College Athletes Employees NCAA Johnson v. NCAA FLSA –

In a recent ruling that advances the prospect of college athletes being recognized as employees, Pennsylvania Federal Judge John Padova dismissed the NCAA’s motion to dismiss a lawsuit brought by Ralph “Trey” Johnson and five other current and former athletes.

Judge Padova issued the denial in Johnson v. NCAA September 22. Last month, he rejected a motion to dismiss filed by the five schools of these players (Villanova, Fordham, Sacred Heart, Cornell and Lafayette). These schools and the NCAA are co-defendants in a case that could eventually be certified as a class action lawsuit.

A 173-page amended complaint filed on September 23 expanded the roster to 14 current and former players who are suing (seven women and seven men). As a result, the list of defendants attending school was expanded to add Duke, Notre Dame, Oregon, Arizona, Penn, Purdue, Tulane, Marist and Drexel.

The NCAA insists that these players do not have standing to sue because the NCAA does not employ them. Judge Padova disagreed. He found the arguments of the players “plausible” and therefore legally sufficient to advance a motion for dismissal. At this point, the players claim they are employees under both state law and the Fair Labor Standards Act, a federal law that guarantees minimum wage and overtime payment. The FLSA is separate from the National Labor Relations Act, which was relied on by Northwestern football players in their unsuccessful efforts in the mid-2010s to be declared employees.

The NCAA’s central argument sets a precedent. In Dawson v. NCAA (2019), the United States Court of Appeals for the Ninth Circuit ruled that college football players in PAC-12 schools were not employees of the NCAA or PAC-12 FLSA. These football players, according to the Ninth Circuit, had no expectation of compensation. The NCAA also functions as a regulator of college sports, not an employer of those who participate in college sports.

The NCAA also relies on Callahan v. City of Chicago (2017), which involved a taxi driver claiming that since the city’s taxi regulations were “so extensive”, the city “should be treated like its employer”. The United States Court of Appeals for the Seventh Circuit disagreed, holding that such a result “would absurdly produce multiple employers for every worker – for the United States, the State of Illinois, Cook County, and other government agencies allow taxi drivers to work in the same direction as Chicago does. In other words, the government allowing people to work in a particular occupation does not convert the government into their employer. Likewise, the NCAA allowing varsity athletes to participate in varsity sports does not convert the NCAA into their employer.

Judge Padova played down these two cases. First, neither is from the federal circuit (the Third) governing the judicial district of Judge Padova. These decisions therefore constitute a persuasive authority and not a binding precedent. Second, the judge pointed out how Dawson and Johnson are “not identical” and each presents different arguments and facts. Third, he pointed out that Callahan implicated the city of Chicago as a defendant while the NCAA “is not a government entity”.

The relevant legal test, Judge Padova said, comes from Regarding Enterprise Rent-A-Car, a United States Court of Appeals case for the Third Circuit in 2012. In company involved branch managers of a national chain arguing that the parent company was their joint employer under the FLSA. The third circuit identified four factors in determining whether two entities are joint employers of the same person.

The first factor is whether the defendant has the power to hire and fire workers. Justice Padova found that the NCAA has substantial powers similar to an employer, including in a way that resembles the authority to hire and fire. For example, NCAA regulations tightly restrict the recruiting process, such as limiting the number of phone calls and communications with recruits as well as prohibiting inducements. The statutes also restrict scholarships. In addition, they are considering penalties for non-compliant member schools and – the judge noted – “require member schools to suspend or terminate student athletes who are deemed ineligible to play by NCAA enforcement staff.”

The second factor is the power to promulgate labor rules and to establish workers’ compensation, benefits and working hours. Here again, Judge Padova viewed the NCAA as functioning as an employer. NCAA regulations govern eligibility, permitted and unauthorized benefits, and oversee athletes and schools participating in what is known as “countable sporting activities” or “CARA.” CARA limits the number of hours varsity athletes can devote to sport, although some athletes contend they often exceed those hours. Most relevant here, the NCAA exercises its authority by punishing schools that fail to adhere to CARA rules and associated programming obligations.

The third factor is involvement in day-to-day supervision. Judge Padova saw several ways in which the NCAA exercises such control. Among them: defining the parameters of how member schools can discipline athletes; establish specific grounds for which schools can reduce or cancel scholarships; and detailing review and appeal procedures.

The fourth factor is the NCAA’s control over player records. Judge Padova noted that the NCAA has record-keeping control through its Eligibility Center. Member schools must share various information with the center, including when a program is the target of an NCAA investigation.

While Judge Padova declined to dismiss the FLSA’s claims against the NCAA, he dismissed those claims against 20 other named Division I universities, which none of the six players attended. These schools include Princeton, Penn State, Pittsburgh, Rutgers, and Temple. The case also concerns unjust enrichment claims which remain at stake against the various groups of defendants.

A day after Judge Padova’s ruling, the five schools attended (Villanova, Fordham, Sacred Heart, Cornell and Lafayette) filed a motion for leave to file an “interlocutory appeal”. Such an appeal is a challenge to a pre-trial decision before the case has been decided on the merits. However, interlocutory appeals are rarely successful, as appellate courts usually want the whole case resolved first.

Here, the five schools (which were joined by the NCAA in their motion to dismiss the brief) argue that when Judge Padova dismissed their motion, he erroneously relied on the approval of the Supreme Court justice of United States Brett Kavanaugh in NCAA v. Alston. This oft-discussed deal lambasted NCAA rules limiting athlete compensation. Schools stress that Judge Kavanaugh’s views are to be viewed as dicta (i.e., comments not essential to keeping) and not as the law – only the majority opinion, drafted by the judge Neil Gorsuch, governs. Schools also insist that judge Padova did not sufficiently take into account Berger c. NCAA, a 2016 Seventh Tour case that revealed varsity athletes are amateurs, not employees.

Going forward, the players, represented by lawyers Paul McDonald, Michael Willemin, Renan Varghese and others, still have a long way to go before they win. Additionally, any victory in a jury trial would almost certainly be challenged in the Third Circuit. However, as the case progresses, attorneys may extract more evidence from the NCAA and require sworn testimony on sensitive matters. After a 9-0 loss to Alston, it will be worth watching if the NCAA chooses to play the long legal game in Johnson or if it “voluntarily” reforms the rights of university athletes.

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