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. e du/thir dc ir c uit_1998/49Filed March 16, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 97-3346 and 97-3347

R. M. SMITH,

v.

NATIONAL COLLEGIATE ATHLETIC ASSOCIATION

Renee M. Smith,

Appellant

On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civ. No. 96-01604)

Argued February 12, 1998

BEFORE: GREENBERG, NYGAARD and MCKEE, Circuit Judges.

(Filed: March 16, 1998)

Renee M. Smith (argued)
5426 Fifth Avenue Shadyside Inn Pittsburgh, PA 15232

Pro Se

Larry A. Silverman
Christine A. Ward Dickie, McCamey & Chilocote

Two PPG Place
Suite 400 Pittsburgh, PA 15222-5402John J. Kitchin (argued)

Robert W. McKinley Swanson, Midgeley, Gagwere, Kitchin & McLarney

922 Walnut
Suite 1500 Kansas City, MO 64106

Attorneys for Appellee

Marcia D. Greenberger Deborah L. Blake (argued)
National Women's Law Center 11 DuPont Circle, N.W.
Suite 800 Washington, D.C. 20036

Attorneys for Amici Curiae National Women's Law Center, American Association for Active Lifestyles & Fitness, American Association of University Women, AAUW Legal Advocacy Fund, American Civil Liberties Union, Center for Women Policy Studies, The Connecticut Women's Legal Fund, Equal Rights Advocates, Inc., National
Association for Girls and Women In Sport, National Coalition for Sex Equity in Education, National Education Association, NOW Legal Defense and Education Fund, Trial Lawyers for Public Justice, Wider Opportunities for Women, Women Employed, Women's Law Project, Women's Legal Defense Fund, Women's Sports Foundation, and The Young The YWCA of the USA

2OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

Renee M. Smith, a pro se litigant, appeals from the district court's order of May 21, 1997, dismissing her complaint for failure to state a claim, and from th e district court's order of June 5, 1997, denying her motion f or leave to amend her complaint. Smith's complaint alleges violations of section 1 of the Sherman Act, 15 U.S. C. S 1, and Title IX of the Educational Amendments of 1972, 20 U.S.C. S 1681, as well as a state law breach of con tract claim against the National Collegiate Athletic Asso ciation ("NCAA"). Smith's allegations arise from the NCAA's promulgation and enforcement of a bylaw prohibiting a student-athlete from participating in intercollegia te athletics while enrolled in a graduate program at a n institution other than the student-athlete's underg raduate
institution.

The district court had jurisdiction over the federa l claims in this matter pursuant to 28 U.S.C. SS 1331 and 13 37 and 15 U.S.C. S 15, and over the state law claim pursua nt to 28 U.S.C. S 1367. This court has jurisdiction to revie w the final orders of the district court pursuant to 28 U.S.C. S 1291.1

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1. According to the NCAA rules, a student-athlete i s eligible to participate in intercollegiate athletics for a total of four se asons within a fiveyear period. Because Smith's five year-period of eligibi lity has expired and, according to the NCAA her complaint seeks only decl aratory relief, the
NCAA concludes that her Title IX claim is moot. We disagree.

Smith's Title IX claim is not moot although her per iod of eligibility has expired because she retains a claim for damages. Se e Ellis Bhd. of Ry., Airline & S.S. Clerks, 466 U.S. 435, 442, 104 S.Ct. 1883, 1889 (1984) (holding that a claim is not moot where there is a viable damages claim); National Iranian Oil Co. v. MAPCO Int'l, Inc., 983 F.2d 485, 489 (3d Cir. 1992); Jersey Cent. Power & Light Co. v. New Jersey , 772 F.2d 35, 41 (3d Cir. 1985). Although count II of Smith's compla int, which asserts a Title IX claim, states that "[t]his action is a req uest for a declaratory

3We exercise plenary review over the district court' s

dismissal of Smith's complaint for failure to state a claim. See Lake v. Arnold, 112 F.3d 682, 684 (3d Cir. 1997 ). We accept all of her allegations as true, view them in the light most favorable to her, and will affirm the dismissa l only if she can prove no set of facts entitling her to reli ef. See Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996); ALA, Inc. v. CCAir, Inc., 29 F.3d 855, 859 (3d Cir. 1994). We re view the
district court's denial of her motion for leave to amend her complaint for abuse of discretion. See In re Burlin gton Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1 997).

