The lawsuit, filed in U.S. District Court in Durham, accuses Duke University, the City of Durham and several school and police officials of fraud, abuse and breach of duty for supporting the prosecution of the case.
The lawsuit accuses the private university of implying the highly ranked team was guilty by canceling its season after the rape allegation surfaced. It also accuses Duke of ignoring, suppressing and discrediting evidence that proved the players innocent, and of idly standing by while players suffered abuse and harassment on campus.
"This lawsuit is born out of Duke and Durham's sustained wrongdoing and callous conduct against the players," lead attorney Chuck Cooper said while announcing the lawsuit at a news conference in Washington, D.C.
The lawsuit also accuses former Durham County District Attorney Mike Nifong and his investigators of hiding and fabricating evidence, and argues that the city of Durham should be held accountable for Nifong's actions.
Nifong won indictments against three lacrosse players after a woman accused them of raping her at a team party in March 2006. But the case unraveled amid the woman's changing story and lack of evidence.
Nifong, who was disbarred and spent a night in jail for his handling of the case, was not named in the lawsuit because of his pending request for bankruptcy protection, but Cooper said he could be added later. Nifong is claiming more than $180 million in liabilities, almost all tied to the prospect of losing two other lawsuits stemming from the rape case.
Pamela Bernard, Duke's vice president and general counsel, said the families declined a university offer to cover the cost of any attorneys' fees or other out-of-pocket expenses.
"We have not yet seen the lawsuit, but if these plaintiffs have a complaint, it is with Mr. Nifong," Bernard said. "Their legal strategy - attacking Duke - is misdirected and without merit."
Cooper said the compensation Duke had offered was inadequate.
The lawsuit filed on behalf of 38 unindicted players and nine members of their families seeks unspecified damages for invasion of privacy, emotional distress and other injuries.
Durham interim City Attorney Karen Sindelar did not immediately return a phone call seeking comment Thursday.
Dave Evans, Collin Finnerty and Reade Seligmann, the players who were charged and later declared innocent, have sued Nifong, the city of Durham and the police detectives who handled the case. They reached an undisclosed financial settlement with the university in June.
Three other players filed a suit last year, accusing the school, Nifong and numerous others of a conspiracy that inflicted emotional distress.
None of the lawsuits were filed against the woman who said she was raped. In the lawsuit filed Thursday, the accuser was called a "deeply mentally disturbed, drug-dependent young woman."