Student-Athletes Denied Wages for Athletic Training

–by Ryan White

Source: Berger v. National Collegiate Athletic Association, No. 16-1558, 2016 WL 7051905 (7th Cir. Dec. 5, 2016).

Abstract:  Two former members of the University of Pennsylvania Women’s Track and Field team sued the school and the NCAA claiming they were entitled to minimum wage for their athletic training. The Seventh Circuit disagreed, but the court left open the possibility for a class of future plaintiffs who may succeed with that argument.

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Facts and Procedure

Gillian Berger and Taylor Hennig both were part of the University of Pennsylvania’s Track and Field team, a Division I school governed by the National Collegiate Athletic Association. Berger and Hennig’s suit against Penn, the NCAA, and 120 other NCAA institutions was predicated on the argument that they, as student athletes, were “employees” and entitled to minimum wage under the Fair Labor Standards Act (29 U.S.C. § 201). The District Court held that the plaintiffs did not have standing to sue any defendants other than Penn, and that the former student athletes failed to state a claim because student-athletes are not employees under the FLSA.

7th Circuit Decision

The 7th Circuit affirmed both of the lower court’s holdings. The opinion quickly dispensed with the first issue of standing, explaining that under the FLSA, an alleged employee’s injuries are only redressable by the employer.  Any connections between the former student-athletes and the NCAA or its other member institutions were “far too tenuous” for the plaintiff-appellants to have standing.

The Court spent a little more time analyzing the alleged employer-employee relationship between Berger and Hennig and Penn under the FLSA. Circular definitions in the statute itself led the Court to look other places to determine whether student-athletes were entitled to minimum wage.

The burden for establishing an employer-employee relationship fell on the plaintiffs, and the Court emphasized that in ultimately making a decision, it must look to the totality of the circumstances. This examination includes reviewing the “economic reality” between the student-athletes and the university. The Court had developed a seven-factor test for analyzing whether migrant laborers were protected by the FLSA, and the Second Circuit had a similar seven-factor analysis for evaluating interns under the FLSA.  The District Court declined to utilize those tests because they did not accurately capture the facts at hand.

The Court was particularly concerned with the revered nature of amateurism in collegiate sports. The amateur status of student-athletes is at the core of the economic reality of the situation. The Court stressed the importance of the eligibility rules developed by the NCAA. In discussing the amateur status of student-athletes, the court cited to O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir. 2015), one of several recent cases where student-athletes have challenged the NCAA seeking better compensation.

The Seventh Circuit considered several other courts’ decisions that found there to be no employer-employee relationship.   One particular scenario in which this has consistently been the case is in regards to workers’ compensation.  Multiple courts have consistently refused to say that student-athletes are employees in the workers compensation context and thus athletes are not entitled to compensation if injured while playing sports for their university.

The Court also looked to the Department of Labor, whose Field Operations Handbook also states that student-athletes are not employees under the FLSA.  One section of that handbook stressed that interscholastic and extracurricular activities, like athletics, are primarily for the benefit of the student. When the benefit is primarily for the student, then the activity cannot be labeled “work.” While not specifically controlling, the Court said the Handbook is persuasive and has been used as guidance repeatedly.

The plaintiff-appellants’ argued that an employer-employee relationship is a particularly fact intensive investigation. The Seventh Circuit disagreed as a matter of law.  The voluntary nature of intercollegiate sports is crucial. The Court emphasized that there is a fundamental difference between “play[ing]” sports and “work.” The Seventh Circuit affirmed the District Court’s grant of defendant-appellants’ motion to dismiss.

Justice Hamilton’s Concurrence

While the majority opinion does not offer any hope for the growing movement seeking compensation for student-athletes, Justice Hamilton’s concurrence does.   Justice Hamilton finds specific facts in the case at hand that may distinguish it from future legislation.  First, Penn does not offer scholarships.  Second, Track and Field is not a revenue sport for the University.  Given those two factors, the amateur status of the student-athletes as the NCAA projects is in its purest form.

