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. Darr ah, Uni t ed S t at es Dis trictJ udge  f or the Northe rnDis t ri c tofI l l i noi s , i s s i t t i ng by des i gna t i on.



## In the 

# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 09

- 3667 T OM G EOR GE , C HRIS V I T R ON, L O RI C H A PK O an d E DWARD S NE AD , o n b eh al fo fthe m se l ve s an d a l l o the r s s i mi l a r l y s i t ua t e d, P laint if fs -App el lants , v. N ATI ONA L C OLLEGI ATE A T HL ET I C A S S OC I A T I ON, D efend a nt-A pp ellee.

A pp eal from the United S t ates Di strictC our t fo r the S outhernDi stricto f Indian a, Indian apolisDiv isi on. No . 08- CV-1684–WilliamT. Lawrence , Judge .
A RG UE D M AR CH 29, 2010

— D ECI DE D J UL Y 16, 2010

Before C UD AH Y an d K ANN E , C ircu it Judges , a nd D ARRAH, D istrict Judge.  D ARRAH, D istrict Judge. Pl ai nti ff s br ought thi s pro posed nati onw i de cl ass act i on a gain st the Nati onalCol l egi ate2 N o. 09

- 3667 A th leti c A s s o c ia t io n (“ N C A A ” ) a n d T ic k e t m a ster, al l egi ng tha t bo th defendants o perat ed i l l ega l l ott eri es to se ll an d d ist rib u te tic ke ts for c er ta in D ivis ion I c h am p io ns hi p to ur na m en ts
. The N CA A mov ed to di smi ss Plain

tiffs’ Secon d A m en d ed Com p lai nt . T he district cou rt dism i sse d al l cl ai m s with prej ud i ce, and this appeal f o l l o we d.

B AC KGR OUND The na m ed pl aint i ff s ar e r es i den ts o fAri zo na , Or eg o n, an d N ew York. Eac h ap p li ed f or ti cket s to N C A A m en ’s ba sk etba l l g ames thr o ug h NCA A-o wned w eb si te s, a nd each of them f or f ei ted ser vi ce f ees w hen they w ere not se l ec te d a s winn er s i n the pr o ce ss . Pl aint i ff s cl ai m the NC AA’ s t i c k e t
- d i s t r ib u t i o n s y s te m , wh i c h th e NC AA ha s o per at ed sinc e atl ea st 19 94 , i s ani l l eg all o tt er y a nd a m eans ofi ncre asi ng r eve n u es at Pl ai nti ff s’ expense. Plaintiff s beli eve th e nu m b e r ofpot en tial class m em bers to be in the hund re ds oftho usands. T he ticket-d istribu tion syste m has b een used f or inte r alia th e N C A A ’s D i vis ion I m en ’s a n d w om en ’s b as ke tb all an d ho ck eyc ha m pi o ns hi p to ur na m en ts
. I n the i r S ec o nd Am en ded Compl aint, Pl aint i ff s spe ci fi ca l l y de scribe the appl i ca ti o n o fthe N CA A’s s y st em f o r di st r ibut i ng ti cket s t o the 2 009 M en’ s Bask etba l l Tournam en t. Fo r th e fi na l g ames o f th att o ur na m en t, dur i ngwhi chthe to p fou r te am s (t h e “ Fin al F ou r” ) c om p et e for th e C h am p ionshi p ti tl e, Pl ai nti ff s ex p l ai n the proce ss as f ol l ows: Each perso n w ho a pp l i ed f orti cket s t o Fi nal Fo u r gam es subm i tte d a si ngl e a pp l i cat ion w i th up to ten e ntri es.N o. 09

- 3667 3 Each entr y was a chance t o w i n, atthe m ost, two ti cket s an d req u ire d a p ay m en t o f a six -d olla r “n on -re fu n d ab le hand l i ng fee. ” A n appli cant coul d w i n onl y o nce. N oneth ele ss , eac h ap p lica n t w as req u ire d to su b m it t h e fu ll f ace val ue o fthe ti cket s f orea ch entr y s ubm i tte d

