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Livers v. National Collegiate Athletic Association

United States District Court, E.D. Pennsylvania

May 18, 2018

LAWRENCE “POPPY” LIVERS, on his own behalf and on behalf of similarly situated persons
v.
NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, a/k/a the NCAA, and the following NCAA Division I Member Schoolsi as representatives of a Defendant Class of all private and semi-public member schools that entered/enter into Athletic Financial Aid Agreements with the Plaintiff Collective BUCKNELL UNIVERSITY, DREXEL UNIVERSITY, DUQUESNE UNIVERSITY, FAIRLEIGH DICKINSON UNIVERSITY, LA SALLE UNIVERSITY, LAFAYETTE COLLEGE, LEHIGH UNIVERSITY, MONMOUTH UNIVERSITY, RIDER UNIVERSITY, ROBERT MORRIS UNIVERSITY, SETON HALL UNIVERSITY, SAINT FRANCIS UNIVERSITY, SAINT JOSEPH'S UNIVERSITY, ST. PETER'S UNIVERSITY, VILLANOVA UNIVERSITY UNIVERSITY OF DELAWARE PENNSYLVANIA STATE UNIVERSITY UNIVERSITY OF PITTSBURGH RUTGERS, STATE UNIVERSITY OF NEW JERSEY TEMPLE UNIVERSITY

          MEMORANDUM RE: MOTION TO DISMISS

          Baylson, J.

         Plaintiff “Poppy” Livers seeks damages under the Fair Labor Standards Act (“FLSA”), arising out of his highly-publicized career as a football star while a student at Villanova University. Ultimately, do the facts allow a conclusion that he was an “employee?” Looking at literature, both old and new, and of course, opera, it can sometimes be easy but other times difficult, to determine who exactly is, or is not, an employee. Shakespeare shows respect for the power of royalty over commoners, as seen in plays such as King Lear and Othello. But, there can be questions about employment status, as to the gravediggers in Hamlet, metaphors for laborers, as to who employed them? In Dickens' world, Scrooge was a mean boss and Bob Cratchit was clearly his abused employee (who undoubtedly would have benefitted from FLSA protections). Turning to espionage, the identity of the employer is often ambiguous. One question frequently asked about characters in LeCarre novels is, “Who are you working for?” - the elusive answer may not be solved until the final page and provides ongoing suspense. Turning to opera, Mozart also respected the privileges of royalty, but with cynicism. In The Marriage of Figaro, there is no doubt that the Count is completely in charge; his employees have few rights and may not have been paid any wages at all. In Cosi Fan Tutte, on the other hand, Mozart, as the musician of the Enlightenment, portrays the maid Despina as constantly outsmarting her employers, Dorabella and Fiordiligi. But, when we consider Wagner, questions can arise. Were Fasolt and Fafner, who contracted with Wotan to build Valhalla, employees or independent contractors? Or were they working for all of the “gods, ” on a “joint employment basis.” Although truth is paramount, at the moment we deal only with allegations. As Plaintiff alleges in exceedingly, and sometimes excessively, detailed paragraphs (174), he requests this Court to endorse a “joint employment theory, ” as to all of the Defendants.

         Plaintiff Livers alleges that Defendant National Collegiate Athletic Association (“NCAA”), Villanova University, and dozens of other NCAA member schools, violated his right to be paid as an employee of the Defendants, acting jointly, for his participation on the Villanova football team as a Scholarship Athlete. Plaintiff seeks to represent a putative class of individuals termed the “Scholarship Athlete Collective, ” comprised of all recipients of athletic scholarships under Athletic Financial Aid Agreements that require participation in NCAA athletics at NCAA Division I member schools. Plaintiff asserts a single claim under the Minimum Wage provisions of the Fair Labor Standards Act (“FLSA”) against all Defendants.

