Banks v. National Collegiate Athletic Ass'n, 91-1666

• Decision Date: 10 December 1992
• Docket Number: No. 91-1666,91-1666
• Citation: 977 F.2d 1081
• Parties: 1992-2 Trade Cases P 69,995 Braxston L. BANKS, Plaintiff-Appellant, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1081

977 F.2d 1081

1992-2 Trade Cases P 69,995

Braxston L. BANKS, Plaintiff-Appellant, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Defendant-Appellee.

No. 91-1666.

United States Court of Appeals, Seventh Circuit.

Argued Dec. 6, 1991.

Decided Oct. 13, 1992.

As Amended Oct. 19, 1992.

Rehearing and Rehearing In Banc

Denied Dec. 10, 1992.

Alan B. Morrison (argued), Michael Tankersley, Public Citizen Litigation Group, Washington, D.C., James A. Masters, Joseph S. Donnelly, Nemeth, Masters & Leone, South Bend, Ind., for plaintiff-appellant.

William C. Barnard (argued), Debra McVicker Lynch, Gayle A. Reindl, Sommer & Barnard, Indianapolis, Ind., John J. Kitchin, Kansas City, Mo., for defendant-appellee.

Before COFFEY and FLAUM, Circuit Judges, and GRANT, Senior District Judge. ^*

COFFEY, Circuit Judge.

Braxston Lee Banks appeals the district court's dismissal of his claim that the National Collegiate Athletic Association ("NCAA") rules withdrawing athletes' eligibility to participate in collegiate sports in the event the athlete chooses to enter a professional draft or engages an agent to help him secure a position with a professional team are an illegal restraint on trade or commerce in violation of 15 U.S.C. § 1. We affirm the judgment of the district court holding that Banks failed to state a claim upon which relief can be granted.

I. FACTS

Banks entered the University of Notre Dame on a full football scholarship in September of 1986. As a freshman Banks started in four or five games and in fact played in all eleven contests. In the first game of his sophomore year, Banks injured his knee and, as a result of his injury, played in only seven games--he started in four of them. Again in his junior year, allegedly because of the knee injury, Banks played in only six games but again started in four. Banks chose to sit out his senior year (1989) because, as he stated, "of my desire to be sure that my knee was fully recovered before I played again." Having completed three years of college eligibility, Banks was eligible to enter the National Football League ("NFL") selection process or "draft" in the spring of 1990. Banks decided to enter the 1990 NFL draft ¹ after representatives of two scouting organizations employed by the NFL teams informed him that he would have been invited to the regular NFL scouting try-outs if he had completed his collegiate eligibility. His decision was allegedly based partially on a fear that playing another season of college football might expose him to further injury and thus prevent him from entering the pros, as well as the belief that he could anticipate being drafted because a former teammate, who was placed in the starting lineup at Notre Dame after Banks suffered a knee injury, was expected to be drafted early. After the news of Banks' entrance into the draft became public, representatives of virtually every NFL team visited Notre Dame and put him through athletic efficiency drills to test his skills. In addition, Banks participated in an NFL tryout in Indianapolis, Indiana for college players who had entered the draft before completing college eligibility. Banks apparently performed below par at the tryouts in Indianapolis, and as a result failed to be selected in the draft or as a free agent.

Under the NCAA rules, an athlete is eligible to play four seasons of an intercollegiate sport within five years of commencing his college education. ² As a result of sitting out his senior year of eligibility, Banks had one year of intercollegiate eligibility remaining when he graduated in August of 1990. ³ Banks concluded that his failure to be picked in the NFL draft was based on the respective teams' fears that his injury made him suspect because of his previous knee injury; rather than the teams' evaluation that his playing skills did not measure up to the professional level of the NFL. In spite of the fact that he was exposing himself to further injury, he decided that the only way for him to demonstrate his ability to compete on the professional level was to return to Notre Dame for graduate courses and re-enter its intercollegiate football program during his final year of eligibility. Unfortunately for Banks, two NCAA eligibility rules stood in his way. Rule 12.2.4.2, the "no-draft" rule, provides that "[a]n individual loses amateur status in a particular sport when the individual asks to be placed on the draft list or supplemental draft list of a professional league in that sport...." Rule 12.3.1, the "no-agent" rule, states: "An individual shall be ineligible for participation in an intercollegiate sport if he or she ever has agreed (orally or in writing) to be represented by an agent for the purpose of marketing his or her athletics ability or reputation in that sport." Since Banks participated in the draft try-outs and agreed to be represented by an agent subsequent to signing up for the draft, either of the two rules (NCAA Rule 12.2.4.2 or Rule 12.3.1) was sufficient to bar him from participating in his final year of eligibility at Notre Dame. The Notre Dame football coaches allegedly wanted Banks to play in the 1990 season, but according to Banks, the school refused to request the NCAA to reinstate Banks' eligibility because no college had ever appealed to the NCAA to restore eligibility of a player who entered the NFL draft. The NCAA declined to consider Banks' personal request for reinstatement, as the bylaws provide only for member colleges to petition for restoration of an athlete's eligibility.

