ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEE:
THOMAS F. BEDSOLE DONALD L. DAWSON
JULIA BLACKWELL GELINAS JOHN B. DRUMMY
MELANIE D. MARGOLIN ERIC D. JOHNSON
Locke Reynolds, LLP Kightlinger & Gray, LLP
Indianapolis, Indiana Indianapolis, Indiana
GREGORY L. CURTNER
DAVID R. GRAND
Miller Canfield Paddock & Stone
Ann Arbor, Michigan
HISPANIC COLLEGE FUND, INC., a ) Delaware Corporation, ) ) Appellant-Plaintiff, ) ) vs. ) No. 49A05-0407-CV-359 ) NATIONAL COLLEGIATE ATHLETIC ) ASSOCIATION, ) ) Appellee-Defendant. )
OPINION FOR PUBLICATION
1. Court Authority to Review NCAA Decisions
Absent fraud, other illegality, or abuse of civil or property rights having their origin elsewhere, Indiana courts will not interfere with the internal affairs of voluntary membership associations. See footnote Ind. High Sch. Athletic Assn, Inc. v. Reyes, 694 N.E.2d 249, 256 (Ind. 1997). This means our courts will neither enforce an associations internal rules nor second-guess an associations interpretation or application of its rules:
As to its member schools, the IHSAA is a voluntary membership association. Judicial review of its decisions with respect to those schools should be limited to those circumstances under which courts review the decisions of voluntary membership associations--fraud, other illegality, or abuse of civil or property rights having their origin elsewhere.
Id. at 257. The Reyes court explicitly rejected additional exceptions. Id.
Member schools have the internal procedures of their own association available to them to adjudicate disputes and, if necessary, change rules or leadership; there is no need for courts to micro-manage these. Ind. High Sch. Athletic Assn, Inc. v. Carlberg by Carlberg, 694 N.E.2d 222, 230 (Ind. 1997), rehg denied. We review for arbitrariness and capriciousness IHSAA decisions affecting students, but there is little justification for such review when the IHSAA member schools are involved. Reyes, 694 N.E.2d at 257.
In addressing the distinction between decisions regarding members and those regarding students, the Reyes court relied on Carlberg, which held decisions of the IHSAA with respect to student-athletes constitute state action for purposes of federal and state constitutional review under the Equal Protection and the Privileges and Immunities Clauses of the federal and state constitutions. Id. at 229. Students, unlike member schools, have not voluntarily subjected themselves to the rules of the IHSAA and they have no voice in its rules or leadership. Id. at 230. Courts therefore have jurisdiction to review challenges to IHSAA rules and enforcement decisions applicable to a particular student, which review will be done in a manner analogous to judicial review of government agency action, i.e., for arbitrariness or capriciousness. See footnote Id. at 231.
HCF is a member of the NCAA, but it is an Affiliated Member (Br. of Appellant at 4) and not a member institution (i.e., a school). It argues the Carlberg student standard, and not the Reyes member standard, should apply to the case before us because its membership in the NCAA is not truly voluntary. That is, the HCF argues it and other affiliated members of the NCAA are similarly situated to the students in Carlberg who, the supreme court recognized, ha[ve] no voice in [the associations] rules or leadership. (Id. at 14) (quoting Carlberg, 694 N.E.2d at 230).
HCF notes decisions finding membership in the NCAA is in some ways less than voluntary. See, e.g., Bd. of Regents of the Univ. of Okla. v. Natl Collegiate Athletic Assn, 546 F. Supp. 1276 (W.D. Okla. 1982), affd in part and remanded in part, 707 F.2d 1147 (10th Cir. 1983), affd sub nom. Natl Collegiate Athletic Assn v. Bd. of Regents, 468 U.S. 85 (1984). The district court concluded the controls the NCAA exercised over televising college football games amounted to a horizontal agreement among competitors to fix prices and restrict output, a group boycott, and the exercise of monopoly power in violation of the Sherman Act.
In that case, the NCAA insisted membership was voluntary, so the plaintiffs were free to withdraw and rid themselves of NCAA control. The court agreed membership was voluntary in the sense that a member institution could withdraw from the NCAA at any time:
However, it is clear from the evidence that an institution which withdraws or is expelled from the NCAA could no longer operate a fully-rounded intercollegiate athletic program. Non-member institutions could not compete in the prestigious NCAA championship events in such sports as baseball, basketball, track, swimming, wrestling and gymnastics. They would therefore be unable to recruit quality athletes into their programs. Its football team could not play on television against members of the NCAA. As a practical matter, membership in the NCAA is a prerequisite for institutions wishing to sponsor a major, well-rounded athletic program.
