Unreported / Non-Citable
Background
The plaintiffs, Shannon Ray, Khala Taylor, Peter Robinson, Katherine Sebbane, and Rudy Barajas, were ‘volunteer coaches’ at NCAA Division I sports programs other than baseball. For years, an NCAA bylaw barred Division I programs from compensating coaches who were designated ‘volunteer coaches’ — meaning these individuals worked without pay even though they performed coaching duties identical to paid coaches lower in the hierarchy. The NCAA repealed the rule in 2023.
The plaintiffs sued the NCAA on behalf of a class of all such volunteer coaches, alleging that the no-pay bylaw was a horizontal restraint of trade in violation of section 1 of the Sherman Antitrust Act. The court previously certified a class of all persons who, between March 17, 2019 and June 30, 2023, worked for an NCAA Division I sports program other than baseball as a ‘volunteer coach.’ That class is estimated to include about 7,718 former coaches. A related case involving baseball volunteer coaches, Smart v. NCAA, recently settled before the same court.
The parties negotiated a settlement after class certification. The plaintiffs filed an unopposed motion asking the court to grant preliminary approval — the first stage of court oversight that allows notice to be sent to class members before final fairness review.
The Court’s Holding
The court preliminarily approved the proposed settlement, finding it falls within the range of possible final approval. The gross settlement amount is $303,000,000, paid in three installments of $101,000,000 each over two calendar years into a common fund. The plaintiffs’ expert, Dr. Ashenfelter, estimated total class damages at $299,600,000 — meaning the gross settlement exceeds 100% of estimated damages. The court called this ‘an exceptional result’ and well within the range previously approved by California federal courts.
The court analyzed the standard preliminary-approval factors. It found the parties had engaged in arms-length, non-collusive negotiations after class certification was already granted. The amount-recovered factor strongly supported approval given the recovery rate. The plan of allocation, which calculates each class member’s ‘Recognized Loss’ based on the wages of the lowest-paid non-volunteer coach for the same school and sport for each six-month period, with a downward adjustment to reflect the volunteer coach’s lower position in the hierarchy, was found adequate. The average payment per class member is approximately $39,260 before fees and expenses.
On attorneys’ fees, the court declined to evaluate the up-to-30% fee request at the preliminary approval stage and reserved the issue for the final-approval hearing, where the court will apply the lodestar method and consider degree of success. On service awards for the five class representatives ($25,000 each, totaling $125,000), the court flagged that this amount is unusually high and instructed counsel to provide more detail in the final approval motion explaining each representative’s contributions and why five class representatives were needed. The court also preliminarily enjoined class members (other than those who timely opt out) from filing parallel claims about the released conduct.
Key Takeaways
- The Eastern District has preliminarily blessed a $303 million Sherman Act settlement for former NCAA volunteer coaches, capping multi-year antitrust litigation challenging the now-repealed no-pay bylaw.
- A settlement that exceeds 100% of estimated class damages will receive substantial deference at the preliminary approval stage.
- The court treated the plan of allocation, which uses a ‘Recognized Loss’ formula tied to comparable paid coaches’ wages with a stepdown for the volunteer coach’s hierarchical position, as a fair and rational distribution method.
- Service awards of $25,000 per class representative are ‘unusually high’ under California federal court standards; counsel must justify both the amount and the number of representatives at final approval.
- Attorneys’ fee requests up to 30% will be reviewed under the lodestar method at final approval, not at preliminary approval.
- The court issued a preliminary anti-suit injunction preventing class members from prosecuting parallel claims about released conduct unless and until they opt out.
Why It Matters
This is a landmark settlement in the long-running effort to bring federal antitrust scrutiny to NCAA compensation rules. With more than 7,700 former coaches eligible and an average per-coach payment of nearly $40,000 before fees, the deal joins a growing list of large NCAA antitrust resolutions emerging from the Eastern District of California. For the NCAA and athletic programs, the settlement underscores that even after repealing a challenged bylaw, the prior conduct can carry hundreds of millions of dollars of liability.
For class action practitioners, the opinion is a useful guide to preliminary-approval analysis in California — particularly the court’s careful handling of fee and service-award requests. The court’s signal that $25,000 service awards will require detailed justification at final approval is a reminder that even strong settlements should not assume rubber-stamping of incentive payments.