In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 17-1711

PETER DEPPE, on behalf of himself 

and all others similarly situated,

Plaintiff-Appellant,

v.

NATIONAL COLLEGIATE 

ATHLETIC ASSOCIATION,

Defendant-Appellee.

____________________

Appeal from the United States District Court for 

the Southern District of Indiana, Indianapolis Division.

No. 1:16-cv-00528-TWP-DKL — Tanya Walton Pratt, Judge.

____________________

ARGUED SEPTEMBER 13, 2017 — DECIDED JUNE 25, 2018

____________________

Before BAUER, ROVNER, and SYKES, Circuit Judges.

SYKES, Circuit Judge. This case raises an antitrust challenge to the NCAA’s1 “year in residence” rule, which requires student-athletes who transfer to a Division I college to

 

1 National Collegiate Athletic Association.
2 No. 17-1711

wait one full academic year before they can play for their

new school. A Division I football player filed a class-action 

lawsuit alleging that the rule is an unlawful restraint of trade 

in violation of § 1 of the Sherman Act. The district court 

dismissed the suit on the pleadings.

We affirm. The year-in-residence requirement is an eligibility rule clearly meant to preserve the amateur character of 

college athletics and is therefore presumptively procompetitive under NCAA v. Board of Regents of University of Oklahoma, 

468 U.S. 85 (1984), and Agnew v. NCAA, 683 F.3d 328 (7th Cir. 

2012).

I. Background

The case comes to us from a dismissal on the pleadings, 

see FED. R. CIV. P. 12(b)(6), so we take the following factual 

account from the complaint, accepting the allegations as 

true. Peter Deppe was a star punter in high school, and 

several schools recruited him to play college football. He 

chose Northern Illinois University (“NIU”), a Division I 

school, and enrolled in June 2014 as a preferred walk-on. In 

other words, NIU invited him to join the football team but 

did not offer him an athletic scholarship. Deppe decided to 

“red shirt” his first year; this meant that he practiced with 

the team during the 2014 season but did not compete, and 

the clock did not run on his four years of NCAA athletic 

eligibility.

Shortly after Deppe enrolled, an NIU football coach told 

him that he would start receiving an athletic scholarship in 

January 2015. That coach soon left NIU, however, and the 

head football coach later informed Deppe that he would not 

receive the scholarship after all. Sometime in 2015 NIU 
No. 17-1711 3

signed another punter, reducing Deppe’s chances of getting

playing time or receiving an athletic scholarship, so in the 

fall of 2015 he started shopping around for a new football 

program. 

The University of Iowa, another Division I school, was 

interested. Coaches at Iowa told Deppe they wanted him to 

join the team if he would be eligible to compete during the 

2016–2017 season. Deppe’s parents asked the NCAA about 

their son’s eligibility to play. The NCAA responded that 

under its year-in-residence rule, Deppe would be ineligible 

to compete for one year following his transfer. 

The year-in-residence bylaw appears in the eligibility section of the NCAA Division I Manual. It provides:

14.5.5.1 General Rule. A transfer student from 

a four-year institution shall not be eligible for 

intercollegiate competition at a member institution until the student has fulfilled a residence 

requirement of one full academic year (two full 

semesters or three full quarters) at the certifying institution. 

NCAA Division I Manual, 183, http://www.ncaapublications. 

com/productdownloads/D118.pdf.

The NCAA permits a one-time transfer with immediate 

athletic eligibility in certain limited circumstances. The socalled one-time transfer exception is available to a Division I 

football player only if he transfers from a school in the 

Football Bowl Subdivision to a school in the Football Championship Subdivision with two or more seasons of athletic 

eligibility remaining, or if he transfers from a Football 

Championship school that offers athletic scholarships to a
4 No. 17-1711

Football Championship school that does not. Id., 184–85,

§ 14.5.5.2.10. The exception was unavailable to Deppe because he intended to transfer from one Football Bowl school 

to another.