         Presently before the Court are two separate Motions to Dismiss the Complaint for failure to state a claim for which relief can be granted and for lack of standing. One Motion was filed by the NCAA and several member schools, including Villanova University. The other Motion was filed by the other NCAA member schools. The Court does not know why Defendants filed Motions to Dismiss separately. For the reasons discussed below, Defendants' motions are granted in full, with prejudice as to the schools that Plaintiff did not attend, without prejudice and with leave to re-plead as to the NCAA and Villanova University.

         I. Summary of Allegations

         A. Background

         Plaintiff Lawrence “Poppy” Livers is an adult who lives in Montgomery County, Pennsylvania. (ECF 1, Complaint ¶ 19.) Plaintiff Livers was a Scholarship Athlete on the Villanova University Football roster during the academic year 2014-15, engaging in at least twenty hours per week during playing and practice season of activity supervised by NCAA athletics supervisory staff. (Id. ¶ 177.) His work as a Scholarship Athlete was non-academic in nature and unrelated and irrelevant to an academic degree program, and he received no academic credit for it. (Id. ¶ 178.)

         The NCAA employs a legislative process to establish bylaws to govern member schools. (Id. ¶ 28.) NCAA bylaws subject all Scholarship Athletes to uniform policies and practices which prohibit the classification of athletes as employees entitled to minimum wage compensation, and which include uniform policies regarding the recruitment of athletes, eligibility of athletes to participate, hours and duration of athletes' participation, and discipline. (Id. ¶ 29.)

         B. Academic and Athletic Scholarships Are Not Compensation

         Academic and athletic scholarships are both grants-in-aid designed to assist academically eligible students in defraying costs of attendance. (Id. ¶ 46.) Academic and athletic scholarships, as compared with some other forms of scholarships, are not taxable income as applied to qualified education expenses required for enrollment and attendance. (Id. ¶¶ 47-48.) An academic scholarship is not compensation to prepare for and/or participate in class, and an athletic scholarship is not compensation to prepare for and/or participate in NCAA athletics. (Id. ¶¶ 49-50.)

         C. Comparison of Scholarship Athletes with Academic Scholarship Recipients

         Both athletic and academic scholarships require recipients to maintain academic standards for scholarship eligibility. (Id. ¶ 51.) Athletic scholarships impose additional obligations and limitations on recipients as compared with academic scholarships. (Id. ¶ 52.) Specifically, athletic scholarships obligate recipients to participate in NCAA athletics as directed and controlled by coaching and training staff, athletics department personnel, and NCAA compliance officers. (Id. ¶ 53.) This participation requirement interferes with, rather than facilitates, academic studies. (Id. ¶ 54.)

         NCAA Division I Constitution Article 2.14 states: “time required of student athletes for participation in intercollegiate athletics [must] be regulated to minimize interference with their opportunities for acquiring a quality education in a manner consistent with that afforded the general student body.” (Id. ¶ 55.) NCAA bylaws seek to achieve minimized interference in the following ways: (i) limiting class time missed; (ii) limiting hours of athletic activities supervised by coaching staff to twenty hours per week in playing and practice season and eight hours per week in off-season; and (iii) requiring NCAA athletics supervisory staff to record the hours of athletic participation on timesheets the same as work study supervisors are required to record the hours of student employment. See, NCAA Division I Bylaws 17.1.7.1; 17.1.7.2; 17.1.7.3.4; 17.1.7.9.1; and 17.1.7.9.2. (Compl. ¶ 56.)

         The NCAA Growth, Opportunities, Aspirations and Learning of Students (GOALS) Study (2015) suggests that NCAA regulations that attempt to minimize interference by athletic participation with academic studies is ineffectual and/or for appearances. (Compl. ¶ 57.) Between 25-36% of student athletes (depending upon the sport) reported that athletic participation prevented them from pursuing their preferred major; between 34-53% reported that participation prevented them from taking classes they wanted to take; and between 38-45% reported that they felt less than positive about their ability to keep up with classes in season. (Id.)

         If injury or illness prevents a Scholarship Athlete from participating in NCAA athletics, the Athletic Financial Aid Agreement obligates the student to “assist the athletics department in other operational activities (i.e., coaching and/or support staff duties)” as directed and controlled by NCAA supervisory staff. (Id. ¶ 63.)

