schools from selling the broadcast rights to

21

their own football games.

22

offer a legitimate “procompetitive” justification for the plan so,

23

under the rule of reason, the Court held that the plan was an

24

unlawful restraint of trade.

The rule was part of a broader plan to

Id.

The Supreme
Id. at

It explained that “many telecasts that would occur

Id. at 107-08.

The NCAA failed to

Id. at 113-20.

25
26
27
28

5

For reasons explained in prior orders, Plaintiffs’ claims in this
case must be analyzed under the rule of reason. See Docket No. 151,
Order Granting in Part and Denying in Part NCAA’s Mot. Dismiss, at 9-10.

9

1

In reaching this conclusion, however, the Court acknowledged

2

that the NCAA must be given some leeway to adopt anticompetitive

3

rules without running afoul of the Sherman Act.

4

intercollegiate athletics is “an industry in which horizontal

5

restraints on competition are essential if the product is to be

6

available at all.”

7

The Court explained,

What the NCAA and its member institutions
market in this case is competition itself -contests between competing institutions. Of
course, this would be completely ineffective
if there were no rules on which the
competitors agreed to create and define the
competition to be marketed. A myriad of rules
affecting such matters as the size of the
field, the number of players on a team, and
the extent to which physical violence is to be
encouraged or proscribed, all must be agreed
upon, and all restrain the manner in which
institutions compete.

8
9
10
United States District Court
For the Northern District of California

Id. at 101.

It reasoned that

11
12
13
14

Id.

15

“particular brand” of athletic competition -- namely, college

16

sports -- which differs from comparable professional sports

17

leagues because it is tied to an “academic tradition.”

18

Proceeding from this premise, the Court then articulated the

19

statement on which the NCAA now relies: “In order to preserve the

20

character and quality of the [NCAA’s] ‘product,’ athletes must not

21

be paid, must be required to attend class, and the like.”

22

102 (emphasis added).

23

The Court further noted that the NCAA sought to market a

Id.

Id. at

This statement does not preclude Plaintiffs’ claims here.

24

explained above, Board of Regents focused on a different set of

25

competitive restraints than the rules challenged in this case.

26

Indeed, the Supreme Court never even analyzed the NCAA’s ban on

27

student-athlete compensation under the rule of reason nor did it

28

cite any fact findings indicating that this ban is the type of
10

As

1

restraint which is “essential if the [NCAA’s] product is to be

2

available at all.”

3

examined whether or not the ban on student-athlete compensation

4

actually had a procompetitive effect on the college sports

5

market,6 despite its own statement that naked restraints on price

6

or output “place upon [the defendant] a heavy burden of

7

establishing an affirmative defense which competitively justifies

8

this apparent deviation from the operations of a free market.”

9

Id. at 113 (emphasis added).

United States District Court
For the Northern District of California

10

Id. at 101.

More importantly, the Court never

This is precisely why many courts have construed the dicta

11

from Board of Regents narrowly, recognizing that it authorizes

12

only a limited range of restraints on competition -- specifically,

13

restraints necessary to ensure that college sports remains a

14
6

15
16
17
18
19
20
21
22
23
24
25
26
27
28

Even if the Court had examined the compensation ban under the
rule of reason, Plaintiffs have plausibly alleged that the “business of
college sports” has changed dramatically over the three decades since
Board of Regents was decided. 3CAC ¶¶ 113, 427-30. “Antitrust law
generally seeks to punish and prevent harm to consumers in particular
markets, with a focus on relatively specific time periods.” Data Gen.
Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1184 (1st Cir. 1994)
(emphasis added), abrogated on other grounds by Reed Elsevier, Inc. v.
Muchnick, 559 U.S. 154 (2010). This is why, in antitrust cases, courts
“ordinarily focus on harm to the competitive process in the relevant
market and time period.” Id. (emphasis added); see also United States
v. Sargent Elec. Co., 785 F.2d 1123, 1127 (3d Cir. 1986) (“Because
Sherman Act conspiracies involve a relevant market and that market may
vary over time, the government’s task in drafting indictments is
somewhat more complex than in other conspiracy contexts.”); United
States v. Int’l Bus. Machines Corp., 1997 WL 217588 (S.D.N.Y.)
(“[W]hereas IBM formerly had a great degree of market power in an
antitrust sense, that market power has been substantially diminished,
and is continuing to diminish, to the point of its disappearance in the
sense of a threat of antitrust violation.”), aff’d, 163 F.3d 737 (2d
Cir. 1998). Thus, Board of Regents offers limited guidance in
determining the impact of the NCAA’s ban on student-athlete pay on the
demand for college sports today. See generally Banks v. NCAA, 977 F.2d
1081, 1099 (7th Cir. 1992) (Flaum, J., concurring in part and dissenting
in part) (“The NCAA continues to purvey, even in this case, an outmoded
image of intercollegiate sports that no longer jibes with reality. The
times have changed.”).