II. FACTS AND PROCEDURAL HISTORY

Smith graduated from high school in the spring of 1 991 and enrolled in St. Bonaventure University the foll owing fall, where she participated in Division I athletic s. Smith played intercollegiate volleyball for St. Bonaventu re during the 1991-92 and 1992-93 athletic seasons. By her ch oice, Smith did not participate in intercollegiate volley ball for St. Bonaventure during the 1993-94 season.

Smith graduated from St. Bonaventure in two and one half years. Thereafter, she enrolled in a postbacca laureate program at Hofstra, and then in 1995 she enrolled i n a second postbaccalaureate program at the University of Pittsburgh. St. Bonaventure did not offer either of these postbaccalaureate programs.

The NCAA is an unincorporated association comprised of public and private colleges and universities and is responsible for promulgating rules governing all as pects of intercollegiate athletics, including recruiting, el igibility of student-athletes, and academic standards. The membe r

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relief challenging sex discriminatory practices and policies of the NCAA . . . in violation of Title IX," her complaint also includes a clause
which prays for additional relief including damages and a ny further relief which the court finds appropriate. App. at 5. In our view , a fair reading of the complaint establishes that it asserts an action for damages under Title IX. See Franklin v. Gwinnett County Pub. Schs., 503 U.S. 60, 112 S.Ct. 1028 (1992) (holding that a claim for damages exist s in an action to enforce Title IX).

4institutions agree to abide by and enforce these ru les. The

NCAA denied Smith eligibility to compete for Hofstr a and the University of Pittsburgh in the 1994-95 and 199 5-96 athletic seasons, respectively, based upon Bylaw 14 .1.8.2 in the NCAA Manual (the "Postbaccalaureate Bylaw"). Th e Postbaccalaureate Bylaw provides that a student-ath lete may not participate in intercollegiate athletics at a postgraduate institution other than the institution from which the student earned her undergraduate degree. 2 Both Hofstra and the University of Pittsburgh applied to the NCAA for a waiver of the bylaw with respect to Smit h, but the NCAA denied both requests. Smith was, however, in good academic standing and in compliance with all o ther NCAA eligibility requirements for the 1994-95 and 1 995-96
athletic seasons.

In August 1996, Smith instituted this suit challeng ing the NCAA's enforcement of the bylaw as well as the NCAA's refusal to waive the bylaw in her case. More partic ularly, Smith alleged that the Postbaccalaureate Bylaw is a n unreasonable restraint of trade in violation of sec tion 1 of
the Sherman Act and the NCAA's refusal to waive the bylaw excluded her from intercollegiate competition based upon her sex in violation of Title IX. Smith also assert ed a state law breach of contract claim based upon the NCAA's denial of eligibility. On May 21, 1997, the district court dismissed
Smith's federal claims for failure to state a claim upon which relief could be granted. The court held that the

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2. The bylaw at issue provides that

[a] student-athlete who is enrolled in a gra duate or professional school of the institution he or she previous ly attended as an undergraduate (regardless of whether the ind ividual has received a United States baccalaureate degree or its eq uivalent), a student- athlete who is enrolled and seeking a second baccalaureate or equivalent degree at the same institution, o r a student-athlete who has graduated and is continuing as a full-ti me student at the same institution while taking course work that wo uld lead to the equivalent of another major or degree as def ined and documented by the institution, may participate in intercol legiate athletics, provided the student has eligibility remaining and su ch participation occurs within the applicable five-year or 10-semest er period . . . .

Rule 14.1.8.2 of NCAA Manual.

5NCAA's refusal to waive the bylaw was not the type of

action to which the Sherman Act applied. It also he ld that Smith's complaint did not allege adequately that th e NCAA was a recipient of federal funding so as to be subj ect to Title IX. By the same order, the district court exe rcised its
discretion to dismiss Smith's state law contract cl aim pursuant to 28 U.S.C. S 1367(c). See Smith v. Natio nal Collegiate Athletic Ass'n, 978 F. Supp. 213 (W.D. P a. 1997).

Thereafter, Smith submitted a proposed amended complaint and moved the district court for leave to amend her complaint, which the district court denied "as moot" on June 5, 1997. Smith filed timely appeals from these orders,
which we have consolidated.