. A cco r di ng l y, i n orde r t o maxi m i ze the c ha nc es f o r wi nni ng a s i ngl e pai r of$15 0 ti cket s, an a pp l i cant woul d have t o subm i t $ 3, 060 ( the f ace v alu e ofte n pai rs o fti cket s pl us a si x-d ol l arha ndl i ngfee f o r e ac h o ft ene nt r i es )
. I fthe appli can t w er e to w i n, he woul d rec ei ve a pai r ofti cket s vi a o ve r ni g htmai l a nd, e ve ntua l l y, a $2 , 700 r efund ( th e tot alti cketpri ce forthe re m ai ni ng ni ne ent ri es)
. The $6 0 i n hand l i ng f ees w oul d b e f or f ei ted to the N C A A . I f the app l i cant were to l ose , he woul d rec ei ve a $ 3, 000 r efund ( hi s en ti r e up- f r ont i nv es tmentmin us the ha nd li ng fees). Pl aint i ff s al l eg e th at th es e r et aine d “ se r vi ce ” o r “ ha ndli ng” fee s, as w el l as the N CA A ’ s use o fthe appli cants’ m o ne y, c o ns ti tu te c o ns i der at i o n f o r a c ha nc e to wi n the ri ght t o pu rchas e “ hi ghl y pr i zed” t i cket s f orpri or i ty sea ti ng at venues that “ar e m uch too sm al l to m eetti cket dem and” and that the NC A A ’ s t i cket

- distributi on s y s t e m c o n s t i t u t e s a n u n l a wfu l l o t t e r y . ( S e c o n d A m. C om p l. ¶ ¶ 46 -47 .) P lain tiffs alleg e t h at “t h e n u m b er of a p p l i c an ts gre at ly ex c ee d s t h e n u m b er of tic ke ts onv irt u ally e ve ry oc c as ion ,” that the NC A A f al sel y a dvert i ses the avai l abi l i ty of ce r ta i n s ea ts a nd “ m an i pul at e[ s] ” th e pur po r te dl y r an dom drawings “to acco m m odate busi ness needs, ” a nd that th e re sa le m a r k e t v a l u e o f th e t ick et s is h igh d u e t o t h eir4 N o. 09

- 3667

W ith th e excep tion of Co u nt II I , all cou nts w ere late r d is- 1 m is se d ag ains t Ti cketm ast er pu rs u a nt t o a s ett le m ent agreem ent. Because Co u n t I V w as ass ert ed againstTicket m ast er only, i t i s not ati ss ue. P lain tiffs also cite Ca lif or nia p ro hib ition s ag ain st priv ate 2 l ot t er i es . Pl ai nt i f f s ’ appe al, ho wever, i s bas ed o n I ndi ana l aw onl y. scarc ity. ( Secon d A m . Com p l. ¶ ¶ 2 5 , 47, 49.) Plaintiff s furthera lleg e that the “s er vi ce fees ” a nd “handl i ng fees ” charg ed by th e N CA A bea r “no re l ati onshi p to the c ost s ofr unning the l ott er y a nd gr oss l y e xcee d[] any cos ts as soc i ate d with the l ott er y. ” ( Se cond A m . Com pl. ¶ 41 .) A ccor ding to Pl ai nti ff s, the N CA A re aps huge p ro fi ts b y h o l di nga nd u s i ngthe mo ne y r e c e i v e d fr o m a pp li can ts (app roxim ately $100 m il li on in 200 8). P lain tiffs ’ Sec on d A m en d ed C om p lain t a ss er ts six c l a i ms , fi v e o fwh i c h r e ma i n e d a tth e t i me th e NC AA fi led its m otion t o d ism iss. Cou nt Iseeks a d eclaratory 1 j ud g men ttha tthe NCAA’ s t i c k e t
- a l l o c a t i o n pr o c ess co ns ti tu tes i l l eg alg ambl i ngi n v i o l at i o n o fI ndi an a law ; C ou n t II i s a cla im for u nj u st en r i c h m e n t ; C ou n t III 2 al l eg es a c i vi l c o ns pi r ac y b etw een the NCA A and Ti c k e t mas t e r ; Co un tV i s f o r mo ni e s h a d a nd r e cei ve d; an d Cou nt VI cl ai m s th e N CA A v i o l at ed th e I nd i an a Decepti ve Consum erS ales A ct ( “DC SA”), co difi ed at I nd

