This opinion has been circulated among all judges of this 

court in regular active service pursuant to Circuit Rule 40(e).

No judge requested to hear this case en banc.

The Honorable Edmond E. Chang, Judge of the United 

States District Court for the Northern District of Illinois,

sitting by designation.

In the

United States Court of Appeals

For the Seventh Circuit

No. 11-3066

JOSEPH AGNEW, et al.,

Plaintiffs-Appellants,

v.

NATIONAL COLLEGIATE ATHLETIC ASSOCIATION,

Defendant-Appellee.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:11-cv-00293—Jane E. Magnus-Stinson, Judge.

ARGUED JANUARY 9, 2012—DECIDED JUNE 18, 2012

Before FLAUM and KANNE, Circuit Judges, and CHANG,

District Judge.


2 No. 11-3066

On February 17, 2012, a new NCAA regulation permitting 1

multi-year scholarships became final. See Steve Wieberg,

Multiyear Scholarship Rule Narrowly Survives Override Vote,

USA TODAY (Feb. 17, 2012, 7:00 p.m.), http://www.usatoday.com/

sports/college/story/2012-02-17/multiyear-scholarships-survivesclose-vote/53137194/1. Since plaintiffs seek damages for prior

actions taken by the NCAA and its member schools, the repeal

of the multi-year scholarship prohibition does not render

this case nonjusticiable.

FLAUM, Circuit Judge. Joseph Agnew and Patrick

Courtney (“plaintiffs”) have at least two things in

common: they were both highly successful high school

football players that earned scholarships to play for

National Collegiate Athletic Association (“NCAA”)

Division I football programs, and they both suffered careerending football injuries during their college tenures. The

athletic scholarships held by plaintiffs at the time of their

injuries were good for one year only, and needed to be

renewed to be valid for any subsequent seasons. When

plaintiffs’ injuries prevented them from playing football,

their scholarships were not renewed. Plaintiffs claim

that two NCAA regulations—the cap on the number

of scholarships given per team and the prohibition of

multi-year scholarships —prevented them from ob- 1

taining scholarships that covered the entire cost of their

college education. These regulations, according to plaintiffs, have an anticompetitive effect on the market for

student-athletes, and therefore violate § 1 of the Sherman

Act. 15 U.S.C. § 1. The NCAA filed a motion to dismiss and

the district court granted that motion, finding that plaintiffs failed to allege a relevant market on which the
No. 11-3066 3

NCAA’s Bylaws had an anticompetitive effect. Plaintiffs

appealed the dismissal. While we depart from some of

the district court’s reasoning, we ultimately conclude

that plaintiffs’ complaint did not sufficiently identify a

commercial market—an obvious necessity for Sherman

Act violations—and thus we affirm the district court’s

dismissal of plaintiffs’ suit.

I. Background

In 2006, after receiving several offers from a number

of college football teams, Agnew enrolled at Rice University on an athletic scholarship. In exchange for agreeing

to play football at Rice, Agnew received a year of education, room, and board at no charge. That scholarship

was renewed for Agnew’s second year at Rice. During his

sophomore year, Agnew suffered a series of footballrelated injuries. The injuries, along with a coaching

change at Rice, resulted in the school’s decision not to

renew Agnew’s scholarship for his junior year. Agnew

successfully appealed this decision and received one

more year-long scholarship, but he was unable to

acquire a scholarship for his senior year. As a result,

he was forced to pay full price for the last year of his

undergraduate education.

Courtney endured a similar experience. In 2009,

Courtney decided to attend North Carolina A&T on full

athletic scholarship to play football. As with Agnew, the

scholarship was only a year long. During training camp

Courtney was injured, and as a result, his scholarship

was not renewed. Due to his financial circumstances

and the high cost of out-of-state tuition, Courtney
4 No. 11-3066

was forced to transfer to a different school and pay

tuition out-of-pocket.

Plaintiffs allege that their failure to acquire a scholarship equal to the full cost of obtaining a bachelor’s

degree is the result of the NCAA’s regulation of participating schools’ athletic scholarships. Plaintiffs specifically cite two NCAA bylaws (the “Bylaws”) as the

source of their injury: (1) the one-year scholarship limit,

which prohibits NCAA member schools from offering

student-athletes multi-year scholarships, 2009-10 NCAA

DIVISION I MANUAL, Bylaw 15.3.3.1 (2009-10); and (2) the

cap on the number of athletic scholarships a school

can offer for each team in a given year, see, e.g., 2009-10

NCAA DIVISION I MANUAL, Bylaw 15.5.4. According to

plaintiffs, NCAA member schools compete intensely

over the premier student-athletes in the country, and if

the Bylaws had not been passed, schools would need to

offer multi-year scholarships to stay competitive in the

market for elite athletes. They assert that multi-year

scholarships used to be the norm before the Bylaws

went into effect. The current ban on such scholarships,

they claim, forces student-athletes who do not have

their scholarships renewed to pay more for their undergraduate education. Plaintiffs further contend that the

limit on the number of athletic scholarships a school can

offer reduces the total number of athletic scholarships

offered, thus preventing some students—perhaps those

that are injured but would have been offered a multiyear scholarship but for the Bylaws—from obtaining

a bargained for education. Plaintiffs therefore maintain that the Bylaws violate § 1 of the Sherman Act.

15 U.S.C. § 1.
No. 11-3066 5

Agnew originally filed the lawsuit as a class action, but had 2

not filed a motion to certify a class at the time of the dismissal

of the claims at issue. Thus, when plaintiffs’ claims were

dismissed, the entire lawsuit was dismissed, since there were

no other parties with legally protected interests in the litigation. See Wiesmueller v. Kosobucki, 513 F.3d 784, 786 (7th Cir.

2008).

On October 25, 2010, plaintiffs filed suit against the

NCAA in the United States District Court for the

Northern District of California. In response, the NCAA 2

filed a motion to dismiss and a motion to transfer simultaneously. The motion to dismiss was fully briefed, but

in February 2011, the Northern District of California

decided not to rule on the motion and to transfer the

case to the Southern District of Indiana. The parties set

a schedule for rebriefing applying Seventh Circuit case

law, and before the briefs were submitted, plaintiffs

filed an amended complaint. The complaint alleged that

the Bylaws resulted in a horizontal agreement to fix

prices and reduce output, which caused a reduction of

the supply of bachelor’s degrees and an increase in

the price for bachelor’s degrees for those that did not

have their scholarships renewed.

In its motion to dismiss, the NCAA argued that plaintiffs’ complaint should be dismissed for three reasons:

(1) it failed to identify a relevant market, a necessity for

a valid Sherman Act claim; (2) it failed to allege facts

sufficient to show that the NCAA injured competition in

a relevant market; and (3) it failed to allege facts sufficient

to show an injury as a result of anticompetitive acts

committed by the NCAA. On September 1, 2011, the
6 No. 11-3066

district court granted the NCAA’s motion to dismiss.