In addition, a player who transfers due to difficult personal or family circumstances or other extenuating circumstances may apply for a waiver of the NCAA’s requirement 

that a student-athlete’s four years of playing time be completed in five calendar years. Id., 79, § 12.8.1; id., 81, 

§ 12.8.1.7; id., 88–89, § 12.8.6. The NCAA informed Deppe 

that if he wanted to try to obtain a waiver, the school to 

which he planned to transfer would have to initiate the 

process on his behalf. In November 2015 the University of 

Iowa granted Deppe academic admission. But a few days 

later, Iowa football staff notified him that the team had 

decided to pursue another punter who had immediate 

eligibility and the school would not initiate the waiver 

process for him.

Deppe sued the NCAA on behalf of himself and a proposed class alleging that two of the Association’s bylaws 

violate § 1 of the Sherman Act: the year-in-residence requirement, and a rule capping the number of athletic scholarships a school can grant each year. He dropped his

challenge to the scholarship cap; only the year-in-residence 

rule remains at issue. Deppe argued that the bylaw is an 

unlawful restraint of trade and that student-athletes would 

receive more generous athletic scholarships if they could 

transfer more freely.

The NCAA moved to dismiss the complaint under 

Rule 12(b)(6), arguing that the year-in-residence bylaw is an 

eligibility rule and thus is presumptively procompetitive 
No. 17-1711 5

under Board of Regents and Agnew and need not be tested for 

anticompetitive effect under a full rule-of-reason analysis.

The district judge agreed and dismissed the case.

II. Discussion

We review the judge’s dismissal order de novo. Tagami v. 

City of Chicago, 875 F.3d 375, 377 (7th Cir. 2017). Section 1 of 

the Sherman Act declares illegal “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in 

restraint of trade or commerce.” 15 U.S.C. § 1. To prevail in a 

suit alleging a violation of § 1, the plaintiff must prove three 

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

resultant unreasonable restraint of trade in [a] relevant 

market; and (3) an accompanying injury.” Agnew, 683 F.3d at

335 (quoting Denny’s Marina, Inc. v. Renfro Prods., Inc., 8 F.3d 

1217, 1220 (7th Cir. 1993)). This case centers on the second 

element—specifically, whether the NCAA’s year-in-residence 

bylaw is an unreasonable restraint of trade. 

The Supreme Court considered the antitrust implications 

of NCAA regulations in Board of Regents. The case raised a 

Sherman Act challenge to the Association’s restrictions on 

televising college football games. 468 U.S. at 91–92. The 

details are not important here; for our purposes, it’s enough 

to note that the Court found the restrictions unlawful under

§ 1 of the Act. Id. at 120. Along the way to that holding, the 

Court had this to say about antitrust challenges to the 

NCAA’s bylaws more generally:

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

means of fostering competition among amateur 

athletic teams and therefore procompetitive 
6 No. 17-1711

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. at 117. The Court closed its decision by observing that 

“[t]he NCAA plays a crucial role in the maintenance of a 

revered tradition of amateurism in college sports” and 

“needs ample latitude” to play that role, and that “the 

preservation of the student-athlete in higher education adds 

richness and diversity to intercollegiate athletics and is 

entirely consistent with the goals of the Sherman Act.” Id. at 

120. 

In Agnew we read this language from Board of Regents to 

mean that although the Sherman Act applies to the NCAA, 

“most [of the Association’s] regulations will be a ‘justifiable 

means of fostering competition among amateur athletic 

teams[]’ and are therefore procompetitive.” 683 F.3d at 341 

(quoting Bd. of Regents, 468 U.S. at 117). We also understood 

these passages as “a license to find certain NCAA bylaws 

that ‘fit into the same mold’ as those discussed in Board of 

Regents to be procompetitive ... at the motion-to-dismiss 

stage” without the need for analysis under the rule-of-reason 

framework. Id. (internal citation omitted) (quoting Bd. of 

Regents, 468 U.S. at 117, 110 n.39). Accordingly, we held that 

“the first—and possibly only—question to be answered 

when NCAA bylaws are challenged is whether the NCAA 
No. 17-1711 7

regulations at issue are of the type that have been blessed by 

the Supreme Court, making them presumptively procompetitive.” Id.