Justice Hamilton points out, though, that a different conclusion could be reached for a student-athlete on scholarship playing a sport like football or basketball that is a major revenue stream for the university. Justice Hamilton concurred because the broad theory pursued by the plaintiff-appellants was just that—too broad.  The amateur status of a D1 basketball or football player in a billion dollar industry presents a much different scenario. The economic reality of someone in that scenario, Justice Hamilton suggests, may be of a fundamentally different nature. There may be a light at the end of the tunnel for those college athletes seeking compensation.

The NFL’s New Application of the Rooney Rule

— by Ben Cranston

Abstract:

If the statistical evidence of success of the NFL’s “Rooney Rule” is any indicator of future increased diversity, we will be seeing significantly more female executives working for NFL franchises in the coming years. The NFL has recently decided to apply the Rooney Rule to open executive-staff positions, requiring teams to interview at least one female candidate for the position. While this new implementation of the rule will likely draw criticism from various sources, challenges to the rule will likely fail in an increasingly open and diverse sports industry.

Articles used:

Brian W. Collins, Note, Tackling Unconscious Bias in Hiring Practices: The Plight of the Rooney Rule, 82 N.Y.U. L. Rev. 870 (2007).

Jane McManus, Rodger Goodell: Women Will Interview for Open Executive Jobs, ESPN (Feb. 4, 2016), http://espn.go.com/espnw/news-commentary/article/14714784/roger-goodell-says-nfl-establish-rooney-rule-women-executive-positions.

 

***

On Thursday, February 4, the NFL announced that they will be applying the “Rooney Rule” to female candidates for open executive-staff positions. The NFL’s Rooney Rule was first applied in 2002 to require NFL teams to interview at least one minority candidate for any open coaching position in response to the small percentage of minority head coaches in the NFL. In the wake of the Arizona Cardinals’ hiring of Jen Welter as an assistant coach, making her the first woman to hold a coaching position in the NFL, and the Bills’ hiring of Kathryn Smith as the first full-time female coach, the NFL intends to further the goal of making coaching and executive staffs not only racially diverse, but diverse across gender lines with the new application of the Rooney Rule.

Many authors have explored the nature of the Rooney Rule and why its implementation has been a great success in the NFL, even though it has faced many forms of criticism in its early stages. Brian Collins of NYU, in his article Tackling Unconscious Bias in Hiring Practices: The Plight of the Rooney Rule, argues that the Rooney rule “travers[es] the line between ‘soft’ and ‘hard’ variants of affirmative action.” He argues that the Rooney Rule is an effective policy to avoid the unconscious bias involved in the hiring practices of the NFL. His article explores the legality of the Rooney Rule and how it may be susceptible to attack on the grounds of reverse racism. The article has particular relevance now, as the Rooney Rule could possibly be attacked again in the wake of its new application to female executive candidates.

In the wake of the Griggs v. Duke Power Company Supreme Court decision, many private employers began implementing affirmative action hiring programs as to avoid liability under Title VII. However, many professional sports leagues implemented “soft” affirmative action techniques, like recruiting and outreach practices, rather than “hard” affirmative action techniques, like quotas and numerical requirements. While leagues like the NBA have been significantly more successful in creating diverse coaching staffs throughout the league by using “soft” techniques, the NFL trailed other professional sports leagues before the implementation of the “hard” Rooney Rule.

While Collins does argue that the Rooney Rule is susceptible to attack under title VII in a reverse discrimination claim by a Caucasian coach who is denied a job, he argues that with some slight changes to the rule, it would be very difficult for that challenger to succeed. The worries about the rule’s applicability and ability to survive a challenge are now even more topical with the application of the Rooney Rule to female candidates. The NFL should be, and is likely, aware of criticism and a possible challenge to the rule now that it has a broader scope. However, the NFL can easily point to the statistics that show a significant increase in minority coaches since 2002 as an indication of the success of the Rooney Rule.