. Code § 24- 5- 0. 5- 1 ets eq . The dis tr i ct c ourtdi sm i sse d the e nti re S eco nd A m ended Com pla i nt with prej ud i ce o n the N CA A ’s M oti on t o D ism iss pu rsu an t to Fed eral Ru les ofCivil Proc ed ure 12(b)(6) an d 9(b).N o. 09

- 3667 5 L E GAL S T ANDAR D A di str i ct c ourt ’ s g ra nt o fa m oti on t o dism iss und er F e de r a l Rule o fCi v i l P r o c e du r e 1 2 ( b ) ( 6 ) i s r e v i e we d de novo . Tam ayo v. Blag ojevi ch , 52 6 F
. 3d 107 4, 1081 ( 7th Cir
. 20 08)
. A l l well

- ple aded fa cts ar e a ccepte d as tr ue, an d a l l r ea so nabl e i nfer en ce s ar e d raw n i n the pl aintiff’s fav or . Id. The al leg ati ons i n the com pla i nt “m ust p lausibly sugge st th a t t h e plaintiffhas a right to reli ef, ra i si ng tha t pos sibi l i ty ab ov e a ‘ specul ati ve l eve l ’ ; i fthey do not, the pla i nti ffp lea ds i tse l fo ut o fco urt. ” Equal E m ploym entO p p ortuni ty Com m ’n v. Co ncent ra Health S ervs. , Inc. , 49 6 F
. 3d 773, 77 6 ( 7th Ci r. 20 07) ( ci ti ng B el l A tl
. Co rp. v. Tw om bly, 12 7 S
. Ct. 19 55, 19 65, 19 73 n. 14 (2007)).

A N A L Y S IS Lo ttery I ndi an a l aw de fi ne s a l o tt er y a s “a s ch em e forthe dist ributi on o fpri zes by l ot orchance. ” Lesh er v. B a ltim o re Fo o tb al l Cl ub , 49 6 N
. E.2 d 785, 78 9 ( I nd

. Ct. A pp . 19 86) ( Le s her ), vac at e d i n p ar ton othe rgroun ds , 51 2 N
. E.2 d 156 ( I n d

. 1 9 8 7 ) , ( q u o t i ngKa szu ba v. Z ienta ra , 49 5 N
. E.2 d 761, 76 3 (In d . A p p . C t. 19 86 ); Tinderv. M usi c O perating, Inc. , 14 2 N
. E
. 2d 6 1 0 , 614 (I nd

. 1957) ( Tind er ))
. Th ese cas es iden tify thre e e l em ents necess ar y to est abl i sh a l ott er y: ( 1) a pri ze, ( 2) a n e l emen t o f cha nc e, a nd ( 3) c o ns i der at i o n f o r the chance t o w i n a pr i ze. The N CA A does notdi spute thi s. T h e N C A A arg u es th at its d ist rib u tio n p r oc es s o n ly gran ts a n opp ortuni tyto purchase ti cket s a t fullpri ce,6 N o. 09

- 3667

w hich the N C A A cont en d s is not a prize. T his argu m ent m i sco nstr ues the natur e o fthe ti cket

- dist ributi on proce ss as ple d by Pl ai nti ff s. A s d e t a iled above, Fi na l Fou r gam es, in pa rticular, r equi red a s i g ni fi ca ntup- f r o nti nv es tment