III. DISCUSSION

A. SHERMAN ACT CLAIM

Count I of Smith's complaint alleges that the NCAA, in promulgating and enforcing the Postbaccalaureate By law,
violated section 1 of the Sherman Act because the b ylaw unreasonably restrains trade and has an adverse anticompetitive effect. As we have indicated, the d istrict
court dismissed this claim for failure to state a c laim upon which relief could be granted, holding that "the ac tions of the NCAA in refusing to waive the Postbaccalaureate Bylaw and allow the Plaintiff to participate in intercoll egiate athletics is not the type of action to which the Sh erman Act was meant to be applied." See Smith, 978 F. Supp. a t 218. Smith argues that the district court erred in limit ing the application of the Sherman Act to the NCAA's commer cial and business activities. We disagree.

Section 1 of the Sherman Act provides, in relevant part, that "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." 15 U.S.C. S 1. Although th e section literally prohibits "every" contract, section 1 doe s not preclude all restraints on trade, but only those th at are unreasonable. See National Collegiate Athletic Ass' n v. Board of Regents of the Univ. of Okla., 468 U.S. 85 , 98 &

6n.17, 104 S.Ct. 2948, 2959 & n.17 (1984); Arizona v

.

Maricopa County Med. Soc'y, 457 U.S. 332, 342-44, 1 02 S.Ct. 2466, 2472-73 (1982). The Clayton Act, 15 U.S .C. SS 15, 26, grants a private right of action to, int er alia, a person "injured in his business or property" by a v iolation
of section 1 of the Sherman Act.3

Smith misconstrues the law in arguing that the Supr eme Court has refused to limit antitrust remedies to co mmercial
interests. The cases she cites address whether the plaintiffs alleged injuries within the meaning of the Clayton Act; in that context, the Court held that the statute was n ot limited to redressing injuries to commercial intere sts. See Reiter v. Sonotone Corp., 442 U.S. 330, 338-89, 99 S.Ct. 2326, 2330 (1979) (holding that "injury to business or property" was not limited to commercial interests); Blue Shield of Va. v. McCready, 457 U.S. 465, 473, 102 S .Ct. 2540, 2545 (1982) (holding that a subscriber to a h ealth plan who had employed the services of a psychologis t alleged a redressable antitrust injury); see also M cNulty v. Borden, Inc., 474 F. Supp. 1111, 1115-18 (E.D. Pa. 1979) (holding that an employee of an alleged antitrust v iolator was injured in his business or property). The quest ion which we now face is different; it is whether antit rust laws apply only to the alleged infringer's commercial ac tivities. Thus, rather than focus on Smith's alleged injuries , we consider the character of the NCAA's activities.

In this regard, we recognize that the Supreme Court has suggested that antitrust laws are limited in their application to commercial and business endeavors. T hus, the Court has explained that

[the Sherman Act] was enacted in the era of` trusts'

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3. Section 4 of the Clayton Act provides:

[A]ny person who shall be injured in his bus iness or property by reason of anything forbidden in the antitrus t laws may sue therefor in any district court of the United States . . . without respect to

the amount in controversy, and shall recover thr eefold the damages by him sustained, and the cost of suit, includi ng a reasonable attorney's fee.

15 U.S.C. S 15.

7and of `combinations' of businesses and of c apital

organized and directed to control of the mar ket by suppression of competition in the marketing of goods and services, the monopolistic tendency of w hich had become a matter of public concern. The end s ought (by these laws) was the prevention of the restra ints to the competition in business and commercial trans actions which tended to restrict production, raise p rices or
otherwise control the market to the detrimen t of purchasers or consumers of goods and service s, all of which had come to be regarded as a special f orm of public injury.

Apex Hosiery Co. v. Leader, 310 U.S. 469, 492-93, 6 0 S.Ct. 982, 992 (1940). The Court also has noted that "in Apex [it] recognized that the Act is aimed primarily at combi nations having commercial objectives and is applied only to a very limited extent to organizations . . . which normall y have other objectives." Klor's, Inc. v. Broadway-Hale St ores, Inc., 359 U.S. 207, 213 n.7, 79 S.Ct. 705, 710 n.7 (1959)

.

The Supreme Court addressed the applicability of th e Sherman Act to the NCAA in National Collegiate Athl etic Ass'n v. Board of Regents, 468 U.S. 85, 104 S.Ct. 2 948, holding that the NCAA's plan to restrict television coverage of intercollegiate football games violated section 1. The Court discussed the procompetitive nature of the NC AA's activities such as establishing eligibility require ments as opposed to the anticompetitive nature of the televi sion plan. See id. at 117, 104 S.Ct. at 2969. Yet, while the C ourt distinguished the NCAA's television plan from its r ule making, it did not comment directly on whether the Sherman Act would apply to the latter.

