Tai Kwan Cureton, et.al. v. NCAA

Opinions of the United

1999 Decisions States Court of Appeals

for the Third Circuit

12-22-1999

Tai Kwan Cureton, et.al. v. NCAA

Precedential or Non-Precedential:

Docket 99-1222

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Filed December 22, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 99-1222

TAI KWAN CURETON; LEATRICE SHAW,

each individually and on behalf of

all others similarly situated,

ALEXANDER WESBY; ANDREA GARDNER

v.

NATIONAL COLLEGIATE ATHLETIC ASSOCIATION,

Appellant

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Civ. No. 97-00131)

District Judge: Honorable Ronald L. Buckwalter

Argued October 1, 1999

BEFORE: GREENBERG, MCKEE, and STAPLETON,

Circuit Judges

(Filed: December 22, 1999)

David P. Bruton (argued)

Michael W. McTigue Jr.

Drinker Biddle & Reath

18th & Cherry Streets

One Logan Square

Philadelphia, PA 19103

Elsa Kircher Cole

General Counsel

National Collegiate Athletic

Association

6201 College Boulevard

Overland Park, KS 66211

Attorneys for Appellant

Andre L. Dennis (argued)

Danielle Banks

Elizabeth R. Leong

Stradley, Ronon, Stevens & Young

2600 One Commerce Square

Philadelphia, PA 19103

Adele P. Kimmel

Trial Lawyers for Public Justice

1717 Massachusetts Avenue, NW

Suite 800

Washington, DC 20036

J. Richard Cohen

Southern Poverty Law Center

400 Washington Avenue

Montgomery, AL 36104

Attorneys for Appellees

2

Marcia D. Greenberger

Leslie T. Annexstein

Neena K. Chaudhry

National Women's Law Center

11 Dupont Circle, NW, Suite 800

Washington, DC 20036

Attorneys for Amici Curiae

American Association of University

Women, American Civil Liberties

Union, Center for Women Policy

Studies, Clearinghouse on Women's

Issues, The Connecticut Women's

Education and Legal Fund, Inc.,

Equal Rights Advocates, National

Association for Girls & Women in

Sport, The National Association of

Social Workers, National Education

Association, National Partnership

for Women & Families, Now Legal

Defense and Education Fund,

Women Employed, Women's Law

Project, The Women's Sports

Foundation, and The YWCA of

the USA

Edward N. Stoner II

Martha Hartle Munsch

Catherine S. Ryan

Reed Smith Shaw & McClay LLP

435 Sixth Avenue

Pittsburgh, PA 15219

Sheldon Elliot Steinbach

American Council on Education

One DuPont Circle

Suite 835

Washington, DC 20036

Attorneys for Amicus Curiae

American Council on Education

3

Paul A. Tufano

General Counsel

Gregory E. Dunlap

Deputy General Counsel

Anthony S. Potter

Assistant General Counsel

Commonwealth of Pennsylvania

Office of General Counsel

333 Market Street

Harrisburg, PA 17101

Attorneys for Amicus Curiae

Commonwealth of Pennsylvania

and Pennsylvania Department of

Education

John H. Findley

Pacific Legal Foundation

10360 Old Placerville Road,

Suite 100

Sacramento, CA 95827

Attorney for Amicus Curiae

Pacific Legal Foundation

Bill Lann Lee

Acting Assistant Attorney General

Dennis J. Dimsey

Marie K. McElderry

Attorneys

Department of Justice

P.O. Box 66078

Washington, DC 20035-6078

Attorneys for Amicus Curiae

United States of America

4

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes on before this court on appeal from an

order for summary judgment in this action challenging

certain academic requirements for participation in varsity

athletics promulgated by the National Collegiate Athletic

Association ("NCAA"). See Cureton v. NCAA, 37 F. Supp.2d

687 (E.D. Pa. 1999). In particular, the plaintiffs challenge

the minimum Scholastic Aptitude Test ("SAT") score

requirement for freshman-year varsity intercollegiate

athletic participation. While the NCAA also has adopted

minimum grade point average ("GPA") requirements, the

plaintiffs do not challenge them directly on this appeal.1 We

set forth the background of the case at some length.

A. The Parties

Plaintiff Tai Kwan Cureton is an African-American who

graduated from Simon Gratz High School in Philadelphia in

June 1996 ranking 27th in a class of 305 students.

Cureton was a member of the track team and earned both

academic and athletic honors as a high school student.

Cureton exceeded the NCAA GPA requirements but did not

achieve the NCAA required SAT score. Cureton alleged that

several NCAA Division I schools recruited him before he

obtained his non-qualifying score on the SAT, but that after

he took the SAT a lesser number of Division I schools

recruited him and such institutions denied him admission

and/or athletic financial aid. Cureton, who alleged he lost

an opportunity to compete as a freshman in Division I

varsity intercollegiate athletics because of NCAA

regulations, enrolled in a Division III school.

_________________________________________________________________

1. The SAT is a nationally recognized standardized test. As an alternative

to the SAT, a student athlete may take the ACT, another nationally

recognized standardized test. The parties, however, have emphasized the

SAT in this action so we discuss only that test.

5

Plaintiff Leatrice Shaw is an African-American who also

graduated from Simon Gratz High School and was ranked

5th in a class of 305 students. Shaw was a member of the

track team and earned both academic and athletic honors

and was selected for membership in the National Honor

Society. Shaw exceeded the NCAA minimum GPA

requirement for freshman-year athletic participation, but

failed to achieve the minimum required score on the SAT.

The Division I school that Shaw entered did offer her

athletic financial aid, but she was unable to compete on the

track team during her freshman year because of the NCAA

regulations at issue here.

Plaintiffs Andrea Gardner and Alexander Wesby are

African-American student athletes who exceeded the NCAA

minimum GPA requirement for freshman year athletic

participation, but failed to achieve the minimum required

score on the standardized college admissions tests. Though

they originally were not parties, the district court allowed

them to intervene by order dated December 18, 1998,

pursuant to Fed. R. Civ. P. 24.

The defendant NCAA is an unincorporated voluntary

association of more than one thousand members, a

majority of which are public and private four-year colleges

and universities that conduct varsity intercollegiate athletic

programs in the United States. The NCAA member colleges

and universities are divided into Divisions. Division I

consists of more than three hundred members. The

Divisions adopt their own bylaws, although some NCAA

bylaws are applicable to all three Divisions. This action

concerns a bylaw adopted by Division I and the curtailment

of the plaintiffs' opportunity to participate in Division I

athletics.

The National Youth Sports Program (the "NYSP"), which

is not a defendant but nevertheless is implicated in this

case, is a youth enrichment program that provides summer

education and sports instruction on NCAA member and

non-member institution campuses. The Department of

Health and Human Services provides the NYSP with Federal

financial assistance. Before 1992, these funds were

advanced to the NCAA, but were not diverted for its use. In

1989, the NYSP Fund (the "Fund") was established as a

6

nonprofit corporation to administer the NYSP. Since 1992,

the department has granted the financial aid intended for

the NYSP directly to the Fund. The Fund is regarded as an

NCAA "affiliate."

Before 1971, college freshmen were not allowed to

compete in varsity sports. Since then, the NCAA has

adopted many rules defining freshman eligibility for varsity

intercollegiate athletic competition, but member institutions

continue to make individual admissions decisions. One of

these rules, Proposition 48, implemented in 1986, required

high school graduates to have a minimum 2.0 GPA in 11

academic core courses and a minimum score of 700 on the

SAT to be eligible for competition, practice, andfinancial

aid based upon athletic ability. Division I implemented the

requirement in response to the public's perception that

NCAA schools were exploiting student athletes for their

talents without concern for whether they graduated.

Division I felt compelled to act despite the fact that student

athletes were graduating at rates comparable to non-

athletes, and African-American student athletes were

graduating at higher rates than African-American students

who were not athletes. Since 1989, when the NCAA phased

in the eligibility requirements, the graduation rates of

student athletes, especially African-Americans, have

increased.