The court held that plaintiffs failed to identify a

cognizable market in which trade was improperly restrained, and that even if plaintiffs did adequately allege

that there is a product market for bachelor’s degrees or

a labor market for student-athletes—as plaintiffs contended during oral argument—those markets are not

cognizable in the context of the Sherman Act. Since the

NCAA’s first argument was sufficient to dismiss plaintiffs’ claims, the court did not pass on the NCAA’s other

arguments. The district court also held that plaintiffs’ claims would be dismissed with prejudice for two

reasons. First, plaintiffs already had the opportunity to

amend their complaint after being exposed to the NCAA’s

arguments in the Northern District of California, and yet

they chose not to clearly identify a relevant commercial

market. Second, plaintiffs did not show how they could

alter their complaint to make it sufficient since, according

to the district court, the markets discussed at oral argument are not cognizable under the Sherman Act. Plaintiffs

have appealed the district court’s decision to dismiss its

claims as well as its decision to dismiss with prejudice.

II. Discussion

Plaintiffs’ suit was brought pursuant to statutory provisions found in the Sherman Act and the Clayton Act.

Under § 1 of the Sherman Act, “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in

restraint of trade or commerce . . . is declared to be illegal.” 15 U.S.C. § 1. Plaintiffs’ civil cause of action is

rooted in the Clayton Act, which states that “any person
No. 11-3066 7

who shall be injured in his business or property by

reason of anything forbidden in the antitrust laws may

sue . . . and shall recover threefold the damages by

him sustained.” 15 U.S.C. § 15. Plaintiffs allege that the

Bylaws are a restraint on trade in the labor market for

student-athletes and the product market for bachelor’s

degrees, and thus violated plaintiffs’ statutory rights

under the Sherman Act. The NCAA contends that plaintiffs’ complaint did not identify any market, including

a bachelor’s degree or labor market, in which the

Bylaws restrained trade. The NCAA further argues that

even if plaintiffs’ complaint did sufficiently identify a

product market for bachelor’s degrees or a labor market

for student-athletes, those markets are not commercial,

and therefore are not cognizable under the Sherman Act.

If this is true, then any NCAA actions affecting those

markets—to the extent that they are markets—are not

subject to antitrust laws.

In reviewing the sufficiency of a complaint, we must

accept all well pled facts as true and draw all permissible

inferences in favor of the plaintiff. Active Disposal, Inc. v.

City of Darien, 635 F.3d 883, 886 (7th Cir. 2011). The

Federal Rules of Civil Procedure require only that a

complaint provide the defendant with “fair notice of

what the . . . claim is and the grounds upon which it

rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

We have explained, however, that a complaint may be

“so sketchy that the complaint does not provide the

type of notice of the claim to which the defendant is

entitled under [the Federal Rules of Civil Procedure],” in
8 No. 11-3066

which case a dismissal of the complaint is proper.

Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499

F.3d 663, 667 (7th Cir. 2007). The Supreme Court has

described this notice-pleading standard as requiring a

complaint to “contain sufficient factual matter, accepted

as true, to ‘state a claim to relief that is plausible on its

face.’ ” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)

(quoting Twombly, 550 U.S. at 570). While factual allegations must be accepted as true, legal conclusions may

not be considered. Id. Dismissals under Rule 12(b)(6)

are questions of law, and thus are reviewed de novo.

Autry v. Nw. Premium Servs., Inc., 144 F.3d 1037, 1039

(7th Cir. 1998). A district court’s decision to dismiss a

complaint with prejudice is reviewed for abuse of discretion. Stanard v. Nygren, 658 F.3d 792, 797 (7th Cir. 2011).

A. Sherman Act Framework

The purpose of the Sherman Act is to protect consumers

from injury that results from diminished competition.

Banks v. NCAA, 977 F.2d 1081, 1087 (7th Cir. 1992). “Thus,

the plaintiff must allege, not only an injury to himself,

but an injury to the market as well.” Car Carriers, Inc. v.

Ford Motor Co., 745 F.2d 1101, 1107 (7th Cir. 1984). Accordingly, a plaintiff must prove three elements to succeed

under § 1 of the Sherman Act: “(1) a contract, combination,

or conspiracy; (2) a resultant unreasonable restraint of

trade in [a] relevant market; and (3) an accompanying

injury.” Denny’s Marina, Inc. v. Renfro Prods., Inc., 8 F.3d

1217, 1220 (7th Cir. 1993). There is no question that all

NCAA member schools have agreed to abide by the
No. 11-3066 9

Bylaws; the first showing of an agreement or contract

is therefore not at issue in this case.

The district court’s dismissal of plaintiffs’ claims

focused solely on the second necessary showing—whether

there has been an unreasonable restraint of trade in a

relevant market. The court did not ultimately reach the

question of whether the restraints were reasonable, since

it found that plaintiffs did not allege a relevant market

on which a restraint of trade could operate. Most § 1 cases

focus not on whether a relevant market exists, but on

the other aspect of the second required showing—

whether a restraint of trade in a given market was

actually unreasonable. While our central discussion will

revolve around whether a relevant market was—or even

could have been—identified in plaintiffs’ complaint, a

brief explanation of how courts determine if restraints

are unreasonable will be helpful in understanding

why plaintiffs are mistaken in their belief that a relevant

market need not be identified at all in this case.

Since the Sherman Act is meant to protect the benefits

of competition, the determination of whether a restraint

is unreasonable must focus on “the competitive effects

of challenged behavior relative to such alternatives as its

abandonment or a less restrictive substitute.” Phillip

Areeda, Antitrust Law ¶ 1500, at 362-63 (1986). Courts

have established three categories of analysis—per se,

quick-look, and Rule of Reason—for determining whether

actions have anticompetitive effects, though the

methods often blend together. Cal. Dental Ass’n. v. FTC,

526 U.S. 756, 779 (1999) (“The truth is that our categories
10 No. 11-3066

of analysis of anticompetitive effect are less fixed than

terms like ‘per se,’ ‘quick look,’ and ‘Rule of Reason’ tend

to make them appear.”); see also United States v. Brown

Univ., 5 F.3d 658, 668 (3d Cir. 1993). All of these methods

of analysis are meant to answer the same question:

“whether or not the challenged restraint enhances competition.” Cal. Dental, 526 U.S. at 780; NCAA v. Bd. of

Regents, 468 U.S. 85, 104 (1984).

The standard framework for analyzing an action’s

anticompetitive effects on a market is the Rule of Reason.

Cf. Chicago Prof’l Sports Ltd. P’ship v. NBA, 961 F.2d 667, 673

(7th Cir. 1992). Under a Rule of Reason analysis, the

plaintiff carries the burden of showing that an agreement or contract has an anticompetitive effect on a

given market within a given geographic area. See Reifert

v. S. Cent. Wis. MLS Corp., 450 F.3d 312, 321 (7th Cir. 2006).

