The Eighth Circuit Court of Appeals affirmed the $42 million settlement between the National Football League (NFL) and almost 25,000 former pro football players who were seeking compensation for the use of their likenesses.
Several named plaintiffs opted out of the agreement and appealed its approval arguing that the resolution was not fair, reasonable, or adequate because it did not provide a direct payment to each class member.
The dispute began in 2009, when a class of former players sought compensation from the NFL for the use of their names, images, likenesses, and identities in NFL Films videos. The videos helped enhance the NFL brand and added profits to the league’s bottom line, the class argued.
After several years of litigation, the parties reached an agreement. For a full release of the claims, the NFL agreed to create and fund the Common Good Entity, a non-profit organization, with up to $42 million over an eight-year period. The league also agreed to establish a licensing agency to assist former NFL players in marketing their publicity rights and pay $100,000 worth of media value until 2021.
A federal district court judge granted approval of the deal in October 2013.
Immediately, several named plaintiffs objected and others opted out of the deal. The challengers argued that the agreement did not provide any direct benefit to the class and that the financial payments were made to a third party and not the class members directly.
In reviewing the district court’s decision, a panel of the Eighth Circuit found it to be fair, reasonable, and adequate. “[T]he settlement agreement provides for two substantial and direct benefits to the class as a whole: the Licensing Agency and a payment of up to $42 million for the benefit of the class,” the court said.
“All class members receive a direct benefit from the settlement: the opportunity to license their publicity rights through the established Licensing Agency, as well as the payments made by the NFL to the Licensing Agency,” the panel wrote. “If the players’ publicity rights are as valuable as [the objectors] claim, the players should be able to realize the value of their publicity rights through the Licensing Agency. While the parties disagree on the value of the Licensing Agency to the different class members, the district court held that through the Licensing Agency class members ‘finally ha[d] an avenue to pursue commercial interests in their own images … [and] for the first time in conjunction with the NFL’s copyrights and trademarks.’”
Further, even though the $42 million will not be paid directly to the class members, “the money is clearly designated for the benefit of the class,” the panel said, adding that “the mere fact” that a financial payout for the benefit of a class is made through a third party does not render a settlement impermissible. “The relevant question is for whom the money will be used, not whose name appears on the check.”
The district court also correctly assessed the relevant factors in support of the settlement, particularly the complexity and expense of further litigation, the court added. The parties had already spent three years in litigation before reaching a deal, and the resolution of the case would have required a review of each player’s contract(s) and “tremendous efforts” on multiple complex legal issues that include an analysis of conflict of law and statutes of limitations, a survey of the various state publicity laws, and the availability of the affirmative constitutional defenses.
Certain objections from the named plaintiffs suggested to the panel that their frustration had more to do with their beliefs about the value of their personal publicity rights claims rather than that of the class as a whole.
“The district court refused to give credence to the vocal minority that focused on receiving a direct financial payout, which the district court believed was a ‘very mistaken belief that they could reap significant financial benefits from continuing this case,’” the court said. “The fact that less than ten percent of the entire class opted out of the settlement—despite conscious efforts by some class members to persuade the other members of the unfairness—suggests it was favorable to what most members believed their claims were worth.”
To read the opinion in Marshall v. NFL, click here.
Why it matters: The Eighth Circuit resoundingly backed the trial court judge’s approval of the “complex” settlement and agreed that the “vocal minority” of objectors were frustrated about what they perceived was a lack of compensation for the full value of their publicity rights. Emphasizing that the district court operated as the guardian of absent class members, the federal appellate panel said the “amount of opposition from the substantial absent minority”—i.e., almost none—“is better indicative of the opposition to the settlement as a whole” than the outspoken named plaintiffs.