The House v. NCAA Settlement Moves Forward After Objection Deadline—But Key Questions Remain About the Deal Poised to Redefine Collegiate Athletics

In advance of the April 7 hearing before US District Judge Claudia Wilken for consideration of final approval of the landmark agreement resolving claims against the NCAA relating to name, image, and likeness (“NIL”) rights—colloquially called the House settlement—interested parties recently filed over 20 objections and 60 letters reacting to the US$2.8 billion antitrust settlement. The objections come on the heels of a Statement of Interest filed by the Department of Justice in the final days of the Biden Administration expressing concern that the settlement amounts to an unlawful salary cap. It seems unlikely that the objections, which take issue with a range of settlement terms, from limits on roster spots to the formula for calculating back pay, will be enough to crater approval of the settlement. But Judge Wilken previously has required the parties to make changes to the settlement, such as to clarify language regarding restrictions on NIL deals, and could do so again.

Final approval of the House settlement would culminate five years of litigation. By compensating former players for the deprivation of their NIL rights and establishing a revenue-sharing framework between members schools and athletes, the settlement would usher in unprecedented and dramatic changes to the collegiate athletic landscape. To the extent they have not done so already, conferences and universities should prepare to implement the changes the settlement imposes, including by considering whether they need to identify new revenue streams and how to manage the disbursement of “Salary Cap” funds in compliance with the law. But House is an antitrust case, and its settlement is not a panacea. It leaves many questions unanswered. Among the open issues are whether NCAA athletes are employees under federal law and whether NIL payments should be treated as educational benefits subject to Title IX.

Background

The dispute began in June 2020, when Plaintiffs Grant House and Sedona Price filed a complaint asserting various antitrust and unjust-enrichment claims against the NCAA and five major conferences challenging rules that prevented college athletes from receiving compensation in exchange for the use of their NIL. Later that year, Plaintiff Tymir Oliver filed another class action challenging NCAA’s NIL restrictions; those cases were consolidated into In re College Athlete NIL Litig., No. 4:20-cv-03919 (N.D. Cal.). The court certified the classes in 2023.

Soon thereafter, Sedona Price and two other then-current college athletes—DeWayne Carter and Nya Harrison—filed a class action lawsuit challenging the NCAA’s rules barring payment for athletic services, contending those restraints violate the antitrust laws. Those claims were eventually consolidated into In re College Athlete NIL, as well.

The plaintiff classes requested the following relief: (1) actual damages according to proof at trial; (2) treble damages pursuant to federal antitrust laws, 15 U.S.C. § 15; (3) a declaratory injunction “declaring as void the NCAA’s Bylaws that operate to impose restrictions on the compensation Division I student-athletes can receive from the schools, conferences, and third parties for their NILs or athletic services and the NCAA’s Bylaws that operate to impose restrictions on the athletic scholarships available for student-athlete labor services by setting maximum numbers or amounts of scholarships that can be provided in each sport”; and (4) “an injunction restraining the NCAA and Conference Defendants from enforcing their unlawful and anticompetitive agreements to restrict the (a) compensation available to Division I student-athletes from the schools, conferences, or third parties for their services or NILs; and (b) athletic scholarships available to Division I student-athletes.” Third Consolidated Amended Class Action Complaint, In re College Athlete NIL Litig., No. 4:20-cv-03919, Dkt. 533 (N.D. Cal. Sept. 26, 2024).

Preliminary-Approved Settlement

Plaintiffs filed a Motion for Preliminary Settlement Approval in July 2024. In the proposed settlement, Plaintiffs proposed four settlement classes:

• A “Settlement Declaratory and Injunctive Relief Class” consisting of “[a]ll student-athletes who compete on, competed on, or will compete on a Division I athletic team at any time between June 15, 2020 through the end of the Injunctive Relief Settlement Term.” The Injunctive Relief Settlement Term was defined as “the ten (10) Academic Years following the date of Final Approval of the Settlement.”
• A “Settlement Football and Men’s Basketball Class” consisting of “[a]ll student-athletes who will receive full GIA scholarships and compete on, competed on, or will compete on a Division I men’s basketball team or an FBS football team, at a college or university that is a member of one of the Power Five Conferences (including Notre Dame) and who have been or will be declared initially eligible for competition in Division I at any time from June 15, 2016 through September 15, 2024.”
• A “Settlement Women’s Basketball Class” consisting of “[a]ll student-athletes who have received or will receive full GIA scholarships and compete on, competed on, or will compete on a Division I women’s basketball team at a college or university that is a member of one of the Power Five Conferences (including Notre Dame), and who have been or will be declared initially eligible for competition in Division I at any time from June 15, 2016 through September 15, 2024.”
• A “Settlement Additional Sports Class” consisting of “all student-athletes who compete on, competed on, or will compete on a Division I athletic team and who have been or will be declared initially eligible for competition in Division I at any time form June 15, 2016 through September 15, 2024,” excluding “members of the Football and Men’s Basketball Class and members of the Women’s Basketball Class.”

Collectively, the Settlement Football and Men’s Basketball Class, the Settlement Women’s Basketball Class, and the Settlement Additional Sports Class are the Settlement Damages Classes.

In exchange for releases of their claims, the proposed settlement provided for the following relief to the plaintiff classes:

• Monetary Relief. Defendants would pay US$2.576 billion to the Settlement Damages Classes, with US$1.976 billion flowing into an NIL Settlement Fund and the remaining US$600 million flowing into an Addition Compensation Settlement Fund, constituting relief for the athletic-services claim.
  • The NIL Settlement Fund will then be disbursed proportionally to three damages categories: US$1.815 billion to the Broadcast NIL (“BNIL”) Fund, US$71.5 million to the Videogame NIL Fund, and US$89.5 million to the Lost NIL Opportunities Fund.
    • The BNIL Settlement Fund will be allocated pro rata to members of the Settlement Football and Men’s Basketball Class and Settlement Women’s Basketball Class based on a student-athlete’s sport played, conference, and the years in which they played, based on the plaintiff classes’ expert’s formula.
    • The Videogame Settlement Fund will be allocated, again, pursuant to the plaintiff classes’ expert’s formula, to members of the Settlement Football and Men’s Basketball Class in pro rata fashion based on a student-athlete’s sport played and the year in which they played.
    • The Lost NIL Opportunities Settlement Fund will be allocated to members of the Settlement Damages Classes based on a “before-and-after” methodology that estimates the third-party NIL damages by examining NIL payments after the rule changes permitted them in July 2021.
  • The Additional Compensation Net Settlement Fund will be divided into two portions: 95 percent will go to members of the Settlement Football and Men’s Basketball Class and Settlement Women’s Basketball Class, and the rest will go to members of the Settlement Additional Sports Class.
• Injunctive Relief. During the ten-year settlement term, NCAA Division I schools can provide student-athletes with direct benefits worth up to 22 percent of the Power Five conference schools’ average athletic revenues each year (the “Salary Cap Rule”). Those benefits are additive to the existing scholarship and other benefits that the NCAA rules currently permit.

The injunctive relief also includes: (1) changing all NCAA and conference rules to permit the new direct benefits from schools to student-athletes allowed by the injunctive settlement; (2) allowing for payments for institutional brand promotion of student-athlete NIL; (3) continuing to permit student-athletes to earn NIL payments from third parties; (4) eliminating all scholarship limits in the NCAA’s rules.

After a hearing and a change to the settlement language regarding the continued regulation of some NIL payments from entities and individuals associated with specific colleges or universities (or boosters), Judge Wilken preliminarily approved of the proposed settlement on October 7, 2024.