As a threshold matter, a plaintiff must show that the

defendant has market power—that is, the ability to

raise prices significantly without going out of business—without which the defendant could not cause

anticompetitive effects on market pricing. Valley Liquors,

Inc. v. Renfield Importers, Ltd., 822 F.2d 656, 666 (7th Cir.

1987). If the plaintiff meets his burden, the defendant

can show that the restraint in question actually has a

procompetitive effect on balance, while the plaintiff can

dispute this claim or show that the restraint in question

is not reasonably necessary to achieve the procompetitive

objective. Areeda, Antitrust Law, ¶1507b, at 397 (1986).

The second framework utilized by courts—the per se

rule—is employed when a “practice facially appears to
No. 11-3066 11

be one that would always or almost always tend to

restrict competition and decrease output.” Bd. of Regents,

468 U.S. at 100 (quoting Broad. Music, Inc. v. Columbia

Broad. Sys., Inc., 441 U.S. 1, 19-20 (1979)). Restraints

that would fall under this category are illegal as a matter

of law for reasons of efficiency; in essence, it is simply

not worth the effort or resources of a Rule of Reason

analysis when “the Court [can] predict with confidence

that the Rule of Reason will condemn [a restraint].”

Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 342

(1990) (quoting Arizona v. Maricopa Cnty. Med. Soc’y, 457

U.S. 332, 344 (1982)). Under the per se framework, a

restraint is deemed unreasonable without any inquiry

into the market context in which the restraint operates.

Bd. of Regents, 468 U.S. at 100. Horizontal price fixing

and output limitation are classic examples of behavior

that is considered anticompetitive per se. Id.

The third framework is the “quick-look” analysis, which

is used where the per se framework is inappropriate, but

where “no elaborate industry analysis is required to

demonstrate the anticompetitive character of . . . an

agreement,” and proof of market power is not required.

Bd. of Regents, 468 U.S. at 109 (quoting Nat’l Soc’y of

Prof’l Engineers v. United States, 435 U.S. 679, 692 (1978)).

Put another way, the quick-look approach can be

used when “an observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect

on customers and markets,” Cal. Dental, 526 U.S. at 770,

but there are nonetheless reasons to examine potential
12 No. 11-3066

procompetitive justifications. See Herbert Hovenkamp,

Antitrust Law, ¶ 1911c, at 273 (1998). Among other situations, the quick-look approach is used when a restraint

would normally be considered illegal per se, but “a

certain degree of cooperation is necessary if the [product

at issue] is to be preserved.” Bd. of Regents, 468 U.S. at 117;

see also Hovenkamp, Antitrust Law, ¶ 1911c, at 274 (1998).

Under this approach, if no legitimate justifications for

facially anticompetitive behavior (such as price-fixing)

are found, no market power analysis is necessary and

the court “condemns the practice without ado.” Chicago

Prof’l Sports, 961 F.2d at 674. But if justifications are

found, a full Rule of Reason analysis may need to take

place. Cf. Chicago Prof’l Sports Ltd. P’ship v. NBA, 95 F.3d

593, 600 (7th Cir. 1996).

Plaintiffs contend that the third framework—the quicklook approach—is the appropriate method for analyzing

whether the NCAA’s actions have had an anticompetitive

effect on a commercial market. This argument finds

support in Board of Regents, where the Supreme Court

held that since college athletics is “an industry in

which horizontal restrictions on competition are

essential if the product is to be available at all,” it is

inappropriate to apply a per se rule to NCAA regulations, even if they amount to horizontal price fixing

and output limitation. 468 U.S. at 100-01; accord Chicago

Prof’l Sports, 961 F.2d at 674. According to plaintiffs, the

NCAA’s restriction on the number of scholarships a

school can provide is a clear limitation on output (that

is, the number of scholarships and, therefore, bachelor’s

degrees) and the NCAA’s restriction of scholarships to
No. 11-3066 13

one year is a clear limitation on price (that is, the price

of bachelor’s degrees and the cost that schools must pay

for student-athletes). They therefore argue that despite

the inapplicability of per se rule cases, a quick-look approach is warranted in this case, as it was in Board of

Regents. Plaintiffs next argue that the quick-look framework absolves them of the burden of describing a

relevant market on which the Bylaws have had an

anticompetitive effect. The Supreme Court, in Board of

Regents, stated that “when there is an agreement not to

compete in terms of price or output, no elaborate

industry analysis is required,” and “naked restraint[s] on

price and output require[] some competitive justification even in the absence of a detailed market analysis.”

468 U.S. at 109-10 (internal quotation marks and

citation omitted); see also Law v. NCAA, 134 F.3d 1010,

1020 (10th Cir. 1998) (“Under a quick look Rule of

Reason analysis, anticompetitive effect is established,

even without a determination of the relevant market,

where the plaintiff shows that a horizontal agreement

to fix prices exists . . . .”).

Out of context, while these quotations seem to support

plaintiffs’ view of the quick-look doctrine, they are misleading. The quotes from Board of Regents and Law are not

referring to the need for a relevant market to exist, but

rather to the plaintiff’s burden of showing that an agreement had anticompetitive effects on a particular market.

As noted above, a plaintiff’s threshold burden under

the Rule of Reason analysis involves the showing of a

precise market definition in order to demonstrate that a
14 No. 11-3066

Aside from the fact that the plaintiffs misunderstand the 3

need for the existence of a relevant market, it is unclear why

they would adamantly seek to avoid the topic of market power.

This appears to be a clear monopsony case, since the NCAA

is the only purchaser of student athletic labor. In any event,

a showing of market power is not necessary in a case

involving clear restrictions on price and output unless and

(continued...)

defendant wields market power, which, by definition,

means that the defendant can produce anticompetitive

effects. See Valley Liquors, Inc., 822 F.2d at 666. The quicklook doctrine permits plaintiffs to forgo any strict

showing of market power, and thus a specific definition

of the relevant market. See Law, 134 F.3d at 1020

(“[W]here a practice has obvious anticompetitive effects—as does price-fixing—there is no need to prove that

the defendant possesses market power.”). This does not

mean, however, that there need not be a relevant market

on which actions have an anticompetitive effect. The

entire point of the Sherman Act is to protect competition

in the commercial arena, Banks, 977 F.2d at 1087; without

a commercial market, the goals of the Sherman Act have

no place. If a plaintiff can show that a defendant has

engaged in naked restrictions on price or output, he

can dispense with any showing of market power until

a procompetitive justification is shown—but the

existence of a relevant market cannot be dispensed with

altogether. Cf. Law, 134 F.3d at 1020. It is the existence

of a commercial market that implicates the Sherman Act

in the first instance.

