1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-16-1998

Smith v. Natl Collegiate

Precedential or Non-Precedential:

Docket 97-3346

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Recommended Citation

"Smith v. Natl Collegiate" (1998). 1998 Decisions. Paper 49.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/49
Filed 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 15222-5402 
 John 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 

 2 
OPINION 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 the district 

court's order of June 5, 1997, denying her motion for 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 contract 

claim against the National Collegiate Athletic Association 

("NCAA"). Smith's allegations arise from the NCAA's

promulgation and enforcement of a bylaw prohibiting a 

student-athlete from participating in intercollegiate 

athletics while enrolled in a graduate program at an 

institution other than the student-athlete's undergraduate 

institution. 

The district court had jurisdiction over the federal claims 

in this matter pursuant to 28 U.S.C. SS 1331 and 1337 and 

15 U.S.C. S 15, and over the state law claim pursuant to 28 

U.S.C. S 1367. This court has jurisdiction to review the final 

orders of the district court pursuant to 28 U.S.C. S 1291.1 

_________________________________________________________________ 

1. According to the NCAA rules, a student-athlete is eligible to 

participate 

in intercollegiate athletics for a total of four seasons within a fiveyear 

period. Because Smith's five year-period of eligibility has expired and, 

according to the NCAA her complaint seeks only declaratory relief, the 

NCAA concludes that her Title IX claim is moot. We disagree. 

Smith's Title IX claim is not moot although her period of eligibility has 

expired because she retains a claim for damages. See 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 complaint, which asserts a 

Title IX claim, states that "[t]his action is a request for a declaratory 

 3 
We 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 dismissal only if 

she can prove no set of facts entitling her to relief. 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 review the 

district court's denial of her motion for leave to amend her 

complaint for abuse of discretion. See In re Burlington Coat 

Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997). 

II. FACTS AND PROCEDURAL HISTORY 

Smith graduated from high school in the spring of 1991 

and enrolled in St. Bonaventure University the following 

fall, where she participated in Division I athletics. Smith 

played intercollegiate volleyball for St. Bonaventure during 

the 1991-92 and 1992-93 athletic seasons. By her choice, 

Smith did not participate in intercollegiate volleyball for St. 

Bonaventure during the 1993-94 season. 

Smith graduated from St. Bonaventure in two and one

half years. Thereafter, she enrolled in a postbaccalaureate 

program at Hofstra, and then in 1995 she enrolled in 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 aspects of 

intercollegiate athletics, including recruiting, eligibility of 

student-athletes, and academic standards. The member 

_________________________________________________________________ 

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 any 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 exists in an action to 

enforce Title IX). 

 4 
institutions agree to abide by and enforce these rules. The 

NCAA denied Smith eligibility to compete for Hofstra and 

the University of Pittsburgh in the 1994-95 and 1995-96 

athletic seasons, respectively, based upon Bylaw 14.1.8.2 in 

the NCAA Manual (the "Postbaccalaureate Bylaw"). The 

Postbaccalaureate Bylaw provides that a student-athlete 

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 Smith, but 

the NCAA denied both requests. Smith was, however, in 

good academic standing and in compliance with all other 

NCAA eligibility requirements for the 1994-95 and 1995-96 

athletic seasons. 

In August 1996, Smith instituted this suit challenging 

the NCAA's enforcement of the bylaw as well as the NCAA's 

refusal to waive the bylaw in her case. More particularly, 

Smith alleged that the Postbaccalaureate Bylaw is an 

unreasonable restraint of trade in violation of section 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 asserted 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 

_________________________________________________________________ 

2. The bylaw at issue provides that 

 [a] student-athlete who is enrolled in a graduate or professional 

 school of the institution he or she previously attended as an 

 undergraduate (regardless of whether the individual has received a 

 United States baccalaureate degree or its equivalent), a student- 

 athlete who is enrolled and seeking a second baccalaureate or 

 equivalent degree at the same institution, or a student-athlete who 

 has graduated and is continuing as a full-time student at the same 

 institution while taking course work that would lead to the 

 equivalent of another major or degree as defined and documented by 

 the institution, may participate in intercollegiate athletics, 

provided 

 the student has eligibility remaining and such participation occurs 

 within the applicable five-year or 10-semester period . . . . 

