In the
United States Court of Appeals
For the Seventh Circuit
No. 09-3667
T OM G EORGE, C HRIS V ITRON,
L ORI C HAPKO and E DWARD S NEAD,
on behalf of themselves and
all others similarly situated,
Plaintiffs-Appellants,
v.
N ATIONAL C OLLEGIATE A THLETIC A SSOCIATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 08-CV-1684—William T. Lawrence, Judge.
S UBMITTED FOR R EHEARING A UGUST 18, 2010—
D ECIDED O CTOBER 18, 2010
Before C UDAHY and K ANNE, Circuit Judges, and
D ARRAH, District Judge.
Hon. John W. Darrah, District Judge for the Northern
District of Illinois, sitting by designation.
2 No. 09-3667
P ER C URIAM. Plaintiffs brought this proposed diversity-
based class action against the National Collegiate
Athletic Association (“NCAA”) and Ticketmaster, al-
leging that the defendants’ combined ticket-distribution
scheme constituted a lottery in violation of Indiana law.
The NCAA moved to dismiss, and the district court
dismissed all claims with prejudice. Plaintiffs then ap-
pealed. On July 16, 2010, we reversed the judgment of
the district court and remanded the case for further
proceedings, with Judge Cudahy dissenting. Upon re-
view after the filing of defendants “petition for
rehearing and suggestion for rehearing en banc,” we
grant the petition for rehearing, vacate our opinion, stay
the appeal, and certify three questions to the Indiana
Supreme Court.
I.
Each of the plaintiffs in this case unsuccessfully applied
for tickets to NCAA basketball games and forfeited
handling fees along the way. After they failed to
obtain tickets, plaintiffs claimed that the NCAA’s ticket-
distribution system constituted an illegal lottery under
Indiana law.
The NCAA’s relevant distribution system has been
used to sell tickets for multiple events, including the
NCAA’s Division I men’s and women’s basketball and
hockey championship tournaments. For each ticket sale,
hopeful purchasers submitted a single application with
up to ten entries. Each entry was a chance to win a pair
of tickets and required payment of the ticket price plus
No. 09-3667 3
a six-dollar handling fee. While an applicant could win
only one pair of tickets, many applicants purchased
multiple entries in order to maximize their chances of
getting one pair of tickets. No matter how many entries
they applied for, applicants had to pay for each entry
up front, along with the per-entry handling fee. Suc-
cessful applicants would receive their tickets and, after
some delay, a refund for their superfluous entries, while
unsuccessful applicants would receive a refund for all
of their entries. Both successful and unsuccessful appli-
cants forfeited all handling fees to the NCAA.
Plaintiffs filed state law claims stemming from the
operation of this ticket-distribution system on diversity
grounds in the United States District Court for the South-
ern District of Indiana. To establish that the system was
an illegal lottery, the plaintiffs argued that the handling
fees, along with the NCAA’s temporary retention of the
applicants’ money, qualified as consideration paid for
the chance to win tickets. They also argued that the
tickets were prizes, as they were difficult to obtain and
worth far more than the face value paid. The district
court dismissed the complaint, holding that the doctrine
of in pari delecto foreclosed recovery. In its order, the
district court also noted that a similar distribution
system, used for the sale of Indianapolis Colts tickets,
was held to not qualify as a lottery by the Indiana Court
of Appeals in Lesher v. Baltimore Football Club, 496
N.E.2d 785, 789-90 (Ind. Ct. App. 1986).
Plaintiffs appealed the district court’s dismissal of
their complaint. In resolving the appeal, we first exam-
4 No. 09-3667
ined whether the plaintiffs had sufficiently alleged all
three elements of an illegal lottery—prize, chance, and
consideration—under Indiana law, see Tinder v. Music
Operating, Inc., 142 N.E.2d 610, 614 (Ind. 1957). We dis-
tinguished the NCAA’s ticket-distribution system from
the one in Lesher on two grounds. First, the ticket-distribu-
tion system in Lesher involved handling fees that were
returned to unsuccessful purchasers; here, those fees
were retained by the NCAA and thus qualified as con-
sideration paid for a chance to win. Second, the plaintiffs
in Lesher conceded that the sale price of the tickets was
their actual value; here, the ticket purchasers claimed
that the difficult-to-obtain tickets were worth far more
than their sale price and thus qualified as valuable
prizes. We held these distinctions made all the difference
and the plaintiffs had pled sufficient facts to show that
the NCAA system constituted an illegal lottery.
We went on to hold that the statutory exception for
bona fide business transactions and the defense of in
pari delecto did not apply. Indiana law excepts from the
definition of gambling any participation in “bona fide
business transactions that are valid under the law of
contracts.” Ind. Code. § 35-45-5-1(d). Reading this in
tandem with Ind. Code § 35-45-5-3(a)(4), which
proscribes all lotteries except those run by the State, we
held that the bona fide business transactions exception
applied to regulated investing and other similar activities,
but not to the NCAA’s ticket system. The doctrine of
in pari delecto, which precludes recovery when parties
are of equal wrongdoing, was also inapplicable: nothing
in the pleadings suggested a mutual agreement between
No. 09-3667 5
the parties to engage in an illegal lottery, and there was
nothing to indicate that the plaintiffs knew they were
participating in an illegal lottery when they attempted
to purchase tickets. Without an exception or other
defense, we held that the district court erred in dis-
missing the plaintiffs’ claims and remanded accordingly.
Judge Cudahy dissented, asserting that the ticket system
was not a lottery, that the broad statutory exception
applied, and that the in pari delecto doctrine foreclosed
recovery. The NCAA then petitioned “for rehearing
and suggestion for rehearing en banc.”
II.
In its petition, the NCAA claimed that its ticket-distribu-
tion system did not qualify as a lottery under Indiana
case law, that the exception for bona fide business trans-
actions applied, and that the in pari delecto defense pre-
cluded recovery. We do note that the question of
whether this ticket-distribution system constitutes a
lottery under Indiana law is a close one, and our
holding could have far-reaching effects on sports-ticket-
distribution systems utilized by the NCAA and others.
At this juncture, we believe that affording the Indiana
Supreme Court the opportunity to interpret the applica-
tion of the Indiana statutes involved here appears to be
the most prudent course of action. Therefore, to that end,
we grant the petition for rehearing, vacate our opinion
issued on July 16, 2010, and respectfully certify the fol-
lowing questions to the Indiana Supreme Court:
6 No. 09-3667
1. Do the plaintiffs’ allegations about the NCAA’s
method for allocating scarce tickets to champion-
ship tournaments describe a lottery that would be
unlawful under Indiana law?
2. If the plaintiffs’ allegations describe an unlawful
lottery, would the NCAA’s method for allocating
tickets fall within the Ind. Code § 35-45-5-1(d) excep-
tion for “bona fide business transactions that are
valid under the law of contracts”?
3. If the plaintiffs’ allegations describe an unlawful
lottery, do plaintiffs’ allegations show that their
claims are subject to an in pari delecto defense as
described in Lesher, 496 N.E.2d at 790 n.1, and
Swain v. Bussell, 10 Ind. 438, 442 (1858)?
We invite reformulation of the questions presented if
necessary, and nothing in this certification should be
read to limit the scope of inquiry to be undertaken by
the Indiana Supreme Court. Further proceedings in this
court are stayed while this matter is under considera-
tion by the Indiana Supreme Court.
Q UESTIONS C ERTIFIED.
10-18-10