         Athletic scholarships are not guaranteed for the entirety of a Scholarship Athletes' college attendance; rather athletic scholarships are “given initially for up to one year” and “can be renewed, reduced, increased or canceled from year to year for almost any reason” by NCAA athletics supervisory staff. See, http://fs.ncaa.org/Docs/eligibilitycenter/AthleticsInformation/FinancialAid.pdf; also http://www.ncaa.org/student-athletes/future/scholarships. (Compl. ¶ 74.)

         Several additional bases exist for cancelling or reducing an athletic scholarship, including when the Scholarship Athlete “renders himself/herself ineligible for intercollegiate competition” by breaking or being suspected of breaking an NCAA rule; engages in “manifest disobedience”; “fails to attend…meetings…and participate in athletic practice sessions and scheduled contests”; “does not comply with expected personal conduct, appearance and dress, both on and off the University campus…when such violations bring discredit to the athletic program”; or “fails to adhere to training rules and regulations.” See NCAA Division I Bylaws 15.3.4.2 and 15.3.5.1. (Compl. ¶ 77.)

         By contrast, most academic scholarships are allotted by academic classifications, that is, a recipient retains the scholarship through graduation as long as she/he continues to maintain academic eligibility standards. (Compl. ¶ 75.) Academic and athletic scholarships both may be cancelled early if the recipient becomes academically ineligible, engages in fraud or serious misconduct, or withdraws from the program to which the scholarship applies. (Id. ¶ 76.)

         Scholarship Athletes are subject to stricter discretionary control of conduct by college supervisory staff than are academic scholarship recipients. (Id. ¶ 83.)

         Scholarship Athletes who seek to transfer schools may be blocked from receiving an athletic scholarship at the school she/he wishes to transfer to. See, NCAA Division I Bylaws 13.1.1.3 and 14.5.5. (Compl. ¶ 84.) If a Scholarship Athlete does transfer to a different school, she/he ordinarily cannot participate in NCAA athletics for a full academic year. See, NCAA Division I Bylaw 14.5.5.1. (Compl. ¶ 84.)

         D. Comparison of Scholarship Athletes with Students in Work Study Programs

         Scholarship Athletes are not paid for participation in NCAA athletics or for performing the operational activities that they are required to assist in when injured or ill. (Compl. ¶ 64.) Academic scholarship recipients participating in work study programs, on the other hand, are paid on a minimum wage scale for operational activities on campus, including in the athletics department and at NCAA contests, for example working as ticket takers, seating attendants, and food concession workers. (Id. ¶¶ 65-66.) Due to Scholarship Athletes' time consuming obligatory participation in NCAA athletics they do not have any time available in their schedule to apply for and work in work study positions that would pay them minimum wage. (Id. ¶ 67.) Some Scholarship Athletes may be forbidden to apply for work study positions by NCAA athletics supervisory staff, in order to ensure time to comply with NCAA progress-toward-degree requirements, found in NCAA Division I Bylaw 14.4, or by work study supervisors, in order to ensure compliance with work study guidelines that limit work based on “how the combination of work and study hours will affect the student's health and academic progress.” See, U.S. Department of Education, 2017-2018 Federal Student Aid Handbook, 6-46. (Compl. ¶ 68.) Scholarship Athletes are prohibited from gaining financially by earning money or accepting discounts by “trading” on their athletics reputation, and if they violate this prohibition will face suspension or termination of eligibility. (Id. ¶ 69.)

         Scholarship Athletes' participation in NCAA athletics is more arduous and time-consuming, and more detrimental to academic studies, than student employment in work study jobs. (Id. ¶ 89). The 2015 NCAA GOALS study indicated that median student athlete reported hours per week of participation in athletic activities was more than 30 hours per week, and for some sports more than 40 hours per week, while the maximum commitment permitted of students employed in work study programs is twenty hours per week. (Id. ¶ 57.) Similar to students employed in work study programs, Scholarship Athletes' performance primarily benefits the NCAA member school, and provides no comparable academic or learning benefit to the student. (Id. ¶ 90.) Revenue generated by NCAA athletics, and benefits from NCAA athletics including promotion and exposure that can increase prospective student applications and help fundraising at member schools, far exceed any revenue generated by, or benefits related to, work study programs. (Id. ¶ 93.)