Although insofar as we are aware no court of appeal s expressly has addressed the issue of whether antitr ust laws apply to the NCAA's promulgation of eligibility rul es, cf. McCormack v. National Collegiate Athletic Ass'n, 84 5 F.2d 1338, 1343 (5th Cir. 1988) (assuming without decidi ng that the NCAA's eligibility rules were subject to antitr ust scrutiny and holding that the "no-draft" and "no-ag ent" rules do not have an anticompetitive effect), many district courts have held that the Sherman Act does not appl y to the NCAA's promulgation and enforcement of eligibil ity

8requirements. See Gaines v. National Collegiate Ath letic

Ass'n, 746 F. Supp. 738, 744-46 (M.D. Tenn. 1990) (holding that antitrust law cannot be used to inval idate NCAA eligibility rules, but noting in dicta that th e"noagent" and "no-draft" rules have primarily procompe titive effects); Jones v. National Collegiate Athletic Ass 'n, 392 F. Supp. 295, 303 (D. Mass. 1975) (holding that antitr ust law does not apply to NCAA eligibility rules); College Athletic Placement Servs., Inc. v. National Collegiate Athle tic Ass'n, 1975-1 Trade Cas. (CCH) P 60,117, available in 1974 WL 998, *2, *3 (D.N.J. 1974) (holding that the NCAA's adoption of a rule furthering its noncommercial objectives, such as preserving the educational standards of its members , is not within the purview of antitrust law), aff'd , 506 F .2d 1050 (3d Cir. 1974) (table).

We agree with these courts that the eligibility rul es are not related to the NCAA's commercial or business ac tivities. Rather than intending to provide the NCAA with a commercial advantage, the eligibility rules primari ly seek to ensure fair competition in intercollegiate athletic s. Based upon the Supreme Court's recognition that the Sherm an Act primarily was intended to prevent unreasonable
restraints in "business and commercial transactions ," Apex, 310 U.S. at 493, 60 S.Ct. at 992, and therefore has only limited applicability to organizations which have p rincipally noncommercial objectives, see Klor's, Inc., 359 U.S . at 214 n.7, 79 S.Ct. at 710 n.7, we find that the Sherman Act does not apply to the NCAA's promulgation of eligibility requirements.4

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4. The recent decision of the Court of Appeals for the Tenth Circuit in Law v. National Collegiate Athletic Ass'n, No. 96-3 034, 1998 WL 23710 (10th Cir. Jan. 23, 1998), does not alter our resul t. At issue in Law was the NCAA's bylaw restricting entry-level coaches' a nnual compensation. The court held that although the restriction was a horizontal price restraint, which is usually per se invalid, the rul e of reason applied because certain products, such as intercollegiate s ports, require
horizontal restraints in order to exist. See id. at *5-*6 (citing National Collegiate Athletic Ass'n v. Board of Regents, 468 U.S. at 100-01, 104 S.Ct. at 2959-60).

The bylaw at issue in Law concerned a restriction o n the business activities of the institutions, whereas the Postbac calaureate Bylaw does

9Moreover, even if the NCAA's actions in establishin g

eligibility requirements were subject to the Sherma n Act,
we would affirm the district court's dismissal of t his claim. The NCAA's eligibility requirements are not "plainl y anticompetitive," National Soc'y of Prof'l Eng'rs v . United States, 435 U.S. 679, 692, 98 S.Ct. 1355, 1365 (197 8), and therefore are not per se unreasonable, see National Collegiate Athletic Ass'n v. Board of Regents, 468 U.S. at 101, 104 S.Ct. at 2960 (refusing to apply per se ru le to NCAA's television plan because the NCAA is involved in an industry where horizontal restraints are necessary to the availability of the product); McCormack, 845 F.2d a t 1343- 44; College Athletic Placement Servs., 1975-1 Trade Cas. (CCH) P 60,117, available in 1974 WL 998, *3. Consequently, if the eligibility requirements were subject to the Sherman Act, we would analyze them under the ru le of

reason.

Under the "rule of reason" test, a court considers all relevant factors in determining a defendant's purpo se in implementing the challenged restraint and the effec t of the restraint on competition, see Orson, Inc. v. Mirama x Film Corp., 79 F.3d 1358, 1367-68 (3d Cir. 1996) (citing Board of Trade of Chicago v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 243-44 (1918)), and asks essentially whe ther the challenged rule promotes or hinders competition. Se e McCormack, 845 F.2d at 1344.