Moreover . . . withdrawal or expulsion from NCAA subjects the non-member to a group boycott, and forces the non-member to attempt to compete against a monopolist. The Court must conclude that NCAA membership is not voluntary for these plaintiffs, or for many other colleges and universities for which athletic excellence is an institutional priority.
Id. at 1288.
Similarly, HCF argues, membership in the NCAA was a prerequisite if it was to raise funds and promote its mission by means of a pre-season football contest.See footnote Under the since-repealed NCAA bylaws, only an affiliated member could sponsor an exempt preseason game.
Even if membership in the NCAA is involuntary for schools under the reasoning articulated in the Board of Regents decision, that logic would not apply to HCF because it is not an educational institution. A school that incorporates competitive athletics as part of its educational program might have little choice but to join the NCAA, but HCF was not under a similar compulsion[.] (NCAA Br. at 13.) Assuming arguendo As a practical matter, membership in the NCAA is a prerequisite for institutions wishing to sponsor a major, well-rounded athletic program, 546 F. Supp. at 1288, there are numerous other ways HCF might raise funds for its mission. We decline to hold HCFs choice to promote a college football contest renders its NCAA membership involuntary.
HCF also notes a distinction between members who are schools and members who are not. It asserts only the member institutions (apparently meaning schools), and not voluntary members like HCF vote on the NCAA bylaws. (Reply Br. of Appellant at 5 n.4.) Therefore, unlike the IHSAA member schools addressed in Carlberg, HCF asserts it does not have the internal procedures of their own association available to them to adjudicate disputes and, if necessary, change rules or leadership[.] 694 N.E.2d at 230.
Our review of a judgment on the pleadings is confined to information included in the pleadings. Bledsoe v. Fleming, 712 N.E.2d 1067, 1070 (Ind. Ct. App. 1999), rehg denied. HCF did not allege in its complaint that the affiliated members lacked voting power. See footnote We therefore decline to hold HCFs membership in the NCAA was not voluntary based on its asserted lack of voting power.
Even if HCF lacks a voice in NCAA decisionmaking, we would not find HCF to be an involuntary member of the NCAA. When HCF sought and accepted membership in the NCAA it presumably did so with knowledge of the conditions of membership. A person who enters an association must acquaint himself with its laws, for they contribute to the admeasurement of his rights, his duties, and his liabilities. Edwards v. Ind. State Teachers Assn, 749 N.E.2d 1220, 1226 (Ind. Ct. App. 2001) (quoting Supreme Lodge, Knights of Pythias of the World v. Knight, 117 Ind. 489, 20 N.E. 479, 483 (1889)). HCF voluntarily subjected itself to the NCAAs decisionmaking process and does not allege the NCAAs actions were fraudulent, otherwise illegal, or that they abused civil or property rights having their origin elsewhere. We therefore cannot accept HCFs invitation to interfere in the NCAAs internal affairs.
2. HCFs Common-law Contract Claim
The articles of incorporation and bylaws of a not-for-profit corporation are generally considered to be a contract between the corporation and its members and among the members themselves. Carlberg, 694 N.E.2d at 230. Relying on this language, HCF asserts its relationship with the NCAA is contractual and therefore a duty of good faith and fair dealing exists, which duty the NCAA violated with its decision. Under a contractual analysis, HCF asserts, the actions of the NCAA are subject to review under an arbitrary and capricious standard. (Br. of Appellant at 15.)
We note initially that Indiana law does not impose a generalized duty of good faith and fair dealing on every contract. See First Fed. Savings Bank v. Key Mkts., Inc., 559 N.E.2d 600, 603-04 (Ind. 1990). Further, while our supreme court has recognized the contractual relationship of a voluntary membership association and its members, Reyes, 694 N.E.2d at 256, it has explicitly stated the actions of a voluntary membership association with respect to a member cannot be reviewed under an arbitrariness standard. Id. Nor will we second guess an associations interpretation or application of its rules. Id. We must decline HCFs invitation to revisit the Reyes holding.