The new application of the Rooney Rule in the NFL will likely draw criticism from many critics of affirmative action practices. However, if the post-Rooney statistical data involving racial diversity in the NFL coaching staffs is any indicator of future gender diversity in executive positions, it will be hard for critics to argue that this rule does not work and does not create more diversity. While the NFL should be prepared for potential attacks on the rule, it is unlikely that such an attack will be successful, nor will an attack find much support in an increasingly open and diverse industry.

 

All Bets Are Off – Daily Fantasy Sports Embroiled in Legal Battle in New York

— by Wes Gerrie

 

Case: People v. FanDuel Inc., DraftKings Inc., et al., No. 453056/15, 2015 N.Y. Misc. Lexis 4521 (S.D.N.Y. Dec. 11, 2015).

 

Abstract

The popular, yet controversial, activity of Daily Fantasy Sports faced its first legal test for illegal gambling operations in New York. The Supreme Court of New York heard both sides and deferred its ultimate decision. However, in the meantime the companies were enjoined from conducting business in the state.

 

Narrative

Introduction

            FanDuel and DraftKings are online Daily Fantasy Sports (“DFS”) companies that operate wagering websites. On these sites the customer selects a set number of professional athletes for their DFS team staying under a salary cap based on an athlete’s perceived value by the companies. The success of their wager is tallied by FanDuel and DraftKings who rely on individual real game performances of the athletes selected. DFS has two types of games: head-to-head (betting selected lineup will perform better than others), or guaranteed prize pools (contest where payout is based on standing).

In this case the People (plaintiff) allege this structure of is a contest of chance. On the contrary, FanDuel and DraftKings (defendants) argue the customer combinations, creation of user algorithms, and analysis of statistics make DFS a game of skill.

 

Procedural History

 

To begin, the complex history of this case began on October 6, 2015 when New York (“NY”) Attorney General (“A.G.”) Eric T. Schneiderman (“Schneiderman”) started an initial probe into DFS in NY, after complaints of insider information benefiting employees winning on the competing site. On November 10, as a result of the investigation Schniederman served a cease and desist letter to both parties, finding these sites are illegal gambling operations.

On November 13 both sites commenced an action for temporary restraining orders against Schniederman in the hopes of pre-emptively stopping action against them. In this action they cited full compliance with NY law as a game of skill, an arbitrary and capricious investigation, violation of Due Process, and tortious interference with their business; this action was denied. On November 17 Schniederman filed for an injunction to prevent FanDuel and DraftKings from operating in NY due to fraudulent conduct and illegal gambling practices.

Court Analysis and Rationale

 

Judge Manuel Mendez ordered an injunction restraining FanDuel and DraftKings from doing business in the State of New York and from accepting entry fees, wagers, or bets from New York consumers for any contest on their websites. The court held for A.G. Schneiderman on the basis of three key rationale.

First, Executive Law §63 permits the NY A.G. to bring action for injunctive relief to remedy a repeated fraud or illegality upon the finding of a prima facie case where the act complained of has the tendency to deceive or creates an atmosphere conducive to fraud. Under General Business Law §349 a prima facie case is established by the showing of injury resulting from defendant engaging in an act or practice materially misleading or deceptive. Additionally, General Business Law §350 permits a prima facie case when the defendant engages in false advertising with a showing of reliance on said advertisement. Here, the court found A.G. Schniederman established a likelihood of success warranting an injunction under the authority of §63 due to violations of both §349 and §350.