3
No. 11-3066 15

(...continued) 3

until a full Rule of Reason analysis takes place. See Bd. of

Regents, 468 U.S. at 109-10.

Of course, plaintiffs must show more than this to actually 4

progress past the motion-to-dismiss stage. As stated supra, a

successful Sherman Act plaintiff must prove the existence of

“(1) a contract, combination, or conspiracy; (2) a resultant

unreasonable restraint of trade in the relevant market; and (3)

an accompanying injury.” Denny’s Marina, 8 F.3d at 1220. It is

unquestionable that the member schools of the NCAA agreed

to follow the NCAA’s Bylaws, thus meeting the first element of

a Sherman Act claim. Since the district court concluded that

plaintiffs did not identify a relevant market in their complaint,

it did not address whether plaintiffs adequately alleged that

the Bylaws are an unreasonable restraint of trade or that

they suffered an accompanying injury. Likewise, we need not

analyze plaintiffs’ assertions regarding the reasonableness of

the NCAA’s restraints or plaintiffs’ alleged injury, since we

ultimately conclude that plaintiffs failed to allege a relevant

market in their complaint.

The stage is therefore set. To succeed in its challenge

of the district court’s dismissal, plaintiffs must prove

two points: (1) that there is a cognizable market on

which the NCAA’s actions could have had anticompetitive effects (thus implicating the Sherman Act); and

(2) that plaintiffs did, in fact, identify that market in

their complaint.4

B. Applicability of the Sherman Act to NCAA’s Bylaws

The district court held that the bachelor’s degree

market and the student-athlete labor market, to the
16 No. 11-3066

extent that they exist at all, could never be cognizable

markets under the Sherman Act regardless of the clarity

of plaintiffs’ complaint. First, the district court found

that we foreclosed any possibility that a labor market

for student-athletes could be cognizable in Banks v.

NCAA, 977 F.2d 1081 (7th Cir. 1992). The district court

went on to reject the possibility of a cognizable

market for bachelor’s degrees, finding two points to be

particularly relevant: (1) that one cannot buy a bachelor’s

degree outright, but rather must meet certain requirements to receive the degree even after tuition has

been paid; and (2) that student-athletes are not given

bachelor’s degrees for playing sports, but rather are

given the opportunity to fulfill certain requirements

that could lead to the bestowal of a bachelor’s degree.

Plaintiffs challenge the district court’s findings.

It is undeniable that a market of some sort is at

play in this case. A transaction clearly occurs between a

student-athlete and a university: the student-athlete

uses his athletic abilities on behalf of the university in

exchange for an athletic and academic education, room,

and board. As the Supreme Court made clear long ago,

however, the Sherman Act was intended for, and thus

only applies to, commercial transactions. Apex Hosiery

Co. v. Leader, 310 U.S. 469, 492-93 (1940). See also Brown,

5 F.3d at 665 (“It is axiomatic that section one of the

Sherman Act regulates only transactions that are commercial in nature.”); Areeda & Hovenkamp, Antitrust

Law, ¶260b, at 250 (2000). In determining whether the

exchange of free or reduced-rate education for athletic

participation constitutes a cognizable market, then, we
No. 11-3066 17

must determine whether such a transaction can be considered commercial. To begin with, the NCAA is not

exempt from the strictures of the Sherman Act merely

because it is a nonprofit entity, as Board of Regents

makes clear. See 468 U.S. at 100. There is no clear line as to

what constitutes a “commercial transaction,” but one

leading commentator has suggested that “today the term

‘commerce’ is much broader than it was [in the past] . . .,

including almost every activity from which [an] actor

anticipates economic gain.” Areeda & Hovenkamp,

Antitrust Law, ¶260b, at 250 (2000).

The Sherman Act clearly applies to at least some of

the NCAA’s behavior. See Bd. of Regents, 468 U.S. 85;

see also Law, 134 F.3d 1010 (holding that the Sherman

Act applies to the NCAA’s regulation of the salaries of

coaches). The question for us, however, is whether and

when the Sherman Act applies to the NCAA and its

member schools in relation to their interaction with

student-athletes. The Supreme Court has not weighed in

on this issue directly, but Board of Regents, the seminal

case on the interaction between the NCAA and the

Sherman Act, implies that all regulations passed by the

NCAA are subject to the Sherman Act. 468 U.S. at 117.

In Board of Regents, the Supreme Court ruled that the

NCAA’s restrictions on televising football games were

a violation of § 1 of the Sherman Act. In so holding, the

Court stated the following:

It is reasonable to assume that most of the regulatory controls of the NCAA are justifiable means of

fostering competition among amateur athletic teams
18 No. 11-3066

and therefore procompetitive because they enhance public interest in intercollegiate athletics. The

specific restraints on football telecasts that are challenged in this case do not, however, fit into the

same mold as do rules defining the conditions of the

contest, the eligibility of participants, or the manner

in which members of a joint enterprise shall share

the responsibilities and the benefits of the total venture.

Id. This presumes the applicability of the Sherman Act

to NCAA bylaws, since no procompetitive justifications

would be necessary for noncommercial activity to

which the Sherman Act does not apply. Nonetheless,

courts have struggled with the applicability of the

Sherman Act to NCAA regulations.

Specifically, the Third and Fifth Circuits have confronted the issue at hand. The Third Circuit decided

the issue definitively, but limited its holding to the

NCAA’s eligibility rules. See Smith v. NCAA, 139 F.3d 180

(3d Cir. 1998). In Smith, the Third Circuit upheld

the dismissal of a suit claiming that an NCAA bylaw

“prohibiting a student-athlete from participating in

intercollegiate athletics while enrolled in a graduate

program at an institution other than the studentathlete’s undergraduate institution” violated the

Sherman Act. Id. at 182. The court first held that the

NCAA’s eligibility rules are not related to the NCAA’s

commercial interests, and thus the Sherman Act does

not apply to the NCAA’s promulgation of such rules. Id.

at 185-86; see also Gaines v. NCAA, 746 F.Supp. 738, 743-
No. 11-3066 19

44 (M.D. Tenn. 1990) (distinguishing between the

NCAA’s commercial rules and noncommercial rules, and

finding that eligibility rules are of the latter type, and

thus not subject to the Sherman Act). In an alternative

holding, the Third Circuit also reasoned that even if the

NCAA’s actions were subject to the Sherman Act, the

plaintiff’s suit should have been dismissed based on a

Rule of Reason analysis. Smith, 139 F.3d at 186. The court

observed that NCAA eligibility rules “allow for survival

of the product, amateur sports, and allow for an even

playing field,” thus making them procompetitive on

balance. Id. at 187. Contrary to the Third Circuit, the

Fifth Circuit assumed without deciding that the

Sherman Act applies to the NCAA’s promulgation

of eligibility rules in McCormack v. NCAA. 845 F.2d 1338,

1343-44 (5th Cir. 1988). The Fifth Circuit nonetheless ruled that a particular NCAA eligibility rule—the

restriction on benefits awarded to student-athletes—

easily survived a Rule of Reason analysis, even at the

dismissal stage. Id. As in Smith, the Fifth Circuit cited the

eligibility rules’ ability to create the product of college

football, preserve that product, and preserve “a mixture

containing some amateur elements.” Id. at 1344-45.

