Rule-of-Reason Sherman Act Claims Against the Ivy League Require Plausible Market Definition (American Express Footnote Narrowly Construed)

1. Introduction

Case: Choh v. Brown University (2d Cir. Apr. 2, 2026) (summary order; nonprecedential).
Parties: Two former Brown University basketball players (plaintiffs) sued Brown and seven other Ivy League universities plus the Council of Ivy Group Presidents (defendants).
Core allegation: The “Ivy League Agreement” allegedly fixed the price of Division I athletic services by collectively agreeing (i) not to offer athletic scholarships and (ii) not to pay (or reimburse certain education-related expenses to) athletes for athletic services, in violation of Sherman Act § 1.
Key issues on appeal: (1) whether plaintiffs were excused from pleading a relevant market because they alleged direct anticompetitive harm from a horizontal restraint; (2) whether the complaint plausibly pleaded relevant markets for (a) educational services sold to, and (b) athletic services purchased from, a defined subset of elite student-athletes; and (3) timeliness as to one plaintiff (not reached).

2. Summary of the Opinion

The Second Circuit affirmed dismissal under Rule 12(b)(6) because plaintiffs did not plausibly plead a relevant antitrust market, a prerequisite to applying the rule of reason. The court rejected the argument that a footnote in Ohio v. American Express Co. eliminates the market-definition requirement for alleged horizontal restraints; it explained that the footnote applies where the market is “self-evident.” The court held both the proposed “Ivy-only” markets and the alternative “Ivy-plus” markets were inadequately pleaded, making the alleged anticompetitive harm legally insufficient “in the market as a whole.” Having affirmed on market-definition grounds, the court did not reach the statute-of-limitations issue.

3. Analysis

A. Precedents Cited

• City of New York v. Group Health Incorporated
  Used for the baseline Second Circuit rule-of-reason pleading requirement: a plaintiff must allege a “plausible relevant market in which competition will be impaired.” This case supplies the doctrinal gatekeeping function that drove the outcome.
• Ohio v. American Express Co.
  Quoted for the Supreme Court’s admonition that courts “usually cannot properly apply the rule of reason without an accurate definition of the relevant market.” Plaintiffs relied on American Express footnote 7 to argue that horizontal restraints can dispense with “precise” market definition; the panel rejected that broad reading and confined the footnote to settings where the relevant market is obvious from context.
• Federal Trade Commission v. Indiana Federation of Dentists and Catalano, Inc. v. Target Sales, Inc.
  Cited as the kinds of cases referenced in American Express footnote 7. The panel emphasized that in those matters the market was effectively apparent (e.g., the dentist community in a defined area; beer wholesalers/retailers in a defined locality), making elaborate market pleading less central. This comparison supported narrowing the footnote rather than expanding it.
• 1-800 Contacts, Inc. v. Federal Trade Commission
  Provided a Second Circuit gloss: American Express footnote 7 does not remove the need to show anticompetitive harm “in the market as a whole.” The panel used this to reinforce that even direct-harm allegations must be evaluated against an identifiable market.
• Regeneron Pharmaceuticals, Inc. v. Novartis Pharma AG
  Served two roles: (i) articulating the liberal Rule 12(b)(6) standard of review and the “relatively permissive pleading standard” for markets; and (ii) providing the operative concept of market pleading—markets must “encompass all interchangeable substitute products,” and a plaintiff must plausibly explain why proposed boundaries exclude substitutes.
• Brown Shoe Co. v. United States
  Used for classic “practical indicia” of product-market boundaries—“peculiar characteristics and uses,” “distinct customers,” and related factors. The panel used this to critique the “Ivy-plus” market: plaintiffs did not specify which schools are included or why, nor articulate principled boundaries.
• National Collegiate Athletic Association (NCAA) v. Alston
  Used as an antitrust comparator in the college-sports context. The panel contrasted the NCAA’s “near complete dominance” and “monopsony power” (making substitutes scarce) with the Ivy League’s lack of comparable dominance. This comparison undercut the idea that the Ivy League (or an “Ivy-plus” cluster) could be treated as a self-contained market without careful pleading.
• Do No Harm v. Pfizer Inc.
  Cited on appellate procedure (waiver of the Rule 58 separate-document requirement) to establish appellate jurisdiction. While not part of the antitrust merits, it shows the court’s willingness to resolve technical finality issues pragmatically where the order is clearly final and the appellees do not object.

