Houston Christian May Lawyer Over Audible After NCAA Loss

Houston Christian University may be a small DI school playing in a conference without a strong presence, but it is trying to play a role at the national championship level, keeping the NCAA and strong conferences from settling House, Driver AND Hubbard antitrust disputes.

HCU’s efforts hit a snag Wednesday when U.S. District Judge Claudia Wilken denied the school’s motion to intervene and seek a declaration that the multibillion-dollar settlement, which has not yet been filed, is invalid.

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As explained below, Wednesday’s events do not necessarily mean ultimate defeat for HCU.

Sporty detailed HCU’s basic legal arguments. The school argues that while it and other schools in 27 non-leading conferences would pay about $990 million under the proposed settlement, HCU: 1) is not a named defendant; 2) did not participate in the settlement talks; 3) did not have its interests represented in the settlement talks; 4) has not been shown to be depriving its athletes of any opportunity to earn NIL, broadcast or video gaming revenue; and 5) never agreed to the settlement.

HCU, which has about 2,300 students and plays in the Southland Conference, has warned that if it is forced to pay back damages for harm it says it never caused, school officials will be violating their fiduciary duties and potentially facing lawsuits. HCU students, 95% of whom receive financial aid, will be deprived of the resources necessary for their higher education.

Wilken was not convinced. She presented several justifications.

First, HCU’s NCAA membership and DI participation are entirely “voluntary.” The fact that HCU is subject to “NCAA decisions and rules” is, as Wilken emphasized, “only because it wants to be.” She suggested that HCU could stop participating in DI if it doesn’t want the DI schools’ obligations. Simply put, if HCU wants the good of DI recognition, it has to accept the bad.

Secondly, HCU was notified of House litigation since it began in 2020. HCU waited until last month, after the settlement was reached, to intervene. Although HCU suggests that it (or other small DI programs) had no significant way to influence the litigation or settlements, at least in theory it could have taken earlier steps to influence the case.

Third, Wilken expressed concern that granting HCU’s motion “would be highly prejudicial” to the NCAA, the power conferences, and the athletes because it would “delay resolution” of the dispute and “disrupt the parties’ settlement talks.”

Fourth, Wilken does not believe she has jurisdiction to address whether, as HCU claims, “the NCAA’s actions violate its own constitution, statutes and rules.” Her ruling suggests that a separate legal proceeding would be needed to pursue that argument.

Wilken’s ruling is a major victory for attorneys representing the players, the NCAA and the Power conferences. If she had allowed HCU to intervene, it’s likely that other colleges frustrated by the settlement and concerned about its financial implications could have filed their own lawsuits.

Equally discouraging for HCU is that Wilken wrote that the school, as a non-class member, “has no standing to oppose the settlement agreement.” She warned that HCU would again have no chance if it tried to oppose it after the settlement agreement was filed. Wilken advised HCU not to “repackage” its claims in her court.

In response to the ruling, HCU’s attorney said his client would consider other options.

HCU has a few options. It could appeal Wilken’s decision to the U.S. Court of Appeals for the Ninth Circuit. HCU could argue that Wilken’s arguments clearly favor form over substance, because regardless of NCAA rules and procedures, HCU has no real ability to influence the dispute or settlement.

HCU also can sue the NCAA in Texas state court for breach of duty, breach of contract and similar state law claims, which include arguments made in documents filed with Wilken. Wilken’s observation that it lacks jurisdiction could be interpreted by the school as reason to consider other courts.

To that end, HCU could seek monetary damages from the NCAA for the harm the settlement would cause HCU students and seek an injunction that would prevent the NCAA from enforcing the settlement in the jurisdiction. The case would be heard by a local judge and perhaps ultimately by a local jury sympathetic to the school and its plight.

The NCAA would seek to have any lawsuits removed from state court, but HCU knows the NCAA sometimes has trouble arguing for removal. The fact that NCAA affiliates are “citizens” in the legal sense of the state of Texas could be used to argue that a Texas court would have personal jurisdiction over the NCAA and deny removal.

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