DOJ Statement of Interest

DOJ is not a party to the lawsuit. But after Judge Wilken preliminarily approved the settlement, it filed a Statement of Interest expressing concern. Specifically, DOJ argued the settlement allows the NCAA, an adjudicated monopsonist (i.e., an entity with monopoly power in the market for acquiring a product or service), “to continue fixing the amount its member schools can pay students for use of their name, image, and likeness.” While the settlement may provide additional compensation for student-athletes, according to DOJ, a cap remains and is “determined by agreement among competing employers (Division 1 colleges and universities) and restrains competition among schools for payments above the cap.” And the “NCAA may attempt to use the cap’s incorporation into a court-approved settlement as a shield against future antitrust actions seeking more complete injunctive relief.” DOJ thus requested that the court either (1) decline to grant the settlement final approval, or (2) make clear that final approval does not constitute a judgment of the competitive impact of the Salary Cap Rule or a determination that the Salary Cap Rules complies with the antitrust laws.

Conferences and Schools Decide Against Opting In

While the Pac-12 Conference, Big Ten Conference, Big 12 Conference, Southeastern Conference, and Atlantic Coast Conference are Defendants, and thus parties to the settlement, there are dozens of other Division I conferences that must decide whether to join in the settlement. The Ivy League was the first conference to decide not to participate the settlement. On January 24, 2025, it announced it would not opt in, meaning Ivy League student-athletes will not receive compensation for their athletic participation and achievements, though they are still eligible to receive NIL payments. In announcing the decision, Ivy League Executive Director Robin Harris said: “I firmly believe that the totality of the Ivy League model—one that offers student-athletes an option with world-class academics and an opportunity for personal growth while yielding consistent national athletics success—is a well-rounded experience that will continue to resonate in this evolving and uncertain era of college sports.”

In addition, individual universities have until March 1, 2025 to decide whether to participate in the settlement. On February 20, University of North Dakota declined, as its Director of Athletics announced that the university would not opt in. He said; “We believe this is the most responsible course of action, as the lawsuit has not yet been settled, and all the conditions are not yet known. Of course, we will revisit this decision at this time next year or post the settlement decision on April 7th.” Over the next few days, other universities may make their intentions clear.

Summary of Objections

The court has set an April 7 hearing date for final approval of the proposed settlement. Ahead of the hearing, the court permitted all interested parties, including current and former college athletes, to file objections to the proposed House settlement. In all, interested parties filed over 20 objections to the settlement, including several filings beyond the January 31 deadline. Other interested parties filed over 60 letters sharing their opinions on the settlement. In addition to objections and letters, at least 250 student athletes have decided to opt out of the settlement, including a group of 67 students led by former Mississippi State running back Kylin Hill, who filed a new antitrust case against the NCAA and power conferences.

One of the notable objections to the settlement concerned the number of students that are able to play Division I sports. Recent Stanford University football player David Kasemervisz objected that the settlement for football players would only apply to scholarship athletes, excluding walk-on athletes such as himself who fully participated as a member of the football team but did not receive a scholarship. Kasemervisz argued that “[m]y NIL was used on broadcast television and other media … [and] to promote the football team during broadcasts” in the same manner that scholarship athletes promote their respective sports. Temple University soccer player Emma Reathaford filed an objection to the settlement, claiming that the settlement has led to roster sports on Reathaford’s “Division 1 athletic team … to be unilaterally reduced.”

Other objections relate to the advantage that the House settlement provides NCAA’s large conferences, known as the Power 4 conferences, at the expense of athletes in non-Power 4 conferences. These complaints have led to a separate lawsuit brought by named plaintiff Dontaie Allen, former basketball player at Kentucky and Western Kentucky and current Wyoming basketball player. See Allen, et al. v. NCAA, 2:25-cv-00014 (E.D. Ky.). Another pending lawsuit, brought by named plaintiff and former Colorado football player Alex Fontenot, objects that the House settlement does not go far enough to provide compensation for athletes beyond NIL deals. See Fontenot v. NCAA, 23-cv-3076 (D. Colo.). Fontenot did not file an objection to the House settlement, but has entered an appearance as an interested party.

LSU gymnast and influencer Olivia Dunne filed an objection, highlighting concerns over the formula for calculating lost NIL opportunities when NIL restrictions were in place. Dunne has received considerable attention for her high earnings as an NIL athlete in 2023, when she ranked as the third highest NIL earner in NCAA. Dunne’s objection as a well-known personality may bring added attention to those opposing the House settlement.