11

1

viable product.7

2

rules restricting the size and availability of student-athletes’

3

scholarships and financial aid grants may be challenged under the

4

Sherman Act, even though they relate to forms of student-athlete

5

compensation.

6

(S.D. Ind.) (holding that a former college football player stated

7

a valid antitrust claim against the NCAA by alleging that its

8

rules “limit the number and distribution of Division I football

9

scholarships and that, as a result, the student-athletes in the

In recent years, courts have held that NCAA

See, e.g., Rock v. NCAA, 2013 WL 4479815, at *14

United States District Court
For the Northern District of California

10

market received less for their labor than they would have received

11

without the restrictions”); White v. NCAA, Case No. 06–999, Docket

12

No. 72, slip op. at 3 (C.D. Cal. Sept. 20, 2006) (holding that

13

former college football and basketball players stated a valid

14

antitrust claim against the NCAA by alleging that its limits on

15

financial aid for student-athletes restrained competition in

16

markets where “colleges and universities compete to attract

17
7

18
19
20
21
22
23
24
25
26
27
28

See, e.g., Metro. Intercollegiate Basketball Ass’n v. NCAA, 339
F. Supp. 2d 545, 548 (S.D.N.Y. 2004) (“[T]he challenged rules and
expansions [governing Division I schools’ participation in year-end
basketball tournaments] are not so obviously reasonable as to fall into
the group of restrictions sanctioned by Board of Regents.”); Law v.
NCAA, 902 F. Supp. 1394, 1404 (D. Kan. 1995) (“Although this Court
concludes from the Supreme Court’s analysis in Board of Regents that the
NCAA’s ‘vital role’ in making college sports available to the public
entitles it to a rule of reason review of the NCAA legislation at issue
here, the Court does not believe that the Supreme Court intended to give
the NCAA carte blanche in imposing restraints of trade on its member
institutions or other parties because of its role in the marketplace.”),
aff’d, 134 F.3d 1010 (10th Cir. 1998); see also Gary R. Roberts, “The
NCAA, Antitrust, and Consumer Welfare,” 70 Tul. L. Rev. 2631, 2659
(1996) (“Despite the Board of Regents dictum suggesting the Court
already knows the answer, it is not at all clear that college sports’
great popularity is substantially greater because the athletes are paid
only with in-kind ‘academic services.’ . . . [Ultimately,] the question
of how much of the consumer utility generated by intercollegiate
athletics is dependent upon the limitations on athlete compensation is
one of fact that would have to be developed in a full record.”).

12

1

student-athletes”); In re NCAA I-A Walk-On Football Players

2

Litig., 398 F. Supp. 2d 1144, 1150 (W.D. Wash. 2005) (holding that

3

former college football players stated a valid antitrust claim by

4

alleging that NCAA restrictions on the number of full scholarships

5

that Division I schools may offer restrain competition in the

6

“market in which NCAA member schools compete for skilled amateur

7

football players”).

8

In each of these cases, former student-athletes were able to
state a valid antitrust claim against the NCAA by alleging that

10
United States District Court
For the Northern District of California

9

its rules hinder competition in the market for student-athletes.