While this Circuit has not definitively decided whether

a cognizable market exists between universities and

student-athletes under the Sherman Act, our case of

Banks v. NCAA included a discussion of the issue in the

form of dicta found in the majority opinion (Coffey and

Grant, JJ.) and in a partial concurrence and dissent

(Flaum, J.). See generally 977 F.2d 1081. In Banks, a former

University of Notre Dame football player challenged
20 No. 11-3066

the NCAA’s rule barring any players who have hired an

agent or entered a professional draft. Id. at 1082. The

majority held that the plaintiff’s complaint failed to

allege an anticompetitive effect on a relevant market,

and thus affirmed the district court’s dismissal of the

plaintiff’s claim. Id. at 1093 (“[W]e need not reach the

merits of whether the no-draft rule is a ‘material term of

employment’ as the dissent argues because Banks has

failed to allege how the no-draft and no-agent rules

are restraints of trade . . . .”). In dicta, the majority determined that even if the plaintiff had properly alleged

anticompetitive effects of the NCAA bylaw in question,

his claim would have failed. Id. at 1090-91. The opinion

reasoned that the no-draft and no-agent bylaws were

both eligibility requirements, which are essential to

preserving the existence of a football league consisting

of student-athletes as well as maintaining a clear line

of demarcation between college sports and professional

sports. Id. at 1089-90. Further, the majority expressed

doubt that a labor market for NCAA athletes exists at

all, since “the value of [a] scholarship is based upon

the school’s tuition and room and board, not by the

supply and demand for players.” Id. at 1091. The

dissent, conversely, believed that the plaintiff had

alleged anticompetitive effects on the nationwide labor

market for college football players, a market that is cognizable under the Sherman Act, and that a view of the

NCAA’s eligibility rules as noncommercial was “an

outmoded image of intercollegiate sports that no longer

jibes with reality.” Id. at 1095, 1099 (Flaum, J., dissenting).

Successful college football programs often lead to
No. 11-3066 21

To illustrate, Forbes reported that the University of Texas’ 5

college football team was worth $129 million in 2011 and

(continued...)

large profits, and to acquire those profits, schools must

pay in-kind benefits, namely, grant-in-aid, access to

training facilities, and instruction from premier coaching.

Id. at 1096, 1099. Significantly, the dissent noted that

the no-agent and no-draft rules are not necessarily

Sherman Act violations, but believed that the plaintiff’s

complaint should have survived a motion to dismiss,

and the procompetitive justifications of the eligibility

rules at stake should have been examined more closely.

Id. at 1098.

We start with the view that the Sherman Act applies

to the NCAA bylaws generally. As indicated above, the

Sherman Act applies to commercial transactions, and

the modern definition of commerce includes “almost

every activity from which [an] actor anticipates

economic gain.” Areeda & Hovenkamp, Antitrust Law,

¶260b, at 250 (2000). No knowledgeable observer could

earnestly assert that big-time college football programs

competing for highly sought-after high school football

players do not anticipate economic gain from a

successful recruiting program. Despite the nonprofit

status of NCAA member schools, the transactions those

schools make with premier athletes—full scholarships

in exchange for athletic services—are not noncommercial,

since schools can make millions of dollars as a result of

these transactions. Indeed, this is likely one reason that 5
22 No. 11-3066

(...continued) 5

generated $71 million in profits. Chris Smith, College Football’s

Most Valuable Teams, FORBES (Dec. 22, 2011, 11:43 a.m.),

http://www.forbes.com/sites/chrissmith/2011/12/22/collegefootballs-most-valuable-teams/.

some schools are willing to pay their football coaches up to

$5 million a year rather than invest that money into

educational resources. See Kristin DeRamus et al., College

Football Coach Salary Database, 2006-2011, (Nov. 17, 2011

11:02 AM), USATODAY, http://www.usatoday.com/sports/

college/football/story/2011-11-17/cover-college-footballcoaches-salaries-rise/51242232/1 (putting top salary for

a college head football coach at roughly $5.2 million).

That is not to suggest that all universities with a

football program are solely driven by economic benefit;

the profits derived from athletics can aid a university

in many positive ways that fall in line with the mission

of the university as a whole. But that does not prevent

many universities, through their football teams, from

entering the recruiting market, setting their recruiting

budget, and making recruiting decisions with economic

interests in mind. Similarly, student-athletes contemplating scholarship offers likely include economic

factors in their decision-making process, such as the

value of a given degree or the increased potential for

entry into professional football. It follows that the

NCAA’s bylaws can have an anticompetitive or a procompetitive effect on collegiate athletics generally and

the national college football recruiting market specifically, and those effects can have an economic component.
No. 11-3066 23

Thus, the transactions between NCAA schools and

student-athletes are, to some degree, commercial in

nature, and therefore take place in a relevant market with

respect to the Sherman Act. See White v. NCAA, CV 06-999-

RGK (C.D. Cal. Sept. 20, 2006) (holding that under

the Sherman Act, “Major College Football” is a relevant

market in which “colleges and universities compete to

attract prospective student-athletes”).

None of this is to suggest that all NCAA bylaws, or

even any NCAA bylaws, are violative of the Sherman

Act. On the contrary, Board of Regents implies that the

Sherman Act does apply to NCAA regulations, but

most regulations will be a “justifiable means of fostering

competition among amateur athletic teams,” and are

therefore procompetitive. 468 U.S. at 117. In fact, the

Supreme Court seemed to create a presumption in

favor of certain NCAA rules when it stated:

It is reasonable to assume that most of the regulatory

controls of the NCAA are . . . procompetitive because they enhance public interest in intercollegiate

athletics. The specific restraints . . . that are challenged

in this case do not, however, fit into the same mold

as do rules defining the conditions of the contest, the

eligibility of participants, or the manner in which

members of a joint enterprise shall share the responsibilities and the benefits of the total venture. 

Id. We construe this language as a license to find certain

NCAA bylaws that “fit into the same mold” as those

discussed in Board of Regents to be procompetitive “in

the twinkling of an eye,” Bd. of Regents, 468 U.S. at 110 n.39
24 No. 11-3066

(citation and quotation marks omitted)—that is, at the

motion-to-dismiss stage. See Am. Needle v. N.F.L., 130

S.Ct. 2201, 2216-17 (2010) (observing that certain agreements between members of a joint venture are “likely to

survive the Rule of Reason” such that they do not require

“a detailed analysis,” and thus the Rule of Reason “can . . .

be applied in the twinkling of an eye”). Thus, the first—

and possibly only—question to be answered when

NCAA bylaws are challenged is whether the NCAA

regulations at issue are of the type that have been blessed

by the Supreme Court, making them presumptively

procompetitive. We now turn to that question.