Division I modified these rules in 1992 when it adopted

Proposition 16, which is at issue here. Proposition 16

increased the number of core courses to 13 and utilized an

index to determine eligibility based on a formula combining

the student's GPA and SAT scores. Using this index, the

minimum score for a student with a GPA of 2.0 is 1010 on

the SAT. Similarly, a student who scored an 820 on the

SAT would need at least a 2.5 GPA to meet the eligibility

requirements.2 As the district court pointed out, this

_________________________________________________________________

2. A student athlete not qualifying under Proposition 16 may become a

"partial qualifier" if he or she achieves a minimum SAT score between

720 and 810 along with a core GPA that produces a combined score

comparable to the combined score required for qualifiers. See Cureton,

37 F. Supp.2d at 691. A partial qualifier cannot compete in

intercollegiate athletics during his or her freshman year, but is eligible

to receive athletically related financial aid. See id. Shaw, Gardner, and

Wesby are partial qualifiers.

7

modification resulted "in a heavier weighting of the

standardized test" because the minimum GPA requirement

was two standard deviations from the mean, whereas the

minimum test score requirement was only one standard

deviation from the mean. Cureton, 37 F. Supp.2d at 691.

B. The Action

Cureton and Shaw filed the complaint in this case on

January 8, 1997. They alleged the minimum standardized

test score component of Proposition 16 had an unjustified

disparate impact on African-American student-athletes in

violation of regulations promulgated pursuant to Title VI of

the Civil Rights Act of 1964, 42 U.S.C. S 2000d et seq.,

which precludes exclusion from participation in, denial of

the benefits of, and discrimination under any program or

activity receiving Federal financial assistance on account of

race, color, or national origin. The NCAA moved to dismiss

the complaint, or alternatively for summary judgment, on

the following grounds: (1) there is no private right of action

for unintentional discrimination under Title VI or its

accompanying regulations; (2) the NCAA is not a"program

or activity" subject to Title VI; and (3) the NCAA does not

receive Federal funds necessary to subject it to Title VI. The

plaintiffs moved for partial summary judgment on the

grounds that, as a matter of law, the NCAA was a covered

program or activity subject to a Title VI action for

unintentional discrimination and was a recipient of Federal

financial assistance for purposes of Title VI.

On October 9, 1997, the district court issued an opinion

and order denying the NCAA's motion but granting in part

and denying in part the plaintiffs' motion for partial

summary judgment. See Cureton v. NCAA, No. 97-131,

1997 WL 634376 (E.D. Pa. Oct. 9, 1997). In that opinion,

the court determined that there was a private cause of

action under Title VI and its accompanying regulations to

remedy cases of disparate impact and that the NCAA was a

program or activity covered by Title VI. Id. at *2. The court,

however, held that it could not conclude on the record

before it that the NCAA was a recipient of Federal funds as

a result of its relationship with the NYSP. In view of our

recent opinion in Powell v. Ridge, 189 F.3d 387 (3d Cir.

1999), recognizing the existence of a private right of action

8

under Title VI, there no longer is an issue on this appeal

regarding that point.

Thereafter, following discovery, the plaintiffs and the

NCAA again filed cross-motions for summary judgment. By

an opinion and order dated March 8, 1999, the district

court denied the NCAA's motion but granted the plaintiffs'

motion. See Cureton, 37 F. Supp.2d at 715. The district

court held that Proposition 16's disparate impact on

African-Americans violates Title VI and the regulations

issued under it.

The court adopted two distinct theories to support its

finding that the NCAA is subject to the prohibitions of Title

VI. See id. at 696. First, the court found that the NCAA is

an "indirect recipient of federal financial assistance"

because it exercises effective control over a block grant

given by the United States Department of Health and

Human Services to the NYSP.3 See Id. at 694. Second, the

court held that Title VI covers the NCAA because member

schools, which indisputably receive federal funds, have

vested the NCAA with controlling authority over federally

funded athletic programs. See Id.

The court then turned to the plaintiffs' argument that the

SAT component of Proposition 16 violates Title VI because

of its alleged discriminatory disparate impact on African-

American student athletes.4 See id. at 696-712. It found

that the plaintiffs provided statistical evidence sufficient to

_________________________________________________________________

3. The complaint also alleges that the Fund receives money from the

Department of Education. Nevertheless, as far as we can ascertain, the

record does not contain any evidence to support this conclusion, and it

appears that the plaintiffs have prosecuted this case only by arguing

that the NCAA receives funds from the Department of Health and

Human Services. However, inasmuch as the regulations of each

department are parallel, we have cited to both sets of them.

4. A disparate impact case is based upon the idea that "some . . .

practices, adopted without a deliberately discriminatory motive, may in

operation be functionally equivalent to intentional discrimination."

Watson v. Fort Worth Bank and Trust, 487 U.S. 977, 987, 108 S.Ct.

2777, 2785 (1988). Many cases have applied this theory to educational

institutions and practices. See, e.g., New York Urban League, Inc. v.

State

of New York, 71 F.3d 1031, 1036 (2d Cir. 1995) (collecting cases).

9

show that the use of the SAT minimum standard "plainly

evince[d] that African-Americans are being selected by

Proposition 16 at a rate disproportionately lower than

whites sufficient to infer causation." Consequently, the

plaintiffs raised a prima facie case of disparate impact

discrimination. See id. at 699-701.

The district court rejected the NCAA's argument that

Proposition 16 benefits African-Americans because of the

alleged increase in graduation rates it has brought about.

The court stated that "the alleged beneficial impact

(increased graduation rates) redounds at the `back-end'

while the adverse impact occurs up-front." Id. at 700. In

this regard, it cited Connecticut v. Teal, 457 U.S. 440, 452-

56, 102 S.Ct. 2525, 2533-35 (1982), for the principle that

racial balance at the end of an employer's entire

promotional process does not preclude a plaintiff from

making a prima facie case of disparate impact

discrimination based on the impact of one component of

the process. Where the initial examination used by an

employer in the challenged hiring process had a disparate

impact, a "bottom-line" justification is not a defense to

employer liability. See id. Accordingly, the district court

concluded that the NCAA did not have a defense simply

because African-Americans enrolled in its member schools

after the adoption of Proposition 16 had an enhanced

chance of getting a degree.

Inasmuch as the plaintiffs demonstrated that African-

Americans are less likely to meet the standards required by

Proposition 16 than whites, the burden shifted to the NCAA

to show an educational necessity for the bylaw. The district

court approved the legitimacy of the NCAA's first proffered

goal of raising all student athletes' graduation rates,

Cureton, 37 F. Supp.2d at 703, yet found the NCAA's

second proffered goal -- closing the gap between white and

black student athletes' graduation rates -- not to have been

an actual goal of Proposition 16. Furthermore, the court

found that there was no legal "support for an educational

institution . . . to engage in such a goal." See id. at 704.

Next, the court determined that Proposition 16's use of the

SAT as a cutoff was not justified by the legitimate goal of

increasing student athletes' graduation rates. Id. at 706-12.

10

Moreover, the court found that the plaintiffs "have shown at

least three alternative practices resulting in less racial

disproportionality while still serving the NCAA's goal of

raising student athlete graduation rates -- not raising them

above a certain threshold number. That is all the proof that

plaintiffs need to demonstrate under Title VI." Id. at 714.

In view of its conclusions, the district court granted

summary judgment to the plaintiffs, and permanently

enjoined the NCAA from continued operation and

implementation of Proposition 16. See id. at 714-15.

Although regarding the matter as ripe for appeal, the court

retained jurisdiction. See id. at 715. By order dated March

16, 1999, the district court modified the March 8, 1999

opinion and order so that the NCAA was permanently

enjoined from denying student athletes freshmen-year

eligibility on the basis of the minimum standardized test

score cutoffs in Proposition 16, but nevertheless could use

minimum GPA cutoffs. See id. at 716.

Subsequently, the NCAA appealed and unsuccessfully

sought a stay in the district court. The NCAA then sought

a stay from this court, which we granted on March 30, 1999.5

II. JURISDICTION and STANDARD OF REVIEW

The district court had jurisdiction under 28 U.S.C.

S 1331. We have jurisdiction under 28 U.S.C.S 1292(a)(1)

as, notwithstanding the district court's entry of a

permanent injunction, it has not entered a final judgment.