11

Likewise, Plaintiffs in the present case allege that the NCAA’s

12

rules prohibiting monetary compensation for student-athletes

13

ultimately restrain competition among Division I schools in the

14

market for football and basketball players -- the “college

15

education” market identified in their 3CAC.

16

anticompetitive harm proceeds as follows.

17

basketball programs routinely compete to recruit the best

18

athletes.

19

offer recruits a variety of non-monetary privileges and incentives

20

such as scholarships, access to state-of-the-art training

21

facilities, and -- at the most elite programs -- the opportunity

22

to compete on a national stage.

23

programs from offering monetary compensation to any recruit for

24

his athletic labor or for the commercial use of his name, image,

25

and likeness.

26

prohibition restrains competition in the market for Division I

27

student-athletes and “result[s] in lower compensation [for the

Plaintiffs’ theory of

Division I football and

In order to attract the top talent, these programs

3CAC ¶ 397.

NCAA rules, however, forbid these

Plaintiffs allege that this

28
13

1

student-athletes] than would otherwise prevail in a more

2

competitive market.”

3

Id. ¶ 398.

These allegations are sufficient to state a Sherman Act

4

claim.

5

pair of former college football players could have stated a valid

6

antitrust claim against the NCAA by alleging that its scholarship

7

rules stifled competition among NCAA schools in the “market to

8

attract student-athletes.”

9

Although the court dismissed the plaintiffs’ claims because they

In Agnew v. NCAA, the Seventh Circuit recognized that a

683 F.3d 328, 347 (7th Cir. 2012).

United States District Court
For the Northern District of California

10

failed to identify such a market, it also recognized that

11

“colleges do, in fact, compete for student-athletes” and “the only

12

reason that colleges do not engage in price competition for

13

student-athletes is that other NCAA bylaws prevent them from doing

14

so.”

15

benefits from recruiting the best student-athletes, the court

16

found that “the transactions between NCAA schools and student-

17

athletes are, to some degree, commercial in nature, and therefore

18

take place in a relevant market with respect to the Sherman Act.”

19

Id. at 340-41 (“No knowledgeable observer could earnestly assert

20

that big-time college football programs competing for highly

21

sought-after high school football players do not anticipate

22

economic gain from a successful recruiting program.”).

23

therefore concluded that the “proper identification of a labor

24

market for student-athletes . . . would meet plaintiffs’ burden of

25

describing a cognizable market under the Sherman Act.”

26

346; accord Rock, 2013 WL 4479815, at *14; White, Case No. 06–999,

27

Docket No. 72, slip op. at 3; In re NCAA I-A Walk-On Football

28

Players Litig., 398 F. Supp. 2d at 1150.

Id. at 346-47.

Because these colleges derive economic

14

The court

Id. at

1

Critically, the Agnew court found that Board of Regents did

2

not pose a barrier to the plaintiffs’ antitrust claims.

3

the court specifically recognized that Board of Regents -- which

4

involved an antitrust challenge brought by universities --

5

provides only limited guidance in cases involving claims by

6

student-athletes, noting,

7

The Sherman Act clearly applies to at least
some of the NCAA’s behavior. The question for
us, however, is whether and when the Sherman
Act applies to the NCAA and its member schools
in relation to their interaction with studentathletes. The Supreme Court has not weighed
in on this issue directly, but Board of
Regents, the seminal case on the interaction
between the NCAA and the Sherman Act, implies
that all regulations passed by the NCAA are
subject to the Sherman Act.

8
9
10
United States District Court
For the Northern District of California

In fact,

11
12
13

Agnew, 683 F.3d at 338-39 (citations omitted; emphasis in

14

original).

15

scholarship rules, rather than its rules prohibiting student-

16

athletes from licensing their publicity rights, the court’s

17

rationale for distinguishing Board of Regents is still persuasive

18

here: in short, Board of Regents did not address the impact of the

19

NCAA’s horizontal restraints on student-athletes.

20

the parties or amici curiae who participated in Board of Regents

21

represented the interests of student-athletes.

