ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION (Docket No. 651)
CLAUDIA WILKEN, District Judge.
Plaintiffs, a group of current and former college athletes, move for class certification to pursue their antitrust claims against Defendant National Collegiate Athletic Association (NCAA).
BACKGROUND
The procedural history and factual background of this case are described at length in the Court's order denying the NCAA's motion to dismiss. Docket No. 876, at 1-7. Accordingly, this order provides only the background necessary to resolve the instant motion.
Plaintiffs are twenty-five current and former student-athletes who played for NCAA Division I men's football and basketball teams between 1953 and the present. Docket No. 832, Third Consol. Class Action Compl. (3CAC) ¶¶ 25-233. Four of these Plaintiffs (Right-of-Publicity Plaintiffs) allege that the NCAA misappropriated their names, images, and likenesses in violation of their statutory and common law rights of publicity. The other twenty-one Plaintiffs (Antitrust Plaintiffs) allege that the NCAA violated federal antitrust law by conspiring with EA and CLC to restrain competition in the market for the commercial use of their names, images, and likenesses. In the pending motion, Antitrust Plaintiffs
Plaintiffs' antitrust claims arise from the NCAA's written and unwritten rules, which allegedly prohibit student-athletes from receiving compensation for the commercial use of their names, images, and likenesses. 3CAC ¶¶ 12-15. According to the 3CAC, these rules preclude student-athletes from entering into group licensing arrangements with videogame developers and broadcasters for the use of their names, likenesses, and images. Plaintiffs allege that these rules restrain competition in "two relevant markets: (a) the student-athlete Division I college education market in the United States (the `education market'); and (b) the market for the acquisition of group licensing rights for the use of student-athletes' names, images, and likenesses in the broadcasts or rebroadcasts of Division I basketball and football games and in videogames featuring Division I basketball and football in the United States (the `group licensing market')."
Plaintiffs seek monetary damages to compensate them for the financial losses they claim to have suffered as a result of the NCAA's alleged plan to fix at zero the price of student-athletes' group licensing rights in videogames and game broadcasts. In addition, Plaintiffs seek to enjoin the NCAA from restraining competition in the group licensing market for student-athletes' name, image, and likeness rights in the future.
LEGAL STANDARD
Plaintiffs seeking to represent a class must satisfy the threshold requirements of Rule 23(a) as well as the requirements for certification under one of the subsections of Rule 23(b). Rule 23(a) provides that a case is appropriate for certification as a class action if
Fed. R. Civ. P. 23(a).
Plaintiffs must also establish that one of the subsections of Rule 23(b) is met. In the instant case, Plaintiffs seek certification under subsections (b)(2) and (b)(3).
Rule 23(b)(2) applies where "the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole." Fed. R. Civ. Proc. 23(b)(2).
Rule 23(b)(3) permits certification where common questions of law and fact "predominate over any questions affecting only individual members" and class resolution is "superior to other available methods for the fair and efficient adjudication of the controversy." Fed. R. Civ. P. 23(b)(3). These requirements are intended "to cover cases `in which a class action would achieve economies of time, effort, and expense . . . without sacrificing procedural fairness or bringing about other undesirable results.'"
Regardless of what type of class the plaintiff seeks to certify, it must demonstrate that each element of Rule 23 is satisfied; a district court may certify a class only if it determines that the plaintiff has borne this burden.
DISCUSSION
Plaintiffs seek to certify a class to pursue injunctive relief under Rule 23(b)(2) and a subclass to pursue monetary damages under Rule 23(b)(3). The proposed Injunctive Relief Class is defined as follows:
Docket No. 651, Mot. Class Cert., at 2. This class shall not include any officers, directors, or employees of the NCAA nor of any Division I colleges, universities, or athletic conferences.
The proposed Damages Subclass is defined as follows:
For reasons explained more fully below, the Court certifies the Injunctive Relief Class but declines to certify the Damages Subclass for failure to satisfy the requirements of Rule 23(b)(3).
I. Rule 23(a) Requirements
A. Numerosity
Plaintiffs assert that the Injunctive Relief Class and the Damages Subclass each contain several thousand potential class members. The NCAA does not dispute that these classes are sufficiently large to satisfy the numerosity prerequisite. Accordingly, Plaintiffs have met this requirement.
B. Commonality
Rule 23 contains two related commonality provisions. Rule 23(a)(2) requires that there be "questions of law or fact common to the class." Rule 23(b)(3), in turn, requires that these common questions predominate over individual ones. This section addresses only whether Plaintiffs have satisfied Rule 23(a)(2)'s requirements, which are "less rigorous than the companion requirements of Rule 23(b)(3)."
The Ninth Circuit has made clear that Rule 23(a)(2) may be satisfied even if fewer than all legal and factual questions are common to the class.
