Court Orders NCAA To Pay Student Athletes’ $33M Legal Bill After Successful Antitrust Challenge To NCAA Rules But Declines To Apply A Multiplier
On December 23, 2019, Magistrate Judge Nathaniel M. Cousins of the United States District Court for the Northern District of California issued an order directing the National Collegiate Athletic Association (“NCAA”) to pay $31.8 million in attorney fees and $1.3 million in costs incurred by plaintiffs in their antitrust challenge to certain NCAA rules governing compensation for student-athletes. In re National Collegiate Athletic Association Athletic Grant-in-aid Cap Antitrust Litigation, No. 4:14-md-02541 (N.D. Ca. Dec. 23, 2019).
Plaintiffs are a class of former and current NCAA Division I athletes who successfully challenged the NCAA’s grant-in-aid cap, which limited student-athlete compensation largely to the cost of college attendance. Defendants are the NCAA and 11 of its regional conferences. Plaintiffs alleged that defendants’ student-athlete compensation cap was exploitative, forced student athletes to prioritize activities that profited defendants over their own education, and caused them to live without basic necessities like adequate food or housing.
Following a 10-day bench trial in September 2018, U.S. District Judge Claudia Wilken found that the student-athlete compensation limits enacted through the NCAA’s legislative process constitute an agreement in restraint of trade in violation of Section 1 of the Sherman Act. Applying the rule of reason, Judge Wilken found that the NCAA’s prohibition on payment of education-related expenses in excess of tuition produces a significant anti-competitive effect on student-athlete compensation and has no redeeming procompetitive effect. Based on this finding, Judge Wilken issued a permanent injunction prohibiting the NCAA from agreeing to restrain certain student-athlete compensation including, among other things: equipment related to the pursuit of academic studies, post-eligibility scholarships for undergraduate or graduate studies, tutoring, study-abroad expenses, scholarships for vocational school, and paid post-eligibility internships. Judge Wilken, however, did not provide a complete victory to plaintiffs. Citing the Ninth Circuit’s earlier opinion addressing the NCAA rules restricting student-athletes’ use of their names, images, and likenesses, O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir. 2015), the court upheld the NCAA’s prohibition on cash payments and other non-education related compensation, finding that those prohibitions had a procompetitive effect, namely maintaining consumer demand for amateur sports as a distinct product from professional sports.
In his order granting plaintiffs’ motion for attorney fees and costs in part, Judge Cousins characterized this result as “a historic outcome resulting in the college athletes’ opportunity to each receive tens of thousands of dollars in benefits and awards each year.” Judge Cousins noted that the outcome was the culmination of five years of litigation and over fifty thousand hours in attorney and staff time. Excluding minor reductions and offsets for, among other things, vague billing entries, Judge Cousins largely accepted plaintiffs’ lodestar amount (the hourly rate multiplied by the number of hours) as reasonable.
Notwithstanding plaintiffs’ success on the merits, however, Judge Cousins denied plaintiffs’ request for a 1.5x multiplier of the lodestar figure. Judge Cousins first noted that plaintiffs were not successful on all of their claims. More importantly, while Judge Cousins acknowledged the complexity of the antitrust issues at stake in the case, and the expert level of representation provided by counsel, he found that the quality of representation and complexity of the issues were “already reflected in Plaintiffs’ counsels’ hourly rates and the number of hours billed.” Accordingly, Judge Cousins found no exceptional circumstances justifying a departure from the lodestar figure.
Mandatory fee awards for prevailing plaintiffs under the Clayton Act already provide a substantial incentive for private citizens to enforce antitrust laws. Judge Cousins’ opinion is significant in recognizing that, notwithstanding the importance of the case, the financial risks taken by plaintiffs’ counsel, and their skill and efforts in achieving a favorable result, awarding a multiplier over actual fees and costs is justified only in exceptional circumstances. This opinion provides a useful guidepost for a rigorous approach to a fee petition.
Both parties have appealed the district court’s underlying ruling. Oral argument in the Ninth Circuit is scheduled for the second week of March 2020.