Kneeland v. National Collegiate Athletic Ass'n, 86-1825

• Decision Date: 26 July 1988
• Docket Number: No. 86-1825,86-1825
• Citation: 850 F.2d 224
• Parties: 47 Ed. Law Rep. 487, 15 Media L. Rep. 1783 Carole KNEELAND and Belo Broadcasting Corp., Plaintiffs-Appellees, and A.H. Belo Corp., d/b/a The Dallas Morning News, The Times Herald Printing Co. and David Eden, Intervenors-Appellees, Cross-Appellants, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, and Southwest Athletic Conference, Defendant-Appellants, Cross-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 224

850 F.2d 224

47 Ed. Law Rep. 487, 15 Media L. Rep. 1783

Carole KNEELAND and Belo Broadcasting Corp., Plaintiffs-Appellees and A.H. Belo Corp., d/b/a The Dallas Morning News, The Times Herald Printing Co. and David Eden Intervenors-Appellees, Cross-Appellants, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, and Southwest Athletic Conference, Defendant-Appellants, Cross-Appellees.

No. 86-1825.

United States Court of Appeals Fifth Circuit.

July 26, 1988.

Rehearing and Rehearing En Banc Denied Aug. 25, 1988.

Robert M. Roller, Katheyn E. Allen, George H. Gangwere, Graves, Dougherty, Hearon & Moody, Austin, Tex., for National Collegiate Athletic Ass'n.

Robert F. Middleton, O. Luke Davis, III, Baker, Smith & Mills, Dallas, Tex., for Southwest Athletic Conference.

Jack Pew, Jr., Charles L. Babcock, Jackson, Walker, Winstead, Cantwell & Miller, Dallas, Tex., for Times Herald Printing and David Eden.

Jack Balagia, Jr., James R. Raup, McGinnis, Lochridge & Kilgore, Austin, Tex., for Kneeland.

William D. Sims, Jr., Paul C. Watler, David B. Dyer, Dallas, Tex., for A.H. Belo Corp.

Appeals from the United States District Court for the Western District of Texas.

Before THORNBERRY, POLITZ and WILLIAMS, Circuit Judges.

POLITZ, Circuit Judge:

The essential question posited on this appeal is whether the National Collegiate Athletic Association (NCAA) and the Southwest Athletic Conference (SWC) are subject to the Texas Open Records Act, Tex.Rev.Civ.Stat.Ann. art. 6252-17a (Vernon Supp.1988). The district court found that the NCAA and SWC received public funds and were governmental bodies within the meaning of the Act. It further found no validity to constitutional claims, asserted statutory exemptions, and a claimed tort-law bar to application of the Act. ¹ We agree with the district court that the funds involved are public funds, but disagree that the NCAA and SWC are governmental bodies. So concluding, we reverse.

BACKGROUND

The facts are set forth fully in the district court opinions reported in 650 F.Supp. at pages 1047, 1064 and 1076. Some are discussed in detail herein. We begin by noting that the genesis of this litigation was a football recruiting scandal at Southern Methodist University, Dallas, Texas. Kneeland, a reporter for the Dallas Morning News, A.H. Belo Corporation, d/b/a The Dallas Morning News, The Times Herald, and David Eden, invoked the Act and sought disclosure of the data developed in the investigations by the NCAA and SWC. When their requests were denied, complainants petitioned the Texas state court for a mandamus commanding disclosure. After removal to federal court because of the Sec. 1983 claims, and a bifurcated trial, the district court held that the NCAA and the SWC were governmental bodies subject to the Act. The district court based its resolution on findings and conclusions about the organization and funding of the NCAA and SWC which we briefly examine.

NCAA

The NCAA is a private association composed of public and private colleges and universities from across the United States. There are member institutions in every state, including four public universities in Texas. The SWC and other regional associations are also members. The NCAA is governed by a constitution, a set of bylaws, and extensive regulations, to which all members commit. The member institutions send delegates to national conventions. These delegates elect a council which, in turn, elects an executive committee which transacts the business of the association, including the collection of dues. In addition, the delegates elect multiple committees which are assigned either responsibilities for a particular sport or an overall function.

The NCAA derives its income from three sources: dues, assessments on television gross rights fees, and championship games and tournaments.

The NCAA receives a four percent assessment on the gross rights fees paid to members for nationally telecast conference football games. Revenue generated by this assessment is used to fund the NCAA's post-graduate scholarship programs and football related services.

The largest part of NCAA revenues comes from championship events. ² The hosting members receive specifically listed expenses, and a percentage, 10 to 15 percent, of the gross receipts from the events, including concessions. The net is remitted to the NCAA. A portion thereof is used to defray the travel and per diem expenses of the visiting teams.