We exercise plenary review on this appeal from the district

court's orders on the motions for summary judgment. See

Seibert v. Nusbaum, Stein, Goldstein, Bronstein & Compeau,

167 F.3d 166, 170 (3d Cir. 1999). Of course, on this appeal

we can remand the matter for entry of a summary

judgment in favor of the NCAA if we conclude that on the

_________________________________________________________________

5. Plaintiffs filed a cross-appeal on April 8, 1999, which we dismissed by

order dated June 11, 1999, as plaintiffs could raise the issues

mentioned in the cross-appeal as alternative grounds to affirm. See Rite-

Aid of Pa., Inc. v. Houstoun, 171 F.3d 842, 853 (3d Cir. 1999). On July

1, 1999, the district court granted the plaintiffs' motion for class

certification. See Cureton, 1999 WL 447313 (E.D. Pa. July 1, 1999). In

view of our result, we will not make further reference to the

certification.

11

undisputed facts it is entitled to a summary judgment as a

matter of law. See Nazay v. Miller, 949 F.2d 1323, 1328 (3d

Cir. 1991).

III. DISCUSSION

Plaintiffs brought this action pursuant to section 601 of

Title VI, which provides:

No person in the United States shall, on the grounds of

race, color, or national origin, be excluded from

participation in, or be denied the benefits of, or be

subjected to discrimination under any program or

activity receiving Federal financial assistance.

42 U.S.C. S 2000d. The Supreme Court has determined that

section 601 prohibits discrimination in or exclusion from

Federally financially assisted programs or activities only on

the basis of intentional discrimination. See Alexander v.

Choate, 469 U.S. 287, 292-93, 105 S.Ct. 712, 716 (1985);

Guardians Ass'n v. Civil Service Comm'n, 463 U.S. 582, 103

S.Ct. 3221 (1983); Powell, 189 F.3d at 392. But the

plaintiffs do not allege intentional discrimination.

Accordingly, they rely on regulations implementing section

601, which the Departments of Health and Human Services

and Education adopted pursuant to section 602 of Title VI

which provides, in relevant part:

Each Federal department and agency which is

empowered to extend Federal financial assistance to

any program or activity, by way of grant, loan, or

contract . . ., is authorized and directed to effectuate

the provisions of [Section 601] of this title with respect

to such program or activity by issuing rules,

regulations or orders of general applicability. . . .

42 U.S.C. S 2000d-1. These regulations extend section 601

to racial, color and national origin discrimination

predicated on recipients administering programs and

activities with a disparate impact.

But section 601 and the regulations have their

limitations, for they are enforceable only against the

recipients of Federal financial assistance. See 42 U.S.C.

S 2000d. The NCAA asserts that it is not a direct recipient

12

of Federal financial assistance and that its relationship with

third parties does not support the extension of Title VI

coverage to the NCAA as an indirect recipient of such

assistance.

The district court recited four different theories that the

plaintiffs proffered to support the extension of Title VI

coverage to the NCAA:

(1) that the NCAA directly receives federalfinancial

assistance through the Fund (which indisputably is a

recipient of federal funds) because the Fund is nothing

more than the NCAA's alter ego; (2) that the NCAA

indirectly receives federal financial assistance through

the Fund due to the NCAA's complete control over the

Fund; (3) that member schools who receive federal

funds have created and comprise the NCAA and that

the NCAA governs its members with respect to athletics

rules; and (4) that recipients of federal financial

assistance have ceded controlling authority over a

federally funded program to the NCAA, who then

becomes subject to Title VI regardless of whether it is

itself a recipient.

Cureton, 37 F. Supp.2d at 694 (emphasis added).

The district court rejected the first theory, as it concluded

that there was insufficient evidence to establish that the

NYSP was the alter ego of the NCAA.

The court did conclude, however, that the NCAA was an

indirect recipient of Federal financial assistance because

"although the Fund is the named recipient of the block

grant, it is merely a conduit through which the NCAA

makes all of the decisions about the Fund and the use of

the federal funds." Id. The NCAA, on the other hand,

asserts that there is no evidence to support a finding that

the NCAA itself controls the Federal monies disbursed by

the Fund.

The court alternatively determined that the NCAA was

subject to Title VI coverage because of its relationship to its

member institutions. The court stated:

Whether characterized as a `delegation' or an

`assignment' of `controlling authority,' `regulation,' or

13

`supervision,' Plaintiffs have established on this record

that the member colleges and universities have granted

to the NCAA the authority to promulgate rules affecting

intercollegiate athletics that the members are obliged to

abide and enforce. Under these facts, the NCAA comes

sufficiently within the scope of Title VI irrespective of

its receipt of federal funds.

Cureton, 37 F. Supp.2d at 696.

The district court was aware of National Collegiate

Athletic Ass'n v. Smith, 119 S.Ct. 924 (1999), which

determined that the mere fact that the NCAA received funds

from members that received Federal financial assistance did

not subject the NCAA to coverage under Title IX of the

Education Amendments of 1972. See Cureton, 37 F.

Supp.2d at 693. While the district court regarded that case

as "applicable" under Title VI, it noted that the Supreme

Court left open the possibility that the NCAA could be

subject to Title IX coverage on the basis of some other

theory. See id. (citing NCAA v. Smith , 119 S.Ct. at 929).

Thus, the district court concluded that the NCAA was

subject to Title VI.

We do not find it necessary to determine whether, by

reason of the NCAA's relationship with the NYSP or the

Fund, we should regard the NCAA as receiving Federal

financial assistance. Rather, we will assume without

deciding that these relationships are sufficient to establish

that Federal financial assistance to the Fund is assistance

to the NCAA itself. But section 601, as originally written,

did not preclude recipients of Federal financial assistance

from discriminating with respect to a program not receiving

such assistance. Thus, the language of Title VI is program

specific as it relates to "participation in," "[denial of] the

benefits of " or "discrimination under" "any program or

activity receiving Federal financial assistance." See Grove

City College v. Bell, 465 U.S. 555, 570-71, 104 S.Ct. 1211,

1220 (1984) (Title IX); Board of Pub. Instruction v. Finch,

414 F.2d 1068 (5th Cir. 1969) (Title VI).

It thus follows that when Congress enacted Title VI, a

department's authority to promulgate regulations under

section 602 to effectuate the provisions of section 601 was

14

subject to the program specific limitations of section 601.

See North Haven Bd. of Educ. v. Bell, 456 U.S. 512, 538,

102 S.Ct. 1912, 1926 (1982); see also Grove City, 465 U.S.

at 570-71, 102 S.Ct. at 1220. Consequently, when the

departments adopted the regulations under Title VI, see 45

C.F.R. S 80.3 and 34 C.F.R. S 100.3, the regulations,

though expanding on section 601 by precluding the use of

"criteria or methods of administration which have the effect

of subjecting individuals to discrimination," only related to

programs or activities receiving Federal financial assistance.

See 45 C.F.R. S 80.3(b)(2); 34 C.F.R.S 100.3(b)(2). Thus, the

regulations, like the statute, are program specific.

Moreover, the regulations themselves demonstrate that

they are program specific. Under the regulations, an

application for Federal financial assistance to carry out a

program must include assurances of nondiscrimination

which may go beyond the program to be Federally assisted.

Thus, 45 C.F.R. S 80.4(d)(2) and 34 C.F.R.S 100.4(d)(2)

provide that "[t]he assurance required with respect to an

institution of higher education . . . or any other institution

. . . shall be applicable to the entire institution unless the

applicant establishes . . . that the institution's practices in

designated parts or programs of the institution will in no

way affect its practices in the program of the institution for

which Federal financial assistance is sought." Clearly, these

provisions cannot possibly accommodate a reading of the

regulations so that as a matter of course their

discriminatory impact aspects are applied beyond the

specific program receiving Federal assistance. We are

constrained to reach this conclusion, as it is obvious that

a recipient of Federal financial assistance need not give an

assurance of nondiscrimination with respect to programs in

no way affecting the Federally assisted program.

It is, of course, true that in response to the Supreme

Court's program specific interpretation of Title IX in Grove

City, Congress passed the Civil Rights Restoration Act of

1987 and thereby modified Title VI so that it encompasses

programs or activities of a recipient of Federalfinancial

assistance on an institution-wide basis. See 42 U.S.C.

