Bleid Sports, LLC (“Bleid”) is in the business of promoting and organizing high school and middle school basketball tournaments. Bleid alleged in its complaint that it organized a tournament called “Rumble at Rupp” to occur on the University of Kentucky’s campus at Rupp Arena to be held on November 25, 2011. Bleid further contended that it and representatives of Rupp Arena reached out to the National Collegiate Athletic Association (“NCAA”) to ensure the event complied with NCAA rules. According to Bleid, the NCAA confirmed that the event was in compliance with NCAA legislation. On November 23, 2011, the University of Kentucky filed for a “Legislative Relief Waiver” with the NCAA to again ensure compliance with NCAA legislation, but the NCAA denied the University of Kentucky’s request. As a result, Rupp Arena officials refused to allow the event to occur at the arena and, thus, Bleid relocated the event to a local high school. Bleid complained that it suffered lost sales and registration fees as a result of moving the event.

The NCAA rule at issue is NCAA Bylaw 13.11.1.8, which states:

An institution…shall not host, sponsor or conduct a nonscholastic basketball practice or competition in which men’s basketball prospective student-athletes…participate on its campus or at an off-campus facility regularly used by the institution for practice and/or competition by any of the institution’s sport programs.

Bleid filed suit against the NCAA on five grounds, which include 1) fraud, 2) negligent misrepresentation, 3) tortious interference with contractual relationships, and 4) tortious interference with prospective business relationships, and 5) the NCAA has limited the competition market by unreasonably and arbitrarily interpreting NCAA Bylaw 13.11.1.8 in violation of Section 1 of the Sherman Act.

As to claims (1)-(4) under Kentucky law, the court concluded that Bleid’s claims fail as a matter of law and, thus, granted the NCAA’s motion to dismiss. Under Kentucky, law, “an unincorporated association cannot be sued solely in its own name.” Bleid did not deny that the NCAA is not a legal entity capable of being sued under Kentucky law, but instead attempted to add a Kentucky state institution as a representative defendant. The court stated that adding a state institution as a party would be futile. Therefore, the court dismissed Bleid’s claims for fraud, negligent misrepresentation, tortious interference with contractual relationships, and tortious interference with prospective business relationships.

As to Bleid’s claims under Section 1 of the Sherman Act, the court concluded that NCAA Bylaw 13.11.1.8 is not commercial in nature and, therefore, Bleid failed to state a claim under the Sherman Act. For a claim to fall within the purview of the Sherman Act, the rule at issue must be commercial in nature. In Bassett v. Kentucky Athletic Association, the Sixth Circuit held “[s]imilar to the eligibility rules in Smith, NCAA rules on recruiting student-athletes, specifically those rules prohibiting improper inducements and academic fraud, are all explicitly non-commercial.” Additionally, the Sixth Circuit stated “[i]n fact, those rules are anti-commercial and designed to promote and ensure competitiveness among NCAA member schools.”

In analyzing the rule, the court stated the “bylaw is clearly a recruiting rule” as it references “prospective student-athletes” and “nonscholastic…competition[s].” Bleid argues, relying on Worldwide Basketball and Sports Tours, Inc. v. NCAA, the bylaw at issue is technically a recruiting rule, but has a commercial effect.  The court stated a “plain reading of the bylaw indicates that it is a recruiting rule rather than a commercial one” and the “enforcement of [the] rules cannot be commercial.” In finding in favor of the NCAA, the court distinguished dicta relied upon by Bleid as stated in Worldwide Basketball. Unlike the plaintiffs in Worldwide Basketball, Bleid only alleges that the NCAA’s “arbitrary interpretation of bylaw 13.11.1.8 has caused it and others commercial harm,” but did not make an allegation that the rule exists purely for commercial reasons. The court indicated if there is confusion between the holdings in Bassett and Worldwide Basketball, Bassett is the controlling case.

In conclusion, Bleid’s state law and antitrust causes of action were dismissed and, thus, the NCAA’s Motion to Dismiss was granted on all counts.

For any questions, feel free to contact Christian Dennie at cdennie@bgsfirm.com.