As noted above, the Supreme Court has recognized th e procompetitive nature of many of the NCAA's restrai nts, including eligibility requirements. See National Co llegiate Athletic Ass'n v. Board of Regents, 468 U.S. at 117 , 104 S.Ct. at 2969. According to the Supreme Court,

[w]hat the NCAA and its member institutions market in this case is competition itself--contests be tween competing institutions. Of course, this woul d be

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not. Because our analysis regarding the applicabili ty of the Sherman Act
focuses on the distinction between commercial and n oncommercial activities, Law is inapposite. Further, because of the significant difference in the nature of the bylaw at issue in L aw and the Postbaccalaureate Bylaw, the Law court's rule of re ason analysis is not
instructive here.

10completely ineffective if there were no rule s on which

the competitors agreed to create and define the competition to be marketed. A myriad of rule s . . . must be agreed upon, and all restrain the ma nner in which institutions compete. . . . Thus, the NCAA plays a vital role in enabling [intercollegiate sp orts] to preserve its character, and as a result enab les a product to be marketed which might otherwise be unavailable. In performing this role, its ac tions widen
consumer choice . . . and hence can be viewe d as procompetitive.

Id. at 101-02, 104 S.Ct. at 2960-61 (footnote omitt ed). In particular, the Court explained that "[i]t is reaso nable to assume that most of the regulatory controls of the NCAA are justifiable means of fostering competition amon g amateur athletic teams and therefore procompetitive because they enhance public interest in intercolleg iate athletics" and suggested that rules establishing el igibility requirements of student-athletes were such controls , while rules limiting television broadcasts were not. See id. at 117,

104 S.Ct. at 2969.

While the parties have not cited any opinion addres sing the particular bylaw at issue here, and we have fou nd none, other courts have held that the NCAA's "no-dr aft" and "no-agent" rules, which disqualify a student-at hlete from further intercollegiate competition if the stu dentathlete enters a professional draft or contacts an agent, are reasonable because they are procompetitive. See McCormack, 845 F.2d at 1343; Banks v. National Coll egiate Athletic Ass'n, 977 F.2d 1081, 1087-94 (7th Cir. 19 92) (holding that NCAA's "no-draft" and "no-agent" rule s do not have an anticompetitive impact on a discernable mar ket); Gaines, 746 F. Supp. at 746; Jones, 392 F. Supp. at 304 (noting in dicta that "any limitation on access to intercollegiate sports is merely the incidental res ult of the organization's pursuit of its legitimate goals"); s ee also Justice v. National Collegiate Athletic Ass'n, 577 F. Supp. 356, 379 (D. Ariz. 1983) (holding that NCAA sanctio ns such as rendering a college team ineligible for post-sea son play and for television appearances imposed for violatio ns of rule against providing compensation to student-athletes did not

11violate antitrust law because sanctions were reason ably

related to the NCAA's goals of preserving amateuris m and promoting fair competition).

We agree with these courts that, in general, the NC AA's eligibility rules allow for the survival of the pro duct, amateur sports, and allow for an even playing field . See McCormack, 845 F.2d at 1345. Likewise, the bylaw at issue
here is a reasonable restraint which furthers the N CAA's goal of fair competition and the survival of interc ollegiate athletics and is thus procompetitive. Clearly, the rule discourages institutions with graduate or professio nal schools from inducing undergraduates at other insti tutions to forgo participating in the athletic programs at their undergraduate institutions in order to preserve eli gibility to participate in intercollegiate athletics on a postbaccalaureate basis. Likewise, the rule discour ages undergraduates from forgoing participation in athle tic programs on their own initiative to preserve eligib ility on a postbaccalaureate basis at another institution. Ind eed, we think that the bylaw so clearly survives a rule of reason analysis that we do not hesitate upholding it by af firming an order granting a motion to dismiss Smith's antit rust
count for failure to state a claim on which relief can be granted.

B. TITLE IX CLAIM

Title IX provides that "[n]o person in the United S tates shall, on the basis of sex, be excluded from partic ipating in, be denied the benefits of, or be subjected to discr imination under any education program or activity receiving F ederal financial assistance." 20 U.S.C. S 1681(a). Interco llegiate athletics is an educational program or activity wit hin the statute. See 20 U.S.C. S 1687; 34 C.F.R. S 106.41 ( a).5

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5. The statute defines "program or activity" as

(2)(A) a college, university, or other posts econdary institution,

or a public system of higher education; or . . .