S 2000d-4a (Title VI); 20 U.S.C. S 1687 (Title IX); see also

NCAA v. Smith, 119 S.Ct. at 928 & n.4 (After passage of

15

Civil Rights Restoration Act, "if any part of the NCAA

received federal assistance, all NCAA operations would be

subject to Title IX."). Nevertheless, the Departments of

Health and Human Services and Education have not

modified 34 C.F.R. S 100.13 and 45 C.F.R.S 80.13 following

enactment of the Restoration Act. Consequently, the

regulations, which, unlike Title VI include disparate impact

provisions, by their terms remain program specific. It

therefore inexorably follows that, to the extent this action is

predicated on the NCAA's receiving Federal financial

assistance by reason of grants to the Fund, it must fail as

the Fund's programs and activities are not in issue in this

case.

In reaching our result, we also point out the following.

Neither Congress nor the Departments of Health and

Human Services or Education has considered, at least in a

formal proceeding of which we are aware, what the

consequences would be if the disparate impact regulations

were expanded beyond their current program specific

limitations. It might well be that such expanded regulations

could subject all aspects of an institution of higher

education's activities to scrutiny for disparate

discriminatory impact beyond anything Congress could

have intended. Furthermore, the regulations have not been

amended pursuant to the notice and comment provisions of

the Administrative Procedure Act. Surely, such an

expansion should not be made without the opportunity for

comment by interested parties. See 5 U.S.C.S 553; see also

NLRB v. Wyman-Gordon Co., 394 U.S. 759, 764, 89 S.Ct.

1426, 1429 (1969).

We realize, of course, that arguably the Civil Rights

Restoration Act implicitly expanded the scope of"program"

within 45 C.F.R. S 80.13 and 34 C.F.R. S 100.13 so that it

is not limited to a specific activity; after all, without such

expansion there would be no regulations dealing with

disparate treatment by reason of race, color, or national

origin beyond the program actually receiving Federal

financial assistance. We, however, will not address that

possibility here beyond pointing it out, as this case does

not involve any allegation of disparate treatment.

Consequently, we have no reason to consider whether the

16

regulations under section 602 could be applied in disparate

treatment cases on an institution-wide basis.

We note that the dissent points out that the Fund may be

the alter ego of the NCAA. See Maj. Op. at 13. It seems

quite clear in view of our conclusions with respect to the

limited scope of the regulations, with which the dissent

agrees, that it is immaterial whether the Fund is the

NCAA's alter ego inasmuch as the discriminatory impact

aspects of the regulations only can be applied to the

specific program receiving Federal assistance and the

Fund's programs are not in issue here. See Grove City, 465

U.S. at 571-72, 104 S.Ct. at 1220-21 (holding that Title IX

only applied to college's financial aid program, for which

federal funds were earmarked, and not to the entire

institution). Moreover, as we have pointed out the plaintiffs

have not alleged that this is a discriminatory treatment

case. Accordingly, even if the NCAA directly received the

Federal financial assistance paid to the Fund our result

would be the same.

The foregoing conclusions bring us to the question of

whether the NCAA is a recipient of Federal funds by reason

of what the plaintiffs call its "controlling authority" over

programs or activities receiving Federal financial assistance.

The case law suggests that the critical inquiry in

determining whether an entity is an indirect recipient of

Federal assistance is whether that entity is the intended

recipient of Federal funds, intention being from Congress's

point of view. See id. at 563-65 & n.13, 104 S.Ct. at 1216-

17 & n.13. The Supreme Court, however, already has found

no indication that member schools paid their dues to the

NCAA with Federal assistance funds "earmarked" for that

purpose. NCAA v. Smith, 119 S.Ct. at 929. Thus, the

controlling authority argument can be sustained, if at all,

only on some basis beyond the NCAA's mere receipt of

dues. See id. at 929-30. Of course, in considering this

"controlling authority" argument, we emphasize that under

the applicable regulations only "recipients" of Federal

financial assistance are subject to the disparate impact

regulations, not merely organizations which have some

relationship with entities receiving such assistance or

organizations which benefit from such assistance. See

17

United States Dep't of Transp. v. Paralyzed Veterans of Am.,

477 U.S. 597, 605-07, 106 S.Ct. 2705, 2710-12 (1986).

In Horner v. Kentucky High School Athletic Ass'n , 43 F.3d

265, 272 (6th Cir. 1994), the court held that the Kentucky

State Board for Elementary and Secondary Education and

the Kentucky High School Athletic Association, its agent to

manage interscholastic sports, were subject to Title IX. But

in that case, the Board controlled and managed on behalf

of the Kentucky Department of Education over $396 million

in Federal funds. Furthermore, the Association was its

agent authorized by statute to manage interscholastic

athletics.6 On the other hand, more recently the court in

Smith v. Metropolitan School District, 128 F.3d 1014, 1019-

21 (7th Cir. 1997), held that individuals in a supervisory

capacity are not liable in an action under Title IX because

they are not recipients of Federal funds notwithstanding

the circumstance that they may have some control over the

funds.7 Of course, Title IX cases are instructive in this Title

VI action as the statutes are essentially similar. See NCAA

v. Smith, 119 S.Ct. at 928 n.3; see also Paralyzed Veterans,

477 U.S. at 600 n.4, 106 S.Ct. at 2708 n.4.

While not a Title VI or Title IX case, we find the Supreme

Court's decision in NCAA v. Tarkanian, 488 U.S. 179, 109

S.Ct. 454 (1988), instructive, as that case makes clear that

the NCAA does not "control" its members. Tarkanian was a

tenured coach, whom the University of Nevada at Las Vegas

(UNLV) reluctantly had suspended under threat of NCAA

sanctions. He then brought an action under 42 U.S.C.

S 1983 claiming that the NCAA was a state actor, because

_________________________________________________________________

6. Actually, Horner was an appeal from an order for summary judgment,

so the court based its holding on the plaintiffs' opposition to the

defendants' motion. It remained for the plaintiffs to prove their case on

the remand.

7. In Davis v. Monroe County Board of Education, 119 S.Ct. 1661 (1999),

a Title IX sexual harassment case against a school board and individual

officials, the district court dismissed the action against all the

defendants. While the case reached the Supreme Court, the Court did

not comment on the case against the individuals, as the plaintiffs

appealed the dismissal of the Title IX claims only against the school

board to the court of appeals. Id. at 1668; see Davis v. Monroe County

Bd. of Educ., 74 F.3d 1186, 1188 n.1 (11th Cir. 1996).

18

the "UNLV delegated its own functions to the NCAA,

clothing the [NCAA] with authority both to adopt rules

governing UNLV's athletic programs and to enforce those

rules on behalf of UNLV." Id. at 192, 109 S.Ct. at 462. The

Court held that the NCAA was not a state actor. While the

Court recognized that the NCAA's rules and

recommendations clearly influenced the UNLV, it concluded

that the UNLV, not the NCAA, took the final action

suspending Tarkanian. See id. at 192, 109 S.Ct. at 462.

The Court reasoned that the UNLV "delegated no power

to the NCAA to take specific action against any university

employee. The commitment by UNLV to adhere to NCAA

enforcement procedures was enforceable only by sanctions

that the NCAA might impose on UNLV itself." Id. at 195-96,

109 S.Ct. at 464. The Court explained that the UNLV had

the option to retain Tarkanian and risk sanctions, perhaps

even expulsion, or to withdraw voluntarily from the NCAA.

See id. at 197-98, 109 S.Ct. at 465. The Court questioned

Tarkanian's assertion that "the power of the NCAA is so

great that the UNLV had no practical alternative to

compliance with its demands." Id. at 198-99, 109 S.Ct. at

465. It stated that "[t]he university's desire to remain a

powerhouse among the Nation's college basketball teams is

understandable, and nonmembership in the NCAA

obviously would thwart that goal. But that UNLV's options

were unpalatable does not mean that they were

nonexistent." Id. at 198 n.19, 109 S.Ct. at 465 n.19.

Similarly, the ultimate decision as to which freshmen an

institution will permit to participate in varsity

intercollegiate athletics and which applicants will be

awarded athletic scholarships belongs to the member

schools. The fact that the institutions make these decisions

cognizant of NCAA sanctions does not mean that the NCAA

controls them, because they have the option, albeit

unpalatable, of risking sanctions or voluntarily withdrawing

from the NCAA. In this regard, we point out that this case

differs from Horner as there the Athletic Association was

exercising public authority with respect to its functions. We

emphasize that the NCAA members have not ceded

controlling authority to the NCAA by giving it the power to

enforce its eligibility rules directly against students.

