NCAA Faces Legal Push Led by Litigator With Tobacco StashPatrick G. Lee
The National Collegiate Athletic Association is expected as early as April to reach an agreement to boost safeguards for athletes who get concussions while playing college sports.
Driving the deal is 59-year-old Seattle lawyer Steve Berman, a onetime college soccer goalie who has brought successful group actions against Big Tobacco, Enron Corp. and Toyota Motor Corp.
Berman has been negotiating since November on a settlement that would create a medical monitoring fund for college athletes who suffered concussions and put stricter guidelines on sending them back into action. Such a deal, which Berman said he expects to make final by an April 24 court hearing, would mark a broadening of concerns over sports head injuries after former professional players struck a $914 million concussions pact with the National Football League in August.
NCAA lawyer Sean Berkowitz, a partner at Latham & Watkins LLP, declined to comment on the case’s status. The NCAA already has sufficient guidelines in place to ensure athletes’ safety, chief legal officer Donald Remy said in an e-mailed statement.
The lawsuit puts Berman at the lead of an effort that could rebalance the relationship between athletes and the Indianapolis-based NCAA, which reported $841.1 million in revenue in the fiscal year ending in August 2012. His firm, Hagens Berman Sobol Shapiro LLP, is also leading three lawsuits against the NCAA that seek to increase athletes’ control over their finances, including one that seeks money for those whose likenesses appeared without their permission in video games.
“The courts are increasingly subjecting the NCAA to the same type of scrutiny that other enterprises and businesses are subject to,” said Jeff Kessler, a sports lawyer at Winston & Strawn LLP who has represented players’ associations in North American pro football, baseball, basketball and hockey. “It’s a big challenge for the NCAA and how it’s going to develop.”
The NCAA lets students receive money for room, board, books, tuition and fees, but not for athletic appearances. It has always held that amateurism is vital to a system in which the priority is education. Several university presidents and athletic directors have argued that football and men’s basketball programs, which will generate $16.3 billion in television contracts that have been announced through about 2025, help subsidize others like track and baseball. Allowing payments to certain athletes for the use of their likenesses would professionalize those players to the detriment of others, Remy said in the statement.
Hagens Berman’s latest suit against the NCAA, filed March 5 in San Francisco, alleges that the association and five regional football conferences conspired to cap the value of “full” scholarships at several thousand dollars below the actual cost of attendance to control costs. The NCAA said it is still reviewing the complaint.
Berman, who attended his hometown’s University of Chicago Law School, co-founded Hagens Berman in 1993 as a 10-lawyer firm. As managing partner, he soon secured a role helping devise a $206 billion settlement for 46 states against cigarette makers. The next decade, he helped recover more than $260 million for Enron employees who claimed the company had mishandled their retirement savings. Last year, he co-led negotiations that resulted in a $1.63 billion agreement over alleged sudden acceleration in some Toyotas.
Berman’s firm, which has grown to include 80 attorneys in nine offices, is currently representing plaintiffs in what is potentially an $840 million group suit alleging that Apple Inc. conspired with publishers to inflate electronic-book prices. It filed suit earlier this year over Target Corp.’s recent loss of as many as 110 million customers’ personal information and payment data. Apple and Target declined to comment.
Berman started looking into head injuries among college athletes in 2011, he said, after reading about a concussion complaint pending against the NFL. He e-mailed lawyers at the firm seeking leads on potential plaintiffs for a case against the NCAA, which he filed in Chicago in September that same year. He has since pitched in on reviewing several thousand documents, interviewing experts and drafting briefs.
College players have little influence on the body that oversees them and the regulations it imposes, said Berman, who is co-leading the concussion negotiations with Chicago firm Siprut PC. “These kids are more vulnerable,” he said. “They’re more impressionable. They don’t have a union that’s fighting for them. They don’t have a collective bargaining agreement.”
At times, he has approached his work like a protective father. Berman’s 13-year-old daughter, a soccer player who aspires to be on a college team, got what he thought was a concussion about a year ago.
“I told her, ’You can’t go to practice and you can’t play this weekend.’ She went ballistic on me,” said Berman, who recalls getting a concussion himself when he played Division I soccer at the University of Michigan. “We compromised and she agreed not to head the ball during the game. Here I am leading this goddamn case and I just caved in to my daughter.”
Berman said he expects a settlement would require the NCAA to institute specific requirements for how schools manage athletes’ concussions. Players need stricter rules to keep them from playing too soon after a head blow because they are loath to pull themselves from a game, he said. Berman’s suit recently had several similar ones consolidated with it in Chicago.
Another of Berman’s NCAA matters, filed in Oakland, California, on behalf of former Arizona State University college quarterback Sam Keller, claims that athletes whose likenesses were used in video games deserve payment under states’ right of publicity laws.
A federal judge combined the Keller complaint with a broader antitrust action lodged by former University of California at Los Angeles basketball player Ed O’Bannon. The suit aims to overturn the NCAA’s allegedly unlawful prohibition on college players profiting from their names, images and likenesses. Trial on the O’Bannon antitrust claims -- which, if upheld, would potentially enable athletes to negotiate licensing deals directly with television networks, videogame makers and apparel companies -- is set for June.
The other two defendants in both likeness lawsuits -- trademark licensing group Collegiate Licensing Co. and videogame developer Electronic Arts Inc. -- have announced they will settle for $40 million, with Berman helping to determine the final terms.
Hagens Berman is also mounting two challenges to the NCAA’s scholarship policies. One suit challenges the caps the NCAA places on the number of football scholarships that Division I schools can award each year. The limits ensure that athletes at these top programs “receive tens of millions less for their labor” than if schools offered scholarships in a competitive market, according to the complaint filed in Indianapolis.
NCAA attorney Remy said in the statement that the “NCAA’s rules are, in fact, good for student-athletes and competition.”
The suit filed this week by Hagens Berman on behalf of players in several football conferences aims to overturn the NCAA’s restriction on the value of athletes’ financial aid, which doesn’t cover living expenses like food, laundry and travel home. Given that Division I football is a “highly competitive marketplace,” scholarships would “rise to at least cover the full cost of attendance, and likely much more” but for NCAA rules, according to the complaint.
$5 Million Tab
The players seek damages from the NCAA and the Atlantic Coast, Big Ten, Big 12, Pac-12 and Southeastern conferences for conspiring to enforce such limits, which they allege violate antitrust law.
The NCAA is evaluating the complaint “as it relates to similar cases filed by the very same plaintiffs’ counsel,” Remy said March 5 in an e-mailed statement. Representatives of the conferences declined to comment.
Berman estimates that the 2 1/2-year-old concussions lawsuit has cost his firm about $5 million in attorney time and $600,000 in fees for experts, depositions, document discovery and travel.
The firm covers such expenses with payouts from previous victories. Berman said he put $10 million of last year’s revenue into the firm’s 2014 pool for group suits. More will come from the firm’s share of the $200 million in fees from the Toyota deal, the second-largest non-bankruptcy award approved last year, according to the National Association of Legal Fee Analysis.