Rule 14.1.8.2 of NCAA Manual. 

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

action to which the Sherman Act applied. It also held that 

Smith's complaint did not allege adequately that the NCAA 

was a recipient of federal funding so as to be subject to 

Title IX. By the same order, the district court exercised its 

discretion to dismiss Smith's state law contract claim 

pursuant to 28 U.S.C. S 1367(c). See Smith v. National 

Collegiate Athletic Ass'n, 978 F. Supp. 213 (W.D. Pa. 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 Bylaw, 

violated section 1 of the Sherman Act because the bylaw 

unreasonably restrains trade and has an adverse 

anticompetitive effect. As we have indicated, the district 

court dismissed this claim for failure to state a claim upon 

which relief could be granted, holding that "the actions of 

the NCAA in refusing to waive the Postbaccalaureate Bylaw 

and allow the Plaintiff to participate in intercollegiate 

athletics is not the type of action to which the Sherman Act 

was meant to be applied." See Smith, 978 F. Supp. at 218. 

Smith argues that the district court erred in limiting the 

application of the Sherman Act to the NCAA's commercial 

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 the section 

literally prohibits "every" contract, section 1 does not 

preclude all restraints on trade, but only those that are 

unreasonable. See National Collegiate Athletic Ass'n v. 

Board of Regents of the Univ. of Okla., 468 U.S. 85, 98 & 

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

Maricopa County Med. Soc'y, 457 U.S. 332, 342-44, 102 

S.Ct. 2466, 2472-73 (1982). The Clayton Act, 15 U.S.C. 

SS 15, 26, grants a private right of action to, inter alia, a 

person "injured in his business or property" by a violation 

of section 1 of the Sherman Act.3 

Smith misconstrues the law in arguing that the Supreme 

Court has refused to limit antitrust remedies to commercial 

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 not 

limited to redressing injuries to commercial interests. 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 health 

plan who had employed the services of a psychologist 

alleged a redressable antitrust injury); see also McNulty v. 

Borden, Inc., 474 F. Supp. 1111, 1115-18 (E.D. Pa. 1979) 

(holding that an employee of an alleged antitrust violator 

was injured in his business or property). The question 

which we now face is different; it is whether antitrust laws 

apply only to the alleged infringer's commercial activities. 

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. Thus, 

the Court has explained that 

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

_________________________________________________________________ 

3. Section 4 of the Clayton Act provides: 

 [A]ny person who shall be injured in his business or property by 

 reason of anything forbidden in the antitrust laws may sue therefor 

 in any district court of the United States . . . without respect to 

the 

 amount in controversy, and shall recover threefold the damages by 

 him sustained, and the cost of suit, including a reasonable 

 attorney's fee. 

15 U.S.C. S 15. 

 7 
 and of `combinations' of businesses and of capital 

 organized and directed to control of the market by 

 suppression of competition in the marketing of goods 

 and services, the monopolistic tendency of which had 

 become a matter of public concern. The end sought (by 

 these laws) was the prevention of the restraints to the 

 competition in business and commercial transactions 

 which tended to restrict production, raise prices or 

 otherwise control the market to the detriment of 

 purchasers or consumers of goods and services, all of 

 which had come to be regarded as a special form of 

 public injury. 

Apex Hosiery Co. v. Leader, 310 U.S. 469, 492-93, 60 S.Ct. 

982, 992 (1940). The Court also has noted that "in Apex [it] 

recognized that the Act is aimed primarily at combinations 

having commercial objectives and is applied only to a very 

limited extent to organizations . . . which normally have 

other objectives." Klor's, Inc. v. Broadway-Hale Stores, Inc., 

359 U.S. 207, 213 n.7, 79 S.Ct. 705, 710 n.7 (1959). 

The Supreme Court addressed the applicability of the 

Sherman Act to the NCAA in National Collegiate Athletic 

Ass'n v. Board of Regents, 468 U.S. 85, 104 S.Ct. 2948, 

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 NCAA's 

activities such as establishing eligibility requirements as 

opposed to the anticompetitive nature of the television plan. 