Unanswered Questions

The House settlement raises additional legal issues, several of which the settlement leaves unaddressed. For example, the settlement may implicate Title IX, as the majority of the settlement funds will be allocated to the subclass representing men’s football and basketball players. The House settlement releases Title IX claims “arising out of or relating to the distribution of the Gross Settlement Fund,” which may in and of itself violate Title IX. Title IX may also be implicated by the damages distribution in the settlement. The Trump Administration recently rescinded the Biden Administration’s US Department of Education’s Office for Civil Rights fact sheet, confirming that the Agency will treat NIL agreements “as a form of athletic financial assistance” and thus, be subject to Title IX. The Trump Administration called the Biden Administration’s guidance “overly burdensome, profoundly unfair, and [going] well beyond what agency guidance is intended to achieve.” https://www.ed.gov/about/news/press-release/us-department-of-education-rescinds-biden-11th-hour-guidance-nil-compensation. Acting Assistant Secretary for Civil Rights Craig Trainor stated that “Title IX says nothing about how revenue-generating athletics programs should allocate compensation among student athletes” and that the requirement to proportionately distribute funds based on gender equity considerations does not have legal support.

The House settlement also does not address open questions concerning the treatment of NCAA athletes as non-employees. Currently, NCAA athletes are not considered employees under federal labor law and do not have the right to form or join a labor union. The Dartmouth University men’s basketball previously filed a petition to the National Labor Relations Board (“NLRB”) to form a union. A regional NLRB official agreed with the Dartmouth basketball team, but as Dartmouth University refused to bargain with the team, the parties were set up for a battle before the NLRB. However, following the change in Administration and empty seats at the NLRB to be filled by the Trump Administration, the Dartmouth team has currently dropped its attempts to unionize to avoid receiving a potentially damaging precedent. See https://apnews.com/article/dartmouth-union-ncaa-cd01a33192c19e41e45ff74e84589097. Regardless of whether the Dartmouth basketball team’s, or a similar petition, moves forward, the House settlement leaves open the question of employment of NCAA athletes.

And when universities begin disbursing funds directly to student-athletes, there will presumably need to be some enforcement mechanism to make sure they are doing so within the confines of the settlement terms (e.g., not exceeding the “Salary Cap”). The contours of that potential enforcement regime are undefined and not included in the settlement. But the Power 4 Conferences have discussed creating an LLC that would police such violations. These discussions are notable, given that under their terms, the enforcement of the rules would not lie with the NCAA. See https://sports.yahoo.com/monumental-shift-power-conferences-not-ncaa-to-control-policing-athlete-compensation-172044629.html? 

Next Steps and What Lies Ahead

On March 3, the parties will file a motion for final approval of the settlement. The motion is required to include the number of class opt-outs and to address objections to the settlement. The court will consider the objections and the parties’ responses at the final approval hearing on April 7. If final approval is granted, the settlement will take effect starting with the next academic year. However, even if approved, the House settlement would mark only the latest development in a quickly evolving landscape surrounding the NCAA’s business structure and athlete compensation. More changes are sure to come. Universities, conferences, and athletes should all continue to monitor developments as they unfold to maintain compliance with the obligations and responsibilities these evolving rules impose. And in the meantime, they can begin preparing for the post-House settlement world by, among others, identifying revenue streams and budgeting processes for the US$20.5 million in “Salary Cap” they may have at their disposal to distribute to student athletes in the 2025-2026 Academic Year.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Ben Bradshaw, an O’Melveny partner licensed to practice law in California and the District of Columbia; Steven J. Olson, an O’Melveny partner licensed to practice law in California; Matthew R. Cowan, an O’Melveny partner licensed to practice law in California; Timothy B. Heafner, an O’Melveny partner licensed to practice law in California; Jack Derewicz, an O’Melveny associate licensed to practice law in the District of Columbia; and Mike Rosenblatt, an O’Melveny associate licensed to practice law in the District of Columbia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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