(4) any other entity which is established by two or more of the entities described in paragraph (1) (2), or (3);

12Thus, the NCAA is subject to Title IX provided that it

receives federal financial assistance within the me aning of section 1681(a).

Federal regulations define "recipient" as including

any public or private agency, institution or organization, or other entity, or any other person, to
whom Federal financial assistance is extende d directly or through another recipient and which opera tes an educational program or activity which receiv es or benefits from such assistance, including any subunit, successor, assignee or transferee thereof.

34 C.F.R. S 106.2(h) (1997) (emphasis added). The p lain language of the statute and regulation is quite bro ad and encompasses indirect recipients of federal funds. S ee Grove City College v. Bell, 465 U.S. 555, 564, 104 S.Ct. 1211, 1216 (1984) (holding that a college received federa l funds where the funds were granted to its students asfina ncial aid rather than directly to the college because the language of the section does not distinguish between direct and indirect receipt of federal funds).

The Court of Appeals for the Sixth Circuit addresse d the applicability of Title IX to a state high school at hletic association in Horner v. Kentucky High Sch. Athleti c Ass'n, 43 F.3d 265 (6th Cir. 1994). In Horner, the plainti ffs, female student-athletes, alleged that the association rece ived dues from its member high schools, many of which receive federal funds, and that a state statute authorized the designation of the association as an agent of the s tate

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any part of which is extended Federal financ ial assistance . . . .

20 U.S.C. S 1687. In addition, federal regulation i n part provides that

[n]o person shall, on the basis of sex, be e xcluded from participation in, be denied the benefits of, be treated di fferently from another person or otherwise be discriminated against in any interscholastic, intercollegiate, club or intramural athletic s offered by a recipient, and no recipient shall provide any such athl etics separately on

such
basis.

34 C.F.R. S 106.41(a).

13board of education. See Ky. Rev. Stat. Ann. S 156.0 70(1),

(2). In that capacity, the association performed th e board's statutory duties with respect to interscholastic sp orts. The plaintiffs alleged that the association violated Ti tle IX by sanctioning fewer sports for girls than boys and by refusing to sanction a particular sport for girls. The court held that the association would be subject to Title IX if the plaintiff could prove her allegations with respect to its fun ctioning and financing. See id.

The district court attempted to distinguish Horner by noting that "even if the [NCAA] receives dues from member schools which receive federal funds, unlike the sit uation in Horner, there is no statutory connection between th e parties such that the Defendant can be considered t he `agent' of its member institutions that receive fed eral financial assistance." See Smith, 978 F. Supp. at 2 20. Thus, according to the district court, the distinguishing characteristic here is the lack of statutory author ity for the NCAA. We disagree. The NCAA acts no less than the association in Horner as an agent of its member ins titutions merely because it lacks statutory authority for its activities. The NCAA is a voluntary organization created by and comprised of the educational institutions which ess entially acts as their surrogate with respect to athletic ru les.

In its construction of section 504 of the Rehabilit ation Act, which contains language identical to that of T itle IX in 20 U.S.C. S 1681(a) regarding receipt of federal as sistance,6 the Supreme Court has indicated that Congress, as i n Title IX, did not distinguish between direct and indirect financial assistance. See United States Dep't of Transp. v. P aralyzed Veterans of Amer., 477 U.S. 597, 606-07, 106 S.Ct. 2705, 2711-12 (1986) (citing Grove City College, 465 U.S. at 564, 104 S.Ct. at 1216 (holding that a college received federal

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6. The Rehabilitation Act states that

[n]o otherwise qualified individual with a d isability in the United States, as defined in section 706(8) of this title, shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected t o discrimination under any program or activity receiving Federal fi nancial assistance.