See id. at 117, 104 S.Ct. at 2969. Yet, while the Court 

distinguished the NCAA's television plan from its rule 

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 appeals 

expressly has addressed the issue of whether antitrust laws 

apply to the NCAA's promulgation of eligibility rules, cf. 

McCormack v. National Collegiate Athletic Ass'n, 845 F.2d 

1338, 1343 (5th Cir. 1988) (assuming without deciding that 

the NCAA's eligibility rules were subject to antitrust 

scrutiny and holding that the "no-draft" and "no-agent" 

rules do not have an anticompetitive effect), many district 

courts have held that the Sherman Act does not apply to 

the NCAA's promulgation and enforcement of eligibility 

 8 
requirements. See Gaines v. National Collegiate Athletic 

Ass'n, 746 F. Supp. 738, 744-46 (M.D. Tenn. 1990) 

(holding that antitrust law cannot be used to invalidate 

NCAA eligibility rules, but noting in dicta that the"noagent" and "no-draft" rules have primarily procompetitive 

effects); Jones v. National Collegiate Athletic Ass'n, 392 F. 

Supp. 295, 303 (D. Mass. 1975) (holding that antitrust law 

does not apply to NCAA eligibility rules); College Athletic 

Placement Servs., Inc. v. National Collegiate Athletic 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 rules are 

not related to the NCAA's commercial or business activities. 

Rather than intending to provide the NCAA with a 

commercial advantage, the eligibility rules primarily seek to 

ensure fair competition in intercollegiate athletics. Based 

upon the Supreme Court's recognition that the Sherman 

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 principally 

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 

_________________________________________________________________ 

4. The recent decision of the Court of Appeals for the Tenth Circuit in 

Law v. National Collegiate Athletic Ass'n, No. 96-3034, 1998 WL 23710 

(10th Cir. Jan. 23, 1998), does not alter our result. At issue in Law was 

the NCAA's bylaw restricting entry-level coaches' annual compensation. 

The court held that although the restriction was a horizontal price 

restraint, which is usually per se invalid, the rule of reason applied 

because certain products, such as intercollegiate sports, 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 on the business 

activities of the institutions, whereas the Postbaccalaureate Bylaw does 

 9 
Moreover, even if the NCAA's actions in establishing 

eligibility requirements were subject to the Sherman Act, 

we would affirm the district court's dismissal of this claim. 

The NCAA's eligibility requirements are not "plainly 

anticompetitive," National Soc'y of Prof'l Eng'rs v. United 

States, 435 U.S. 679, 692, 98 S.Ct. 1355, 1365 (1978), 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 rule 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 at 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 rule of 

reason. 

Under the "rule of reason" test, a court considers all 

relevant factors in determining a defendant's purpose in 

implementing the challenged restraint and the effect of the 

restraint on competition, see Orson, Inc. v. Miramax 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 whether the 

challenged rule promotes or hinders competition. See 

McCormack, 845 F.2d at 1344. 

As noted above, the Supreme Court has recognized the 

procompetitive nature of many of the NCAA's restraints, 

including eligibility requirements. See National Collegiate 

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 between 

 competing institutions. Of course, this would be 

_________________________________________________________________ 

not. Because our analysis regarding the applicability of the Sherman Act 

focuses on the distinction between commercial and noncommercial 

activities, Law is inapposite. Further, because of the significant 

difference in the nature of the bylaw at issue in Law and the 

Postbaccalaureate Bylaw, the Law court's rule of reason analysis is not 

instructive here. 

 10 
 completely ineffective if there were no rules on which 

 the competitors agreed to create and define the 

 competition to be marketed. A myriad of rules . . . 

 must be agreed upon, and all restrain the manner in 

 which institutions compete. . . . Thus, the NCAA plays 

 a vital role in enabling [intercollegiate sports] to 

 preserve its character, and as a result enables a 

 product to be marketed which might otherwise be 

 unavailable. In performing this role, its actions widen 

 consumer choice . . . and hence can be viewed as 

 procompetitive. 

