Settlement of the House Case
June 23, 2025Introduction
On June 6, 2025, the United States District Court for the Northern District of California approved a landmark settlement that significantly changes NCAA Division I sports. The settlement of In re College Athlete NIL Litigation, also known as the House case, establishes new rules governing student-athlete name, image, and likeness (NIL) rights, student-athlete compensation and scholarships, and roster sizes.
Two of the settlement’s terms are especially noteworthy: first, the settlement provides nearly $2.8 billion in back payments to student-athletes who competed from 2016 through 2024 and were previously barred to varying degrees under NCAA regulations from earning NIL money; second, the settlement allows NCAA member institutions to share up to approximately $20.5 million in revenues annually with current student-athletes starting July 1, 2025, with that amount growing year-to-year.
On June 9, 2025, we published a brief overview of the settlement. This Client Alert more fully discusses the plaintiffs, the case, the settlement, some immediate reaction to the settlement, and our current view as to certain potential future material challenges.
Discussion
The Plaintiffs and their Claims
In re College Athlete NIL Litigation began in 2020 when a group of Division I student-athletes filed class-action antitrust lawsuits against the NCAA and the athletic conferences historically known as the “Power Five” (the ACC, Big Ten, Big 12, SEC, and Pac-12). The lead plaintiffs included Grant House, a swimmer from Arizona State University, and Sedona Prince, a women’s basketball player from the University of Oregon. Student-athletes from other universities then filed additional cases, which ultimately were consolidated.
The plaintiff student-athletes argued that the NCAA’s rules violated federal antitrust laws by illegally restricting their ability to receive compensation, including for use of their NIL. Specifically, they challenged NCAA rules that:
- prohibited or limited compensation that Division I student-athletes could receive from NCAA member institutions or conferences for the use of their NIL;
- prohibited or limited compensation that Division I student-athletes could receive from third-parties for use of their NIL;
- prohibited or limited compensation that Division I student-athletes could receive from member institutions or conferences for their athletic services, which compensation is sometimes referred to as “pay-for-play”; and
- set a maximum number of scholarships that could be provided in each sport to Division I student-athletes.
The student-athletes argued that these restrictions artificially suppressed what they could earn in a free market, effectively operating as an illegal agreement among competitors (the NCAA member institutions and conferences) to limit compensation for athletes’ labor. They sought both monetary damages for past harm and an injunction removing these restrictions going forward.
History of the Case
The litigation proceeded through several phases over the last five years. The plaintiffs successfully opposed motions to dismiss their claims and achieved a significant victory in 2023 when the court “certified” the class of plaintiffs. Certification allowed the case to proceed as a class action composed of hundreds of thousands of current and former Division I student-athletes.
The NCAA and conferences attempted to appeal the class certification decision, but the United States Court of Appeals for the Ninth Circuit denied their request, allowing the case to move forward. In May 2024, after the close of discovery and after the plaintiffs filed a motion for summary judgment, the parties reached an agreement to settle the case. Class action settlements must be approved by the court, so the parties presented the proposed settlement agreement to the court, which granted preliminary approval in October 2024. Class members then had an opportunity to submit claims, opt out, or file objections to the proposed settlement.
The court received numerous objections to the proposed settlement. The court’s most significant concerns centered on roster limits that would be imposed under the settlement, with objectors arguing that current student-athletes would lose their positions on teams as member institutions reduced roster sizes in accordance with the agreement. The court noted that immediate implementation of roster limits could harm student-athletes who were already on teams. To address this issue, the parties modified the settlement. They created a “grandfathering” provision that exempts current student-athletes who might lose their spots due to the new roster limits. Such student-athletes will not count against roster limits for the remainder of their college careers.
This solution satisfied the court, which overruled the remaining objections and granted final approval of the settlement on June 6, 2025.
Terms of Settlement
The settlement includes the following important terms. It is important to note that, while the Power Five schools are bound by the these terms, other Division I member institutions have the option to opt into these terms, but are not required to do so.
Elimination of Scholarship Caps: The settlement removes all NCAA limits on the number of scholarships that can be provided in each sport. Under the settlement, member institutions can provide full scholarships to every athlete on their rosters, subject only to the roster limits described below.
Roster Limits: The settlement imposes new roster size limits for each sport. For example, football rosters are capped at 105 players. These limits replace the previous system where teams could have unlimited players only a subset of whom might receive scholarships.