— as m uch as $3 , 06 0. I nc l ude d i n thi s co stwer e “n o n- r efundabl e ha ndl i ngfe e s . ” Unsucce s s fula pp l i c a nt s we r e r e fun de d a po r ti o n o fthe i r up- f r o nti nv es tment at so m e l at erpo i nt i n t i me , b u ta l l h a n d l i n gfe e s we r e r e t a i n e d b y th e NC AA. I n dis m i ssing Pl ai nti ff s’ S eco nd A m ended C om pla i nt, the di s t r i c tc o ur tc i t e d Le s her, a c as e f r o m the I ndi an a c o u r to fa pp e a l s , w h i c h h e l d th a ta d i s t r ib u t i o n s c h e me for se aso n ti cket s t o I nd i anapol i s Col ts gam es did not const i tute an unl aw ful l ott er y. 51 2 N
. E.2 d at 7 89- 90. I n Lesh er, a l l a ppl i ca nt s su bmi tt ed th e f ac e va l ue o fthe t i c ke ts so u gh t p lu s a h an d lin g fe e. Id. a t 78 7- 88
. W i nners w er e s e lec te d atran d om . Id. L os er s re c eiv ed a fu ll re fund o fthe ti cketpri ce a n d the ha nd ling fee
. Id. at 787- 88. Defi ni ng a pri ze as “som ethi ng o fm or e v al ue than the a m ount i nvest ed, ” the Lesh erc o ur t he l d tha t th e appli cants m er el y “ i nvest ed the pri ce o fthe ti cket s and r ec ei ve d i n e xc ha ng e ei th erthe t i ck et s o r the en ti r e amoun t i nv ested, ” su chtha t “tho se r ec ei vi ng ti cket s g ot nothi ng o fg reate r val ue than thos e who re

cei ved r efund s. ” Id. a t 78 9- 90
. Be ca us e th e co ur t f o und th atno pr i ze ha d b ee n aw ard ed , i t he l d tha t th e sc h em e w as n ot a lot te ry . Id. at79 0. H er e, Pl aint i ff s al l eg e th eywer e r equired to i nv es t th e add i t i o na l “ s e r v i c e fe e ” o r “ ha nd l i ngfe e ” o fs i x t o t enN o. 09

- 3667 7 dol l ar s perti cketo r entr y, wh i ch bea rs no re l ati on t o th e N C A A ’ s a c tu al c os t in ad m in ist er in g t h e t ick et -d ist ributi on pro cess a nd w a s n o t refund ed
. W i n o r l o se , the ser vi ce fee w as f or f ei ted by al l e n tr an ts and ret ai ned by the NC A A
. T h u s, Pl ai nti ff s hav e a l l ege d the e xi ste nce ofc o ns i der at i o n n o t pr es en t i n Lesh er, wh e r e t he ha nd li ng fee w as refun d ed to those w ho d id n ot secu re ti cket s. Pl ai nti ff s hav e a l so al l ege d the e xi ste nce o fa pri ze not pr es en t i n Lesh er . The y s pec i fi ca l l y a l l eg e tha t th e scarc ity ofthe t ic k e t s m akes th ose tickets far m ore va l uabl e th anthe cost ofpur ch as e. Al th o ug h the pl ainti ff s i n Lesh er att em pted to m ake a si m ilar argum ent, that case was deci ded o n a m ot ion f orsum m ar y j ud gm en t, an d the cou rt de term ined that the p lai n t if fs had not pr ese nted evi dence nece ssa ryto es tabl i sh that fair -m ar ke t v alu e w as h igh er th an fac e v alu e. See id
. at 789 ( “Because they did notco m e f or w ar d w i th ev i dence disputi ng the f act ofval ue and beca use the co urt had evi de nc e a s t o the ma r k e tv a l ue o fthe t i c k e t s , Le s her and D i l l on’ s a rgum ent o n appeal r ega rdi ng the val ue o f sc ar c e co m m od itie s is of n o b en efit to th em n ow .”). T h is c as e, by co n tr as t, w as d ism i s se d on a m ot ion ch all engi ng the suffi ci ency ofthe com pla i nt. To defeatthat m o ti o n, Pl aint i ff s ne ed o nl y ha ve all eged th atthe f ai r- m ar ketval ue o fthe ti cket s ex ceeded thei r f ace val ue such that those ti cket s co nsti tute som et h i ng o f m or e v al ue than the a m ount i nv ested. Pl ai nti ff s hav e done so

. The N C A A al so ar gues that Pl ai nti ff s hav e no t a l l ege d ane l ement o fc ha nc e. I n Indi an a, the “ ch an ce ” el ement8 N o. 09

- 3667 is m et if “t h e w in n in g of a p riz e i s d e p e n d en t p rim ar ily on, i fnotso l el y, upon chance [ra th erthan ski l l ]
. ” Tind er, 14 2 N
. E. 2d at6 15
. F o r a n e ve nt in whi chthe de m an d f orti cket s e xceeds the supply and the ri ght t o pu rchas e tic ke ts is allo c at ed atran d om , th e e lem en t o f ch an c e is p lain . A p p lica n ts for N C A A t i c ke ts d o n ot ob ta in th eir re w ar d thro ugh any exer ci se ofsk i ll o r j ud gm ent. N onethel ess , the N CA A ar gues th at i ts ti cket