19

We also point out that applying the disparate impact

regulations to the NCAA is inconsistent with the

contractual character of section 601. The Supreme Court

explained in Paralyzed Veterans that the antidiscrimination

provisions in section 504 of the Rehabilitation Act of 1973,

29 U.S.C. S 794, which has language tracking Title VI, have

a contractual basis. Accordingly, the Court said that

"Congress limited the scope of S 504 to those who actually

`receive' federal financial assistance because it sought to

impose S 504 coverage as a form of contractual cost of the

recipient's agreement to accept federal funds." 477 U.S. at

605, 106 S.Ct. at 2711. Thus, "[b]y limiting coverage to

recipients, Congress imposes the obligations ofS 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.

Title VI is a similar statute. See 45 C.F.R.S 80.4; 34

C.F.R. S 100.4. But there is no contractual privity between

the Departments of Health and Human Services and

Education and the NCAA with respect to Federal financial

assistance to the NCAA members. Therefore, the NCAA is

not in a position to accept or reject the Federal funds paid

to those institutions. We do not suggest that an absence of

privity means that in no circumstances may a controlling

authority argument be viable; we note that those who truly

assume control of federally-funded programs are in a

position to accept or reject that control as part of a decision

whether or not to receive federal funds indirectly.

Nonetheless the absence of privity clearly signals that a

court should be circumspect in imposing Title VI

obligations on an entity which is not a direct recipient of

Federal financial assistance. Such caution is consistent

with the Spending Clause foundation for Title VI. See Davis

v. Monroe County Bd. of Educ., 119 S.Ct. 1661, 1669-70

(1999).

We recognize that the dissent suggests that the NCAA

constitution requires NCAA members to cede authority over

their athletic programs to the NCAA, but the NCAA

constitution expressly provides for the retention of

institutional control over individual athletic programs.

While the constitution requires conformity with the NCAA's

20

rules and regulations, the ultimate decisions whether to

conform are made by individual members. Therefore, the

constitution is completely consistent with our result.

Furthermore, we cannot understand how the fact that the

NCAA promulgates rules and regulations with respect to

intercollegiate athletics somehow means that the NCAA has

controlling authority over its members' programs or

activities receiving Federal financial assistance. After all,

the institutions decide what applicants to admit, what

employees to hire, and what facilities to acquire.

IV. CONCLUSION

In view of the foregoing determinations, it is unnecessary

for us to reach the other issues raised on this appeal.

Moreover, inasmuch as the parties agree that there are no

disputes of material fact with respect to the question of

whether the NCAA is subject to Title VI (and we are aware

of none), and we have concluded that the NCAA is entitled

to a judgment as a matter of law, there is no reason why

this litigation should continue. Consequently, we will

reverse the order of the district court of March 8, 1999, and

will remand the case to the district court to enter summary

judgment for the NCAA.

21

McKEE, Circuit Judge, concurring in part and dissenting in

part.

I agree with the majority's analysis insofar as my

colleagues conclude that the District Court's grant of

summary judgment can not be sustained under the

applicable regulations of the Departments of Health and

Human Services and the Department of Education. As I

discuss below, the language of the regulations those

agencies adopted pursuant to SS 601 and 602 of Title VI are

program-specific. Accordingly, it appears that the relief for

the discriminatory impact that the District Court found

under Proposition 16 must be limited to the National Youth

Sports Program (the "Fund"). However, I believe that the

NCAA may well be subject to Title VI under the plaintiff 's

theory that the NCAA is a controlling entity of its member

institutions, or the alternative alter ego theory advanced by

the plaintiffs. Thus, I can not agree with the majority's

analysis insofar as it holds that the NCAA is entitled to

summary judgment. Rather, I believe that we should

remand for a trial to resolve the issue of whether the NCAA

is a controlling entity under Title VI or the Fund is merely

its alter ego. However, before explaining my position, a brief

parenthetical is necessary.

Title VI extends protection based upon race, color or

national origin. Accordingly, this dispute is framed by

issues of race. Nevertheless, the issues here are of such

gravity, and the social context in which they arise are of

such magnitude, that I think it is important that an aspect

of this controversy not be lost even though it is irrelevant

to our legal analysis. Buried deep within this record is a

statement that is of such consequence that it ought not to

be ignored. Yet, that statement has been lost in the

intensity of the debates underlying this legal dispute. The

NCAA's Rule Change Memorandum contains the following

statement:

Low-income student-athletes also have been impacted

to a greater degree than other student-athletes by

Proposition 16 standards. For example, in 1997, 18

percent of all student-athletes with a self-reported

family income below $30,000 failed to qualify, whereas

22

only 2.5 percent of student-athletes with a family

income greater than $80,000 failed to qualify.

JA at 756a. Proposition 16 therefore has a disparate impact

on poor student-athletes regardless of race. Thus, the

dynamics of the disparate impact here are the dynamics of

socio-economic status. These are issues of class; not race.

Student athletes are more likely to be adversely affected by

Proposition 16 whether they are Black or White if they are

poor. Concomitantly, student athletes are more likely to be

advantaged by Proposition 16 if they have attended schools

with abundant resources and are from families that know

about, and have the resources to avail themselves of, the

proliferation of privately sponsored courses that prepare

high school students for the SAT exam. See Los Angeles

Times, More Latinos Take SAT Exams But Scores Lagging,

Sept 2, 1998, at A1 ("Suburban and affluent students . . .

enjoy another advantage--greater access to commercial test

preparation courses that can add 120 points or more to a

student's SAT score."). The economic stratification that

exists in our society often means that issues of class are

either translated into issues of race, or the two are so

intertwined as to be inseparable.

Because we function as a court of law, and not as a

legislature, the significance of the NCAA's Memorandum

can play no role in our adjudication of this appeal.

However, the explosiveness of the issues lying coiled just

below the surface of this dispute require that the broader

implications of this debate be kept in proper perspective.1

I. The Applicable Regulations.

I begin my legal analysis with the regulations that have

been promulgated under Title VI. 34 C.F.R. S 100.3

promulgated by the Office of Civil Rights of the Department

of Education provides in relevant part that:

(b)(2) A recipient [of funds under Title VI], in

determining the types of services, financial aid, or

_________________________________________________________________

1. This observation is not intended to detract from, or add to, the

discussion of the cultural bias that many believe also influences SAT

scores.

23

other benefits, . . . or the class of individuals to whom,

or the situations in which, such services, . . . will be

provided under any such program, or the class of

individuals to be afforded an opportunity to participate

in any such program, may not, directly or through

contractual or other arrangements, utilize criteria or

methods of administration which have the effect of

subjecting individuals to discrimination because of

their race, color, or national origin, or have the effect of

defeating or substantially impairing accomplishment of

the objectives of the program as respect individuals of

a particular race, color, or national origin.

34 C.F.R. S 1003(b)(2). The cited Authority for that

regulation is "Sec. 601, 602, 604, Civil Rights Act of 1964;

78 Stat. 252, 253, 42 U.S.C. 2000d, 2000d-1m 2000d-3."

The Department of Health and Human Services

promulgated an identical regulation at 45 C.F.R.

S 80.3(b)(2), and the identical provisions of The Civil Rights

Act of 1964 are cited as authority for that regulation. As the

majority notes, the scope of these regulations is limited by

34 C.F.R. S 100.4(d)(2) and 45 C.F.R. S 80.4(d)(2)

respectively. That limitation provides that the respective

prohibition of discrimination "shall be applicable to the

entire institution unless the applicant establishes . . . that

the institution's practices in designated parts or programs

of the institution will in no way affect its practices in the

program of the institution for which Federal financial

assistance is sought." See Maj. Op. at 15.2

As the majority explains, this limitation is a direct result

of the original interpretation of Title VI. See Grove City v.

Bell, 465 U.S. 555 (1984). Maj. Op. at 15-16. However,

Congress subsequently enacted the Civil Rights Restoration

Act, 42 U.S.C. S 2000-4, and thereby broadened the reach

of Title VI beyond the offending program in response to

Grove City. However, neither HHS nor the Department of

Education amended the applicable regulations to make

them coextensive with the expanded scope of the Civil

_________________________________________________________________

2. Here, there is nothing to demonstrate that practices of the Fund (the

direct recipient of Title VI funds) affect the broader practices of the

NCAA.

