GEORGE v. NATIONAL COLLEGIATE ATHLETIC ASSOC. (October 18, 2010)
Tom George and the other plaintiffs took part in a basketball ticket distribution system operated by the National Collegiate Athletic Association (NCAA). They submitted applications for tickets with payment for the requested tickets and a $6.00 fee for every application. Successful applicants received their tickets – unsuccessful applicants received a refund of the ticket price. Both forfeited the fee. The plaintiffs, all unsuccessful applicants, brought suit alleging that the scheme was an unlawful lottery under Indiana law. Judge Lawrence (S.D. Ind.) found that the in pari delicto defense applied and dismissed the complaint. On appeal, the Seventh Circuit reversed (opinion and intheiropinion). The Court concluded that the in pari delicto defense did not apply. It also held that the plaintiffs alleged the elements of an unlawful lottery under Indiana law and that Indiana’s “bona fide business transaction” exception did not apply. It distinguished the Indiana Supreme Court’s approval of a similar ticket distribution system used by the Indianapolis Colts. Judge Cudahy dissented, disagreeing with the majority on each of its three conclusions. The NCAA petitioned for rehearing and rehearing en banc.
In their opinion, Circuit Judges Cudahy and Kanne and District Judge Darrah granted the petition for rehearing, vacated the earlier opinion, and certified three questions to the Indiana Supreme Court. The Court noted that the question was a close one that could have significant consequences on sports ticket distribution systems. It certified to the Indiana Supreme Court three questions: a) do the complaint allegations state the elements of an unlawful lottery, b) if a), does the NCAA system meet the “bona fide business transaction” exception to an unlawful lottery, and c) if a), are the claims subject to the in pari delicto defense.