Plaintiffs have satisfied this requirement with respect to both the Injunctive Relief Class and Damages Subclass. They have identified several common questions of law and fact that must be resolved to determine whether the NCAA violated federal antitrust law. These questions include: the size of the "education" and "group licensing" markets identified in the complaint; whether NCAA rules have harmed competition in those markets; and whether the NCAA's procompetitive justifications for its conduct are legitimate. These types of questions, all of which may be resolved by class-wide proof and argument, are typically sufficient to satisfy commonality in antitrust class actions.
Although the NCAA notes that some of the "common" questions that Plaintiffs identify in their brief — such as certain damage-related questions — are not actually amenable to class-wide proof, this is not sufficient to defeat commonality. As noted above, "all that Rule 23(a)(2) requires is `a single
C. Typicality
Rule 23(a)(3) requires that the "claims or defenses of the representative parties [be] typical of the claims or defenses of the class." Thus, every "class representative must be part of the class and possess the same interest and suffer the same injury as the class members."
In this case, the named Plaintiffs' interests are closely aligned with those of absent class members. All of the named Plaintiffs play or played for a Division I men's football or basketball team; all were depicted, without their consent and without payment, in videogames or game broadcasts; and all complied with NCAA rules that allegedly barred them from selling or licensing the rights to their names, images, and likenesses. These characteristics are common to every putative class member and form the basis for the antitrust injuries that Plaintiffs assert in this case. In antitrust cases, this uniformity of class members' injuries, claims, and legal theory is typically sufficient to satisfy Rule 23(a)(3).
The NCAA has not identified any defense that applies uniquely to the named Plaintiffs nor any other barrier to Rule 23(a)(3) typicality. In fact, it fails to cite, let alone discuss, Rule 23(a)(3) in either of its briefs.
D. Adequacy
Rule 23(a)(4) establishes as a prerequisite for class certification that "the representative parties will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). Rule 23(g)(2) imposes a similar adequacy requirement on class counsel. "Resolution of two questions determines legal adequacy: (1) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?"
The NCAA contends that there are conflicts of interest among class members that preclude class certification here. It points specifically to the fact that, in an unrestrained market for publicity rights, some putative class members — such as star athletes — would command a higher price for their name, image, and likeness rights than others. According to the NCAA, if Plaintiffs were to prevail in this case, those high-value class members would be entitled to a larger share of damages than others because they would have suffered greater economic losses from the NCAA's ban on student-athlete compensation. Yet, Plaintiffs' proposed model for allocating damages fails to account for these differences between class members. Instead, Plaintiffs' model proposes that damages be allocated equally among the members of every football and basketball team. Plaintiffs' expert, Dr. Roger Noll, describes the process as follows:
First, the supposed intra-class conflict that the NCAA has identified here is illusory. Although it is true that class members' publicity rights vary widely in value, it does not necessarily follow that a model of equal sharing among team members would inevitably create a conflict of interest. As noted above, Plaintiffs allege harm to competition within a
Courts have highlighted this distinction in other cases where plaintiffs sought class certification to pursue claims based on group licensing rights. In
Even if Plaintiffs' method of allocating damages did create such a conflict, this would not be sufficient to prevent class certification. The Ninth Circuit has made clear that "damage calculations alone cannot defeat certification" and the "potential existence of individualized damage assessments . . . does not detract from the action's suitability for class certification."
Finally, to the extent that Plaintiffs' damages model did create the potential for any conflicts of interest, those conflicts would only affect class members seeking
Plaintiffs have therefore satisfied all of the Rule 23(a) requirements with respect to both the Injunctive Relief Class and the Damages Subclass.
II. Rule 23(b) Requirements
A. Rule 23(b)(2): Injunctive Relief Class
A court may grant certification under Rule 23(b)(2) "if class members complain of a pattern or practice that is generally applicable to the class as a whole. Even if some class members have not been injured by the challenged practice, a class may nevertheless be appropriate."
Here, the NCAA contends that certification under Rule 23(b)(2) is inappropriate because Plaintiffs' "demand for damages predominates over any request for injunctive relief" and "`individualized monetary claims belong in Rule 23(b)(3)'" rather than Rule 23(b)(2). Docket No. 677, NCAA Opp. Class Cert., at 21-22 (citing
With respect to the Rule 23(b)(2) class, Plaintiffs seek certification to pursue an injunction barring the NCAA from prohibiting current and former student-athletes from entering into group licensing deals for the use of their names, images, and likenesses in videogames and game broadcasts. Their request for this injunction is not merely ancillary to their demand for damages. Rather, it is deemed necessary to eliminate the restraints that the NCAA has allegedly imposed on competition in the relevant markets. Without the requested injunctive relief, all class members — including both current and former student-athletes — would potentially be subject to ongoing antitrust harms resulting from the continued unauthorized use of their names, images, and likenesses. Because an injunction would offer all class members "uniform relief" from this harm,
B. Rule 23(b)(3): Damages Subclass
To qualify for certification under Rule 23(b)(3), "a class must satisfy two conditions in addition to the Rule 23(a) prerequisites: common questions must `predominate over any questions affecting only individual members,' and class resolution must be `superior to other available methods for the fair and efficient adjudication of the controversy.'"
