NCAA v. House Settlement Investigated by Montana and South Dakota Attorneys General

The attorneys general of Montana and South Dakota are considering legal action to overturn aspects of the House of NCAA settlement agreement.

“The settlement is unfair to Montana universities,” said a spokesman for Montana Attorney General Austin Knudsen. “We are exploring what legal action we can take.”

The state’s two Division I universities, Montana and Montana State, compete in the Big Sky Conference at the FCS level, while South Dakota has two DI FCS schools that compete in the Summit Conference.

A spokesman for South Dakota Attorney General Marty Jackley said his office is also “reviewing options regarding the NCCA lawsuit and settlement.”

As drafted, the settlement would require the non-power conference schools, such as those in Montana and South Dakota, to forfeit $990 million in NCAA benefits over the next decade to EXCEED any “back pay damages” that would go primarily to former power conference football and basketball players.

Since May, when the main details of the House settlement was made public, a number of non-Power Five schools and conferences have voiced concerns that they are bearing an unfair burden for a situation not of their own making and that they are having to resolve antitrust lawsuits in which they are not named as defendants.

Earlier this month, Houston Christian University raised these concerns when it attempted to intervene as a party to the lawsuit, but that attempt was met with a sharp rejection from U.S. District Court Judge Claudia Wilken.

On Tuesday, Houston Christian’s outside counsel James Sears Bryant said Sporty that the school plans to appeal Wilken’s rejection this week. Sporty has outlined potential arguments HCU could make in an appeal or in a separate lawsuit against the NCAA.

It remains to be seen whether another party, including an attorney general acting on behalf of a state’s universities, will make a similar attempt to intervene, given Wilken’s sweeping order. A school or attorney general could also file a lawsuit against the NCAA, as others have done successfully in the past seven months (albeit in cases that raised different legal questions).

In January, the attorneys general of Tennessee and Virginia filed a lawsuit against the NCAA over its NIL rules. That effort was later bolstered by an amended complaint from the chief law enforcement officers of Florida, New York and Washington, D.C., and ultimately led to the college sports governing body freezing its NIL enforcement activities.

Additionally, Florida Attorney General Ashley Moody filed a lawsuit in April against the Atlantic Coast Conference, alleging it violated her state’s public records law by refusing to turn over a copy of media rights contracts to Florida State University, which had sued the ACC over exit fees.

AGs who want to challenge the settlement have several legal options, though any approach would face significant hurdles. They could file a motion to intervene in the House settlement. If Wilken were to allow this, the AGs would formally have a voice in the legal process.

The AGs could argue that they are eager to be within their rights by emphasizing that they represent their respective state governments, which in turn charter and fund the public universities that are parties to the settlement by virtue of their NCAA membership. From that perspective, it is the states’ money—that is, taxpayers’ money—that is at stake in the settlement. So are the obligations of state governments and university officials to oversee that money and to meet related fiduciary duties. The AGs could argue that they should have been consulted in the settlement discussions and that they should have been able to request changes before the settlement was approved.

Wilken would be inclined to reject these motions to intervene, just as she rejected the HCU motion.

For starters, neither the AGs nor the states they represent are parties to the lawsuit and thus may not have jurisdiction. While the AGs can insist that they, and the public universities in their states, all fall under the same umbrella known as the state government, Wilken might find that a bit of a stretch. A state university’s athletic department is overseen by the state university, not the AG, governor, or other state official.

Wilken might also wonder why the attorneys general did not act sooner, given that the House The lawsuit has been pending in court since 2020. To the extent the AGs are alleging that the NCAA violated its own rules, Wilken would be inclined to argue that she lacks standing to address that issue. She is presiding over a lawsuit that is about whether the NCAA’s rules comply with antitrust law, not whether the NCAA misapplied its own rules. Further, Wilken could argue that it is not yet ripe for intervention, since it would likely be months before she would grant preliminary approval, and the terms of the settlement could change significantly in that time.

A better option for the AGs would be to sue the NCAA in state court, seeking a restraining order and injunction blocking implementation of the settlement. A state court would offer several advantages over a federal court, including a more sympathetic forum through a local jury and, depending on the state, an elected judge. The NCAA has also at times had difficulty moving state court filings to federal court.

It also wouldn’t be difficult for the AGs to draft a complaint that raises claims of breach of fiduciary duty and breach of contract. The AGs could easily quantify the financial harm their states would suffer if the settlement goes forward. To help obtain a restraining order and/or injunction, the AGs could also argue that some of the harm would be irreparable (meaning it cannot be remedied through monetary damages) because, they might argue, students’ chances of receiving financial aid would be forfeited and the schools’ and states’ brands would be irreparably tarnished.