A federal judge has ruled that South Dakota’s lawsuit against the NCAA should proceed in state court, after the association previously sought to have the case moved to federal jurisdiction.
South Dakota’s attorney general Marty Jackley originally filed suit in September on behalf of the state’s two Division I schools—the University of South Dakota and South Dakota State—accusing the NCAA of breaching its constitution, bylaws and fiduciary duties to its members by agreeing without membership’s vote to a $2.8 billion settlement to resolve the House v. NCAA, Hubbard v. NCAA and Carter v. NCAA antitrust cases.
South Dakota’s suit argues that non-Power Four Division I schools, such as USD and SDSU, who were not named defendants in those antitrust cases, are being inequitably burdened by their settlement’s damage allocation model. A fairness hearing before U.S. District Court Judge Claudia Wilken, for final approval of the settlement, is scheduled next week.
If approved, approximately 60% of the back-pay damages outlined in the settlement agreement would be funded by reducing annual revenue distributions to schools. The extent of these reductions for individual schools would depend on the NCAA distributions their conferences received between 2016 and 2024.
According to the NCAA, non-Power Four members would experience about a 1% to 2% reduction their total athletics revenue.
In a 12-page order issued late last week, U.S. District Court Judge Karen E. Schreier remanded South Dakota’s case back to the state circuit court, where it had originally been filed. In turn, Jackley filed a motion Monday for a preliminary injunction in Brookings County, seeking to block the NCAA from withholding funds from the state’s two Division I schools to cover the settlement costs.
“Having profited handsomely from their student athletes for decades, the Power Four schools can better afford their proportionate share of the damages than publicly funded state universities like the University of South Dakota, South Dakota State University and hundreds of other state schools,” the motion stated, echoing the arguments made in the original lawsuit.
An NCAA spokesperson did not immediately respond to a request for comment.
“We intend to stop the NCAA from forcing South Dakota’s Universities and students to be responsible for $8 million in the NCAA’s mistake,” Jackley said in a statement.
South Dakota’s D-I schools compete in the Football Championship Subdivision, where they have enjoyed competitive success. Both schools’ football teams advanced to NCAA FCS semifinals last season and SDSU’s women’s basketball team pulled off an impressive first-round NCAA tournament upset this month against Oklahoma State.
The NCAA sought to move South Dakota’s case to federal court, arguing that some of its state law counts raised significant federal issues including one, in particular, addressing Title IX. South Dakota, in turn, removed the gender-equity count in an amended complaint and motioned to have the case returned to state court, where it is more likely to survive dismissal.
In arguing for state jurisdiction, the plaintiffs referenced the failed attempt by Houston Christian University to directly intervene in House, while raising similar issues over the settlement. Judge Wilken denied the school’s motion, ruling that the university had not demonstrated the court’s jurisdiction over the matter
Judge Schreier’s ruling last week noted that Wilken’s decision against Houston Christian University “bolstered” her own determination to allow the South Dakota case to proceed in state court. Concluding that a dispute over a settlement agreement “is a dispute under state contract law,” she rejected the NCAA’s argument that the original class actions’ federal nature should dictate the venue for South Dakota’s suit.
South Dakota’s legal challenge is just one of several battles that will continue to plague the NCAA even if it successfully resolves House. Just last week, attorneys representing the prospective class in Fontenot v. NCAA, an antitrust case closely mirroring House, filed an amended complaint, adding 292 plaintiffs.
Meanwhile, lawyers advocating for current and former female college athletes—some of whom have formally objected to the settlement—have publicly signaled their intent to launch Title IX litigation if the agreement moves forward. Adding to the NCAA’s legal woes is the ongoing Johnson v. NCAA class action suit, originally filed in 2019, which argues that college athletes should be considered employees of their universities.
(This has been updated with a statement from Jackley and in the third and fourth paragraphs with additional context about how the House v. NCAA settlement.)