With Notre Dame's football season rapidly approaching (first practice August 17, 1990), Banks filed his complaint in the United States District Court for the Northern District of Indiana in South Bend on August 9, 1990. In his first cause of action Banks requested a preliminary injunction against Notre Dame and the NCAA to prevent the enforcement of the no-draft and no-agent rules; in his second cause of action, Banks sought an injunction on behalf of himself and a class of players similarly situated restraining the NCAA from enforcing the rules. The district court denied Banks' request for a preliminary injunction after a hearing. The court held that Banks had "not demonstrated a reasonable likelihood of success on his claim that the NCAA's regulations restrain trade in violation of § 1 of the Sherman Act." After the denial of his request for a preliminary injunction that would have allowed him to play during the 1990 season, Banks' hopes of reentering the Notre Dame football program evaporated because of NCAA Rule 14.2, which limits an athlete's intercollegiate eligibility to five calendar years from the date he registers as a full-time student. ⁴ Thereafter, Banks amended his complaint on August 30, 1990 and withdrew his request for a "preliminary injunction" and made two claims: (1) requesting that the NCAA be permanently enjoined from enforcing Rules 12.2.4 and 12.3 on behalf of the plaintiff's class (Amended Complaint, pp 30-33), and (2) treble damages from the NCAA for "the loss of his grant-in-aid worth approximately $16,000 for another year, the value of the extra year of education, and the value of another year of football eligibility at Notre Dame." (Amended Complaint, p 36). Pursuant to Federal Rule of Civil Procedure 12(b)(6), the NCAA moved to dismiss Banks' complaint for failure to state a claim (the complaint stated two claims) upon which relief can be granted. In granting the NCAA's motion, the district court stated with respect to Banks' individual claim for treble damages:

"Mr. Banks argues that he has asserted a cognizable injury under the antitrust laws in the second cause of action of his amended complaint. He contends that the impact of the NCAA's rules cannot be resolved on a motion to dismiss since disposition of that issue is fact-sensitive. He suggests that the NCAA rules violate the antitrust laws by restricting opportunities in the labor market for collegiate football players. Mr. Banks further suggests that the rules effect a group boycott on the part of the NCAA and the NFL teams over collegiate football players as consumers in the labor market. Mr. Banks does not suggest what anti-competitive effects result from either restraints in the football labor market or the group boycott; nor does he challenge the purported pro-competitive impact of the NCAA's no draft rules."

Mem. Op. at 5-6 (Feb. 20, 1991) (emphasis added). The court held that:

"Mr. Banks' amended complaint fails to allege facts establishing the NCAA's violation of the antitrust laws. As discussed in the August 17 order, the NCAA has demonstrated significant pro-competitive effects of its no draft rules. Mr. Banks has alleged no anti-competitive effects to overcome this positive impact and show an adverse market impact upon either collegiate players or NCAA member institutions. As discussed in the August order, the rules affect neither the player's ability to receive financing for their education nor the school's opportunity to compete for athletes. While Mr. Banks claims that the NCAA rules in question accomplish a group boycott by way of restricting the football labor market, he ties those allegations to no competitive impact on any identifiable market. Mr. Banks has no antitrust injury that can be gleamed [sic] from the amended complaint."

Id. at 10-11 (emphasis added).

II. ISSUES

We will address the following issues in this appeal: 1) whether Banks has standing to act as a class representative for the purpose of seeking to enjoin the NCAA's enforcement of its no-draft and no-agent rules; 2) whether the district court erred in dismissing this antitrust claim under Rule 12(b)(6) for failure to state a claim upon which relief can be granted; and 3) whether the plaintiff stated a valid antitrust claim in his second cause of action.

III. STANDING

The NCAA asserts that since Banks' claim on behalf of the class for injunctive relief is moot as to Banks, ⁵ he lacks the...