I should begin this post with a disclaimer. I went to the University of Chicago (proud member of the Class of 1982). Although the school boasts an alumnus who was the first Heisman Trophy winner ever (Jay Berwanger, Class of 1935, rumored to be the model for the figure on the trophy itself), it abolished varsity football in 1939. The then-University President, Robert Maynard Hutchins, felt that big-time college sports detracted from the U of C’s academic mission. Hutchins once famously remarked: “Every time I feel like exercising, I lie down until the feeling goes away.” (Football eventually returned in 1969 at the Division III level.)
So, you can imagine the culture shock I felt when I went to law school at the University of Michigan, which has a slightly different attitude about collegiate sports.
With that disclaimer out of the way, I’d like to focus on the NLRB’s recent decision in Northwestern University v. College Athletes Players Association (CAFA), which has been a topic of much discussion. In its decision, the NLRB ruled that college football players on grant-in-aid scholarships are essentially “employees” of the University, and have the right to unionize and collectively bargain over work rules and benefits.
Commentators on the issue seem to be divided into two basic camps.
On the one hand, some argue that, of course the athletes are employees; colleges derive enormous amounts of money from the efforts of these players, who are subject to strict rules about conduct, in exchange for scholarships and benefits worth over $70,000 a year. Not much by professional sports standards these days.
On the other hand, some argue that this is another example of the litigation system run amok. The athletes are students who are being given a free education in exchange for playing a game, and if we allow them to unionize, where will it end? And how is this fair to students in non-revenue-generating sports?
The answers to these questions are way above my pay grade. I’d like to focus only on the decision itself (which I’m sure will be the subject of an appeal), to see what lessons management can learn in general.
Michael Rosenberg from Sports Illustrated crystallized the main issue very cogently, when he wrote: “College athletes sign contracts –i.e., scholarships – that require them to do specific work (training, practice, competition) in exchange for specific compensation (tuition, room and board) for a one-year period, renewable by the University. That is an employment agreement anywhere else in America.”
In rendering his decision, in fact, the NLRB Regional Director spent 11 single-spaced pages just reviewing the various requirements and restrictions placed upon scholarship football players.
The key passage in the ruling appears at page 18, where the Regional Director wrote: “The players spend 50 to 60 hours per week on their football duties during a one-month training camp prior to the start of the academic year and an additional 40 to 50 hours per week on those duties during the three or four month football season. Not only is this more hours than many undisputed full-time employees work at their jobs, it is also many more hours than the players spend on their studies…it cannot be said that they are ‘primarily students’ who ‘spend only a limited number of hours performing their athletic duties.’”
The Regional Director also noted that scholarship football players’ athletic duties do not constitute a core element of their educational degree requirements; the academic faculty does not supervise their athletic duties; and their compensation cannot be deemed “financial aid,” because academic financial aid is not supposed to be provided in exchange for any type of service from the student. The Regional Director also comments upon the obvious: That football generates an enormous amount of money. Here, Northwestern reported that its football team generated total revenues of $235 million and incurred total expenses of $159 million between 2003 and 2012. (The Regional Director was untroubled by the fact that the “compensation” paid to the student-athletes is not taxed.)
Free-economist Stephen Moore, no friend of labor unions, has written as follows in Investor’s Business Daily: “The NCAA brought this whole controversy on itself. It contends that its first concern is for the ‘student athletes,’ but [the Northwestern player who brought the NLRB action] has a point about the shoddy treatment of the players who make millions of dollars for their schools...The University of Michigan was quite happy to make millions of dollars – and still is – selling Chris Webber’s yellow jersey with the number 4 and his name on the back, but howls in righteous indignation that he took $10,000 in payments from a booster.”
Here are a few lessons to be derived from this decision:
1. Never fall in love with your own story. We do a fair amount of trial work at my firm, and any time we try a case, we “mock try” it before a focus group before we ever get to Court. Sometimes the client sits in on the focus group. I usually encourage the client to do that, because I want the client to see what we’re thinking and what our theme of the case is. The danger, though, is that the client hears our presentation and thinks, “slam dunk” (pardon the sports analogy). When you litigate a case, you may think you’re in the right, and there’s no way that a rational person could disagree. But a million things can go wrong, from a judge who doesn’t think the Rules of Evidence apply in his courtroom (been there), to a key witness who forgets to take his ADD medication (done that). I doubt whether most people in the Northwestern administration, or at the NCAA, ever dreamed that unionization of college football players was possible. Northwestern, obviously, couldn’t have settled this case at this point, since the question presented a zero sum game: either the players can unionize, or they can’t. Most cases, however, CAN settle, and a lot of them settle in a range that any competent lawyer or risk manager could have predicted reasonably closely at the outset.
2. Judges and juries look for black hats and white hats; only then do they look for a legal “hook” to hang the hats on. Here, the Regional Director seems to have been motivated by what he considered to be the inherent unfairness in the system. (See Mr. Moore’s comments above.) In his view, college football players work extremely long hours under stringent and arduous rules in exchange for “pay” (an education if they want, plus room and board) that can be withdrawn at any time at the University’s whim. He saw this as an imbalance of power. When you’re analyzing a case, you must take the imbalance of power between the parties into consideration.
3. The NLRB is currently very labor-friendly. Keep that in mind, especially when dealing with potential Section 7 issues (employees have the right to act together to try to improve their pay and working conditions, with or without a union). Sometimes, employers assume that they have the right to regulate the content of discussions between employees, for example on Facebook pages. Not necessarily so. But that’s another topic for another day.
- Gene Killian