Second, New York State Constitution Article 1 §9 states “no lottery or sale of lottery tickets, pool-selling, book making or any other kind of gambling…shall hereafter be authorized or allowed within [New York]”. In NY, Penal Law §225 defines gambling as when a person stakes or risks anything of value upon the outcome of a contest of chance not under their control. Here, Judge Mendez specifically mentioned A.G. Schniederman has a greater likelihood of success on the merits of this illegal gambling and contest of chance allegation. In finding this Judge Mendez interpreted §225 broadly and determined DFS involves illegal gambling in some capacity. The court differentiated the case at hand from Humphrey v. Viacom by stating DFS is not a one-time fee, not seasonal, and has a percentage of every fee being paid directly to these companies who control almost every aspect of the wager. Judge Mendez wrote this reflects NY State’s policy against commercial gambling.

Lastly, the final rationale involved refuting FanDuel and DraftKing’s claims made in their November 16th action. Judge Mendez pointed out Due Process only requires notice and an opportunity to be heard which was properly complied with during A.G. Schniederman’s month long investigation. Additionally, the court found no showing of an arbitrary and capricious enforcement of illegal gambling laws because both FanDuel and DraftKings were named defendants and no “similarly situated” DFS websites were exempted from A.G. Schneiderman’s probe.

 

Conclusion

 

However, later in the day, after this decision was handed down, the Appellate Court of NY granted a temporary stay of the injunction.[1] Part of this stay led to the announcement a New York State Appellate Division five-judge panel will hear the case in full on January 4th, 2016. The appeals and memorandum[2] for this hearing have been filed in this landmark case, so place your bets!

 

 

 

[1]           Chris Grove, Daily Fantasy Sites Get Reprieve After Initial Loss in New York Court Battle; FanDuel Reenters NY, Legal Sports Report, December 11, 2015,  http://www.legalsportsreport.com/6690/dfs-sites-ny-court-battle/.

 

[2]           Recently, A.G. Schneiderman wrote an addendum to the case seeking a return of all profits earned by the sites to it’s fans.

Article: Changing the Game: The Litigation that may be the Catalyst for Change in Intercollegiate Athletics

The first reported intercollegiate athletics contest in the United States took place in 1852.1  Harvard University challenged Yale University to a rowing contest similar to those staged in England by Oxford University and Cambridge University.  To tilt the competition in its favor, Harvard University sought to gain an unfair advantage over Yale University by obtaining the services of an athlete who was not a student. 2  Subsequently, colleges and universities across the country challenged one another to athletics contests in a variety of sports.

In 1905, the United States was in an uproar over the violence associated with intercollegiate football. Football student-athletes’ use of gang tackling and mass formations led to numerous injuries and deaths.3  Thus, the public urged universities to abolish football or take steps to reform the game.  As a result, President Theodore Roosevelt called the nation’s top intercollegiate athletics leaders to the White House to discuss reformation of intercollegiate football.4  One such leader, Chancellor Henry M. MacCracken of New York University, called a meeting of officials from the nation’s thirteen most prominent universities to discuss reformation of the intercollegiate football playing rules.  Subsequently, a sixty-two member body formed the Intercollegiate Athletic Association of the United States (IAAUS).5  In 1910, the IAAUS became known as the National Collegiate Athletic Association (NCAA). For the next ten years, the NCAA was merely a discussion group that developed rules applicable to intercollegiate athletics.

The complexity and scope of intercollegiate athletics has grown substantially since the 1920s.  Today, the NCAA is a voluntary unincorporated association that governs more than 1,200 colleges, universities, athletic conferences, and sports organizations; 380,000 student-athletes; and eighty-eight championship events in three divisions.6  To improve efficiency and parity, the NCAA promulgated rules and regulations to monitor a variety of issues facing member institutions, conferences, student-athletes, and coaches, including bylaws governing amateurism,7 recruiting,8 eligibility,9 financial aid,10 and practice and playing seasons.11  These rules and regulations, established by volunteer representatives from member institutions and conferences, govern intercollegiate athletics and seek to further the goals set forth by the NCAA.12  The NCAA has established goals to “[p]romote student-athletes and college sports through public awareness . . . [p]rotect student-athletes through standards of fairness and integrity . . . [p]repare student-athletes for lifetime leadership, and [p]rovide student-athletes and college sports with the funding to help meet these goals.”13