- dist ributi on schem e l acks any el em ent o fchance becau se a r andom draw i ng o ccurs o nl y i f the dem and fo r ti cket s t o a g i ven eve nt exce eds the sup ply

. There f or e, an e l em ent o f chance i s no t ne ce s s ar i l y p resen t. B ut Pla in t iffs spec if

i c a l l y a l l e g e th a tt i c k e t s a r e h i g h l y p r i z e d a n d th a tthe venues h ost i ng the ev ents ar e “ m uch too sm al l to m eet ti cketdem and.” ( Se cond A m . Com pl. ¶ 4 7.) T h e f act that al l appli cants m ay w in t ick ets f orso m e e vents does not obvi ate Pl ai nti ff s’ clai m s that they pai d m oney to e nt erdr awi ng s f o r v al uabl e tic k et s wher e th e dem and fo r ti cket s did exce ed the supp l y. Thu s, Pl ai nti ff s hav e a lleg ed al l el em ents ofa l ott er y: th eypa i d a pe r - ti ck eto r p er-e nt r y fee ( co ns i der at i o n) to e nt era r an do m dr awi ng( ch an ce ) i n h o pes o fo bt aini ng scarc e, valua ble ti cket s (a prize). The NCA A al so a r g ue s th ate ve n i fi ts t i ck et
- di st r ibutio n p ro c es s is a lot te ry , i t is n ot u n law fu l b e c a u s e it fi ts w i thi n an e xcep tio n to I nd i ana’ s s tatutor y defi ni ti on of “gam bli ng . ” U nd er I nd iana la w , it is un law ful f or a perso n to kno w i ngl y o r i ntenti onal l y engag e i n gam bl i ng, I nd. Co de § 35

- 45- 5- 2( a) , whi chi s defi ne d a s “r i sk i ng m o n ey or ot h er p ro p er ty for ga in, con tin ge n t in w h oleN o. 09

- 3667 9 or i n p art up on lot, cha nc e, o r th e op eration of a g ambl i ngde vi ce ; b uti t do es no t i nc l ude pa r ti ci pat i ng in : . . . bon a fid e b u sin es s t ra n sa c tio n s t h at are va lid un d er the law of con tracts , ” I nd

. Cod e § 35-45-5-1(d). Clea rly, the e xcepti on i n the sta tute w as i ntended to ex cl ude s ucha ct i vi ti es a s r egul at ed i nv es tingfr o m the d efin itio n of ga m b lin g. See, e. g., A ute n v . State, 54 2 N
. E.2 d 215, 22 2 ( I nd

. Ct. A pp . 19 89) ( sta ti ng tha t acti vi ti es of a bro ker age fi rm ’ s pu rchas i ng stock s on m ar gi n w oul d fa l l under the bo na -fi de-business- tr ansacti o n exce pti o n un derI ndi an a l aw) ; Chr i st o phe r T. Pi ckens , N ote , Of Booki es and Brokers : A re Spo rts Futu res G a m blin g o r Inv esting, and D o es It E ven M a tter? , 14 Geo. M ason L. Rev. 227, 248 ( 2 0 0 6) ( d iscus sing W yom ing’s n earl y i denti calexcl usi on o f“bo na fi de busi ness tr ansacti ons w hi ch ar e v al i d und erthe l aw o fco ntra cts” as a l egislat i ve e ff o r t to e xc l ude i nv es tinga ct i vi ti es fr o m the sta tutor y defi ni ti on o f“g am bl i ng”) ( quoti ng W yo. S tat
. A nn . § 6-7- 101(a)(i ii )( B )- (C)). M or eo ve r, an ot h er st at u to ry p ro vis ion m ak es it unl awfult o c o nduc t a l o tt er y wi th o utr eg ar d f o r the d efin itio n of “g am b lin g” p ro vid ed in s ec tio n35 -45 -5-1
. See I nd

