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ATTORNEYS FOR APPELLANTS William N. Riley Joseph N. Williams Brad A. Catlin Indianapolis, Indiana Leonard W. Aragon Robert B. Carey Phoenix, Arizona

ATTORNEYS FOR APPELLEE George T. Patton, Jr. Peyton L. Berg Indianapolis, Indiana Douglas N. Masters Chicago, Illinois Michael Mallow Benjamin King Los Angeles, California

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Indiana Supreme Court
_________________________________ No. 94S00-1010-CQ-544 TOM GEORGE, CHRIS VITRON, LORI CHAPKO, AND EDWARD SNEAD, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED,

In the

FILED
Apr 21 2011, 9:37 am
of the supreme court, court of appeals and tax court

CLERK

Appellants (Plaintiffs below), v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Appellee (Defendant below). _________________________________ Certified Question from the United States Court of Appeals for the Seventh Circuit, No. 09-3667 The Honorable Richard D. Cudahy, Circuit Judge The Honorable Michael S. Kanne, Circuit Judge The Honorable John W. Darrah, District Judge _________________________________ April 21, 2011 Sullivan, Justice.



Honorable John W. Darrah, District Judge for the Northern District of Illinois, sitting by designation.

The NCAA randomly allocated championship sporting event tickets to applicants who had offered to purchase tickets by submitting the face value of the tickets along with a nonrefundable handling fee. The face-value amount (but not the handling fee) was refunded to applicants whose offers were not accepted. The NCAAs ticket-allocation process was not an illegal lottery under Indiana law because no prize was awarded to those applicants who received the opportunity to purchase tickets. Background The National Collegiate Athletic Association ("NCAA") is an organization through which the nations colleges and universities govern their athletic programs. Many NCAA competitions have gained widespread popularity, particularly the womens and mens NCAA Division I basketball tournaments and the NCAA Division I mens ice-hockey championship tournament. Due to both the popularity of such events and the limited seating in sports venues, demand for tickets often exceeds supply.

To distribute tickets to these events, the NCAA developed the following ticketdistribution system. The NCAA sets the face value of the tickets to its events many months before the event. Would-be ticket purchasers submit to the NCAA an application offering to purchase tickets for a particular event. Each applicant may submit only one application, but, for at least some events, an applicant can submit multiple offers on a single application, though only one offer can be accepted. When submitting an application, the applicant must submit the face value of the tickets along with a nonrefundable handling or service fee1 for each offer. When demand exceeds supply, the NCAA uses a random-selection program to accept offers from the pool of offers. Applicants whose offers are accepted receive event tickets via overnight delivery. Applicants whose offers are rejected receive refunds of the ticket price, though it may take several weeks or months. No applicant receives a refund of the handling fee.

Counsel for the plaintiffs has attached several different labels to this fee, including "entry fee." We refer to it as a "handling fee" throughout this opinion.
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This ticket-allocation plan was used for the 2009 NCAA Mens Final Four, the championship round of the mens basketball tournament. The NCAA set the face value of the tickets at $150 each, and tickets were sold in pairs. Fewer than 5,000 tickets were released for sale and several hundred thousand people submitted offers. Each applicant could submit up to 10 offers to purchase a pair of tickets, but if one offer was accepted, the remaining offers were rejected. A handling fee of $6 was charged for each offer.2 If an applicants offer was accepted, he or she would receive game tickets via overnight mail, and if that applicant had made more than one offer, he or she also received a refund of the total ticket price for the other (rejected) offers,3 though it would arrive several months later. Applicants whom had all their offers rejected also received refunds of the total ticket price offered. No one received a refund of the handling fees.

The plaintiffs in this case submitted offers to the NCAA to purchase tickets for the NCAA Division I mens basketball tournament, but their offers were not accepted. They submitted their applications knowing both that the handling fee was nonrefundable and that there was a possibility demand would exceed supply and that the random-selection process would be utilized. Dissatisfied with not being able to purchase tickets, the plaintiffs filed suit against the NCAA and Ticketmaster in federal court for the Central District of California. Ticketmaster settled with the plaintiffs and venue was transferred to the Southern District of Indiana.

The plaintiffs alleged several claims, but the underlying basis for all of their claims is the allegation that the NCAAs ticket-distribution system constitutes an unlawful lottery under Indiana law. Judge Lawrence dismissed the complaint with prejudice for failure to state a claim, holding that even if the NCAA was operating an illegal lottery under Indiana law, the plaintiffs claims were barred by the equitable doctrine of in pari delicto because the plaintiffs were aware of the essential features of the process when they applied for tickets. George v. Natl Collegiate Athletic Assn, No. 1:08-cv-1684-WTL-JMS, 2010 U.S. Dist. LEXIS 113997, 2009 WL

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An applicant submitting only one offer was required to submit with the application $306 ($150 x 2 + $6) whereas an applicant submitting 10 offers was required to submit with the application $3,060 (($150 x 2) x 10 + ($6 x 10)). 3 An applicant who submitted 10 offers, one of which was accepted, would receive a $2,700 refund (9 pairs of tickets x $300 per pair).

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6965794 (S.D. Ind. Sept. 25, 2009).4 In other words, assuming the ticket-distribution process was an unlawful lottery, the plaintiffs could not seek help from the court because they knowingly participated in it.

On appeal, a panel of the United States Court of Appeals for the Seventh Circuit, in a 2-1 decision, reversed. George v. Natl Collegiate Athletic Assn (George I), 613 F.3d 658 (7th Cir. 2010). Over the dissent of Judge Cudahy, the majority held that the ticket-distribution process was a lottery under Indiana law; that the process did not fall within the statutory exception for bona fide business transactions; and that the in pari delicto defense was not available because the NCAA had a greater degree of fault than the plaintiffs. Id. at 661-64. The same panel, however, granted the NCAAs petition for rehearing and vacated its prior decision. George v. Natl Collegiate Athletic Assn (George II), 623 F.3d 1135 (7th Cir. 2010) (per curiam). It noted both that the question whether this distribution process was a lottery under Indiana law "is a close one" and that its decision "could have far-reaching effects." Id. at 1137. Pursuant to Indiana Appellate Rule 64, it certified the following three questions for our consideration: 1. Do the plaintiffs allegations about the NCAAs method for allocating scarce tickets to championship tournaments describe a lottery that would be unlawful under Indiana law? 2. If the plaintiffs allegations describe an unlawful lottery, would the NCAAs method for allocating tickets fall within the Ind. Code

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