         Scholarship Athletes are subject to stricter discretionary control of performance and conduct by college supervisory staff than students in work study. (Id. ¶ 94)

         E. Comparison of Scholarship Athletes with Students Involved in Student-Run Groups

         Student participants in student-run groups have a different experience than NCAA Scholarship Athletes and students who participate in work study programs because students are solely or principally responsible for student-run group leadership, organization and decision-making; faculty involvement, if it exists, is advisory, not supervisory, and is not a full-time duty. (Id. ¶ 96.) In addition, in contrast to NCAA athletics and work study programs, hours of participation in student-run groups are not recorded on timesheets maintained by supervising staff. (Id. ¶ 97.) Scholarship Athletes are subject to far stricter discretionary control of performance and conduct by college supervisory staff than are members of student-run groups. (Id. ¶ 98.) Student-run groups are often related/relevant to an academic degree program and/or eligible for academic credit, in contrast to NCAA athletics and work study programs. (Id. ¶ 99.) NCAA member schools describe student-run group leadership, organization and decision-making that occurs in the context of intramural and interscholastic club sports as education experiences distinctly different from NCAA athletics. (Id. ¶ 100.)

         F. Revenue Generation and Employment Status

         Several persons treated as college employees generate no, or de minimis, revenue, including students in work study programs, college support staff who perform operational activities on campus, and college staff in “cost centers, ” that is, departments that spend money without bringing money in. (Id. ¶ 105.)

         In NCAA athletics, and professional sports, athletes are revenue-generating because it is their athletic performance that is marketed and sold to consumers as a sports product. (Id. ¶ 106.) By contrast to athletes, coaches, training staff and team administrative personnel generate no, or considerably less, revenue from their performance. (Id. ¶ 107.) Consumers attend or tune into athletic contests primarily to see players play. (Id. ¶ 108.)

         Athletes are also crucial to selling the sports product through promotion, including the use of their names, images, and likenesses in advertising, interaction with the community of sports consumers, interaction with the community of sports donors, and interaction with sports broadcasters and media. (Id. ¶ 110.) Only select members of the coaching and training staff and team administrative personnel are involved in selling the sports product through promotion. (Id. ¶ 111.) For these reasons, in the context of professional sports most athletes are paid more than coaches, training staff, and team administrative personnel. (Id. ¶ 112.) In Fiscal Year 2015, the median total salaries and benefits for NCAA athletics supervisory staff for NCAA member schools competing in the Football Bowl Subdivision was over $25 Million; for member schools competing in the Football Championship Subdivision the median total was over $6 Million; and for member schools not competing in football the median total was over $4 Million. (Id. ¶ 113.) Scholarship Athletes are not paid. (Id. ¶ 114.)

         G. Joint Employment Allegations: NCAA Member School Agreements

         NCAA member schools, by agreement among them, impose on all member schools restrictions on the number of permissible recruiting contacts (face to face interactions with a prospect), evaluations (off-campus activity designed to assess the athletic ability or academic qualifications of a prospect), phone calls, and the permissible time periods during which all of this activity can occur in. (Id. ¶¶ 148-52.) NCAA member schools also, by agreement, impose restrictions on the recruitment of student-athletes who are already attending other member schools, and the circumstances under which a Scholarship Athlete may transfer between schools and retain eligibility for a scholarship and to compete. (Id. ¶¶ 154-57.)