Agnew involved a challenge to the NCAA’s scholarship 

cap and its prohibition of multiyear scholarships. Id. at 332. 

Extrapolating from Board of Regents, we distilled the following legal standard for determining whether a § 1 challenge in 

this context may go forward or should be dismissed on the 

pleadings: an NCAA bylaw is presumptively procompetitive 

when it is “clearly meant to help maintain the ‘revered 

tradition of amateurism in college sports’ or the ‘preservation of the student-athlete in higher education.’” Id. at 342–

43 (quoting Bd. of Regents, 468 U.S. at 120). On the other 

hand, “if a regulation is not, on its face, helping to ‘preserve 

a tradition that might otherwise die,’” no such presumption 

is warranted. Id. at 343 (quoting Bd. of Regents, 468 U.S. at 

120).

Importantly here, we also explained that “[m]ost—if not 

all—eligibility rules ... fall within the presumption of procompetitiveness” established in Board of Regents. Id. After all,

“the Supreme Court explicitly mentioned eligibility rules as 

a type that ‘fit[s] into the same mold’ as other procompetitive 

rules.” Id. (alteration in original). And because eligibility 

rules “define what it means to be an amateur or a studentathlete,” they are “essential to the very existence of the 

product of college football.” Id.

The rules challenged in Agnew did not govern athletic 

eligibility or otherwise “fit into the same mold” of the presumptively procompetitive regulations mentioned in Board 

of Regents. Id. at 344–45. But the absence of a procompetitive 

presumption did “not equal a finding that [the rules] are 
8 No. 17-1711

anticompetitive;” rather, it simply meant that they could not 

be presumed procompetitive at the pleadings stage. Id. at 

345. So we moved to the next step in the § 1 analysis and 

determined that the complaint failed to identify a relevant 

cognizable market and affirmed the dismissal of the suit on 

that basis. Id. at 345–47.

Unlike the bylaws at issue in Agnew, the year-inresidence requirement is plainly an eligibility rule. It appears 

in the eligibility section of the NCAA Division I Manual. On 

its face, it governs a transfer student’s eligibility for intercollegiate athletic competition. In particular, the bylaw suspends a transfer student’s athletic eligibility until the student 

has spent one full academic year at his new college. 

Deppe insists that the year-in-residence rule does not “fit 

within the contours of a traditional eligibility bylaw.” On the 

contrary, the rule falls neatly in line with other rules courts 

have characterized as eligibility rules. In Agnew we gave the 

example of a class-attendance requirement to explain why 

eligibility rules are entitled to a procompetitive presumption. We said: “There may not be such a thing as a studentathlete, for instance, if it was not for the NCAA rules requiring class attendance, and thus no detailed analysis would be 

necessary to deem such rules procompetitive.” Id. at 343 

(internal quotation marks and citation omitted). Bylaws that 

have been classified as eligibility rules include: a bylaw 

revoking a student-athlete’s eligibility to compete if he enters 

the professional draft or hires a professional agent, Banks v. 

NCAA, 977 F.2d 1081, 1082–83 (7th Cir. 1992); a rule allowing 

the suspension of a college football program for illicitly 

compensating players beyond scholarships, McCormack v. 

NCAA 845 F.2d 1338, 1343 (5th Cir. 1988); and a bylaw 
No. 17-1711 9

making student-athletes ineligible to compete at a graduate 

school different from their undergraduate institution, Smith 

v. NCAA, 139 F.3d 180, 186 (3d Cir. 1998), vacated on other 

grounds by NCAA v. Smith, 525 U.S. 459 (1999). We have no 

difficulty concluding that the year-in-residence bylaw is an 

eligibility rule. 

