Agnew v. National Collegiate Athletic Ass'n
2012 U.S. App. LEXIS 12256
| 7th Cir. | 2012Background
- Agnew and Courtney allege NCAA bylaws restricting scholarships (one-year limits and team cap) reduce aid to student-athletes, allegedly harming education financing.
- Plaintiffs claim the bylaws create anticompetitive effects in labor and education-product markets for student-athletes and degrees.
- District court dismissed, holding plaintiffs failed to identify a cognizable Sherman Act market and thus lacked a necessary market definition.
- The Seventh Circuit reviews de novo, addressing whether a cognizable market exists and whether the complaint adequately identified it.
- Court acknowledges NCAA bylaws may be procompetitive under a presumption for certain rules, but holds the complaint failed to identify a valid market and thus affirms dismissal.
- Court notes that even with a potential procompetitive framework, a cognizable market and proper pleading are required for Sherman Act claims to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a cognizable market exists for Sherman Act claim | Agnew asserts a bachelor’s degree or student-athlete labor market. | NCAA contends no cognizable market exists under the Sherman Act. | No cognizable market identified in complaint; dismissal affirmed. |
| Whether the bylaws are presumptively procompetitive | Board of Regents presumption should apply to NCAA rules broader than eligibility. | Presumption limited to eligibility rules; bylaws here are not obviously procompetitive. | Presumption does not render the bylaws automatically procompetitive; must plead market. |
| Adequacy of the complaint under Rule 12(b)(6) | Complaint adequately alleged markets and injury. | Complaint vague about market contours; failed notice pleading. | Complaint failed to identify a cognizable market; dismissal with prejudice upheld. |
| Applicability of Sherman Act to NCAA bylaws generally | NCAA bylaws restrain trade in student-athlete labor or education markets. | NCAA bylaws may be subject to antitrust laws but require proper market pleading. | Sherman Act applies but pleading insufficient to show market power and restraint. |
Key Cases Cited
- Board of Regents v. NCAA, 468 U.S. 85 (U.S. (1984)) (horizontal restraints essential to product; some rules procompetitive; others violate §1)
- Banks v. NCAA, 977 F.2d 1081 (7th Cir. 1992) (eligibility rules may be procompetitive; no-draft rule preserves amateurism)
- Smith v. NCAA, 139 F.3d 180 (3d Cir. 1998) (eligibility rules create product; procompetitive under Rule of Reason)
- McCormack v. NCAA, 845 F.2d 1338 (5th Cir. 1988) (eligibility rule preserves amateurism; potentially procompetitive)
- Law v. NCAA, 134 F.3d 1010 (10th Cir. 1998) (labor market cognizable; employment-like competition elsewhere)
- Chicago Prof'l Sports Ltd. P'ship v. NBA, 961 F.2d 667 (7th Cir. 1992) (quick-look analysis for sports leagues; need for justifications)