Although the plaintiffs in Agnew focused on the NCAA’s

Indeed, none of

22

Thus, while Board of Regents gives the NCAA “ample latitude”

23

to adopt rules preserving “the revered tradition of amateurism in

24

college sports,” 468 U.S. at 120, it does not stand for the

25

sweeping proposition that student-athletes must be barred, both

26

during their college years and forever thereafter, from receiving

27

any monetary compensation for the commercial use of their names,

28

images, and likenesses.

Although it is possible that the NCAA’s
15

ban on student-athlete pay serves some procompetitive purpose,

2

such as increasing consumer demand for college sports, Plaintiffs’

3

plausible allegations to the contrary must be accepted as true at

4

the pleading stage.

5

1127, 1133 (N.D. Cal. 2005) (“Whatever the merits of these

6

[procompetitive] arguments, they are intrinsically factual,

7

contrary to plaintiffs’ pleading and inappropriate for resolution

8

at the motion to dismiss stage.”); see also Paladin Associates,

9

Inc. v. Montana Power Co., 328 F.3d 1145, 1156 (9th Cir. 2003)

10
United States District Court
For the Northern District of California

1

(stating that courts must “review all the facts, including the

11

precise harms alleged to the competitive markets, and the

12

legitimate justifications provided for the challenged practice” in

13

order to “determine whether the anticompetitive aspects of the

14

challenged practice outweigh its procompetitive effects” (emphasis

15

added)).

16
17

2.

Brennan v. Concord EFS, Inc., 369 F. Supp. 2d

Publicity Rights in Sports Broadcasts

The NCAA contends that the First Amendment and the California

18

Civil Code bar student-athletes from asserting any rights of

19

publicity in the use of their names, images, and likenesses during

20

game broadcasts.

21

asserted any right-of-publicity claims here,8 their rights of

22

publicity nevertheless remain relevant because their antitrust

23

claims depend in part on the existence of a “group licensing”

24

market where, absent NCAA rules, student-athletes would be able to

25

sell their publicity rights in “broadcasts or rebroadcasts of

Although Plaintiffs have not technically

26
8

27
28

As noted above, the twenty-one Plaintiffs who assert antitrust
claims in this action are distinct from the four Plaintiffs who asserted
right-of-publicity claims. See 3CAC ¶¶ 2-3. Only the antitrust claims
are at issue here.

16

1

Division I basketball and football games.”

2

broadcasters were simply allowed to use student-athletes’ names,

3

images, and likenesses without student-athletes’ consent -- as the

4

NCAA contends -- then there would be no demand among broadcasters

5

for those student-athletes’ publicity rights.

6

argues, Plaintiffs’ lack of publicity rights in sports broadcasts

7

mandates the dismissal of any antitrust claims premised on the

8

unauthorized use of their names, images, and likenesses in those

9

broadcasts.9

United States District Court
For the Northern District of California

10

3CAC ¶ 391.

If

Thus, the NCAA

Neither the First Amendment nor the California Civil Code

11

requires dismissal of Plaintiffs’ antitrust claims.

12

3344(d) of the California Civil Code provides that an individual

13

has no right of publicity in the “use of [his or her] name, voice,

14

signature, photograph, or likeness in connection with any news,

15

public affairs, or sports broadcast or account.”

16

§ 3344(d).

17

claims brought under California law.

18

precludes Plaintiffs from selling or licensing their publicity

19

rights in California, it does not prevent them from doing so in

20

any other state that recognizes the right of publicity.

21

again, Plaintiffs allege harm to a national market for the

22
23
24
25
26
27
28

Section

Cal. Civ. Code

This provision only applies to right-of-publicity

9

As such, even if it

Once

The Court notes that, even if Plaintiffs lack publicity rights in
broadcast footage, the “group licensing” market they identify would
still encompass the market for group licenses to use their names,
images, and likenesses in videogames. The NCAA does not argue that the
First Amendment or California Civil Code precludes Plaintiffs from
selling the rights to use their names, images, and likenesses in
videogames. Such an argument would likely fail in light of the Ninth
Circuit’s recent decision in this case. In re NCAA Student-Athlete Name
& Likeness Licensing Litig., 724 F.3d 1268, 1284 (9th Cir. 2013) (“EA’s
use of the likenesses of college athletes like Samuel Keller in its
video games is not, as a matter of law, protected by the First
Amendment.”).

