Smith v. Nat'l Collegiate Athletic Assoc.

• Decision Date: 18 May 2001
• Docket Number: Nos. 97-3346,97-3347,s. 97-3346
• Citation: 266 F.3d 152
• Parties: (3rd Cir. 2001) R. M. SMITH APPELLANT, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION On Remand from the United States Supreme Court Submitted pursuant to L.A.R. 34.1(a) on
• Court: U.S. Court of Appeals — Third Circuit

Page 152

266 F.3d 152 (3rd Cir. 2001)

R. M. SMITH APPELLANT, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION

Nos. 97-3346, 97-3347

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

On Remand from the United States Supreme Court Submitted pursuant to L.A.R. 34.1(a) on May 18, 2001 Filed August 22, 2001

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA AND ON REMAND FROM THE SUPREME COURT OF THE UNITED STATES (D.C. No. 96-CV-01604) District Judge: The Honorable Donetta W. Ambrose

Virginia A. Seitz, Sidley & Austin 1722 Eye Street, N.W., Suite 300 Washington, DC 20006 Attorney for Appellant

Carole S. Katz, Reed Smith 435 Sixth Avenue Pittsburgh, PA 15219 John J. Kitchin, Robert W. McKinley, Esq. Swanson Midgley 2420 Pershing Road, Suite 400 Kansas City, MO 64108 Christine A. Ward, Sweeney, Metz, Fox, McGrann & Schermer 11 Stanwix Street Pittsburgh, PA 15222 Attorneys for Appellee

Neena K. Chaudhry, National Women's Law Center 11 DuPont Circle, N.W., Suite 800 Washington, DC 20036 Attorney for Amicus-Appellant

Before: Nygaard, Mckee, and Greenberg, Circuit Judges.

OPINION OF THE COURT

Nygaard, Circuit Judge.

Once again, we review Renee M. Smith's appeal from the District Court's dismissal for failure to state a claim and its denial of her motion to amend her complaint. Smith alleges that the National College Athletic Association's bylaw, which prohibited her from participating in athletics while enrolled in a graduate program outside her undergraduate institution, violated Title IX of the Education Amendments of 1972. The primary issue we must decide is whether the NCAA can be considered a recipient of federal funds, thereby subjecting it to Title IX. Smith initially attempted to amend her complaint to argue that the NCAA is subject to Title IX because it receives dues from its members universities, which are recipients of federal funds. We accepted this theory in Smith v. NCAA, 139 F.3d 180, 189 (3d Cir. 1998). The United States Supreme Court, however, reversed, but left Smith's two alternative theories for bringing the NCAA under the prescriptions of Title IX unresolved. See NCAA v. Smith, 525 U.S. 459, 468-470, 119 S.Ct. 924, 929-30 (1999). Those two theories are now before us in this appeal.

I. BACKGROUND

The NCAA is an unincorporated association comprised of public and private colleges and universities. It is responsible for promulgating rules governing all aspects of intercollegiate athletics, including recruiting, eligibility of student-athletes, and academic standards. By joining the NCAA, members agree to abide by and enforce these rules. Among them is the Postbaccalaureate Bylaw, which allows a postgraduate student-athlete to participate in intercollegiate athletics only at the institution that awarded her an undergraduate degree.

Smith was an undergraduate at St. Bonaventure University, an NCAA member, where she played intercollegiate volleyball in 1991-92 and 1992-93. She chose not to play volleyball during the 1993-94 season. Smith graduated from St. Bonaventure in two and one half years. Thereafter, she enrolled in a post-graduate program at Hofstra University that was not offered at St. Bonaventure. During the 1995-96 academic year, she enrolled in a different post-graduate program at the University of Pittsburgh. Like Hofstra, St. Bonaventure did not offer this program. In both years, Smith sought to play intercollegiate volleyball, but the NCAA denied her eligibility under its Postbaccalaureate Bylaw. The NCAA also declined Hofstra's and the University of Pittsburgh's requests for a waiver of the Bylaw.

In August 1996, Smith filed her initial complaint in this case. She alleged, inter alia, that the NCAA's refusal to grant a waiver excluded her from participation in intercollegiate athletics on the basis of her sex in violation of Title IX.¹ The NCAA moved to dismiss the complaint on the ground that it failed to allege that the NCAA is a recipient of federal financial assistance, and the District Court agreed. See Smith v. NCAA, 978 F. Supp. 213, 219-20 (W.D. Pa. 1997). Smith then filed a motion for leave to amend her complaint to allege that the NCAA "receives federal financial assistance through another recipient and operates an educational program, or activity which receives or benefits from such assistance." The District Court denied the motion, holding that it was moot.