. C od e § 3 5- 45- 5- 3( a) ( 4) ( “A per son w ho know i ngl y o r i ntenti onal l y . . . co nd ucts l ott er ies
. . . co m m i ts professio n al g am b lin g, a C las s D felon y. . . . ”); Lashbrook v. State, 55 0 N
. E. 2d 772, 776- 77( I nd. Ct
. App. 1 99 0) ( affi r m i ng convi cti on f or profess i onal gam bl i ng und erse cti on 35- 45- 5- 3( a)(4) based o n an “a i rpl ane i nvest m ent pr ogr am ” h el d to be a n i l l ega l l ott er y)
. I nd i ana pro scr ibes all l ott er i es except those r un by the S tat e, wh er e pr ofi ts10 N o. 09

- 3667 go to benefi t Ind i ana r esi dents. Se eL. E. Se rvs. , Inc . v. StateLotte ry Com m ’n , 6 4 6 N. E. 2 d 3 3 4 , 3 3 9

- 4 0 ( I nd

. Ct
. App
. 1995 ) ( “W i th the exce pti on of l ott er i es conducted by the S tat e Lot ter y Com m i ssi on, l ott er i es are consi dered i l l eg a l g a mbl i ngi n I nd i a na . ” )
. Be c a us e P l a i nt i ff s h a ve s uffi c i e nt l y p l e d tha tthe NCAA c o nd uc t e d a l o t ter y, the b ona- fi de-business-transacti on e xcepti on t o the s tat
utor y defi ni ti on o fga m bl i ng i s o fno eff ect.

In Pari D el ict o U nd er the eq uitab le doct rine of in paridel ict o , “ w he re th e wro ngof both pa r ti es i s equa l, the po si ti o n o fthe defe n d an t i s the st ro nger . ” K nauer v. Jonathan R ober ts F in . G roup, Inc. , 3 4 8 F
. 3 d 2 3 0 , 2 3 6 ( 7 th C i r . 2 0 0 3 ) ( q u o t i ng They e v. B a tes , 33 7 N
. E.2 d 837, 84 4 ( I nd

. Ct. Ap p. 19 75) ( They e ) )
. I t l i ter al l y m eans “ofequ al fa ult

. ” They e, 33 7 N
. E.2 d at 8 44 ( quoti ng Pe r ma L i f e M u f f l e rs , In c . v. Int’l Parts Corp. , 3 92 U .S
. 13 4, 13 5 ( 1968 ) )
. Thus, “where both parti es ar e i n d e l i ct o . . . i t does not al w ays f ol l ow that they s t a nd in paridel ict o , f or there m ay be, and often are, very diff er ent deg re es i n thei r gui l t. ” St e wartv. Wr ight, 14 7 F
. 3 2 1 , 3 2 9 ( 8 th Ci r . 1 9 0 6 ) ( qu o t i ng 1 S t o r y, Eq
. J ur. § 300) (i talics add ed ). Re l y i ng o n th e appl i ca ti o n o f th at do ct r i ne i n Lesh er, the dist ri ct c ourt di sm i sse d m osto fthe counts i n Pl ai nti ff s’ Se cond A m ended C om pla i nt bas ed on i ts concl usi on that Pl ai nti ff s were equal l y a t f aul t for th ei r parti ci pati on i n the N CA A ’ s s chem e. Butthe l an g ua g e i n Lesh err el i ed upon by the di str i ct co ur t was di ct a, whi ch, i n tur n, r el i ed o n Sw ain v. Bu ss el l ,N o. 09

- 3667 11 10 Ind

. 438 (1858) ( Sw ain )
. I n Sw ain , th e I ndi an a Suprem e Cour t hel d that the defendant’s sche m e f or the di str ibuti on ofr eales tat e thro ugh a r andom dr awi ngwas a n un l awfull o tt er y pr o hibi ted by I ndi an a sta tu t e a nd c o ns t i t ut i o n b ut tha t the pl a i nt i ff wa s not en titl ed to rel ief beca us e he w as aw are of th e sch em e’s unl aw fulna tu r e an d ha d a ctua l l y a r r an g ed wi ththe d efe n d an t t o v iola te th e la w . Id. at44 3. H er e, the Se cond A m ended Com pla i nt does not st ate ori m plya m utual ar ra ngem ent t o vi ol ate the l aw . N or does i t r efl ect that Pl ai nti ff s knew o r ha d reas on t o suspect they w er e ag re eing to parti ci pate in an i l l ega l l ott er y at the ti m e they sought to pu rchas e ti cket s. W hen allrea s o n a ble i nferen ces are d raw n in P lai nt iffs’ favor, Sw ain does notsupport dism i ssa l atthe ple ading s s tag e. I nd i ana l aw m ake s i t u nl aw ful to conduct l ott er i es oro ther w i se gam bl e kno w ingly
. I nd

