Court to take on student-athlete compensation, class action cases
on Dec 16, 2020 at 1:32 pm
The justices on Wednesday added three new cases, for a total of two hours of argument time, to their list of cases slated for oral argument this term. The announcement that the justices would tackle significant issues relating to antitrust protection for the National Collegiate Athletic Association and class-action lawsuits came just two days after the justices released their second set of orders from their private conference on Dec. 11. The move resembled a similar set of orders at this time last year, allowing the justices to continue fill out their docket for the second half of the term without having to wait for their next regularly scheduled conference on Jan. 8.
The Supreme Court agreed to wade into the controversial issue of compensation for college athletes, granting National Collegiate Athletic Association v. Alston and American Athletic Conference v. Alston. Over 35 years ago, the Supreme Court indicated in NCAA v. Board of Regents that rules regarding eligibility standards for college athletes are subject to a different and less stringent analysis than most antitrust cases. But earlier this year, the U.S. Court of Appeals for the 9th Circuit ruled, in a case brought by Division 1 football and basketball players, that the NCAA’s limits on providing education-related benefits – such as computers, science equipment, post-graduate scholarships and internships – violate federal antitrust laws.
The NCAA (along with 11 major athletic conferences) came to the Supreme Court in October, asking the justices to review that decision. The NCAA told the justices that, if allowed to stand, the 9th Circuit’s ruling “will fundamentally transform the century-old institution of NCAA sports, blurring the traditional line between college and professional athletes.”
The athletes urged the justices to stay out of the dispute, arguing that what the NCAA and the schools are really seeking is antitrust immunity. But Congress, they contended, has not only declined to provide such a shield, but it is currently considering whether to “roll back” limits on athlete compensation, “recognizing the profound inequity of a system that enables conference executives, athletic directors, coaches, schools, television networks, and a host of others to make billions of dollars on the backs of young, often underprivileged players.”
The justices on Wednesday morning granted the petitions filed by both the NCAA and the athletic conferences, consolidated the two cases for one hour of oral argument.
The Supreme Court also granted a petition filed by credit-reporting giant TransUnion, which had asked it to weigh in on issues related to class actions and punitive damages. The case, TransUnion v. Ramirez, arose when Sergio Ramirez went to a Nissan dealership with his wife and father-in-law to buy a car, but a credit report indicated that Ramirez’s name matched a name on the list, maintained by the Treasury Department’s Office of Foreign Assets Control, of people with whom U.S. companies cannot do business. Ramirez and his wife still bought a car that day, but they did it only in her name. TransUnion eventually removed the OFAC alert from any future credit reports that might be requested by or for Ramirez, but – out of an abundance of caution – Ramirez canceled a planned trip to Mexico.
Ramirez then went to federal court, alleging that TransUnion’s actions violated the Fair Credit Reporting Act. The district court certified the case as a class action that included everyone who had received a letter from TransUnion, during a six-month period, indicating that their name was a “potential match” for one on the OFAC list. Only a fraction of those class members had their credit reports sent to a third party.
The jury awarded each class member nearly $1,000 for violations of the FCRA and over $6,000 in punitive damages, bringing the total verdict to more than $60 million. On appeal, the 9th Circuit upheld the statutory damages but reduced the punitive damages to roughly $32 million.
TransUnion came to the Supreme Court this fall, asking the justices to weigh in on two questions. The first is whether either the Constitution or the federal rules governing class actions allow the case to go forward when most class members were not harmed at all, and any harm that they did suffer was nothing like Ramirez’s. The second is whether the $32 million punitive damages award was so large in comparison with the damages for the violation of the FCRA that it violates the Constitution. The justices agreed to hear the first question, but declined to take up the punitive damages issue.
The cases granted Wednesday will likely be argued in the spring, with decisions to follow by summer.
This post was originally published at Howe on the Court.