We reversed. Although Smith's original complaint failed to state a Title IX claim, we held that her allegation that the NCAA receives dues from federally-funded member institutions was sufficient to bring the NCAA "within the scope of Title IX as a recipient of federal funds and would survive a motion to dismiss." Smith, 139 F.3d at 190. The Supreme Court disagreed. It held that the mere fact that an entity receives dues from a federally-funded program is not, by itself, sufficient to render it a recipient of federal funds. See Smith, 525 U.S. at 468, 119 S.Ct. at 929. The Court explained that "[a]t most, the Association's receipt of dues demonstrates that it indirectly benefits from federal assistance afforded its members." Id. Thus, the Supreme Court vacated our decision. It noted, however, that Smith pressed two alternative theories for bringing the NCAA under the purview of Title IX. Specifically, she argued that when a recipient cedes "controlling authority" over a federally funded program, the controlling entity is covered by Title IX. See id. at 469-70, 119 S.Ct. at 930. She also argued that the NCAA directly and indirectly receives federal financial assistance through the National Youth Sports Program ("NYSP")² and the National Youth Sports

Program Fund ("Fund"), which are administered by the NCAA. See id. The Court did not address these theories but instead left them "to the courts below on remand." Id. Accordingly, they are now before us for consideration.

II. DISCUSSION

A. Controlling Authority Theory

Smith first argues that the NCAA is subject to Title IX because it has "controlling authority" over the intercollegiate athletic programs of its member institutions that receive federal financial assistance.³ She seeks to amend her complaint to include this theory.

We have previously addressed whether the NCAA has "controlling authority" over its federally-funded members in the context of Title VI. In Cureton v. NCAA, 198 F.3d 107 (3d Cir. 1999), African-American student athletes alleged that the NCAA's scholastic aptitude test requirements concerning freshman year intercollegiate competition disparately impacted them and thus violated Title VI.⁴ The NCAA moved to dismiss the complaint arguing, inter alia, that the NCAA does not receive federal funds. See id. at 111.

The District Court held that the prohibition's disparate impact on African-Americans violated Title VI and its corresponding regulations. The court adopted two distinct theories to support its finding. First, the court determined that the NCAA was an "indirect recipient of federal financial assistance" because it exercised effective control over a block grant given by the United States Department of Health and Human Services to the NYSP. Second, the court held that Title VI covered the NCAA because member schools had vested the NCAA with controlling authority over their federally-funded athletic programs. See id. at 111-12 (citing Cureton v. NCAA, 37 F. Supp.2d 687, 694 (E.D. Pa. 1999)).

We reversed the District Court with respect to both theories. First, we assumed without deciding that the NCAA's relationship with the NYSP and the Fund rendered it an indirect recipient of federal financial assistance. However, we concluded that the regulations implementing Title VI are program specific--that is, they only forbid disparate impact discrimination in programs that actually receive federal financial assistance. Therefore, we held that, to the extent the plaintiffs' claims were predicated upon the NCAA's receipt of federal financial assistance through the Fund, they were insufficient, because the Postbaccalaureate Bylaw was unrelated to the Fund's programs. See id. at 115-16.

Next, we rejected the plaintiffs' "controlling authority" theory. In so doing, we relied upon the Supreme Court's decision in NCAA v. Tarkanian, 488 U.S. 179, 109 S.Ct. 454 (1988). In Tarkanian, the NCAA recommended that the University of Nevada at Las Vegas ("UNLV") suspend its men's basketball coach following the NCAA's investigation into numerous allegations of rules violations. UNLV disagreed with the NCAA's recommendation, but ultimately adopted it. The coach then brought an action under 42 U.S.C. S 1983, claiming that the NCAA was a state actor, because UNLV delegated its functions to the NCAA and ceded its authority both to adopt and enforce rules governing UNLV's athletic programs. The Court held that the NCAA was not a state actor. Although it recognized that the NCAA's rules and recommendations clearly influenced UNLV, it concluded that the University, not the NCAA, made disciplinary decisions concerning its employees. The Court explained that UNLV had choices. It could have retained Coach Tarkanian in spite of NCAA recommendations and risked sanctions, or it could have voluntarily withdrawn from the NCAA. The Court stated that although "UNLV's options were unpalatable does not mean that they were nonexistent." Id. at 198 n.19, 109 S.Ct. at 465 n.19.

Based on the above, we concluded that Tarkanian "makes clear that the NCAA does not `control' its members." Cureton, 198 F.3d at 116. We reasoned that, similar to the personnel and employee decisions at issue in Tarkanian, the ultimate decision as to which freshman will participate in varsity intercollegiate athletics belongs to the member schools. We stated: "The fact that the institutions make these decisions cognizant of NCAA sanctions does not mean the NCAA controls them, because they have the option, albeit unpalatable, of risking sanctions or voluntarily...