The parties disagree on the scope of the presumption

favoring certain NCAA regulations. Plaintiffs argue that

the presumption should be limited to NCAA eligibility

rules. They distinguish Banks, Smith, and McCormack on

the grounds that the regulations upheld in those cases,

unlike the regulations here, were eligibility rules. See Banks,

977 F.2d 1081 (suggesting in dicta that procompetitive

justifications for NCAA eligibility rules would undoubtedly outweigh any anticompetitive effects if the Sherman

Act does, in fact, apply to said rules); Smith, 139 F.3d 180

(same); McCormack, 845 F.2d at 1345 (reasoning at the

motion to dismiss stage that “[t]he eligibility rules create

the product and allow its survival in the face of commercializing pressures,” and thus “do not violate the antitrust laws”). The NCAA, on the other hand, argues that

the procompetitive presumption should not be limited

to eligibility rules. Despite the Fifth Circuit’s clear conceptualization of the limitation on collegiate athlete

compensation as an eligibility rule, see McCormack, 845
No. 11-3066 25

F.2d at 1343, the NCAA argues that the regulation at

issue in McCormack is better characterized as a financial

aid rule, similar to the Bylaws at issue in this case. It

therefore argues that any procompetitive presumption

that might have been at play in McCormack should

apply here.

In considering the parties’ arguments and attempting to

discern the scope of the presumption established by

Board of Regents, it is important to consider the context

in which that presumption was discussed. Directly preceding the language that allegedly establishes the presumption is a reminder that the NCAA’s collusive

behavior is only permissible because “a certain degree

of cooperation is necessary if the type of competition

that [the NCAA] and its member institutions seek to

market is to be preserved.” Bd. of Regents, 468 U.S. at 117.

The Supreme Court made this point in greater detail in

a separate section of its opinion, where it explained

why “horizontal restraints on competition are essential

if the product [of collegiate sports] is to be available at

all.” See id. at 98-105. The Court explained that any

league sport will require the joint establishment of

certain rules, such as the “size of the field” or the “number

of players on a team.” Id. at 101. College football, the

court reasoned, requires even more joint activity, since

the NCAA seeks to market a particular brand of

football—college football. The identification of this

“product” with an academic tradition differentiates

college football from and makes it more popular than

professional sports to which it might otherwise be
26 No. 11-3066

comparable, such as, for example, minor league baseball. In order to preserve the character and quality

of the “product,” athletes must not be paid, must

be required to attend class, and the like. And the

integrity of the “product” cannot be preserved except

by mutual agreement; if an institution adopted

such restrictions unilaterally, its effectiveness as a

competitor on the playing field might soon be destroyed. Thus, the NCAA plays a vital role in

enabling college football to preserve its character, and

as a result enables a product to be marketed which

might otherwise be unavailable.

Id. at 101-02. Herein lies the scope of the procompetitive presumption for certain NCAA regulations. A certain

amount of collusion in college football is permitted

because it is necessary for the product to exist. Accordingly, when an NCAA bylaw is clearly meant to help

maintain the “revered tradition of amateurism in college

sports” or the “preservation of the student-athlete in

higher education,” the bylaw will be presumed

procompetitive, since we must give the NCAA “ample

latitude to play that role.” Id. at 120. But if a regulation

is not, on its face, helping to “preserve a tradition that

might otherwise die,” either a more searching Rule of

Reason analysis will be necessary to convince us of its

procompetitive or anticompetitive nature, or a quick

look at the rule will obviously illustrate its anticompetitiveness. See id. In Board of Regents, for instance, the Supreme Court ruled that the limitation on the type of

television contracts that member schools are allowed to

enter into does not aid in the preservation of amateurism
No. 11-3066 27

We need not touch upon the debate of whether all eligibility 6

rules or just most eligibility rules are due a presumption, as

the Bylaws at issue in this case are not, in fact, eligibility rules.

or student-athletes, and is thus a violation of the

Sherman Act. Id. The Court rejected the argument that

the television plan equalized competition on the field

and reasoned that, in any event, “the NCAA imposes

a variety of other restrictions designed to serve

amateurism which are much better tailored to the goal

of competitive balance . . . [and] which are ‘clearly sufficient’ to preserve competitive balance to the extent it is

within the NCAA’s power to do so.” Id. at 117-20.

Most—if not all—eligibility rules, on the other hand, fall

comfortably within the presumption of procompetitiveness afforded to certain NCAA regulations, as both

parties agree. Beyond the obvious fact that the Supreme 6

Court explicitly mentioned eligibility rules as a type

that “fit[s] into the same mold” as other procompetitive

rules, they are clearly necessary to preserve amateurism

and the student-athlete in college football. Indeed, they

define what it means to be an amateur or a studentathlete, and are therefore essential to the very existence

of the product of college football. Accord Banks, 977 F.2d

at 1089-90 (“[T]he no-draft rule and other like NCAA

regulations preserve the bright line of demarcation between college and ‘pay for play’ football.”); Smith, 139

F.3d at 187 (“[T]he NCAA’s eligibility rules allow for the

survival of the product, amateur sports, and allow for an

even playing field.”); McCormack, 845 F.2d at 1344-45 (“The
28 No. 11-3066

One should not mistake the analysis we discuss here as 7

requiring proof of the procompetitive nature of the NCAA’s “no

payment” rules on a case-by-case basis. This analysis involves

a determination of whether a rule is, on its face, supportive of

the “no payment” and “student-athlete” models, not whether

“no payment” rules are themselves procompetitive—under

Board of Regents, they clearly are.

NCAA markets college football as a product distinct

from professional football. The eligibility rules create

the product and allow its survival in the face of commercializing pressures.”). There may not be such a thing as a

student-athlete, for instance, if it was not for the NCAA

rules requiring class attendance, and thus no “detailed

analysis,” Am. Needle, 130 S.Ct. at 2216-17, would be

necessary to deem such rules procompetitive. Cf. Bd.

of Regents, 468 U.S. at 102. The same goes for bylaws

eliminating the eligibility of players who receive cash

payments beyond the costs attendant to receiving an

education—a rule that clearly protects amateurism. Cf.

McCormack, 845 F.2d 1338.