Id. at 101-02, 104 S.Ct. at 2960-61 (footnote omitted). In 

particular, the Court explained that "[i]t 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

because they enhance public interest in intercollegiate 

athletics" and suggested that rules establishing eligibility 

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 addressing 

the particular bylaw at issue here, and we have found 

none, other courts have held that the NCAA's "no-draft" 

and "no-agent" rules, which disqualify a student-athlete 

from further intercollegiate competition if the studentathlete enters a professional draft or contacts an agent, are 

reasonable because they are procompetitive. See 

McCormack, 845 F.2d at 1343; Banks v. National Collegiate 

Athletic Ass'n, 977 F.2d 1081, 1087-94 (7th Cir. 1992) 

(holding that NCAA's "no-draft" and "no-agent" rules do not 

have an anticompetitive impact on a discernable market); 

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 result of the 

organization's pursuit of its legitimate goals"); see also 

Justice v. National Collegiate Athletic Ass'n, 577 F. Supp. 

356, 379 (D. Ariz. 1983) (holding that NCAA sanctions such 

as rendering a college team ineligible for post-season play 

and for television appearances imposed for violations of rule 

against providing compensation to student-athletes did not 

 11 
violate antitrust law because sanctions were reasonably 

related to the NCAA's goals of preserving amateurism and 

promoting fair competition). 

We agree with these courts that, in general, the NCAA's 

eligibility rules allow for the survival of the product, 

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 NCAA's 

goal of fair competition and the survival of intercollegiate 

athletics and is thus procompetitive. Clearly, the rule 

discourages institutions with graduate or professional 

schools from inducing undergraduates at other institutions 

to forgo participating in the athletic programs at their 

undergraduate institutions in order to preserve eligibility 

to participate in intercollegiate athletics on a 

postbaccalaureate basis. Likewise, the rule discourages 

undergraduates from forgoing participation in athletic 

programs on their own initiative to preserve eligibility on a 

postbaccalaureate basis at another institution. Indeed, we 

think that the bylaw so clearly survives a rule of reason 

analysis that we do not hesitate upholding it by affirming 

an order granting a motion to dismiss Smith's antitrust 

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 States 

shall, on the basis of sex, be excluded from participating in, 

be denied the benefits of, or be subjected to discrimination 

under any education program or activity receiving Federal 

financial assistance." 20 U.S.C. S 1681(a). Intercollegiate 

athletics is an educational program or activity within the 

statute. See 20 U.S.C. S 1687; 34 C.F.R. S 106.41 (a).5 

_________________________________________________________________ 

5. The statute defines "program or activity" as 

 (2)(A) a college, university, or other postsecondary 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); 

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

receives federal financial assistance within the meaning 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 extended directly 

 or through another recipient and which operates an 

 educational program or activity which receives 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 plain 

language of the statute and regulation is quite broad and 

encompasses indirect recipients of federal funds. See Grove 

City College v. Bell, 465 U.S. 555, 564, 104 S.Ct. 1211, 

1216 (1984) (holding that a college received federal funds 

where the funds were granted to its students asfinancial 

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 addressed the 

applicability of Title IX to a state high school athletic 

association in Horner v. Kentucky High Sch. Athletic Ass'n, 

43 F.3d 265 (6th Cir. 1994). In Horner, the plaintiffs, female 

student-athletes, alleged that the association received 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 state 

_________________________________________________________________ 

 any part of which is extended Federal financial assistance . . . . 

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

 [n]o person shall, on the basis of sex, be excluded from 

participation 

 in, be denied the benefits of, be treated differently from another 

 person or otherwise be discriminated against in any 

interscholastic, 

 intercollegiate, club or intramural athletics offered by a 

recipient, 

 and no recipient shall provide any such athletics separately on 

such 

 basis. 

