• Appeal ruling this week seen hurting bid to lift all pay caps
  • Next case comes before judge who earlier ruled for athletes

College athletes are heading back to court in pursuit of pay for play one day after a major setback in their quest for a larger share of the multibillion-dollar industry.

A time-out might help.

The next match over compensation for student athletes is set for Thursday before the same judge whose 2014 ruling siding with them was pared back Wednesday by the U.S. Court of Appeals in San Francisco.

Labor lawyer Jeff Kessler, who helped win free agency for National Football League players, is seeking to lift all National Collegiate Athletic Association limits on compensation for Division I athletes in a case most legal experts deem to be the biggest threat to the college amateur model. The antitrust suit, if successful, could lead to bidding wars for high-school talent.

Wednesday’s appeals court decision endorsed the NCAA’s practice, begun Aug. 1, of allowing member schools to give student athletes stipends -- typically $3,000 to $7,000 a year -- to meet the total cost of attendance. Before that, the NCAA’s rules permitted payments to players only for tuition, room, board, books and fees.

The ruling “is a terrible precedent” for Kessler’s case, said Stephen Ross, a law professor at Pennsylvania State University and director of its sports law institute. The three-judge panel’s majority opinion found it “self-evident” that having colleges paying athletes more than education costs was inconsistent with amateurism.

Attendance Costs

Tyrone Thomas, a Washington lawyer who advises colleges in NCAA cases, said the appeals court ruling doesn’t bode well for eliminating pay caps entirely.

“Does it close the book on Kessler? No,” Thomas said. “But it’s absolutely a strengthening factor for the NCAA.”

On Thursday, the lead athletes in Kessler’s case are scheduled to ask U.S. District Judge Claudia Wilken in Oakland, California, to let them proceed on behalf of tens of thousands of other students as they press for a ruling that the caps on financial aid violate antitrust law. Class-action status would give students who couldn’t afford to sue individually a stake in the outcome. The NCAA opposes letting more athletes join the case.

If the case goes to a trial, it hasn’t been resolved whether it would be before Wilken or in New Jersey federal court where the lawsuit was filed.

Ultimate Relief

William Gould, a Stanford University law professor who specializes in sports antitrust issues, said he doesn’t think Wednesday’s ruling “has much or any bearing on” Kessler’s case, which he said is really about whether caps violate antitrust laws. The appeals court’s decision may affect what “ultimate relief” the athletes get, he said.

Some former student athletes may benefit from Wednesday’s ruling in a third case before Wilken. The judge is being asked to award damages to past competitors for the gap between capped scholarships they received and the actual cost of school attendance, estimated to be $3,000 to $4,000 a year for each, according to Steve Berman, a lawyer for the athletes.

Potential Damages

For about 21,000 male and female student athletes who the lawyers seek to represent, potential damages for the period from 2010 to 2015 range from $283 million to $378 million, Berman said. The amount awarded could be tripled under antitrust law.

Berman said Wednesday’s ruling will help in his push to secure court-ordered full attendance compensation for top-tier women basketball players using the same rationale that the appeals court applied to male athletes. He said the ruling should boost his effort to win damages for athletes who were denied full attendance costs in the past.

Kessler previously referred inquiries about his case to Berman and wasn’t available to comment on Wednesday’s ruling.

The case is In re NCAA Athletic Grant-in-Aid Cap Antitrust Litigation, 14-cv-02758, U.S. District Court, Northern District of California (Oakland). The appeals court case is O’Bannon v. National Collegiate Athletic Association, 14-17068, U.S. Court of Appeals for the Ninth Circuit (San Francisco).

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