Plaintiffs have not presented sufficient evidence here to establish that certification is appropriate under Rule 23(b)(3). In particular, they have failed to satisfy the manageability requirement because they have not identified a feasible way to determine which members of the Damages Subclass were actually harmed by the NCAA's allegedly anticompetitive conduct. Courts have recognized that, in price-fixing cases such as this one, where the "fact of injury" cannot be determined by a "virtually mechanical task," class manageability problems frequently arise.
The first barrier to manageability here is the so-called "substitution effect," which stems from Dr. Noll's opening expert report on the economic impact of the NCAA's rules. As is customary in antitrust cases, Dr. Noll's report described how the relevant markets would be expected to function in the absence of the challenged restraints on competition — in this case, without the ban on student-athlete compensation.
Critically, however, Dr. Noll also notes that if these athletes had stayed in college — as they might have done if not for the alleged restraints on competition in the group licensing market — they would have displaced other student-athletes on their respective teams. Docket No. 683, Wierenga Decl., Ex. 4, Feb. 2013 R. Noll Depo., at 364:13-:24. Those displaced student-athletes would have either been forced to play for other Division I teams or simply lost the opportunity to play Division I basketball altogether. In either case, they would not have suffered injuries as members of the teams for which they actually played because, as Dr. Noll suggests, they would never have been able to play for those teams in the absence of the challenged restraints.
Plaintiffs have not proposed any method for addressing this substitution effect among individual student-athletes. Nor have they proposed any method for addressing the related substitution effect among Division I schools. One of Plaintiffs' central contentions in this case is that, without the ban on student-athlete pay, competition among Division I schools for student-athletes would increase substantially. That increased competition for student-athletes, combined with the potentially higher costs of recruiting and retaining those student-athletes, would have likely driven some schools into less competitive divisions, thereby insulating entire teams from the specific harms that Plaintiffs allege in this suit. Wierenga Decl., Ex. 2, Expert Report of Daniel L. Rubinfeld, at ¶¶ 185-86. Plaintiffs have not provided a feasible method for determining which members of the Damages Subclass would still have played for Division I teams — and, thus, suffered the injuries alleged here — in the absence of the challenged restraints. This shortcoming likewise contributes to the impossibility of determining which class members were actually injured by the NCAA's alleged restraints on competition and, as such, precludes certification under Rule 23(b)(3).
Another barrier to manageability here is determining which student-athletes were actually depicted in videogames during the relevant class period and, thus, members of the Damages Subclass.
Plaintiffs have also failed to present a feasible method for determining on a class-wide basis which student-athletes appeared in game footage during the relevant period. Under Plaintiffs' proposed class definition, the only student-athletes who belong in the Damages Subclass are those who appeared in game footage licensed after July 21, 2005. Plaintiffs have not proposed a straightforward method for identifying this subset of student-athletes. Although they point to various third-party resources containing information such as team rosters, game summaries, televised game schedules, and broadcast licenses, they have not provided any formula for extracting the relevant information from each of these resources and using that information to identify putative subclass members. In particular, Plaintiffs have not explained how they would determine which of the student-athletes listed on team rosters actually appeared in televised games. Nor have they explained how they would determine which games were broadcast pursuant to licenses issued after July 21, 2005. Without a means of accomplishing these tasks on a class-wide basis, Plaintiffs would have to cross-check thousands of team rosters against thousands of game summaries and compare dozens of game schedules to dozens of broadcast licenses simply to determine who belongs in the Damages Subclass. This is not a workable system for identifying class members.
In light of these obstacles to manageability, class resolution does not provide a superior method for adjudicating this controversy. Accordingly, certification of the Damages Subclass under Rule 23(b)(3) is denied.
III. Evidentiary Objections
The NCAA's objections to the testimony of Plaintiffs' experts, Dr. Noll and Larry Gerbrandt, are overruled. Each of these witnesses offered relevant testimony regarding whether the question of antitrust liability can be resolved through class-wide proof and analysis and each witness based his opinions on a sufficiently reliable methodology. This is enough to satisfy Federal Rule of Evidence 702.
CONCLUSION
For the reasons set forth above, Plaintiffs' motion for class certification (Docket No. 651) is GRANTED in part and DENIED in part. The Court certifies the following class under Rule 23(b)(2):
Further, Antitrust Plaintiffs' attorneys are certified as class counsel.
The NCAA's motion for leave to file a supplemental memorandum regarding new evidence (Docket No. 881) is DENIED. The NCAA has not explained why it was unable to obtain and present this evidence during the extensive briefing on class certification. In addition, the NCAA's request to present this evidence is moot because the evidence pertains to the calculation and allocation of damages, which is no longer relevant in light of the Court's denial of class certification under Rule 23(b)(3).
Plaintiffs shall submit any dispositive motions, including any
IT IS SO ORDERED.
FootNotes
281 F.R.D. at 442-43.
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