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

 13 
board of education. See Ky. Rev. Stat. Ann. S 156.070(1), 

(2). In that capacity, the association performed the board's 

statutory duties with respect to interscholastic sports. The 

plaintiffs alleged that the association violated Title 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 functioning 

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 situation in 

Horner, there is no statutory connection between the 

parties such that the Defendant can be considered the 

`agent' of its member institutions that receive federal 

financial assistance." See Smith, 978 F. Supp. at 220. Thus, 

according to the district court, the distinguishing

characteristic here is the lack of statutory authority for the 

NCAA. We disagree. The NCAA acts no less than the 

association in Horner as an agent of its member institutions 

merely because it lacks statutory authority for its activities. 

The NCAA is a voluntary organization created by and

comprised of the educational institutions which essentially 

acts as their surrogate with respect to athletic rules. 

In its construction of section 504 of the Rehabilitation 

Act, which contains language identical to that of Title IX in 

20 U.S.C. S 1681(a) regarding receipt of federal assistance,6 

the Supreme Court has indicated that Congress, as in Title 

IX, did not distinguish between direct and indirectfinancial 

assistance. See United States Dep't of Transp. v. Paralyzed 

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 

_________________________________________________________________ 

6. The Rehabilitation Act states that 

 [n]o otherwise qualified individual with a disability 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 to discrimination under 

 any program or activity receiving Federal financial assistance. 

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

 14 
funds 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 those that 

indirectly receive federal assistance, holding that only those 

the receive federal funds are within the statute. Thus, the 

Court rejected the argument that all commercial airlines 

are "recipients" of federal funds simply because airport 

operators receive federal funds which benefit the airlines in 

the form of runways, inter alia. See id. at 606, 106 S.Ct. at 

2711. The Court defined "recipient" from a contractual 

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 funds and 

thereby accept the concomitant obligations of the statute. 

See id.7 

Notwithstanding the parallel language of the 

Rehabilitation Act and Title IX, we do not apply the 

Paralyzed Veterans Court's definition of "recipient" to Title 

IX in the circumstances here. In our view, the broad 

regulatory language under Title IX, which defines a

recipient as an entity "which operates an educational 

program or activity which receives or benefits" from federal 

funds, 34 C.F.R. S 106.2(h) (1997) (emphasis added), 

requires that we reach a different result. Application of 

Paralyzed Veterans here would render the regulatory

definition of "recipient" under Title IX a nullity. After all, 

unlike the commercial airlines in Paralyzed Veterans, the 

NCAA is not merely an incidental beneficiary of federal 

funds. Quite to the contrary, it seems to us that the 

relationship between the members of the NCAA and the 

organization itself is qualitatively different than that 

between airlines and airport operators, for we think that it 

_________________________________________________________________ 

7. The Court noted that "Congress enters into an arrangement in the 

nature of a contract with the recipients of the[federal] funds: the 

recipient's acceptance of the funds triggers coverage 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. 

 15 
would be unreasonable to characterize the latter as

surrogates for the airlines. Given the breadth of the 

language of the Title IX regulation defining recipient, we 

hold that allegations in Smith's proposed amended 

complaint, that the NCAA receives dues from its members 

which receive federal funds, if proven, would subject the 

NCAA to the requirements of Title IX. 

The district court found that Smith's original complaint 

did not allege that the NCAA was a recipient of federal 

funds, and therefore dismissed the Title IX claim. See 

Smith, 978 F. Supp. at 219. Smith's complaint included the 

following allegation: 

 This action is a request for declaratory relief 

 challenging sex discriminatory practices and policies of 

 the NCAA, Hofstra University, and the University of 

 Pittsburgh in violation of Title IX of the Educational 

 Amendments of 1972, 20 U.S.C. S 1681. Title IX 

 prohibits sex discrimination in an educational program 

 or activity receiving federal financial assistance. 

Compl. P 25. We agree that Smith's original complaint did 

not contain an allegation that the NCAA receives federal 

financial assistance. Thus, the district court properly 

dismissed her original Title IX complaint.8 

But we have not confined our analysis to Smith's original 

complaint for, as we have indicated, following the district 

court's dismissal of her claims, Smith moved for leave 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 district court 

was unaware of its discretion to allow the proposed

_________________________________________________________________ 

8. However, Judge McKee would hold that Smith's original complaint 

sufficiently states that the NCAA receives federalfinancial assistance 

under the pleading requirements that we apply to pro se complaints. See 

Zillich v. Lucht, 981 F.2d 694 (3d Cir. 1992) ("When, as in this case, 

plaintiff is a pro se litigant, we have a special obligation to construe 

[her] 

complaint liberally."). 

