Despite signaling disapproval last month with key settlement terms—especially regarding regulation of name, image and likeness (NIL) deals connected to boosters and collectives—U.S. District Judge Claudia Wilken on Monday preliminarily approved a multibillion-dollar settlement to resolve the House, Carter and Hubbard antitrust litigations.
It is rare for a federal district judge to deny preliminary approval of a class action antitrust settlement, but as recently shown in litigation involving UFC fighters, rare isn’t never.
But rare is still rare.
In a 10-page order, Wilken concluded, on a preliminary basis only, the settlement complies with the requirements of Federal Rule of Civil Procedure 23 that the agreement be fair, reasonable and adequate.
During a hearing on Sept. 5, Wilken signaled she wasn’t inclined to grant approval unless the parties made changes to several provisions. On Sept. 26, the plaintiffs’ attorneys submitted a revised settlement that most notably contained softened language regarding restrictions on NIL deals. The changes were enough to persuade Wilken to move forward to the next phase of the approval process.
Class members, who (though it varies by settlement classes), are D-I athletes who played at some point since June 15, 2016. To varying degrees based on which sport they played, with football players expected to receive the bulk of the money, athletes will be compensated for lost opportunities to earn compensation via NIL, video games and broadcasts. The settlement also reimagines college sports as a pro sports system, with member schools being able to elect to join a pay-for-play model wherein colleges pay athletes, subject to an annual salary-cap-style limit, for media rights, ticket sales sponsorships and NIL.
Settlement members will be notified, including by postcards, about their potential benefits and rights under the settlement terms. They will be able to request exclusion from its terms by Jan. 31, 2025. Athletes who opt out will retain their antitrust claims against the NCAA and power conferences and could commence litigation. Whether an athlete remains in the class or opts out, they preserve claims under other areas of law, including labor, employment and Title IX laws. Also, the settlement is structured so that if there are numerous opt-outs, the settlement will be terminated; obviously, the NCAA doesn’t want to strike a deal and then face numerous other antitrust lawsuits.
The granting of preliminary approval is a significant advancement of the settlement, but should not be conflated with final approval, which is a separate and potentially much more contentious process. There are other possible complications ahead, including settlement members and other impacted parties petitioning the U.S. Court of Appeals for the Ninth Circuit or eventually the U.S. Supreme Court to intervene. Houston Christian University has already attempted to block the settlement by petitioning the Ninth Circuit. Last week, a group of athletes, including a high school football star, objected, and there is separate antitrust litigation brought by players in a Colorado federal court.
As part of the final approval process, Wilken has scheduled a fairness hearing for Apr. 7, 2025. During the hearing, she’ll hear from athletes, schools and conferences who object to the settlement or otherwise wish to express concerns. Objectors can speak at this hearing and submit written comments.
If there are many objections and if they raise persuasive points, Wilken could deny final approval and urge the parties to make changes, with the cases returning to the docket a possibility. For a previous example of such a process, look no further than a 2010s settlement involving Google and authors that dragged on for years because of objections, including over the dramatic impact the settlement would have in reshaping the industry for digitized books. The settlement ultimately collapsed, and the case went to trial.
“We are thrilled by Judge Wilken’s decision to give preliminary approval to the landmark settlement that will help bring stability and sustainability to college athletics while delivering increased benefits to student-athletes for years to come,” NCAA president Charlie Baker said in a statement. “Today’s progress is a significant step in writing the next chapter for the future of college sports. We look forward to working with all of Division I, and especially student-athlete leadership groups to chart the path forward and drive historic change.”
For the NCAA and the plaintiffs’ attorneys, Monday is a positive development but is by no means represents the crossing of the finish lines. There are still miles to go on that front.
(This story has been updated to include NCAA president Charlie Baker’s statement and details on the revised House settlement.)