         NCAA member schools, by agreement among them, uniformly impose NCAA bylaws which determine the eligibility of any student athlete to participate in NCAA athletics. See, e.g., NCAA Division I Bylaws Articles 10. Ethical Conduct; 12. Amateurism and Athletics Eligibility; and 14. Academic Eligibility. (Compl. ¶ 159.) NCAA member schools already require information sharing and reporting of information that could impact the eligibility of any prospective or current student athlete. See, NCAA Division I Bylaw 12.1.1.1.2.2; NCAA Division I Bylaw 12.7.2. (Compl. ¶ 160.)

         NCAA member schools, by mutual agreement, impose restrictions on Countable Athletically Related Activities (“CARA”) defined as “any required activity with an athletics purpose involving student-athletes and at the direction of, or supervised by, one or more of an institution's coaching staff.” NCAA Division I Bylaw 17.02.1. (Compl. ¶ 162.) In playing and practices season CARA is limited to four hours per day and twenty hours per week; in offseason, CARA is limited to a maximum of eight hours per week with a maximum of two hours per week spent on skill-related workouts. NCAA Division I Bylaws 17.1.7.1 and 17.1.7.2. (Compl. ¶ 163.) NCAA member schools require each other to record CARA hours daily on timesheets as in work study programs. NCAA Division I Bylaw 17.1.7.3.4. (Compl. ¶ 164.)

         NCAA member schools, by mutual agreement, impose prohibitions on Scholarship Athlete compensation. NCAA Division I Bylaws 12.1.2 and 12.1.2.1.1. (Compl. ¶ 166.) Compensation provided to a student athlete is considered a Severe Breach of Conduct (level I Violation). NCAA Division I Bylaw 19.1.1(f). (Compl. ¶ 166.) .

         NCAA member schools, by mutual agreement, require suspension of a student athlete from athletic participation for infraction of the NCAA bylaws, NCAA Division I Bylaw 12.11, set a five-year expiration date for participation in NCAA athletics, NCAA Division I Bylaw 12.8, and specify permissible bases on which athletic scholarships can be canceled early, which effectively constitutes termination of an athlete's position on a team, NCAA Division I Bylaws 15.3.4 and 15.3.5. (Compl. ¶ 168.)

         NCAA member schools, by mutual agreement, subject student athletes to discipline by the NCAA Committee on Infractions and NCAA Infractions Appeals Committee, which include representatives from peer institutions and prohibit participation in adjudication by anyone connected with an institution under investigation. NCAA Division I Bylaws 19.3.1, 19.3.4, 19.4.1 and 19.4.3. (Compl. ¶ 170.)

         No NCAA member school has unilateral discretion to “opt out” of NCAA bylaws. (Compl. ¶ 171.) In order to obtain an exemption from any NCAA bylaw governing Scholarship Athletes, a NCAA member school must apply to a committee including representatives from peer, competing institutions. The NCAA Initial-Eligibility Waivers Committee, NCAA Division I Bylaw 21.7.5.1, and NCAA Committee on Student-Athlete Reinstatement, NCAA Division I Bylaw 21.7.6.6. (Compl. ¶ 172.) Infractions of an NCAA bylaw could subject a member school to financial penalties, suspension or termination of student athlete eligibility, reduction of scholarships for coming academic years, suspension of coaching staff, and/or disqualification from competition. NCAA Division I Bylaws 19.9.5, 19.9.7 and 19.9.8. (Compl. ¶ 173.)

         Furthermore, the NCAA Infractions Program establishes, under “Expectations and Shared Responsibility, ” that each NCAA member school “has an affirmative obligation to report all instances of noncompliance, ” and “cooperate fully with and assist, ” investigations, regarding any student athlete, including prospective student athletes not yet enrolled at any institution, or student athletes enrolled in another institution. See, NCAA Division I Bylaws 19.2.2 and 19.2.3. (Compl. ¶ 174.) Failure to cooperate in an NCAA investigation is considered a Severe Breach of Conduct (Level I Violation). NCAA Division I Bylaw 19.1.1(c). (Compl. ¶ 174.)

         II. Procedural History

         On September 26, 2017 Plaintiff filed a Complaint. (ECF No. 1.) The Complaint states one claim on behalf of ...


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