24

Rights Restoration Act. Consequently, regulations that were

initially designed to lengthen the reach of a statutory

prohibition against discrimination by extending it to

unintended discriminatory consequences ("disparate

impact") now appear to have a shorter reach than the

statutory prohibition the regulations were supposed to

expand.

My colleagues address the apparent tension between the

Civil Rights Restoration Act and the regulations as follows:

We realize, of course, that arguably the Civil Rights

Restoration Act implicitly expanded the scope of the

"program" within 45 C.F.R. 21 80.13 and 34 C.F.R.

S 100.13 so that it is not limited to a specific activity;

after all, without such expansion there would be no

regulations dealing with disparate treatment by reason

of race, color, or national origin beyond the program

actually receiving Federal financial assistance. We,

however, will not address that possibility here beyond

pointing it out, as this case does not involve any

allegation of disparate treatment. Consequently, we

have no reason to consider whether the regulations

under section 602 could be applied in disparate

treatment cases on an institution-wide basis.

Maj. Op. at 16-17 (emphasis in original).

It may be that this regulatory anomaly is more the result

of administrative inertia than studied decision making.

However, the agencies ought not to assume that their

regulations have been implicitly amended by the

subsequent legislation. If our analysis of the explicit

language of these regulations is not what the agencies

intend, I would hope that they take steps to promulgate

amendments to their regulations that will clearly reflect the

intended scope of the meaning of "program" as that term

relates to Title VI, and similar prohibitions of

discrimination.

Of course, this does not end the inquiry. As the majority

notes, we must still determine "whether the NCAA is a

recipient of Federal funds by reason of what the plaintiffs

call its `controlling authority' over programs or activities

receiving Federal financial assistance." Maj. Op. at 17. It is

25

at this point that I part company with my colleagues as I

believe that the NCAA may well be subject to Title VI

because it may be a controlling authority, or because the

Fund may be its alter ego. Although the Supreme Court

held in NCAA v. Smith, ___ U.S. ___, 119 S.Ct. 924, 926

(1999), that dues payments to the NCAA from its member

institutions, who are themselves recipients of Federal

financial assistance, are not sufficient to subject the NCAA

to Title IX, the Court refused to reject either of these two

alternative theories as a bases of recovery under Title IX.

Rather, the Court stated that it would not decide the

question of whether the NCAA "directly and indirectly

receives federal financial assistance" because of its

relationship to the Fund, and the question of whether

"when a recipient cedes controlling authority over a

federally funded program to another entity, the controlling

entity is covered by Title IX regardless [of] whether it is

itself a recipient" because neither question was decided by

the lower courts. Id. at 930. Thus, the Court left "resolution

of those grounds to the courts below on remand." Id. at

926. Those questions, albeit with regard to Title VI and not

Title IX, are squarely before us now, and I do not believe

that either proposition can be rejected as a matter of law.

II. The NCAA as a Controlling Authority.

As noted above, the NCAA is not subject to Title VI

merely because it receives dues from member institutions

who are themselves recipients of Federal assistance. Smith,

___ U. S. at ___, 119 S.Ct. at 926. The Federal funds going

to the NCAA member institutions are not earmarked for

NCAA dues, and therefore, although the NCAA is a

beneficiary of those funds it is not a "recipient." See United

States Dep't of Transp. v. Paralyzed Veterans of America,

477 U.S. 597, 605-07 (1986).

Thus, plaintiffs' "controlling authority argument can be

sustained, if at all, only on some basis beyond the NCAA's

mere receipt of dues." Maj. Op. at 17. For purposes of our

discussion, there are two entities over which the NCAA may

have controlling authority -- the NCAA's member

institutions, and the Fund. I will first explain why I believe

the plaintiffs have demonstrated that the NCAA may have

26

controlling authority over its members, and then discuss

the NCAA's relationship to the Fund.

A. The NCAA's Control of Member Institutions.

1. The NCAA Constitution

The constitution of the NCAA provides in part: "The

control and responsibility for the conduct of intercollegiate

athletics shall be exercised by the [member] institution

itself." NCAA Const., Art, 6, Rule 6.01.1. Atfirst blush, this

suggests that member institutions have not ceded

controlling authority over intercollegiate sports to the NCAA

because constituent colleges and universities retain

responsibility for, and control of, their intercollegiate

athletics.

However, the constitution also provides that one of the

purposes of the NCAA is: "To uphold the principle of

institutional control of, and responsibility for, all

intercollegiate sports in conformity with the constitution and

the bylaws of the Association." NCAA Const., Art. I, Rule

1.2(b) (emphasis added). The NCAA's constitution also

states: "It is the responsibility of each member institution to

control its intercollegiate athletics program in compliance

with the rules and regulations of the Association. NCAA

Const., Art. 2, Rule 2.1.1 (emphasis added). These two

rules appear to be in tension with Rule 6.01.1 and appear

to trump whatever authority member institutions might

otherwise have under the NCAA's constitution to retain

control over their intercollegiate athletic programs.

Consequently, I believe the plaintiffs here may be correct in

their contention that the NCAA's constitution requires

NCAA members to effectively cede authority over their

intercollegiate athletic programs to the NCAA. Moreover,

plaintiffs' position is clearly supported by the very

precedent that my colleagues rely upon in granting

summary judgment to the NCAA.

2. NCAA v. Tarkanian.

The majority relies heavily upon the Supreme Court's

decision in NCAA v. Tarkanian, 488 U. S. 179 (1988), to

27

support its conclusion that the NCAA is not a controlling

authority of the member institutions. However, Tarkanian

proves just the opposite. Tarkanian illustrates the extent of

absolute control the NCAA has over its member colleges

and universities for purposes of our analysis, and the case

establishes that the NCAA may well be a controlling

authority to the extent that it should be subject to Title VI.

Tarkanian involved a dispute between UNLV and its

basketball coach, Jerry Tarkanian. The Supreme Court

began its analysis of the issues in that case with "a

description of the relationship among the three parties --

Tarkanian, UNLV, and the NCAA." 488 U.S. at 182.

Tarkanian had been hired as UNLV's basketball coach in

1973. He "inherited a team with a mediocre 14-14 record."

Id. at 180. However, "[f]our years [after Tarkanian became

coach] the team won 29 out of 32 games and placed third

in the championship tournament sponsored by the National

Collegiate Athletic Association." Id. 4 In return, the

university compensated Tarkanian at a level that reflected

both his value to the university, and the university's

appreciation of his having transformed its basketball team

into a national powerhouse. He "was initially employed on

a year-to-year basis but became a tenured professor in

1977." Id. at 182. As a tenured professor Tarkanian would

have received an annual salary of $53,000. However, as

head basketball coach his compensation was

$125,000, plus 10% of the net proceeds received by

UNLV for participation in NCAA-authorized

championship games, plus fees from basketball camps

and clinics, product endorsements, and income

realized from writing a newspaper column, speaking on

_________________________________________________________________

4. The importance of the NCAA's Basketball tournament -- popularly

referred to as "March Madness" -- is evidenced by the fact that a major

television network recently paid $6 billion for the rights to broadcast

the

tournament for the next eleven years. See CBS Signs $6 Billion Deal With

NCAA, Wall St. J. Nov 19, 1999, at A3 ("To keep the tournament CBS

had to withstand strong competition from Walt Disney Co., which

wanted the tournament for its ABC and ESPN Networks and News

Corp.'s Fox network and its sports cable outlets. . . . with the internet

and new-media rights as part of the deal, some industry observers

wondered if CBS didn't get a bargain.") (emphasis added).

28

a radio program entitled `THE JERRY TARKANIAN SHOW,' and

appearing on a television program bearing the same

name. That compensation was entirely contingent on

[Tarkanian's] continued status as the Head Basketball

Coach at UNLV.

Id. at 182, n.1 (internal quotation marks omitted). Despite

Tarkanian's success, and the university's appreciation of it,

in September of 1977, the university informed Tarkanian

that he was going to be suspended.

No dissatisfaction with Tarkanian, once described as

the winningest active basketball coach, motivated his

suspension. Rather, the impetus was a report by the

NCAA detailing 38 violations of NCAA rules by UNLV

personnel, including 10 involving Tarkanian. The NCAA

had placed the university's basketball team on

probation for two years and ordered UNLV to show

cause why the NCAA should not impose further

penalties unless UNLV severed all ties during the

probation between its intercollegiate athletic program

and Tarkanian.