As we’ve noted, most NCAA eligibility rules are entitled 

to the procompetitive presumption announced in Board of 

Regents because they define what it means to be a studentathlete and thus preserve the tradition and amateur character of college athletics. Agnew, 683 F.3d at 343. Deppe has not 

persuaded us that the year-in-residence requirement is the

rare exception to this general principle. Indeed, the complaint alleges that Division I football student-athletes would 

transfer more often if not for the year-in-residence rule. 

Without it student-athletes could be “traded” from year to

year like professional athletes. A college player could begin 

the season playing for one school and end the season playing for its rival. Uninhibited transfers with immediate 

eligibility to play would risk severing the athletic and academic aspects of college sports, threatening the character of 

intercollegiate athletics. The year-in-residence rule guards 

against that risk and thus is “clearly meant to help maintain 

the ‘revered tradition of amateurism in college sports.’” Id. at 

342 (quoting Bd. of Regents, 468 U.S. at 120). 

Deppe points to the exceptions and the possibility of a 

waiver of the Association’s five-year rule, arguing that if 

these forms of relief are available, then the year-in-residence 

requirement is actually unnecessary to the survival of college 

football. This argument is a nonstarter. To begin, the test 

under Agnew is not whether college athletics could survive 
10 No. 17-1711

without this bylaw, but rather whether the rule is clearly 

meant to help preserve the amateurism of college sports. 

And scrutinizing the NCAA’s bylaws as Deppe suggests 

conflicts with the Supreme Court’s admonition in Board of 

Regents that the NCAA needs “ample latitude” to preserve 

the product of college sports. 468 U.S. at 120. That the NCAA 

allows some avenues for relief does not suggest that the yearin-residence requirement is aimed at an objective other than 

the maintenance of the amateur character of the college 

game. Instead it suggests that the NCAA is willing to allow 

players certain flexibility where doing so will not damage 

the product of college football. 

Next, Deppe argues that the NCAA enforces the year-inresidence requirement for economic reasons and not to 

preserve the product of college football. He asks us to infer 

an economic motive from the fact that the one-time transfer 

exception is unavailable to most Division I football, basketball, and ice-hockey players—the highest-revenue sports

programs in the NCAA. This argument ignores the innocent 

explanation that these are precisely the athletes who are 

most vulnerable to poaching. Without transfer restrictions, 

the players in these high-revenue sports could be traded like 

professional athletes. 

Deppe also argues that because the year-in-residence requirement impedes transfers, it lowers the administrative 

costs associated with player movement, including recruiting 

and retention expenditures. That is, schools are saving 

money they would otherwise need to spend on more generous scholarships to tempt their student-athletes to stay, as 

well as money necessary to recruit and train new players to 

replace those who leave. But the fact that colleges may save 
No. 17-1711 11

money as a consequence of the year-in-residence requirement does not mean that the bylaw is fundamentally aimed 

at containing costs rather than preserving the amateur 

character of college football. 

Last, Deppe argues that at bottom, the year-in-residence 

rule serves economic interests because it “preserves the 

hegemony of the top ‘Power 5’ conferences”—the most 

powerful group of schools in the NCAA. He asserts that 

these schools recruit the most talented high-school athletes 

and that the year-in-residence rule prevents those studentathletes from transferring to less powerful schools. But the 

rule impedes transfers in both directions. Without it, the 

“Power 5” schools could poach rising stars from smaller 

schools, which would risk eroding the amateur character of 

the college game.

In sum, the year-in-residence rule is, on its face, a presumptively procompetitive eligibility rule under Agnew and 

Board of Regents. Accordingly, a full rule-of-reason analysis is 

unnecessary. Deppe’s Sherman Act challenge to the NCAA’s 

year-in-residence bylaw fails on the pleadings.

AFFIRMED.