SWC

The SWC is a non-profit association composed of nine member-universities, including four Texas public institutions. It is governed by a constitution and bylaws. Its revenues are generated by gate receipts and television fee assessments. Under the SWC bylaws, each member remits 50% of its share of the receipts from non-conference regionally or nationally televised games. Teams in conference games share 30%; the remainder is remitted to the SWC. Payments previously were directed to the universities. Since initiation of this litigation the SWC has requested that the television networks send the payments directly to the SWC, which deducts its percentage and forwards the remainder to its members. Each year the SWC sets aside its estimated expenses for the coming year and it then makes an equal distribution of the excess funds to its nine member-universities.

ANALYSIS

A. Public Funds

The Act defines public funds as "funds of the State of Texas or any governmental subdivision thereof." Tex.Rev.Civ.Stat.Ann. art. 6252-17a, Sec. 2(1)(F); (Vernon Supp.1988). Texas universities and colleges are created by the Texas Constitution and are subdivisions of the state. Our inquiry is whether the revenues remitted to the NCAA and the SWC by Texas public universities are public funds under the Act.

1. NCAA

The district court held that the sums paid by public schools to the NCAA in dues, assessments of television gross rights fees, and unreimbursed salaries and costs connected with championship events, were public funds. The court found that the athletic departments of Texas state universities were auxiliary enterprises, and funds in their accounts were public funds belonging to the State of Texas. The court also held that under the holding of Board of Regents of University of Oklahoma v. NCAA, 546 F.Supp. 1276 (W.D.Okla.1982), aff'd., 468 U.S. 85, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984), football television rights are owned by universities; those belonging to public schools belong to the state and the revenues derived become state funds. The NCAA does not challenge either ruling. Rather, it contends that it is the exclusive owner of the championship events, and that the ultimate issue is whether its Enforcement Division, which developed and holds the investigative records at issue herein, is the recipient of public funds, assuming that there were unreimbursed costs and expenses, since the championship events are structured with a percentage component arrangement.

The evidence relative to the sources of the $1.5 million budget of the Enforcement Division is conflicting. The district court found that revenues from telecast assessments, as well as that derived from championship events, were used to fund all NCAA divisions, including enforcement. Considering the earmarking of assessments for "football related services," and the testimony by the NCAA comptroller that all funds were commingled, the tracing of specific funds to specific functions is not possible. The district court's factual finding that Enforcement Division funds came from all three revenue sources easily withstands a clearly erroneous challenge. Fed.R.Civ.P. 52(a). Accordingly, even if the costs of unreimbursed goods and services provided for championship events are not deemed public funds, it is still apparent that the Enforcement Division receives some public funds.

2. SWC

The SWC Bylaws are part of the contractual arrangement between member-schools and the SWC. Bylaw 9.04(A) requires members to tender one-half of their receipts from non-conference football games, while Bylaw 9.05 entitles the SWC to 70% of the receipts of conference games. In addition, the SWC receives television gross rights fees assessments. As noted, after deducting anticipated expenses the SWC annually returns these funds in equal portions to its nine members.

SWC maintains that the monies received from gate receipts and television broadcasts belong to it, that its members merely act as collecting and disbursing agents. The district court rejected this argument. The SWC now reurges it, citing A.H. Belo v. Southern Methodist University, 734 S.W.2d 720 (Tex.App.1987--error denied May 18, 1988). In that case the Texas intermediate appellate court held that the funds annually distributed to the four private-member universities (Southern Methodist University, Texas Christian University, Baylor and Rice) were not public funds, and that by receipt thereof, the four universities did not become governmental bodies.

SWC and the NCAA would have us read this decision as authority for the proposition that television broadcast revenues and fee assessments paid by the Texas public institutions to the SWC are private funds held in trust by the members for the SWC. The same argument would apply to the four percent gross rights fee assessment imposed by the NCAA Bylaw 8-2-(c). The argument is based on the fact that gate receipts and broadcast fees received by athletic departments are considered auxiliary or local funds which need not be deposited in the state treasury. Tex.Ed.Code Ann. Sec. 51.002. However, guiding jurisprudence and persuasive opinions ³ of the Texas Attorney General, issued over an extended period of time, convince us that these funds are public funds.

Property of various kinds comprise public funds. Goggans v. Simmons, 319 S.W.2d 442 (Tex.Civ.App.1958) (writ ref'd n.r.e.). Property includes obligations, rights, and other intangibles. Womack v. Womack g141 Tex. 299, 172 S.W.2d 307 (1943). The right...