7

The Bylaws at issue in this case, however, are not eligibility rules, nor do we conclude that they “fit into the

same mold” as eligibility rules. See In re NCAA I-A Walk-on

Football Players Litigation, 398 F.Supp.2d 1144, 1149

(W.D.Wash. 2005) (finding that the cap on the number of

scholarships a college team can grant does not implicate

student-athlete eligibility “in the same manner as rules

requiring students to attend class or rules revoking eligibility for entering a professional draft”). These Bylaws—

a one-year limit to scholarships and a limit on scholar-
No. 11-3066 29

ships per team—are not inherently or obviously necessary

for the preservation of amateurism, the student-athlete,

or the general product of college football. Issuing more

scholarships (thus creating more amateur players) and

issuing longer scholarships cannot be said to have an

obviously negative impact on amateurism. Nor is there

an obvious effect on the ability of college football to

survive without the Bylaws in question. The NCAA

argues that multi-year scholarships would make it too

difficult for less wealthy schools to compete in the recruiting market, but this claim is weakened by the fact

that the restriction on multi-year scholarships was only

instituted in 1973, Zachary Stauffer, NCAA Approves

New Rules—But Do They Matter?, FRONTLINE (Oct. 28,

2011, 4:58 p.m.), http://www.pbs.org/wgbh/pages/frontline/

sports/money-and-march-madness/ncaa-approves-newrules-but-do-they-matter/, and has recently been rescinded,

see Steve Wieberg, supra. In any event, the claim is far

too great a leap to make without evidentiary proof at

the full Rule of Reason stage. Similarly, the rules limiting

the number of scholarships available for every NCAA

team may have procompetitive effects, such as the prevention of elite programs stockpiling athletes, but it is

not intuitive that the recruiting market would be unable

to handle this potential pitfall on its own. The Bylaws

at issue, especially the prohibition against multi-year

scholarships, seem to be aimed at containing university

costs, not preserving the product of college football,

though evidence presented at a later stage could prove

that the Bylaws are, in fact, key to the survival of the

student-athlete and amateurism.
30 No. 11-3066

It is true that the prohibition against multi-year scholarships is, in a sense, a rule concerning the amount of

payment a player receives for his labor, and thus may

seem to implicate the split between amateur and pay-forplay sports. After all, student-athletes are paid, but

their payment is limited to reimbursement for costs

attendant to receiving an education. For the purposes

of college sports, and in the name of amateurism,

we consider players who receive nothing more than

educational costs in return for their services to be

“unpaid athletes.” It is for this reason, though, that the

prohibition against multi-year scholarships does not

implicate the preservation of amateurism, for whether

or not a player receives four years of educational

expenses or one year of educational expenses, he is still

an amateur. It is not until payment above and beyond

educational costs is received that a player is considered

a “paid athlete.” The NCAA could (but does not) argue

that payment of more than one year’s educational costs

for only one year of athletic services—a scenario that

may unfold if a player with a multi-year scholarship

is released from the team or injured—would result in the

destruction of amateurism. Once again, this assertion

is belied by the fact that multi-year scholarships were

wholly permissible before 1973, see Zachary Stauffer, supra,

and amateurism, by all accounts, was alive and well

in college sports in the first seven decades of the

twentieth century. See, e.g., Mechelle Voepel, College

athletes are already getting paid, ESPN.COM (July 18, 2011),

http://sports.espn.go.com/ncaa/columns/story?columnist=

voepel_mechelle&id=6739971.
No. 11-3066 31

As for the NCAA’s argument that, according to

McCormack, both eligibility rules and financial aid rules

are deserving of a procompetitive presumption, we

disagree. The NCAA’s limitation on athlete compensation beyond educational expenses, which was implicated

in McCormack, directly advances the goal of maintaining

a “clear line of demarcation between intercollegiate

athletics and professional sports,” Banks, 977 F.2d at 1089

(quoting Gaines, 746 F.Supp. at 744), and thus is best

categorized as an eligibility rule aimed at preserving the

existence of amateurism and the student-athlete. The

Bylaws at issue in this case, on the other hand, are not

directly related to the separation of amateur athletics

from pay-for-play athletics, as explained in the preceding

paragraphs. Nor do they help preserve the existence of

the student-athlete (as a facial matter, anyway), since

they actually limit the number of athletes awarded financial aid and the amount of financial aid that an athlete

can be awarded. Thus, financial aid rules do not

always assist in the preservation of amateurism or the

existence of student-athletes, so the regulations at issue

cannot be presumptively procompetitive simply because

they relate to financial aid.

The lack of a procompetitive presumption in favor of

the two Bylaws under consideration does not equal a

finding that they are anticompetitive; it simply means

that they cannot be deemed procompetitive at the motionto-dismiss stage. In fact, some of the procompetitive

arguments made by the NCAA, if supported by evidence,

could lead to a finding that the Bylaws are reasonable

restrictions on trade. The district court did not reach the
32 No. 11-3066

issue of whether the NCAA Bylaws were an unreasonable

restriction on trade, but rather held that plaintiffs did

not—and could not—allege a relevant market cognizable

under the Sherman Act. As we have made clear, we

disagree that plaintiffs could not have alleged a relevant

cognizable market, but we ultimately conclude that

plaintiffs did not identify such a market in their

complaint, see infra Part C, and that the district court’s

dismissal was justified.

C. Adequacy of Plaintiffs’ Complaint

As already noted, naked price and output controls can

obviate the need for a detailed market analysis in a

Sherman Act case, Bd. of Regents, 468 U.S. at 109, but that

does not eliminate the need for a relevant commercial

market to exist altogether. Apex Hosiery, 310 U.S. at 492-93.

In an area that is not obviously commercial, and thus

where the Sherman Act’s application is not clearly apparent, we believe it is incumbent on the plaintiff to

describe the rough contours of the relevant commercial

market in which anticompetitive effects may be felt,

even when a quick-look approach is all that is called

for. It must therefore be determined whether the actual

markets allegedly identified in plaintiffs’ complaint—

the market for bachelor’s degrees and the market

for student-athlete labor—were actually identified, and

if so, whether they adequately describe the relevant

market on which the Bylaws may have had an

anticompetitive effect. The district court held that plain-
No. 11-3066 33

tiffs failed to identify in their complaint either of the

markets they now present, and we agree.

