As we have written previously, on May 23, 2024, the NCAA and the “power-five” conferences reached a groundbreaking settlement in a class action lawsuit pertaining to three antitrust cases – House v. NCAA, Carter v. NCAA, and Hubbard v. NCAA. As agreed by the parties, the settlement would alter the landscape of collegiate athletics by allowing colleges and universities to pay student-athletes directly. A key caveat, however, was whether the terms of the proposed settlement would be approved by the presiding judge, U.S. District Court Judge Claudia Wilken. Judge Wilken’s approval is required for the settlement to go into effect.
On September 5, attorneys for the parties met with Judge Wilken to discuss the proposed settlement terms. At the hearing, Judge Wilken made clear that she would not grant preliminary approval of the settlement unless the parties made certain modifications, particularly with respect to name, image and likeness (“NIL”), boosters and NIL collectives.
Judge Wilken voiced concerns about how the settlement distinguishes traditional NIL deals from “pay-for-play” deals, and questioned why the NCAA would authorize pay-for-play-like contracts (in which schools are allowed to pay student-athletes directly, subject to an annual salary cap), while simultaneously continuing to police NIL deals with certain restraints (including disclosure obligations). The parties had until September 26th to submit a revised proposed settlement.
On September 26th, the parties proposed a revised settlement in an attempt to assuage Judge Wilken’s concerns. The parties hope to convince Judge Wilken that the NCAA’s authority to enforce pay-for-play rules will not be expanded by this settlement, and that the settlement will not restrain the marketplace for student-athletes, including with boosters and NIL collectives.
After reviewing the revised proposed settlement, Judge Wilken will decide whether to grant preliminary approval of the settlement as amended, or to hold another hearing. If Judge Wilken grants preliminary approval, this is not the end of the story. She will also need to grant final approval, prior to which she will hold a fairness hearing where the parties will be able to voice additional concerns. If the settlement does receive final approval, there is also a chance that it will be challenged at the U.S. Court of Appeals for the Ninth Circuit, thus delaying enforcement of the settlement even further.