. C od e §§ 35- 45- 5- 2, 35 -45 -5-3 (a)( 4). A s a lleg ed , th e N C A A ’s a c t o f kn ow in gly conducti ng an u nl aw ful l ott er y dem onst ra tes a gr eat er d eg re e o f fau lt t h an P lain tiffs ’ a c t o f u n w itt in gly enter i ng tha t l ott er y. A s s uch, the d istri ct c ourter re d i n hol ding that the doct ri ne o f in p a ri d el ict o bars Pl ainti ff s fro m se eki ng r el i effro m the cour t.

R em aining Co unts A fterdeter m i ni n g that Pl ai nti ff s were bar re d fr om ch al l en g i ngthe NCA A’s a ll ege d l o tt er y b y the do ct r i ne of in paridel ict o , the dist ri ct cour t l i ste d a num ber ofdefi ci enci es i n Pl ai nti ff s’ DC SA cl ai m s. Pl ai nti ff s’ r e-12 N o. 09

- 3667

m ai ni ng co unts were not ad d re sse d. W i thout el abor ati on, the enti re act i on was di sm i sse d w i th prej ud i ce. A l l o fP l ai nti ff s’ cl ai m s, however, i ncor pora te

— and, to som e e xtent, r el y o n

— al l o fthe prece ding al l ega ti ons, includ ing the l ottery claim

. A s d iscus sed above, Plaintiffs have su ffi ci entl y a l l ege d that the N CA A o perat ed an unlawfull otter y. A ccor dingl y, the dist ri ct c ourt ’ s o rder ofdi sm i ssa l m ust be r eve rs ed as to al l c ount s r emai ni ng i n Pl ai nti ff s’ S eco nd A m ended C om pla i nt.

C ONC L US I ON F o r the r ea so ns s ta te d abo ve , the j udg m ento fthe dist ri ct c ourti s R EVER S ED , and the case i s R EMAND ED f or fur th erpr o ce eding s co ns i st en t wi ththi s o pi ni o n.

C UDAH Y, Cir cu i tJudg e, di ss en ting . Ir es pec tful l y di ss en t f ro m the concl usi on o fthe m aj or i ty that the m ode o f di s t r ib ut i o n o fc e r t a i n s o ught

- a ft e r t i c k e t s f o r s po rt s ev en ts , as p lea d e d , i s t ec h n ica lly an illega l “lot te ry .” This case i s i nd i sti ngui shabl e i n re lev ant r espect s fro m Le s he rv. B a lti m or eFo ot b al l Cl ub , 49 6 N
. E.2 d 785 ( I nd

. Ct. A p p . 198 6), va ca t e d in pa rt on ot he rgroun ds , 51 2 N
. E.2 d 156 ( I nd

. 19 87) . T he pri nci pal gr ound fo r dist i ncti on as se r te d b y the maj o r i tyi s th ati n Lesh er the a pp l i cati onN o. 09

- 3667 13 fee s o f th e los in g a p p l i c an ts w er e re tu rn ed w h ile in the prese nt case they ar e not. This m ay be a b as is for fi nd i nga n o v e r c ha r g e h e r e , b uti ti s h a r dl y g r o un ds f orel evat i ng the pre sent proced u re to the sta tus o fan illeg al “ lot te ry .” Lesh er relie d p rim aril y on a fi nd ing of in paridel ict o to inv alid at e t h at law su it a n d t h i s i s a n eq u ally va lid gr ound fo r dism i ssi ng thi s o ne. W i th r espectto an a l m ost identi ca l s ch eme in Lesh er, th e In d ian a C ou rtof A p p ea ls s t a t e d: [ P]l ai nti ff s cl ai m the ti cketall oca ti on pl an co nsti tuted a con st itu tio n ally p ro sc rib ed lot te ry , ye t th e y p ar tic ipated i n the pla n, kno w i ng tha t a “bl i nd lotte ry ” was possibl e. Even i fwe w er e t o concl ud e that the pl an did co nsti tute a co nsti tuti onal l y p roscr ibed l ott er y, w e w ou ld n ot e t h e w or d s o f ou r Su p re m e C ou rtin Sw ain v. Bu ss el l , 10 I nd

