Braxston L. Banks v. National Collegiate Athletic Association
1992 WL 278832, 977 F.2d 1081 (1992)
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Rule of Law:
To state a claim for a violation of Section 1 of the Sherman Act under the Rule of Reason, a plaintiff must allege not only a harm to themselves but also a specific anti-competitive effect on a discernible market. NCAA eligibility rules designed to preserve amateurism are analyzed under the Rule of Reason and are not considered restraints on trade if the plaintiff fails to allege such an anti-competitive market impact.
Facts:
- Braxston Banks attended the University of Notre Dame on a full football scholarship starting in 1986.
- After a knee injury during his sophomore year, he played intermittently and chose to sit out his senior season in 1989 to ensure his knee fully recovered.
- With one year of college eligibility remaining, Banks decided to enter the 1990 National Football League (NFL) draft, partly due to fear of re-injury if he played another college season.
- Banks participated in NFL tryouts and was represented by an agent but was not selected in the draft or signed as a free agent.
- He then sought to return to Notre Dame for his final year of eligibility to demonstrate his professional-level skills.
- NCAA Rule 12.2.4.2 (the 'no-draft' rule) and Rule 12.3.1 (the 'no-agent' rule) made Banks ineligible to return to collegiate play because he had entered the draft and retained an agent.
- The University of Notre Dame, though allegedly wanting Banks to play, declined to petition the NCAA to reinstate his eligibility.
Procedural Posture:
- Braxston Banks sued the NCAA in the U.S. District Court for the Northern District of Indiana.
- The district court denied Banks's initial request for a preliminary injunction to prevent the enforcement of the NCAA's no-draft and no-agent rules.
- Banks amended his complaint to seek a permanent injunction on behalf of a class and treble damages for his individual injury.
- The NCAA moved to dismiss the amended complaint for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6).
- The district court granted the NCAA's motion to dismiss.
- Banks, as the appellant, appealed the district court's dismissal to the U.S. Court of Appeals for the Seventh Circuit, with the NCAA as the appellee.
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Issue:
Do the NCAA's 'no-draft' and 'no-agent' eligibility rules, which render a student-athlete ineligible for intercollegiate competition after entering a professional draft or hiring an agent, constitute an illegal restraint of trade under Section 1 of the Sherman Act when the plaintiff fails to allege an anti-competitive effect on a relevant market?
Opinions:
Majority - Coffey, Circuit Judge
No. The NCAA's rules do not constitute an illegal restraint of trade because the plaintiff failed to state a valid claim by not alleging an anti-competitive effect on an identifiable market. Under the Supreme Court's decision in NCAA v. Board of Regents, NCAA eligibility rules are analyzed under the Rule of Reason, not as per se antitrust violations. To state a claim under the Rule of Reason, a plaintiff must allege both a discernible market and that the challenged rules have an anti-competitive effect on that market. While Banks identified potential markets (college football players and NCAA member institutions), his complaint failed to articulate any anti-competitive impact. The court reasoned that the NCAA's eligibility rules are pro-competitive because they preserve the unique 'product' of amateur college football by maintaining a 'clear line of demarcation' between it and professional sports. These rules are viewed as legitimate eligibility requirements designed to foster fair amateur competition and prioritize education, not as anti-competitive restraints on a labor market.
Dissenting - Flaum, Circuit Judge
Yes. Banks's complaint should have survived the motion to dismiss because it adequately alleged an anti-competitive effect in a relevant market. The relevant market is the nationwide labor market for college football players, where colleges are the 'purchasers' of labor and players are the 'suppliers.' The anti-competitive effect is that the no-draft rule eliminates a potential element of competition among colleges; without the rule, colleges could compete for athletes by offering them the valuable opportunity to test the NFL draft and return to college if unsuccessful. By agreeing to this rule, NCAA members have collectively foreclosed a 'term of employment' that players would find advantageous, thereby harming competition in the labor market. The majority's view that college sports are non-commercial is an outdated myth, and the court should not have decided the competitive balance of the rules on a motion to dismiss without further factual development.
Analysis:
This decision solidifies the significant hurdle student-athletes face when challenging NCAA eligibility rules on antitrust grounds. It reinforces the principle that under the Rule of Reason, a plaintiff must plead with specificity how a rule harms market-wide competition, not just how it causes individual harm. The court's deference to the NCAA's role in preserving amateurism demonstrates a judicial reluctance to treat college sports as a purely commercial labor market. This precedent makes it more difficult for subsequent plaintiffs to succeed unless they can artfully draft a complaint that connects NCAA rules to a tangible, negative impact on competition among its member schools or for player services.