 16 
amended complaint despite the dismissal or whether the 

court believed that the amendment would be futile even if 

pleaded. Nevertheless, under either view, the district 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 time 

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 discretion, 

district courts should grant such requests freely when 

justice so requires. Id. 

After the district court enters judgment on a motion to 

dismiss, a plaintiff no longer may amend her complaint as 

of right. See Newark Branch, NAACP v. Town of Harrison, 

907 F.2d 1408, 1417 (3d Cir. 1990); Kauffman v. Moss, 420 

F.2d 1270, 1276 (3d Cir. 1970). However, even though 

Smith no longer was entitled to amend her complaint as of 

right after the dismissal of her claim, it was within the 

district court's discretion to grant her leave to amend. See 

Newark Branch, NAACP, 907 F.2d at 1417; Kauffman, 420 

F.2d at 1276; In re Sverica Acquisition Corp. v. Load 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 where both 

complaint and action dismissed, but could seek leave 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 amend is 

within the discretion of the District Court . . . outright 

refusal to grant the leave without any justifying reason 

appearing for the denial is not an exercise of that

discretion; it is merely an abuse of that discretion 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 leave to 

amend on grounds such as undue delay, bad faith, dilatory 

motive, and prejudice, as well as on the ground that an 

amendment would be futile. See id.; In re Burlington Coat 

Factory Sec. Litig., 114 F.3d at 1434; Massarsky v. General 

Motors Corp., 706 F.2d 111, 125 (3d Cir. 1983). An 

 17 
amendment is futile if the complaint, as amended, would 

not survive a motion to dismiss for failure to state a claim 

upon which relief could be granted. See In re Burlington 

Coat Factory, 114 F.3d at 1434 (citing Glassman v. 

Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996)). In 

determining whether the amendment would be futile, the 

district court applies the same standard of legal sufficiency 

as under Fed. R. Civ. P. 12(b)(6). See id. 

Smith alleged facts in her proposed amended complaint 

which, if proven, would establish that the NCAA was a 

recipient of federal funds within the meaning of Title IX. 

Her motion states that she intended the amended 

complaint to cure any allegational defects, and the

proposed amended complaint includes an allegation that 

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 program or 

activity which receives or benefits from such assistance." 

App. at 98. This allegation plainly alleges that the NCAA 

receives dues from member institutions, which receive 

federal funds. As discussed above, this allegation would be 

sufficient to bring the NCAA within the scope of Title IX as 

a recipient of federal funds and would survive a motion 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 district court, 

which erred in its conclusion that there was jurisdictional 

defect, abused its discretion in denying a plaintiff's motion 

for leave to amend his complaint because the proposed 

amendment would not cure the jurisdictional defect). Thus, 

if the district court denied Smith leave to amend because it 

viewed the proposed amendments as futile, it erred because 

the conclusion was based on an error of law. Furthermore, 

we see no basis to conclude that the district court

justifiably could have denied the motion to amend on the 

grounds that Smith had acted in bad faith, with a dilatory 

 18 
motive, or had delayed unduly in bringing the motion or 

that granting the motion would prejudice the NCAA. Indeed, 

there is nothing in the record to support a conclusion that 

the district court denied the motion to amend on any 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 district 

court's dismissal of appellant's Sherman Act claim, vacate 

its dismissal of the Title IX claim, and reverse the district 

court's denial of her motion for leave to amend her

complaint with respect to her Title IX claim. In light of this 

conclusion, we will remand to the district court for 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 jurisdiction 

pursuant to 28 U.S.C. S 1367(c). The parties will bear their 

own costs on this appeal. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

_________________________________________________________________ 

9. We do not imply that we have any view of the merits 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 prove her allegations 

to support the applicability of Title IX to the NCAA. Thus, we emphasize 

that we merely hold that the amendment would not have been futile in 

the sense that it would not have pled adequately that the NCAA was 

subject to Title IX. 

 19