29 U.S.C. S 794 (emphasis added).

14funds where the funds were granted to its students as

financial aid rather than directly to the college)) . The Court, however, drew a distinction between those entities which indirectly benefit from federal assistance and thos e that indirectly receive federal assistance, holding that only those
the receive federal funds are within the statute. T hus, the Court rejected the argument that all commercial air lines are "recipients" of federal funds simply because ai rport operators receive federal funds which benefit the a irlines in the form of runways, inter alia. See id. at 606, 10 6 S.Ct. at 2711. The Court defined "recipient" from a contract ual perspective, limiting "recipients" of federal funds , and therefore the obligations of the act, to those who are in a position to decide whether to "receive" federal fun ds and thereby accept the concomitant obligations of the s tatute.
See id.7

Notwithstanding the parallel language of the Rehabilitation Act and Title IX, we do not apply th e Paralyzed Veterans Court's definition of "recipient " to Title IX in the circumstances here. In our view, the broa d regulatory language under Title IX, which defines a recipient as an entity "which operates an education al program or activity which receives or benefits" fro m federal funds, 34 C.F.R. S 106.2(h) (1997) (emphasis added)
, requires that we reach a different result. Applicat ion of Paralyzed Veterans here would render the regulatory definition of "recipient" under Title IX a nullity. After all, unlike the commercial airlines in Paralyzed Veteran s, the NCAA is not merely an incidental beneficiary of fed eral funds. Quite to the contrary, it seems to us that t he relationship between the members of the NCAA and th e organization itself is qualitatively different than that between airlines and airport operators, for we thin k that it

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7. The Court noted that "Congress enters into an ar rangement in the nature of a contract with the recipients of the[fed eral] funds: the recipient's acceptance of the funds triggers covera ge under the nondiscrimination provision." 477 U.S. at 605, 106 S.Ct. at 2711. The Court further noted that "[b]y limiting coverage to recipients, Congress imposes the obligations of S 504 upon those who are in a position to accept or reject those obligations as a part of the decision whether or

not to `receive' federal funds." Id. at 606, 106 S.Ct. at 2711.

15would be unreasonable to characterize the latter as

surrogates for the airlines. Given the breadth of t he language of the Title IX regulation defining recipi ent, we hold that allegations in Smith's proposed amended complaint, that the NCAA receives dues from its mem bers which receive federal funds, if proven, would subje ct the NCAA to the requirements of Title IX.

The district court found that Smith's original comp laint did not allege that the NCAA was a recipient of fed eral funds, and therefore dismissed the Title IX claim. See Smith, 978 F. Supp. at 219. Smith's complaint inclu ded the following allegation:

This action is a request for declaratory rel ief challenging sex discriminatory practices and policies of the NCAA, Hofstra University, and the Univer sity of Pittsburgh in violation of Title IX of the E ducational Amendments of 1972, 20 U.S.C. S 1681. Title IX prohibits sex discrimination in an education al program or activity receiving federal financial assi stance.

Compl. P 25. We agree that Smith's original complai nt did not contain an allegation that the NCAA receives fe deral financial assistance. Thus, the district court prop erly dismissed her original Title IX complaint.8

But we have not confined our analysis to Smith's or iginal complaint for, as we have indicated, following the district court's dismissal of her claims, Smith moved for le ave to amend her complaint pursuant to Fed. R. Civ. P. 15. By order dated June 5, 1997, the district court denied this motion, stating only that the motion "is denied as moot, the court having granted defendant's motion to dismiss on May 20, 1997." App. at 117. Because the district court gave no further explanation, it is unclear whether the dist rict court was unaware of its discretion to allow the proposed

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8. However, Judge McKee would hold that Smith's ori ginal complaint sufficiently states that the NCAA receives federalf inancial assistance under the pleading requirements that we apply to pr o se complaints. See Zillich v. Lucht, 981 F.2d 694 (3d Cir. 1992) ("Whe n, as in this case, plaintiff is a pro se litigant, we have a special o bligation to construe
[her] complaint liberally.").

16amended complaint despite the dismissal or whether the

court believed that the amendment would be futile e ven if pleaded. Nevertheless, under either view, the distr ict court erred in denying Smith's motion for leave to amend.

Pursuant to Fed. R. Civ. P. 15(a), a plaintiff has an absolute right to amend her complaint once at any t ime before a responsive pleading is served. Thereafter, a plaintiff
must seek leave of the district court to amend her pleading, and although it is within the district court's disc retion, district courts should grant such requests freely w hen justice so requires. Id.