. 438, 442 ( 1858 ): “Ifthe p lai nt iff, wi th th e f a c t s b e f o r e h i m, s a w pr o p e r t o b e c o me a par ti ci pant i n such an i l l eg al and pro hibi ted tr ansacti on . . . he i s n ot i n condi ti on t o ask

. . . the ai d of a c ou rt .” Lesh er, 4 96 N. E. 2d at7 90 n. 1. I n pr edi ct i ngho w the I ndi a na S up r e me Co ur two ul d d e c i de a s t a t e - l a w i s s ue, w e c an ob vio u sly look t o t h e In d ian a C ou rtof A p p ea ls as p er su as ive au th or ity
. Se e, e . g. , AA R Air craf t & Engi ne Grou p, Inc . v. Edward s , 27 2 F
. 3d 468, 47 0 ( 7th Ci r. 20 01) ( obs er vi ng tha t, wh er e the st ate s u p re m e co urt has no t spoke n, “the deci si ons of the st ate ’ s i nter m edi ate a p p e l l a t e c o u r t s a r e a u th o r i t a t i v e u n l e s s w e h a v e a c o mpel lin g reaso n to doubt that they ha ve sta ted the l aw cor re ctl y”)
. Ise e no r eas on wh y Lesh er shoul d not be14 N o. 09

- 3667 tr ea te d a s au th o r i ta ti ve i n thi s i ns tan ce and Ifi nd the pu rpor ted di sti ncti on r ega rdi ng the r etur n offees to be without s i gni fi cance to the questi on wh ether the pla i nti ff s parti ci pated i n the t i cket

- dist ributi on m ec h an ism , “kn ow in g t h at a ‘b lin d lot te ry ’ w as p os sib le.” Lesh er, 496 N
. E.2 d at 7 90 n. 1. A l though the ci ted st ate
m en t b y t h e In d ian a C o u r t o f A p p ea ls w as te c h n ica lly di ct a, Ifi nd the l o g i c per su as i ve a s appl i ed to the pr es en t case . The eff or ts by the m aj or i ty to re l y o n the re l ativ e culpabi l i tyo fthe de f en dan t co m par ed w ith th ato fthe pl aint i ff s o r b e t we e n a mo t i o n f o r s ummar y j ud g men ta nd a m oti on t o dism i ss ar e a l so w i thout si gni fi cance. I n a ddi t i o n, the a rgume nttha tthe t i c k e t s a wa r de d, be ca us e o fthe i r s ca r ci ty, a r e m o r e va l uabl e th anthe pri ce o ri gi nal l y c harg ed f orthem i s m i sl eadi n g. Fa ce val ue i s i n f act the v al ue r eal i zed by the i ssuer . A fter allo c atio n, theyacqui re , as a re sul t o fthe ver y pr oce ss ofall oca ti on, a re sal e v al ue, notnece ssa ri l y t o be re al i zed, and f orthatr eas on i rr el evant
. There ar e o therr eas ons f orexcl ud i ng thi s pro cess ofti cketdi strib u tio n f ro m being cl ass i fi ed as an i l l ega l “l ott er y. ” One o fthes e i s the st atuto ryexem p tio n f or “bona fi de tran sa cti ons that ar e v al i d und erthe l aw o f co nt r ac ts
. ” I nd. Co de § 35

- 45

- 5- 1( d)

. Thi s i s a ve r y o pen ended ex em pti on that i s e asi l y a pp l i cabl e t o thi s devi ce

— i nci dent alto al l oca ti ng sc ar ce t i cket s f orpopula r spor ts eve nts.

7- 16- 10