Plaintiffs come closest to identifying a relevant commercial market in their discussion of bachelor’s degrees,

but we nonetheless conclude that the complaint falls

short. Plaintiffs admit that before filing their amended

complaint in the lower court, they removed two important

portions from their original complaint: (1) a section

heading entitled “Relevant Market,” and (2) a sentence

stating that “bachelor’s degrees from accredited colleges

and/or universities constitute a distinct product market.” It is clear, therefore, that they believed a relevant

market need not be identified or they attempted to

hedge their bets by keeping their market allegations

vague. Plaintiffs’ complaint did state that “NCAA

member institutions compete with each other to attract

and enroll highly skilled athletes to their institution for

obtaining bachelor’s degrees,” which at least suggests

the existence of some market, but the confines of that

market are far too unclear. For instance, it is not

apparent whether plaintiffs believe that the Bylaws

affect an overall market for bachelor’s degrees, which

would impact scholarship athletes and non-athletes

alike, or some subsidiary market that only concerns

athletes attempting to obtain educational degrees in

exchange for athletic services. This may seem like nitpicking, but if a Sherman Act claim of this nature progresses past the quick-look stage and enters a full-fledged

Rule of Reason analysis, the scope of the market becomes

of central importance.
34 No. 11-3066

Moreover, even if we deemed plaintiffs’ complaint to

put the NCAA on sufficient notice of the relevant

market affected by the Bylaws, we would still have

doubts about plaintiffs’ ability to survive a motion to

dismiss. As mentioned above, the customer base in a

product market for bachelor’s degrees would include

many more people than scholarship athletes. Bachelor’s

degrees are issued to literally thousands of people, only

a small portion of which are scholarship athletes, and

an even smaller portion of which are athletes whose

scholarships were not renewed. The anticompetitive

impact of an NCAA bylaw would therefore likely be

very minimal. Another problem with the alleged market

for bachelor’s degrees, which was discussed by the

district court, is the fact that degrees are not automatically received or guaranteed upon payment of

tuition. As many unhappy undergraduates can attest,

payment of tuition does not ensure the receipt of a degree. Plaintiffs cite Brown in support of their proposed

market, where the Third Circuit found a cognizable

market for educational services provided by Ivy League

colleges. 5 F.3d 658. But the difference between a market

for educational services and a market for bachelor’s

degrees is of vital importance. A student is owed educational instruction upon payment of tuition, though what

a student does with that instruction and whether

that instruction leads to a degree is up to the student. A

bachelor’s degree, on the other hand, is not bought outright. It is the opportunity to earn a bachelor’s degree

that one pays for (or performs athletic services for, as the

case may be). Thus, plaintiffs’ complaint did not identify
No. 11-3066 35

Again, this does not necessarily mean that any challenge of 8

any NCAA bylaw will survive the motion-to-dismiss stage.

Many NCAA bylaws can be deemed procompetitive “in the

twinkling of an eye.” Cf. Bd. of Regents, 468 U.S. at 109 n.39

(continued...)

a product market for bachelor’s degrees, but even if it

did, we would likely find that such a market—to the

extent that it exists—is not cognizable under the

Sherman Act.

The proper identification of a labor market for studentathletes, on the other hand, would meet plaintiffs’

burden of describing a cognizable market under the

Sherman Act. As an initial matter, labor markets are

cognizable under the Sherman Act. Nichols v. Spencer Int’l

Press, Inc., 371 F.2d 332, 335-36 (7th Cir. 1967). The Banks

majority, in dicta, opined that the market for scholarship

athletes cannot be considered a labor market, since

schools do not engage in price competition for players,

nor does supply and demand determine the worth of

student-athletes’ labor. 977 F.2d at 1091. We find this

argument unconvincing for two reasons. First, the only

reason that colleges do not engage in price competition

for student-athletes is that other NCAA bylaws

prevent them from doing so. The fact that certain

procompetitive, legitimate trade restrictions exist in a

given industry does not remove that industry from

the purview of the Sherman Act altogether. Rather, all

NCAA actions that are facially anticompetitive must

have procompetitive justifications supporting their existence. Second, colleges do, in fact, compete for student- 8
36 No. 11-3066

(...continued) 8

(quoting P. Areeda, The “Rule of Reason” in Antitrust Analysis:

General Issues 37-38 (Federal Judicial Center, June 1981)).

athletes, though the price they pay involves in-kind

benefits as opposed to cash. For instance, colleges may

compete to hire the coach that will be best able to

launch players from the NCAA to the National Football

League, an attractive component for a prospective

college football player. Colleges also engage in veritable

arms races to provide top-of-the-line training facilities

which, in turn, are supposed to attract collegiate athletes. Many future student-athletes also look to the

strength of a college’s academic programs in deciding

where to attend. These are all part of the competitive

market to attract student-athletes whose athletic labor

can result in many benefits for a college, including economic gain.

Unfortunately for plaintiffs, nothing resembling a

discussion of a relevant market for student-athlete

labor can be found in the amended complaint. Indeed, the

word labor is wholly absent. Plaintiffs claim that they

“allege[d] that there was ‘no practical alternative’

available for students wishing to pursue an education

in exchange for their playing ability,” but the paragraph

that they cite to in their amended complaint explains

the lack of “practical alternatives” for colleges wanting

to field teams outside of the NCAA’s framework, not

the lack of “practical alternatives” for student-athletes.

Plaintiffs appear to have made the strategic decision

to forgo identifying a specific relevant market. Whatever
No. 11-3066 37

the reasons for that strategic decision, they cannot now

offer post hoc arguments attempting to illuminate a

buried market allegation. We therefore affirm the

district court’s dismissal of plaintiffs’ claims.

D. Dismissal with Prejudice

The district court’s denial of plaintiffs’ request to

amend their complaint is reviewed for abuse of discretion,

Stanard, 658 F.3d at 797, which is a “heavy burden.”

Jackson v. Bunge Corp., 40 F.3d 239, 246 (7th Cir. 1994).

Under Rule 15(a) of the Federal Rules of Civil Procedure,

a complainant may amend his complaint as a matter

of course in response to a motion to dismiss, but any

subsequent amendments can only be made with consent

of the opposing party or the court’s leave. We have

stated that a district court is not required to grant such

leave when a plaintiff has had multiple opportunities

to state a claim upon which relief may be granted. Emery

v. Am. Gen. Finance, Inc., 134 F.3d 1321, 1322-23 (7th

Cir. 1998). By our count, plaintiffs had three opportunities to identify a relevant market in which the

NCAA allegedly committed violations of the Sherman

Act. Plaintiffs obviously could have established a

relevant market from the outset, but they also had the

opportunity to amend their complaint and include an

identification of a cognizable market after the full

briefing and argument of the NCAA’s motion to dismiss

in the California district court. Further, plaintiffs actually

took advantage of their ability to amend their complaint

in the Indiana district court, yet even after confronting
38 No. 11-3066

the NCAA’s claim that a relevant market had not been

identified, they still did not include a clear identification

of the market in which the NCAA allegedly acted

in an anticompetitive manner. Further, “[i]t is a basic

principle that the complaint may not be amended by

the briefs in opposition to a motion to dismiss, nor can it

be amended by the briefs on appeal.” Thomason v.

Nachtrieb, 888 F.2d 1202, 1205 (7th Cir. 1989). We therefore

cannot find that the district court abused its discretion

in dismissing plaintiffs’ claims with prejudice.

III. Conclusion

For the foregoing reasons, we AFFIRM the decision

of the district court.

6-18-12