Intercollegiate athletics has become a successful commercial enterprise.  Through the advent of television and media outlets and a growing public appetite for sports spectacle, intercollegiate athletics has continued to grow rapidly.  In 1938, the University of Pennsylvania televised the first intercollegiate football game.14  Then, in 1951, the NCAA members endorsed a program of restricted live football telecasts, administered through the 1983 playing season.15   However, the NCAA television plan was met with skepticism, and it was ultimately found by the United States Supreme Court to violate antitrust laws.16  Today, the NCAA’s television involvement includes broadcasts and cable telecasts of championship events such as the Division I Men’s Basketball Tournament (“March Madness”).17  In June 2010, the NCAA negotiated another blockbuster deal to televise March Madness, whereby the NCAA will receive $10.8 billion over fourteen years from CBS and Turner Sports for March Madness’ media rights.18

As a result of commercial advancements, intercollegiate athletics has grown into a multibillion-dollar industry annually.19  During the 2010-2011 college football bowl season, the Bowl Championship Series (BCS) distributed over $169 million, which derives, in part, from a $125 million ESPN media rights agreement.20  Intercollegiate athletic conferences are also negotiating and obtaining enormous media rights agreements, which is evidenced by the Southeastern Conference’s fifteen-year, $2.5 billion agreement with ESPN.21  As a result of the economic prosperity in intercollegiate athletics, coaches and administrators are receiving generous salaries and benefits.22

In the mid 1990s, economic analysts estimated the capitalized economic value of major intercollegiate athletics programs, such as the University of Michigan, University of Notre Dame, the Ohio State University, University of Florida, and other similarly situated programs, to be $250 to $300 million, which is comparable to major professional sports franchises.23  It would seem these programs would have substantially more value today.

This article will argue NCAA student-athletes are neither professionals nor amateurs; therefore, courts should adopt a new standard of review to determine whether student-athletes have cognizable claims against the NCAA when balanced against the traditional notions of amateurism.  Part II of this article provides a historical view of amateurism and how the principles of amateurism have changed over time.  Part III discusses and sets forth claims brought by student-athletes against the NCAA in five very important lawsuits: White v. NCAA, Oliver v. Barratta, Keller v. NCAA, O’Bannon v. NCAA, and Agnew v. NCAA. Finally, Part IV discusses how these lawsuits will impact the future of the NCAA and intercollegiate athletics, and how the traditional notions of amateurism are no longer a cognizable justification to challenges brought by student-athletes.

View Full PDF.

Christian Dennie received his B.B.A. from Sam Houston State University and his J.D. from the University of Oklahoma College of Law. He is a partner at Barlow Garsek & Simon, LLP with offices in Dallas, Texas and Fort Worth, Texas and is an adjunct professor of law at Texas Wesleyan University School of Law. This Article is dedicated to Lillie Grace Dennie who has a world of opportunities ahead.

