18th Annual Workplace Class Action Report - 2022 Edition

306 Annual Workplace Class Action Litigation Report: 2022 Edition Law, and the Connecticut Minimum Wage Act against the universities (“Attended School Defendants” or “ASDs”), the National Collegiate Athletic Association ("NCAA"), 20 additional named D-1 universities (the "Non- Attended School Defendants" or "NASD"), and a putative Defendant class made up of 125 NCAA D-1 colleges and universities. The ASDs filed a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim on the grounds that Plaintiffs could not establish that the ASDs were their employer under the relevant laws. The Court explained that the U.S. Supreme Court recently held that the NCAA’s restriction on education-related benefits and compensation violated the Sherman Act. As a result, the Court rejected the ASDs argument that Plaintiffs could not be their employees because of the “revered tradition of amateurism in college sports.” Id . at *34. The Court applied a multi-factor test used for evaluating when an student or intern should be considered an employee based on which party benefits the most from the relationship to determine whether Plaintiffs should be considered employees. The Court noted that some of the factors weighed against a finding that Plaintiffs should be considered employees, including that they had no expectation of compensation or of a job. The Court found two of the factors neutral, including whether an intern received training similar to that in an educational environment, and the extent to which the internship was limited to the period in which it provided beneficial learning. However, the Court held that several of the factors weighed in favor of a finding that Plaintiffs were employees. These factors included the extent to which an internship was related to an intern’s education, whether an internship accommodated any academic commitments and if the work was complimentary to employees or whether it displaced other work. The Court determined that balancing all the factors, Plaintiffs’ complaint plausibly alleged that they were the ASDs’ employees. For these reasons, the Court denied the ASDs’ motion to dismiss. Johnson, et al. v. NCAA, 2021 U.S. Dist. LEXIS 180618 (E.D. Penn. Sept. 22, 2021). Plaintiffs, a group of student-athletes at five colleges and universities, filed a class action alleging that student-athletes who engaged in NCAA Division 1 ("D-1") interscholastic athletic activity for their colleges and universities should be considered employees who should be paid for the time they spent related to those athletic activities. Id . at *2. Plaintiffs brought claims claiming violations of FLSA, the Pennsylvania Minimum Wage Act, the New York Labor Law, and the Connecticut Minimum Wage Act against the universities, the National Collegiate Athletic Association ("NCAA"), 20 additional named D-1 universities (the "Non-Attended School Defendants" or "NASD"), and a putative Defendant class made up of 125 NCAA D-1 colleges and universities. Id . at *2-3. The NCAA and the NASD moved to dismiss pursuant to Rule 12(b)(1) on the ground that Plaintiffs lacked standing to sue them under Article III because they were not joint employers of Plaintiffs. The Court granted in part and denied in part the motion. With respect to NCAA, the Court held that it "does more than just impose rules regarding the recruitment of intercollegiate athletes; it also investigates violations of those rules and imposes penalties, including the firing of student athletes, for those violations.” Id . at *21-22. The Court further held that Plaintiff sufficiently alleged that the NCAA by-laws governed amateurism, eligibility, awards, benefits, expenses, and each sport’s playing and practice season, and therefore showed significant control over student athletes. The Court also noted that the NCAA also had the ability to impose discipline on student-athletes and maintained all records relating to student athletes. As a result, the Court concluded that Plaintiffs plausibly alleged that NCAA was the employer of Plaintiffs. However, the Court found that with respect to the NASD, Plaintiffs failed to allege facts that established that it had an employer relationship with Plaintiffs. For these reasons, the Court granted the NASD’s motion to dismiss and denied the NCAA’s motion to dismiss. NCAA v. Alston, et al., 141 S. Ct. 2141 (2021). Plaintiffs, a group of student-athletes, brought an antitrust lawsuit challenging the NCAA’s restrictions on compensation, alleging that the NCAA’s rules violated § 1 of the Sherman Act, which prohibits contracts, combinations, or conspiracies “in restraint of trade or commerce.” Id . at 2142. Following a bench trial, the District Court upheld the NCAA’s rules limiting undergraduate athletic scholarships and other compensation related to athletic performances, and found unlawful and enjoined certain NCAA rules limiting the education-related benefits that its member schools may make available to student- athletes. On both parties’ appeals, the Ninth Circuit affirmed in full. It held that the District Court “struck the right balance in crafting a remedy that both prevents anticompetitive harm to student-athletes while serving the procompetitive purpose of preserving the popularity of college sports.” Id . at 2147. The U.S. Supreme Court subsequently accepted certiorari and affirmed the District Court’s ruling. First, the Supreme Court explained that in view of the common law and the law in place when the Sherman Act was passed, the phrase “restraint of trade” was best read to mean undue restraint. Thus, it opined that a rule of reason analysis should be used