Id. at 180-81 (emphasis added). NCAA rules did not allow

it to directly sanction Tarkanian for his role in the

purported rules violations. Accordingly, the NCAA had

"proposed a series of sanctions against UNLV including a 2-

year period of probation during which its basketball team

could not participate in postseason games or appear on

television." Id. at 186. However, the NCAA also required the

University "to show cause why additional penalties should

not be imposed against UNLV if it failed to discipline

Tarkanian by removing him completely from the

University's intercollegiate athletic program during the

probation period." Id. at 187.

In response, the president of the University directed the

vice president to conduct a hearing to determine what the

University should do. "Tarkanian and UNLV were

represented at the hearing; the NCAA was not." Id. at 186.

Following that hearing, the vice president of the University

"expressed doubt concerning the sufficiency of the evidence

supporting the [NCAA's] findings." Id . Nevertheless, "he

concluded that `given the terms of our adherence to the

29

NCAA we cannot substitute -- biased as we must be -- our

own judgment on the credibility of witnesses for that of the

infractions committee and the Council [of the NCAA]." Id. at

186-7 (emphasis added). He advised the University's

president that the NCAA's ultimatum that the University

sever all ties to its intercollegiate athletic program and

Tarkanian "or else," left the University with but three

alternatives. The University could

1. Reject the sanction requiring [disassociatio n] from

Coach Tarkanian from the athletic program and take

the risk of still heavier sanctions, e.g., possible extra

years of probation.

2. Recognize the University's delegation to the NC AA of

the power to act as ultimate arbiter of these matters,

thus reassigning Mr. Tarkanian from his present

position--though tenured and without adequate notice--

even while believing that the NCAA was wrong.

3. Pull out of the NCAA completely on the grounds that

[the University] will not execute what [it] hold[s] to be

their unjust judgments.

109 S.Ct. at 187 (emphasis added). Faced with an offer it

could not refuse, the University "accepted the second option

and notified Tarkanian that he was to be `completely

severed of any and all relations, formal or informal with the

University's Intercollegiate athletic program during the

period of the University's NCAA probation,' " Id., just as the

NCAA wished. Thereafter Tarkanian filed suit under 42

U.S.C. S 1983 against the UNLV arguing that its actions

had deprived him of property and liberty without due

process of law. He brought a second civil rights action

against the NCAA. The two suits were consolidated on

appeal to the Supreme Court. The Court concluded that

Tarkanian had no cause of action against the NCAA under

S 1983 because the alleged deprivations did not arise from

state action as required for liability under S 1983. The

Court stated:

it was UNLV, the state entity, that actually suspended

Tarkanian. Thus the question is not whether UNLV

participated to a critical extent in the NCAA's activities,

but whether UNLV's actions in compliance with the

30

NCAA rules and recommendations turned the NCAA's

conduct into state action.

Id. at 193. The Court held that it did not because "the

source of the legislation adopted by the NCAA is not Nevada

but the collective membership, speaking through an

organization that is independent of any particular state." Id.

The Court noted that the NCAA might still be a state actor

if "UNLV, by embracing the NCAA's rules, transformed them

into state rules and the NCAA into a state actor." Id.

However, the Court concluded that the nexus between

UNLV and the NCAA was not sufficient to cloak the NCAA

with the state authority vested in the University.

Contrary to being an agent of the state, the NCAA had

acted in opposition to, rather than in compliance with, the

wishes of the state agency. "During the several years that

the NCAA investigated the alleged violations, the NCAA and

UNLV acted more like adversaries than like partners . . .".

Id. at 196. Here, the majority concludes that "the Supreme

Court's decision in NCAA v Tarkanian, is instructive, as

that case makes clear that the NCAA does not `control' its

members." Maj. Op. at 8. However, Tarkanian proves the

reverse. The issue there was not whether the NCAA

controlled its members, but whether a state institution that

was a member of the NCAA controlled that organization to

the point of transforming the NCAA into a state actor. My

colleagues therefore look at Tarkanian through the wrong

end of the telescope. We are not focused upon a university's

control of the NCAA. Rather, we must focus upon the

NCAA's control of the colleges and universities that

comprise its membership. Tarkanian is compelling support

for the plaintiffs' argument that the NCAA does exercise

sufficient control over members' intercollegiate athletic

programs to subject it to Title VI. The fact that UNLV was

coerced into accepting the only viable option among the

three choices left it by the NCAA's ultimatum in that case

demonstrates just how much control the NCAA has over

member institutions' athletic programs. Although that

control may not be as great outside of Division I, the

control certainly seems pervasive insofar as those schools

that are subject to Proposition 16 are concerned.

31

Of course, I realize that the Court in Tarkanian

recognized that "UNLV could have retained its coach and

risked additional sanctions, perhaps even expulsion from

the NCAA, or it could have withdrawn voluntarily from the

Association," Id. It should come as no great surprise that it

did neither. That is consistent with the Court's conclusion

that the NCAA was not a state actor. However, it is also

consistent with, and I think illustrative of, the NCAA's near

total control of its members insofar as the amenities that

are tethered to Division I athletic dominance in a "money

sport" like college basketball. UNLV knew it had an

alternative to suspending Tarkanian. The University clearly

did not want to suspend him. The University thought that

doing so was unjust and unjustifiable. Yet, Tarkanian was

suspended just as the NCAA had commanded. The

Supreme Court expressed skepticism over whether those

circumstances established the NCAA's state authority, but

the Court clearly entertained the possibility that those

circumstances established the NCAA's control of UNLV's

athletic program.

Tarkanian argues that the power of the NCAA is so

great that the UNLV had no practical alternative to

compliance with its demands. We are not at all sure

this is true, but even if we assume that a private

monopolist can impose its will on a state agency by a

threatened refusal to deal with it, it does not follow

that such a private party is therefore acting under

color of state law.

In the final analysis the question is whether the

conduct allegedly causing the deprivation of a federal

right [can] be fairly attributable to the State. It would

be ironic indeed to conclude that the NCAA's imposition

of sanctions against UNLV -- sanctions that UNLV and

its counsel including the Attorney General of Nevada,

steadfastly opposed during protracted adversary

proceedings -- is fairly attributable to the State of

Nevada. It would be more appropriate to conclude that

UNLV has conducted its athletic program under color of

the policies adopted by the NCAA, rather than that

those policies were developed and enforced under color

of Nevada law.

32

Id. at 199. (emphasis added).

Therefore, I believe a fact finder could reasonably

conclude that the member institutions have ceded control

over their intercollegiate programs to the NCAA, and this

could subject the organization to Title VI. However, even if

the NCAA is not a controlling authority, I think a

reasonable inference could be drawn that the Fund is the

alter ego of the NCAA, and therefore the latter is actually a

recipient of Federal assistance under Title VI.

B. The NCAA's Control Over the Fund

It is undisputed that the NCAA created the Fund in an

attempt to insulate itself from being considered a recipient

of Federal assistance. Frank Marshall, the NCAA's Group

Executive Director for Finance and Business Services and

the Secretary/Treasurer of the Fund, testified at his

deposition as follows:

Over time the NCAA has wanted to insure that it is not

a recipient or a contractor of the federal government

and has tried to manage the NYSP program in

accordance with that. The NYSP Fund I believe was

created to be the grant recipient related to the NYSP

grant to help insure that distinction.

App. at 147a.

That motivation is not, by itself, a justification for viewing

the NCAA and the Fund as a single entity. However, I think

that a genuine question remains as to whether the Fund

has an existence separate and apart from the NCAA.

1. Arguments in favor of the Fund as alter ego

Plaintiffs argue the following to support their claim that

the Fund has no separate existence and is, therefore, the

alter ego of the NCAA:

- Pursuant to the Funds' byla ws, the Funds' Board of

Directors is composed solely of high-level NCAA employees

and the chair of the NCAA's NYSP Committee.

33

- All of the decisions regard ing the NYSP Fund's

operations and use of federal funds are made by the

NCAA's NYSP Committee.

- The NCAA's NYSP Committee h as final approval over

which colleges and universities may participate in the NYSP

as subgrantees and over which schools may continue to

participate in the program.

- The NCAA performs all of th e NYSP's administrative

services, pursuant to a contract, for annual consideration

of one dollar.

