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7th Circuit reverses dismissal of NCAA illegal ticket-lottery suit

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The 7th Circuit Court of Appeals has allowed a proposed class action case claiming the National Collegiate Athletic Association operates an illegal lottery to sell tickets to certain sporting events to go forward.

Judge William T. Lawrence of the U.S. District Court, Southern District of Indiana, Indianapolis Division, had dismissed all of the plaintiffs’ claims with prejudice on the NCAA’s motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b). Plaintiffs Tom George and others applied for tickets to NCAA men’s basketball games through NCAA-owned websites. In order to apply for tickets for the men’s Final Four, applicants may submit a single application with up to 10 entries and the full face value of the tickets plus a $6 non-refundable handling fee. Applicants can only win once and would get at most two tickets. Refunds would be sent to applicants according to whether they won or not, but the $6 handling fee on each entry would not be returned.

The plaintiffs alleged the ticket-distribution system constitutes an unlawful lottery because there are far more applicants than tickets available and the handling fee bears no relation to the cost of running the lottery. They also sued Ticketmaster and settled on most of the charges.  

In Tom George, et al. v. National Collegiate Athletic Association 09-3667, the majority on the 7th Circuit found distinction between the instant case and Lesher v. Baltimore Football Club, 496 N.E.2d 785, 789 (Ind. Ct. App. 1986), on which the District Court relied to dismiss the case. In Lesher, all applicants submitted the face value of tickets sought plus a handling fee. Losers were reimbursed the full amount, plus the fee. The Lesher court held the process wasn’t a lottery because no prize had been awarded and ticket winners got nothing of greater value because losers received a full refund.

But in the instant case, the NCAA kept the handling fee. The plaintiffs also alleged the existence of a prize not present in Lesher: the scarcity of the tickets makes those tickets far more valuable than the cost to purchase.

The plaintiffs have alleged all elements of a lottery: they paid a per-ticket or per-entry fee (consideration) to enter a random drawing (chance) in hopes of obtaining scarce, valuable tickets (a prize), wrote Judge John W. Darrah of the Northern District of Illinois, who is sitting by designation.

The majority also found the District Court erred in holding that the doctrine of in pari delicto barred the plaintiffs from seeking relief from the court.

“Indiana law makes it unlawful to conduct lotteries or otherwise gamble knowingly. As alleged, the NCAA’s act of knowingly conducting an unlawful lottery demonstrates a greater degree of fault than Plaintiffs’ act of unwittingly entering that lottery,” wrote the judge.

Since the plaintiffs had sufficiently alleged the NCAA operated an unlawful lottery, the 7th Circuit reversed the order on all counts and remanded for further proceedings.

Judge Richard Cudahy dissented, finding the instant case indistinguishable from Lesher.

“There are other reasons for excluding this process of ticket distribution from being classified as an illegal ‘lottery,’” he wrote. “One of these is the statutory exemption for ‘bona fide transactions that are valid under the law of contracts.’ This is a very open-ended exemption that is easily applicable to this device -- incidental to allocating scarce tickets for popular sports events.”
 

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  2. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

  3. Any attorneys who practice in federal court should be able to say the same as I can ... efiling is great. I have been doing it in fed court since it started way back. Pacer has its drawbacks, but the ability to hit an e-docket and pull up anything and everything onscreen is a huge plus for a litigator, eps the sole practitioner, who lacks a filing clerk and the paralegal support of large firms. Were I an Indiana attorney I would welcome this great step forward.

  4. Can we get full disclosure on lobbyist's payments to legislatures such as Mr Buck? AS long as there are idiots that are disrespectful of neighbors and intent on shooting fireworks every night, some kind of regulations are needed.

  5. I am the mother of the child in this case. My silence on the matter was due to the fact that I filed, both in Illinois and Indiana, child support cases. I even filed supporting documentation with the Indiana family law court. Not sure whether this information was provided to the court of appeals or not. Wish the case was done before moving to Indiana, because no matter what, there is NO WAY the state of Illinois would have allowed an appeal on a child support case!

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