EA must defend NCAA conspiracy lawsuit

Thu May 17, 2012 6:35pm EDT

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(Reuters) - Electronic Arts Inc (EA.O) lost its bid to be dismissed from a lawsuit accusing the video game company of involvement in an NCAA conspiracy to prevent college athletes from being paid.

Plaintiffs led by former UCLA basketball star Ed O'Bannon had accused the National Collegiate Athletic Association and its marketing company of violating U.S. antitrust law by conspiring to force students to sign away their ability to profit commercially from playing college sports.

Arguing that the company is profiting improperly from using their images and likenesses in its games, the plaintiffs said EA agreed to abide by NCAA rules preventing student-athletes from being paid, even after finishing their collegiate eligibility.

EA asked that it be dismissed from the case. It claimed that its licensing agreements neither apply to former student-athletes, nor show any promise "to price-fix, boycott, or otherwise refuse to deal" with former student-athletes.

But in a Wednesday order, U.S. District Judge Claudia Wilken in Oakland, California let the plaintiffs pursue antitrust claims against the Redwood City, California-based company.

The licensing agreements "can fairly be read to evidence a 'meeting of the minds' between EA and the other defendants not to compensate former student-athletes, where such a contract would interfere with the student-athletes' existing agreements with the NCAA," she wrote.

"Further, the agreements give broad authority to the (marketing company) and NCAA to inspect EA's financial records related to the products, allowing them to see that payments were almost never made to former student-athletes," she added.

EA spokesman John Reseburg declined to comment. Jon King, a lawyer for plaintiffs in the case, did not immediately respond to requests for comment.

While many college athletes receive scholarships, strict NCAA rules bar them from sharing in the millions of dollars that schools receive from television and licensing deals. EA produces games based on NCAA basketball and football.

Wilken had in May 2011 dismissed the plaintiffs' original antitrust claims against EA, but let the plaintiffs amend their complaint to add facts that might suggest a conspiracy. Wednesday's decision allows the amended complaint to go forward.

EA has also faced lawsuits by former athletes over its alleged unauthorized use of their images in its video games.

Among those athletes is Samuel Keller, a former quarterback for Arizona State University and the University of Nebraska. Keller is also a plaintiff in the litigation before Judge Wilken. His claims were not addressed in Wednesday's decision.

On Wednesday, EA settled separate litigation in which rival Activision Blizzard Inc (ATVI.O) accused two former executives who developed the "Call of Duty" video game of breaking their employment agreements to develop games for EA. [ID:nL1E8GH00D]

The case is In re: NCAA Student-Athlete Name & Likeness Licensing Litigation, U.S. District Court, Northern District of California, No. 09-01967.

(Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)

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