17

1

licensing rights to their names, images, and likenesses in game

2

broadcasts.

3

pleading stage, the NCAA would have to identify a law or set of

4

laws that precludes student-athletes from asserting publicity

5

rights to game broadcasts in every state.

6

here.

7

To disprove the existence of this market at the

It has not done so

Although the First Amendment -- unlike the California Civil

8

Code -- does impose certain limits on the right of publicity in

9

every state, the NCAA has not shown that those limits preclude

United States District Court
For the Northern District of California

10

Plaintiffs from asserting publicity rights in the specific types

11

of broadcasts at issue here.

12

federal courts of appeals have ever squarely addressed whether the

13

First Amendment bars athletes from asserting a right of publicity

14

in the use of their names, images, or likenesses during sports

15

broadcasts.

16

sought to balance an individual’s right of publicity against First

17

Amendment concerns is Zacchini v. Scripps–Howard Broadcasting Co.,

18

433 U.S. 562 (1977).

19

station was not entitled to First Amendment protection for

20

broadcasting the entire fifteen-second “human cannonball” act of a

21

performer at an Ohio county fair.

22

reasoned that the station was not protected because it filmed and

23

broadcast the performer’s entire act without the performer’s

24

consent and, in so doing, undermined the performer’s economic

25

livelihood by reducing demand for his live show.

26

(“The effect of a public broadcast of the performance is similar

27

to preventing petitioner from charging an admission fee.”).

Neither the Supreme Court nor the

The only case in which the Supreme Court has ever

There, the Court held that a television

28
18

Id. at 563-64.

The Court

Id. at 575-76

1

Zacchini does not provide a clear test for balancing the
right of publicity against free speech concerns.

3

court decisions provide some guidance in this area.

4

Nat’l Hole-In-One Ass’n, for instance, a federal district court

5

held that the First Amendment did not bar a professional golfer’s

6

right-of-publicity claim against a company that used footage of

7

him to promote its fundraising events.

8

(D. Ariz. 2000).

9

footage -- which showed the golfer making a hole-in-one at a

10
United States District Court
For the Northern District of California

2

professional tournament more than a decade earlier -- was not

11

protected because the company used it for “strictly commercial”

12

purposes.

13

purpose of using a person’s identity is strictly to advertise a

14

product or a service, as it is here, the use is not protected by

15

the First Amendment.”

16

Critically, the court distinguished between the original broadcast

17

of the golfer’s hole-in-one -- which, it suggested, was entitled

18

to First Amendment protections -- and “its subsequent unauthorized

19

reproduction,” which was “not automatically privileged simply

20

because the hole-in-one continued to be a ‘newsworthy’ event.”

21

Id. at 1114.

22

However, lower
In Pooley v.

89 F. Supp. 2d 1108, 1110

The court held that the company’s use of the

Id. at 1114.

The court explained that “when the

Id. at 1113 (emphasis in original).

A similar case, Dreyer v. NFL, 689 F. Supp. 2d 1113 (D. Minn.

23

2010), also held that use of footage of an athlete’s past

24

accomplishments is not entitled to First Amendment protection when

25

it is done exclusively for commercial purposes.

26

group of former professional football players alleged that the NFL

27

had violated their rights of publicity “by using video footage

28

from games in which they played as part of the NFL Films’
19

In Dreyer, a

1

promotional videos.”

2

analysis of the footage under the Eighth Circuit’s “commercial

3

speech” test, the court denied the NFL’s motion for judgment on

4

the pleadings.

5

that the constitutional protection to be afforded the films may

6

not outweigh Plaintiffs’ interests in their own identities.”).

7

in Pooley, the Dreyer court’s decision rested on the plaintiffs’

8

allegations “that the films’ entire purpose is to promote the

9

NFL.”

Id. at 1115.