Revenue Sharing: The settlement authorizes schools to share athletics revenue directly with student-athletes for the first time. Power Five member institutions can share up to 22% of their average athletic revenues each year, approximately $20.5 million annually for the 2025-26 academic year. This amount will grow year-over-year.
Name, Image, and Likeness: Under the settlement, a student-athlete may be paid by his or her university or by third-parties for the use of his or her name, image, and likeness, though any such arrangements generally must be reported to the College Sports Commission (described below). The settlement contemplates that the NCAA and the conferences will implement rules prohibiting NIL payments by collectives and other individuals unless the payment is for a “valid business purpose related to the promotion or endorsement of goods or services provided to the general public for profit, with compensation at rates and terms commensurate with compensation paid to similarly-situated individuals with comparable NIL value who are not current or prospective student-athletes at” the member institution in question.
College Sports Commission: The settlement establishes a new enforcement entity called the College Sports Commission, which will receive and review various reports required under the settlement. The Commission will monitor reports of revenue-sharing agreements and licenses between member institutions and student-athletes, as well as reports of third-party NIL deals exceeding $600. The College Sports Commission also is charged to enforce rules requiring that NIL payments serve a valid business purpose rather than function as recruiting inducements.
Settlement Payments to Class Members: The settlement provides $2.576 billion to be distributed to eligible class members over the next ten years. These payments are intended to compensate current and past student-athletes for lost NIL opportunities. The payment amounts vary significantly based on the sport the student-athlete played, his or her conference affiliation, and the number of years of the student-athlete’s eligibility.
What Is Happening Now?
Appeal Filed by Student-Athletes Based on Title IX
To date, two groups of student-athletes who have competed in women’s sports have filed appeals of the settlement approval with the Ninth Circuit. It appears likely that the appealing student-athletes will argue that the back-damages formula violates Title IX, the federal law prohibiting discrimination based on sex in educational programs. The House Court previously rejected Title IX objections during the settlement-approval process.
The House settlement provides that any appeal automatically stays distribution of payments, meaning the hundreds of thousands of eligible student-athletes will not receive settlement compensation until all appeals are resolved. However, the appeals do not stay the effective date of any other provision of the settlement, including the revenue-sharing provisions, which will go into effect on July 1, 2025.
Additional appeals challenging the settlement may be filed until July 7, 2025.
Additional Potential Challenges
Several legal and practical challenges may emerge as the settlement is implemented.
Antitrust: In granting final approval of the settlement, the court emphasized that the settlement’s authorization of certain restrictions, such as the revenue-sharing caps and roster limits, does not constitute a judicial determination that these restrictions comply with antitrust law. The court explicitly noted that its approval does not provide the NCAA or athletic conferences with immunity from antitrust liability. In the final days of the Biden administration, the Department of Justice filed a statement expressing concern that the settlement allows the NCAA to continue operating as a “monopsonist” (a single buyer in a market of many sellers) by setting the 22% revenue-share cap.
College Sports Commission: As mentioned, the settlement creates the College Sports Commission and authorizes it to enforce new rules surrounding student-athlete NIL agreements. Numerous questions remain about how this Commission will function in practice. The College Sports Commission must develop procedures for investigating potential violations and establish standards for determining “valid business purpose.”
State Law Issues: Some objectors argued to the court that the settlement could not be approved because, according to the objectors, the terms of the settlement contradict certain state laws that govern student-athlete compensation. In overruling these objections, the court expressly noted that the settlement does not preempt state laws governing student-athlete compensation, which vary significantly across the country. Thus, institutions must be aware that they may have concurrent or even conflicting obligations under the settlement and state law.
Congressional Action: NCAA member institutions and leadership have sought federal legislation that would provide antitrust immunity and establish nationwide uniformity regarding the laws governing college sports. On June 12, 2025, the House Subcommittee on Commerce, Manufacturing, and Trade held a hearing to consider draft legislation addressing many of the issues facing college sports, but federal action does not appear imminent. See Winning Off the Field: Legislative Proposal to Stabilize NIL & College Athletics Before the Subcomm. on Commerce, Manufacturing, & Trade of the H. Comm. on Energy & Commerce, 119th Cong. (2025).
Conclusion
The House settlement represents a significant development in college sports. The attorneys in Lewis Rice’s Education and Sports Law Practice are experienced at counseling and representing student-athletes, universities, NIL collectives, and others on a variety of matters, including those related to name, image, and likeness arrangements and student-athletes’ rights under revenue-sharing arrangements. If you or your institution would like to know more about the impact of the House settlement, contact one of the authors of this summary.
