Deppe v. Nat'l Collegiate Athletic Ass'n
893 F.3d 498
7th Cir.2018Background
- Plaintiff Peter Deppe, a Division I football player and former NIU walk-on, sought to transfer to the University of Iowa after losing a promised scholarship and being supplanted on the roster.
- The NCAA informed Deppe that its Division I "year-in-residence" bylaw (one full academic year ineligible after transferring) would render him ineligible to compete immediately; the one-time transfer exception did not apply to his intended move.
- Iowa declined to pursue a waiver that might have permitted immediate eligibility, and Deppe sued the NCAA on behalf of a putative class under § 1 of the Sherman Act challenging the year-in-residence rule as an unlawful restraint of trade.
- The district court dismissed the complaint under Rule 12(b)(6); the Seventh Circuit reviewed that dismissal de novo.
- The NCAA argued the bylaw is an eligibility rule presumptively procompetitive under Supreme Court precedent and Seventh Circuit precedent, so no rule-of-reason analysis was required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the year-in-residence bylaw is an unreasonable restraint of trade under § 1 of the Sherman Act | Deppe: the rule unlawfully restrains trade by limiting transfers and suppressing scholarship competition | NCAA: the bylaw is an eligibility rule that preserves amateurism and is presumptively procompetitive under Board of Regents and Agnew | The bylaw is an eligibility rule and presumptively procompetitive; dismissal on pleadings affirmed |
| Whether eligibility-rule presumption applies despite exceptions/waiver processes | Deppe: availability of exceptions shows the rule is unnecessary to preserve the college-sports product | NCAA: exceptions are limited and reflect calibrated flexibility; presumption tests intent to preserve amateurism, not survivability without the bylaw | Exceptions do not defeat the presumption; rule is clearly aimed at preserving amateur character |
| Whether the NCAA’s motive (economic/protecting Power 5) negates presumption | Deppe: the rule protects high-revenue programs and has economic effects that suggest anticompetitive intent | NCAA: plausible non-antitrust justifications exist (preventing poaching, preserving product); effects alone don’t negate presumption | Court rejects inference of anticompetitive motive from economic effects; procompetitive presumption remains |
| Whether a full rule-of-reason market analysis is required at the pleading stage | Deppe: should proceed to full rule-of-reason to assess anticompetitive effects and market impact | NCAA: if rule is a presumptively procompetitive eligibility rule, no full rule-of-reason is needed at pleading stage | No full rule-of-reason required; complaint dismissed for failure to overcome presumption |
Key Cases Cited
- NCAA v. Board of Regents of Univ. of Okla., 468 U.S. 85 (Sup. Ct. 1984) (eligibility and rules preserving amateurism are presumptively procompetitive)
- Agnew v. NCAA, 683 F.3d 328 (7th Cir. 2012) (applies Board of Regents presumption; most eligibility rules are procompetitive at pleading stage)
- Banks v. NCAA, 977 F.2d 1081 (7th Cir. 1992) (eligibility rule revoking status for entering draft/agent hire is within NCAA authority)
- McCormack v. NCAA, 845 F.2d 1338 (5th Cir. 1988) (suspension of program for illicit payments relates to eligibility/product preservation)
- Smith v. NCAA, 139 F.3d 180 (3d Cir. 1998) (eligibility rule affecting graduate-school transfer upheld as an eligibility regulation)