After conducting a lengthy

Id. at 1121 (“Plaintiffs sufficiently established

As

Id. at 1120 (emphasis added); see also Jordan v. Jewel Food

United States District Court
For the Northern District of California

10

Stores, Inc., 851 F. Supp. 2d 1102, 1105 (N.D. Ill. 2012)

11

(applying “commercial speech” test to determine whether former

12

professional basketball player was entitled to summary judgment on

13

his right-of-publicity claims).

14

Under the framework adopted in these cases, the central

15

question in determining whether the First Amendment bars an

16

athlete’s right-of-publicity claim is whether the defendant’s use

17

of the athlete’s name, image, or likeness is primarily

18

“commercial.”

19

“The Professional Athlete’s Right of Publicity,” 10 Marq. Sports

20

L.J. 23, 44-45 (1999) (“Courts are forced to conduct a very

21

delicate balancing act in determining where ‘newsworthy’ ends and

22

‘commercial’ begins”).

23

specific analysis.”

24

(“A court must examine the ‘content, form, and context’ of the

25

speech ‘as revealed by the whole record’ to determine whether the

26

speech is commercial speech.” (citing Connick v. Myers, 461 U.S.

27

138, 147–48 (1983))).

28

areas ‘the boundary between commercial and noncommercial speech

See generally Laura Lee Stapleton & Matt McMurphy,

This typically involves a “highly fact

Id.; see also Dreyer, 689 F. Supp. 2d at 118

The Ninth Circuit has noted that “in many

20

1

has yet to be clearly delineated.’”

2

Angeles, 697 F.3d 1146, 1151 (9th Cir. 2012) (citations omitted).

3

Thus, even though the commercial speech determination is a

4

question of law, courts are sometimes reluctant to make this

5

determination at the pleading stage, before the record has been

6

more fully developed.

7

Charles v. City of Los

In the present case, Plaintiffs provide only general

8

descriptions of the “broadcasts [and] rebroadcasts of Division I

9

basketball and football games” in which they assert publicity

United States District Court
For the Northern District of California

10

rights.

11

different types of game footage -- including live game broadcasts,

12

rebroadcasts of “classic games,” highlight films, and “‘stock

13

footage’ sold to corporate advertisers,” id. ¶¶ 372, 440-72 -- it

14

offers scant details about each of these specific categories.

15

Thus, it is difficult to determine with any certainty whether

16

these broadcasts are primarily commercial in nature.

17

Nevertheless, on the present motion, the allegations in the 3CAC

18

must be construed in the light most favorable to Plaintiffs.

19

viewed in this light, it is plausible that at least some of the

20

broadcast footage described in the complaint -- particularly the

21

promotional highlight films and the “stock footage” sold to

22

advertisers -- was used primarily for commercial purposes.

23

Dreyer, 689 F. Supp. 2d at 1120 (“Giving Plaintiffs the benefit of

24

every reasonable inference about the [NFL highlight] films, it is

25

a plausible inference that the films are advertisements within the

26

meaning of the [commercial speech] test.”).

27
28

3CAC ¶ 391.

Although their complaint refers to several

When

See

Thus, the First Amendment does not provide a basis for
dismissing Plaintiffs’ broadcast-related claims at this stage.
21

1

Should the NCAA raise this issue again at summary judgment,

2

Plaintiffs will need to submit evidence that the relevant

3

broadcast footage on which their claims are based -- including

4

both the archival game footage and the live game broadcasts -- was

5

used primarily for commercial purposes.

6

City of Los Angeles, 638 F.3d 703, 715 (9th Cir. 2011) (“Where the

7

facts present a close question, ‘strong support’ that the speech

8

should be characterized as commercial speech is found where the

9

speech is an advertisement, the speech refers to a particular

See generally Hunt v.

United States District Court
For the Northern District of California

10

product, and the speaker has an economic motivation.” (citations

11

omitted)).

12
13

3.

Copyright Act Preemption

The NCAA’s final argument in support of dismissal is that the

14

“Copyright Act preempt[s] the application of any applicable right

15

of publicity laws to the broadcast of college football and

16

basketball games.”