  1. See RONALD A. SMITH, SPORTS AND FREEDOM: THE RISE OF BIG-TIME COLLEGE ATHLETICS 168 (Peter Levine & Steven Tischler eds., 1988). []
  2. Rodney K. Smith, The National Collegiate Athletic Association’s Death Penalty: How Educators Punish Themselves and Others, 62 IND. L.J. 985, 989 (1987). Clearly, the propensity to seek unfair advantages existed from the beginning of intercollegiate athletics in the United States. []
  3. Id. at 990 (stating in 1905, there were approximately eighteen deaths and one hundred major injuries in intercollegiate football). []
  4. Id. []
  5. It was the flying wedge, football’s major offense in 1905, that spurred the formation of the NCAA. See Dr. Myles Brand, Address to the National Press Club (Mar. 4, 2003), available at http://www.ncaa.org/wps/wcm/connect/06f11d004e0d4e059106f11ad6fc8b25/20030304_nat_press_club_speech.pdf?MOD=AJPERES&CACHEID=06f11d004e0d4e059106f11ad6fc8b25. []
  6. See Differences Among the Three Divisions, NAT’L COLLEGIATE ATHLETIC ASS’N, http://www.ncaa.org/wps/wcm/connect/public/ncaa/about+the+ncaa/who+we+are/differences+among+the+divisions/division+i/about+division+i (last visited Apr. 12, 2011); see also Bowers v. Nat’l Collegiate Athletic Ass’n, 475 F.3d 524, 529 (3rd Cir. 2007); Breakdown of 88 NCAA Championships International Rights Holder, NAT’L COLLEGIATE ATHLETIC ASS’N, http://www.ncaa.org/wps/wcm/connect/6322f5804e0da8699802f81ad6fc8b25/App6.pdf?MOD=AJPERES&CACHEID=6322f5804e0da8699802f81ad6fc8b25 (last visited Oct. 6, 2011); Press Release, Nat’l Collegiate Athletic Ass’n, NCAA Launches Latest Public Service Announcements, Introduces New Student-Focused Website (Mar. 13, 2007), available at http://fs.ncaa.org/Docs/PressArchive/2007/Announcements/NCAA%2BLaunches%2BLatest%2BPublic%2BService%2BAnnouncements%2BIntroduces%2BNew%2BStudent-Focused%2BWebsite.html. []
  7. See 2010-2011 NCAA Division I Manual § 12 (2011) [hereinafter NCAA Bylaws]. []
  8. See id. § 13. []
  9. See id. § 14. []
  10. See id. § 15. []
  11. See id. § 17. []
  12. See 2010-2011 NCAA Division I Manual § 1.2-1.3 (2011) [hereinafter NCAA Constitution]. []
  13. State of the Association address, THE NCAA NEWS (Jan. 17, 2000, 3:20:09 PM), http://fs.ncaa.org/Docs/NCAANewsArchive/2000/association-wide/state%2bof%2bthe%2bassociation%2baddress%2b-%2b1-17-00.html. []
  14. Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 89 (1984). []
  15. A Brief History of NCAA Television Coverage, NAT’L COLLEGIATE ATHLETIC ASS’N, http://www.ncaa.org/wps/wcm/connect/broadcast/media/broadcasting/a+brief+history+of+ncaa+television (last visited Apr. 12, 2011). []
  16. Bd. of Regents, 468 U.S. at 106-113 (holding the record supported the district court’s conclusion that the NCAA unreasonably restrained trade under the Sherman Act). []
  17. A Brief History of NCAA Television Coverage, supra note 15. []
  18. Steve Weiberg, NCAA President: Time to discuss players getting sliver of revenue pie, USA TODAY (Mar. 29, 2011), available at http://www.usatoday.com/sports/college/mensbasketball/2011-03-29-ncaa-pay-for-play-final-four_N.htm. []
  19. See KNIGHT FOUNDATION COMMISSION ON INTERCOLLEGIATE ATHLETICS, A CALL TO ACTION: RECONNECTING COLLEGE SPORTS AND HIGHER EDUCATION 17 (2001), available at http://www.knightcommission.org/images/pdfs/2001_knight_report.pdf. []
  20. Revenue Distribution Data Released, ESPN.COM (Jan. 25, 2011), http://espn.go.com/espn/print?id=6057935&type=story; Weiberg, supra note 18. In turn, bowl games distributed over $260 million to colleges and universities. And, the bowl games generated $1.285 billion in economic impact for the host communities. Id. []
  21. Weiberg, supra note 18. []
  22. Id. (stating University of Louisville head basketball coach Rick Pitino is being paid $7.5 million in 2011). []
  23. See RICHARD G. SHEEHAN, KEEPING SCORE: THE ECONOMICS OF BIG TIME SPORTS 314-17 (1996). []