After the district court enters judgment on a motio n to dismiss, a plaintiff no longer may amend her compla int as of right. See Newark Branch, NAACP v. Town of Harri son, 907 F.2d 1408, 1417 (3d Cir. 1990); Kauffman v. Mos s, 420 F.2d 1270, 1276 (3d Cir. 1970). However, even thoug h Smith no longer was entitled to amend her complaint as of right after the dismissal of her claim, it was with in the district court's discretion to grant her leave to a mend. See Newark Branch, NAACP, 907 F.2d at 1417; Kauffman, 4 20 F.2d at 1276; In re Sverica Acquisition Corp. v. Lo ad Rite Trailers, Inc., 179 B.R. 457, 459 (E.D. Pa. 1995); Fearon v. Community Fed. Sav. & Loan of Phila., 119 F.R.D. 13 , 15 (E.D. Pa. 1988) (plaintiff had no right to amend wh ere both complaint and action dismissed, but could seek leav e of court to do so). Thus, her motion to amend was not moot in the sense of being too late or being foreclosed by the
dismissal.

While "the grant or denial of an opportunity to ame nd is
within the discretion of the District Court . . . o utright refusal to grant the leave without any justifying r eason appearing for the denial is not an exercise of that discretion; it is merely an abuse of that discretio n and inconsistent with the spirit of the Federal Rules." Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230 (1962). On the other hand, a district court justifiably may deny l eave to amend on grounds such as undue delay, bad faith, di latory motive, and prejudice, as well as on the ground tha t an amendment would be futile. See id.; In re Burlingto n Coat Factory Sec. Litig., 114 F.3d at 1434; Massarsky v. General Motors Corp., 706 F.2d 111, 125 (3d Cir. 1983). An

17amendment is futile if the complaint, as amended, w ould

not survive a motion to dismiss for failure to stat e a claim upon which relief could be granted. See In re Burli ngton Coat Factory, 114 F.3d at 1434 (citing Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 19 96)). In determining whether the amendment would be futile, the district court applies the same standard of legal s ufficiency as under Fed. R. Civ. P. 12(b)(6). See id.

Smith alleged facts in her proposed amended complai nt which, if proven, would establish that the NCAA was a recipient of federal funds within the meaning of Ti tle IX.
Her motion states that she intended the amended complaint to cure any allegational defects, and the proposed amended complaint includes an allegation t hat the NCAA is an indirect recipient of federal funds. In particular, her proposed amended complaint alleges that "[t]he NCAA is a recipient of federal funds because it is an entity which receives federal financial assistance through another recipient and operates an educational progr am or activity which receives or benefits from such assis tance." App. at 98. This allegation plainly alleges that th e NCAA receives dues from member institutions, which recei ve federal funds. As discussed above, this allegation would be sufficient to bring the NCAA within the scope of Ti tle IX as a recipient of federal funds and would survive a mo tion to
dismiss.

If a district court concludes that an amendment is futile based upon its erroneous view of the law, it abuses its discretion in denying a plaintiff leave to amend to include a legally sufficient allegation. See Centifanti v. Nix, 865 F.2d 1422, 1431 (3d Cir. 1989) (holding that the distric t court, which erred in its conclusion that there was jurisd ictional defect, abused its discretion in denying a plaintif f's motion for leave to amend his complaint because the propos ed amendment would not cure the jurisdictional defect) . Thus,
if the district court denied Smith leave to amend b ecause it viewed the proposed amendments as futile, it erred because
the conclusion was based on an error of law. Furthe rmore, we see no basis to conclude that the district court justifiably could have denied the motion to amend o n the grounds that Smith had acted in bad faith, with a d ilatory

18motive, or had delayed unduly in bringing the motio n or

that granting the motion would prejudice the NCAA. Indeed, there is nothing in the record to support a conclus ion that
the district court denied the motion to amend on an y of these grounds. Overall, therefore, we are satisfied that the district court abused its discretion in denying the motion to amend the complaint.9

IV. CONCLUSION

For the foregoing reasons, we will affirm the distr ict court's dismissal of appellant's Sherman Act claim, vacate its dismissal of the Title IX claim, and reverse th e district
court's denial of her motion for leave to amend her complaint with respect to her Title IX claim. In li ght of this conclusion, we will remand to the district court fo r further proceedings consistent with this opinion and direct the
district court to reinstate her state law contract claim, over which the district court declined to exercise juris diction pursuant to 28 U.S.C. S 1367(c). The parties will b ear their own costs on this appeal.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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9. We do not imply that we have any view of the mer its of Smith's Title IX claim. The parties have not briefed the merits, and the district court will address those issues on remand if Smith can pr ove her allegations to support the applicability of Title IX to the NCA A. Thus, we emphasize that we merely hold that the amendment would not ha ve been futile in the sense that it would not have pled adequately th at the NCAA was subject to Title IX.

19