- The administrative services include handling the receipt

and the disbursement of the federal grant money through

a bank account that bears the name, "The National

Collegiate Athletic Association -- The National Youth Sports

Program."

- Upon dissolution of the Fun d, all of the Funds' assets

are to be transferred to the NCAA.

- The Fund does not observe s tandard corporate

formalities. It has no offices, no employees and no

letterhead. It has never had a Board of Directors meeting

nor has the Fund performed anything other than

ministerial functions since its inception.

- In 1993, the NCAA prepared and submitted form

guidelines to HHS on the Fund's behalf, which identified

the NCAA and not the Fund as the grantee. The guidelines

specified that the NCAA was responsible for the program's

direction and control.

- Four years after the Fund b ecame the named grantee,

HHS issued a press release identifying the NCAA as

recipient of the annual grant to operate the NYSP.

- In 1994, The Department of Health and Human

Service's Office of Civil Rights investigated allegations that

the NCAA engaged in discrimination in violation of Title IX

based on HHS' determination that the NCAA was the

recipient of federal funds.

34

2. Arguments Against Viewing the Fund

as an Alter Ego.

The NCAA disagrees. It argues that it successfully created

the Fund as a separate entity, and that there was nothing

wrong with doing so. In support of its assertion that the

Fund is a separate entity the NCAA submits:

- All of the federal funds re ceived by the Fund are sub-

granted to third parties, and none have ever been diverted

to or for the benefit of the NCAA.

- Since its creation, the NYS P Fund has remained

separate and distinct from the NCAA and the Fund's

separate and distinct character is evidenced by the fact that

the Fund contracts with third parties for services,

maintains its own insurance5 and Federal Employee

Identification Number ("E.I.N."), and has been sued in its

own name. In addition, the Fund's fiscal year runs from

June 1 through May 31, while the NCAA's fiscal year runs

from September 1 through August 31.

- The Fund pays individuals t o perform evaluations of

the program.

- The NCAA only provides free administrative services to

the Fund pursuant to a written contract.

- Although the NYSP Committee was created by the

NCAA and although the NYSP Committee makes final

determinations with respect to the disposition of funds, the

NYSP Committee is not controlled by the NCAA. According

to the NCAA, the NYSP Committee has no NCAA employees.

Rather, it is composed of representatives from five

participating NYSP institutions and three ex-officio

members, including two representatives from the federal

government.

_________________________________________________________________

5. This assertion is not entirely true. Although the Fund has been the

named recipient of federal funds since 1992, the named insured on the

insurance policies has not always been the Fund. From June 1, 1992 to

June 1, 1994, the named insured was "National Collegiate Athletic

Association d/b/a National Youth Sports Program." It is only from June

1, 1994, that the named insured has been "National Youth Sports

Program Fund."

35

- In 1989, the Department of Education's Office of Civil

Rights declined to investigate an allegation that Proposition

48 discriminated against students with learning disabilities

in violation of S 504 of the Rehabilitation Act of 1973 based

on its determination that the NCAA was not a recipient of

federal funds.

3. More Than One Inference Can Be Drawn From

Undisputed Facts.

Of course, this matter is before us on appeal from the

District Court's grant of summary judgment. The parties

did agree at oral argument that there are no genuine issues

of disputed material fact. Nevertheless, unlike my

colleagues, I do not think that the purported absence of

disputed facts necessarily warrants a grant of summary

judgment because the undisputed facts allow for more than

one interpretation of the relationship of the Fund to the

NCAA. Thus, I believe that summary judgment to either

party is inappropriate. See Nathanson v. Medical College of

Pennsylvania, 926 F.2d 1368, 1380 (3d Cir. 1991)

("Summary judgment may not be granted . . . if there is a

disagreement over what inferences can be reasonably

drawn from the facts even if the facts are undisputed.").

The conflict between Rule 6.01.1, on the one hand, and

Rules 1.2(b) and 2.1.1, on the other hand viewed in context

with the realities of the importance of NCAA membership to

Division I schools places the issue of the NCAA's control of

member institutions into a posture that can only be

resolved by a trier of fact. Similarly, issues remain as to

whether the Fund is an alter ego of the NCAA. For example,

both parties here rely on the undisputed fact that the NCAA

provides administrative services to the Fund for a nominal

yearly fee as support for their completely opposite

conclusions. Similarly, it is undisputed that the Fund's

Board of Directors is composed of high-level NCAA

employees, that the NYSP Committee is a NCAA committee,

and that the NYSP Committee makes final determinations

with respect to the disposition of the HHS grant. However,

it is also undisputed that no NCAA employees are members

of the NYSP Committee. Rather, the NYSP Committee is

comprised of representatives from five participating NYSP

36

institutions and three ex-officio members, including two

representatives from the federal government. I believe that

more than one conclusion can reasonably be drawn from

the undisputed facts. Consequently, I believe that the

matter should be remanded for trial.

III. Limitations Imposed Under The Spending Clause

If the NCAA is found to be a controlling authority of its

members, the NCAA may still not be subject to Title VI. As

the majority correctly notes, Title VI is Spending Clause

legislation. Maj. Op. at 20. Title VI's character as a "typical

`contractual' spending power provision," Guardians Ass'n v.

Civil Service Comm'n, 463 U. S. 582, 599 (1985), raises a

crucial question that was not addressed by the District

Court. The majority claims that there is "no contractual

privity between the Departments of Health and Human

Services and Education and the NCAA with respect to

Federal financial assistance to NCAA members." Maj. Op. at

20. However, I do not think we can jump to that conclusion

without a proper privity analysis, and the District Court

never conducted one. Moreover, if a fact finder concludes

that the Fund is merely an alter ego of the NCAA, the

privity hurdle may be cleared.6 Similarly, if member

institutions have ceded control of their programs to the

NCAA, one could logically conclude that Congress intended

to include the NCAA (as the authority actually controlling

the programs receiving the Federal assistance) within the

_________________________________________________________________

6. Under the traditional application of the alter ego doctrine, corporate

form may be disregarded when the corporation is "the mere

instrumentality or business conduit of another corporation or person." 1

FLETCHER CYCLOPEDIA OF PRIVATE CORP. S 41.10(perm. ed. rev. vol. 1999).

"The effect of applying the alter ego doctrine . . . is that the

corporation

and the person who dominates it are treated as one person, so that any

act committed by one is attributed to both, and if either is bound, by

contract, judgment or otherwise, both are equally bound. . . ." Dudley v.

Smith, 504 F.2d 979, 982 (5th Cir. 1974) (citation omitted) (emphasis

added). Thus, I believe it is an open question as to whether the program-

specific limitation of the regulations can reach the NCAA if the Fund is

truly its alter ego and was established solely to provide interference for

an end run around Title VI. See Maj. Op. at 17.

37

contractual obligations required of a grantee under Title VI.7

I do not think that Congress intended to enter into

contractual obligations with colleges and universities in

return for giving Federal assistance, and then allow those

same institutions to keep the assistance while evading their

contractual obligations by turning control of their

intercollegiate athletics over to a purported insulated third

party.

I agree that Spending Clause jurisprudence dictates that

we should be "circumspect in imposing Title VI obligations

on an entity which is not a direct recipient of Federal

financial assistance." Maj. Op. at 20. However, that does

not preclude our requiring the District Court to undertake

a privity analysis after resolution of the competing

inferences arising from the undisputed facts to determine

whether the NCAA's own conduct or structure subjects it

the restrictions of Title VI. Moreover, if the Fund is merely

the alter ego of the NCAA the latter may be the recipient,

and we ought not treat the Fund as a separate entity.

Accordingly, I conclude that the only appropriate course

here is to reverse the District Court's grant of summary

judgment, and remand the matter for trial.

IV. CONCLUSION

For the foregoing reasons, I respectfully dissent from the

majority opinion and would, instead, remand for resolution

of the competing inferences that can arise from the

undisputed facts. Once the inferences are drawn, a proper

analysis of the NCAA's privity of contract under the

Spending Clause can proceed.

_________________________________________________________________

7. In Paralyzed Veterans of Am, when considering the application of the

Spending Clause to the limitations imposed upon recipients of Federal

assistance under S 504 of the Rehabilitation Act, the Supreme Court

stated: "[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.

38

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

39