17

relies principally on Jules Jordan Video, Inc. v. 144942 Canada

18

Inc., 617 F.3d 1146, 1155 (9th Cir. 2010), where the Ninth Circuit

19

held that an adult film actor’s right-of-publicity claim against a

20

film production company was preempted by the Copyright Act.

21

NCAA Mot. Dismiss 3.

For support, the NCAA

Jules Jordan is inapposite here because the right-of-

22

publicity claim in that case was based not merely on the

23

misappropriation of the plaintiff’s name, image, and likeness but

24

on the sale of counterfeit DVDs featuring films that the plaintiff

25

had produced.

26

the [] defendants reproduced and distributed the DVDs without

27

authorization.”

28

right-of-publicity claim was “based entirely on the

“The essence of [the plaintiff]’s claim [was] that

Id. at 1153, 1155 (noting that the plaintiff’s

22

1

misappropriation of the DVDs and [his] appearance therein”

2

(emphasis added)).

3

films, the court concluded that the plaintiff’s “right of

4

publicity claim falls within the subject matter of copyright, and

5

[] the rights he asserts are equivalent to the rights within the

6

scope of § 106 of the Copyright Act.”

7

Because the plaintiff owned a copyright in the

Id.

In contrast, the rights Plaintiffs seek to assert in the

8

present case are fundamentally different from those protected by

9

the Copyright Act.

Plaintiffs here do not own copyrights in any

United States District Court
For the Northern District of California

10

of the game footage described in their complaint and, thus, do not

11

seek to protect their copyrights in that footage.

12

seek the right to license the commercial use of their names,

13

images, and likenesses in certain broadcast footage.

14

on Copyright § 1.01[B][1][c], at 1–30 (“The ‘work’ that is the

15

subject of the right of publicity is the persona, i.e., the name

16

and likeness of a celebrity or other individual.

17

hardly be said to constitute a ‘writing’ of an ‘author’ within the

18

meaning of the Copyright Clause of the Constitution.”).

19

Dreyer court relied on this same distinction in rejecting the

20

NFL’s argument that the Copyright Act preempted the right-of-

21

publicity claims of former players who were featured without their

22

consent in promotional highlight films.

23

at 1121.

24

Rather, they

See 1 Nimmer

A persona can

The

Dreyer, 689 F. Supp. 2d

Further, Plaintiffs’ underlying claims here are not preempted

25

by the Copyright Act because they are based principally on an

26

injury to competition, not simply misappropriation.

27

preemptive effect the Copyright Act has on right-of-publicity

28

claims, federal courts have made clear, “Intellectual property
23

Whatever

1

rights do not confer a privilege to violate the antitrust laws.”

2

See, e.g., United States v. Microsoft Corp., 253 F.3d 34, 63 (D.C.

3

Cir. 2001) (emphasis added; citations and quotation marks omitted)

4

(rejecting defendant’s argument that it could not incur antitrust

5

liability merely by exercising its copyrights); see also Ralph C.

6

Wilson Indus., Inc. v. Chronicle Broad. Co., 1982 WL 257, at *2

7

(N.D. Cal.) (“The fact that the Copyright Act permits the grant of

8

a geographically exclusive license does not immunize such licenses

9

from attack under the antitrust laws.”).

Therefore, the NCAA’s

United States District Court
For the Northern District of California

10

motion to dismiss Plaintiffs’ Sherman Act claims on this basis is

11

denied.

12
13

CONCLUSION
For the reasons set forth above, the NCAA’s motion to dismiss

14

(Docket No. 857) is DENIED.

NCAA shall file its answer within

15

fourteen days of this order.

EA and CLC’s motions to dismiss

16

(Docket Nos. 856, 858) are denied, without prejudice, as moot.

17

They, along with Plaintiffs, shall file their motion for

18

preliminary settlement approval as soon as practicable.

19

IT IS SO ORDERED.

20
21
22

Dated: 10/25/2013

CLAUDIA WILKEN
United States District Judge

23
24
25
26
27
28
24