The National Collegiate Athletic Association (NCAA), which brings in nearly $1 billion a year in revenue, faces increasing scrutiny of its business model in the media and in courts. Administrators, athletic directors, and coaches are handsomely paid, but players can earn no income beyond academic scholarships and stipends. Advocates argue that athletes are the economic driving force behind the lucrative college sports industry and should be allotted some piece of the profits. In Berger v. Nat’l Collegiate Athletic Ass’n, the latest case seeking to translate this claim into a cognizable legal theory, three University of Pennsylvania (Penn) women’s track and field athletes brought suit against their university and the NCAA. Plaintiffs’ alleged they were employees, not student-athletes, and thus entitled to minimum wage under the Fair Labor Standards Act (FLSA). But on February 16, 2016, the Southern District of Illinois dismissed their suit with prejudice. No. 1:14-CV-1710-WTL-MJD, 2016 WL 614365.
This post will explore why the plaintiffs’ claims in Berger fell short and attempt to lay the groundwork for a similar FLSA suit that might have a greater chance of success.
Why the Berger Plaintiffs Did Not Qualify as Employees
The Court in Berger held that the fact that plaintiffs participated in an NCAA athletic team at Penn did not make them employees of Penn for FLSA purposes. It derived this conclusion from two points of analysis, the Department of Labor’s position on the issue and the Seventh Circuit test for employment under the FLSA. The test for who qualifies as an employee is a flexible one that looks to all the circumstances of the work activity to determine the economic reality of the relationship. Berger, No. 1:14-CV-1710-WTL-MJD, 2016 WL 614365, at *9.
The District Court’s found that the DOL offered implicit acceptance of the view that student-athletes are not employees by never pursing an FLSA claim on behalf of student athletes. And it offered explicit support of this position in a Wage and Hour Division Field Operations Handbook, which states:
“Activities of students in [athletic programs], conducted primarily for the benefit of the participants as part of the educational opportunities provided to the students… do not result in an employee–employer relationship.”
10b03(e) (Oct. 20, 1993). Berger, No. 1:14-CV-1710-WTL-MJD, 2016 WL 614365, at *10.
In its examination of the “economic reality” of the relationship between plaintiffs and Penn, the District Court noted that the Supreme Court recognized a “revered tradition of amateurism in college sports,” National Collegiate Athletic Ass’n v. Board of Regents of Univ. of Okla., 468 U.S. 85, 120 (1984), and that the tradition is an essential part of the relationship. Further, it reasoned that because generations of students have and continue to compete to be part of such a tradition, the students at Penn who participate in sports do so because they view it as beneficial enough to justify the effort they require. Berger, No. 1:14-CV-1710-WTL-MJD, 2016 WL 614365, at *9. The Court noted that the benefits of amateur sports by definition exclude monetary compensation. Id.
A Narrow Path Forward
Berger is yet another indication that advocates will need to be creative to convince a court to question the NCAA’s student-athlete framework. But it also hints at what it would take to build a successful FLSA suit. The plaintiffs in Berger originally brought suit against every university with a Division I athletics program and the NCAA. During the course of the suit, the District Court dismissed the claims against every university other than Penn, holding that plaintiffs failed to allege they could be employees of any other defendant. Berger, No. 1:14-CV-1710-WTL-MJD, 2016 WL 614365, at *2. This suggests future plaintiffs will likely have to shrink their ambitions, as it will be difficult to establish an employer-employee relationship with more than one university. This puts a premium on choosing the right plaintiff who could effectively make the two arguments discussed in the Berger opinion.
Economic Reality and the DOL’s Position
The original plaintiff in Berger was Samantha Sackos, a former University of Houston soccer player, who sought to pursue her claims on behalf of all student athletes in the NCAA’s Division I. Sackos was later replaced by the three aforementioned Penn track and field athletes. In both cases, plaintiffs were athletes in programs that do not produce a significant profit for their universities. Department of Education data shows that the University of Houston womens’ sports, excluding basketball, operated with a net profit of exactly $0; womens’ athletics at Penn, excluding basketball, netted around $75,000. (Unfortunately, the Department of Education does not break out specific statistics for either women’s soccer or track and field.)
The profitability of an institution’s athletic programs matter because it can lend credence to the argument that the college athletics programs are run as and should be treated as businesses. Establishing an employment relationship under the FLSA would require meeting both the DOL’s primary benefit test and the Seventh Circuit economic reality test. A demonstration that the presumed academic benefit conferred to college athletes is not as great as courts have assumed would strengthen the argument that the benefit to the university far exceeded the benefit to the athlete. Likewise, a record of consistent profitability combined with lackluster academic achievement for athletes could help demonstrate that the focus of the relationship between athletes and their university is not as much academic as it is the generation of revenue from athletic programs.
This could most easily be done by choosing a plaintiff who participated in a profitable sport (likely men’s football or basketball) at a university with a prominent athletics program. To further maximize the suits’ chances, the plaintiff might be selected from a university whose program was recently sanctioned by the NCAA for academic violations. Athletes in the men’s basketball program at Syracuse University, which produced a profit of $16 million (sure to be higher this year, which saw a lucrative trip to the Final Four) while simultaneously being sanctioned for serious academic fraud come to mind as an example of potentially strong plaintiffs.
Plaintiffs must also contest the District Court’s assumption that the tradition of amateurism in college sports is an essential part of the economic reality of college athletics. Data suggesting the increasing commercialization of college athletics could help rebut this assumption. A study by Ryan Brewer of Indiana University-Purdue University valuing college football programs found that the top nine football programs were all worth over a half a billion dollars each. If Individual men’s basketball players could receive compensation in a free market system, some would be worth as much as $1.7 million. These numbers could help to establish an overall climate of professionalization and increasing profits that might dispel with the fiction of amateurism.
A suit against a single university would not establish employee status for all college athletes. Indeed, even a successful suit would leave open the question of whether athletes are employees at every university, or only under the right circumstances. Regardless, proceeding with the strongest available case would send universities and the NCAA a signal that they should consider changing the way student-athletes are treated before courts force them to.