B. Legal Reasoning

1. Rule-of-reason claims generally require a market
   The panel treated market definition as a necessary analytic frame for rule-of-reason adjudication. Without a plausible market, allegations of harm cannot be assessed as harm to “competition” (as opposed to harm to particular competitors or a subset of participants).
2. The “horizontal restraint” argument did not excuse market pleading
   Plaintiffs framed the Ivy League Agreement as a classic horizontal agreement among competitors “not to compete in some way,” and urged that American Express footnote 7 relaxed market-definition requirements. The panel rejected that reading and reasoned that the cited footnote’s examples involved self-evident markets; the Ivy League’s asserted markets were not self-evident and thus required plausible boundaries.
3. “Ivy-only” markets failed because the complaint itself alleged meaningful substitutes
   Plaintiffs alleged that AAHA students would not see non-Ivy Division I schools as reasonable substitutes. But the complaint also alleged that academically selective non-Ivy institutions offer athletic scholarships while maintaining academic standing—explicitly citing Stanford as an “exemplar.” The panel treated this internal inconsistency as fatal to the “no substitutes” claim and concluded plaintiffs were effectively pleading interchangeability with non-Ivy options (i.e., economic substitutes).
4. “Ivy-plus” markets failed for lack of coherent boundaries
   Plaintiffs alternatively gestured toward a market including Ivies plus “a few other schools, including Stanford, Notre Dame, Duke, and Rice,” but did not plead which schools are in or out, why those are the right comparators, or what principled criteria set the market’s edge. Invoking Brown Shoe Co. v. United States, the panel found the “boundaries of the relevant product market” were not plausibly pleaded.
5. College-sports structure mattered, but did not rescue pleading defects
   The panel’s use of National Collegiate Athletic Association (NCAA) v. Alston underscored a key distinction: the NCAA’s dominance can support market power findings, but a single conference typically lacks that dominance. This reinforced skepticism that the Ivy League could be treated like a market unto itself absent detailed substitutability and boundary allegations.
6. Disposition
   Because market pleading failed, the court held the deficiency was “fatal” to both direct and indirect anticompetitive-harm theories under Sherman Act § 1 and affirmed dismissal, declining to reach timeliness.

C. Impact

• Constrains conference-based antitrust pleading strategies
  Plaintiffs challenging compensation limits imposed by a subset of schools (conference, league, or brand-affiliated group) should expect skepticism if they define the market as “the defendants themselves” without robust substitute analysis.
• Narrows reliance on the American Express footnote for horizontal restraints
  The order signals that alleging a horizontal agreement is not, by itself, a pleading shortcut; market context remains central unless the market is genuinely self-evident.
• Reinforces disciplined market-boundary pleading even at Rule 12
  While acknowledging permissive market pleading, the panel required internal coherence (no contradiction with pleaded facts) and intelligible outer limits (who is in, who is out, and why).
• Signals that “Ivy League” may be treated as brand, not market
  The opinion frames “Ivy League brand” appeal as potentially distinct from an antitrust market, cautioning against using prestige as a proxy for non-substitutability.

4. Complex Concepts Simplified

Section 1 of the Sherman Act

Prohibits agreements that unreasonably restrain trade (e.g., price-fixing). Plaintiffs must show harm to competition, not just harm to them.

Rule of reason

A balancing framework that assesses a restraint’s competitive harms and benefits. It typically requires defining the market to evaluate overall competitive effects.

Relevant market

The arena of competition—who competes with whom—for a product/service. A plausible market must include reasonably interchangeable substitutes.

Substitutability / “interchangeable substitutes”

If consumers (or suppliers) can switch to other options in response to price or terms, those other options are substitutes and usually belong in the same market.

Horizontal restraint

An agreement among competitors at the same level (here, universities competing for athletes) to limit competition (here, allegedly limiting athlete compensation).

Monopsony power

Market power on the buyer side—when buyers can depress the price paid to sellers because sellers have few alternatives (as the NCAA was found to have in Alston).

“Ivy-only” vs. “Ivy-plus” markets

“Ivy-only” treats the eight Ivy schools as the market; “Ivy-plus” adds a small set of elite non-Ivy schools. The court found both approaches inadequately pleaded.

5. Conclusion

This summary order’s central contribution is its insistence—consistent with City of New York v. Group Health Incorporated and Ohio v. American Express Co.—that rule-of-reason Sherman Act § 1 claims ordinarily live or die on plausibly pleaded market definition. The Second Circuit refused to treat the Ivy League’s coordinated scholarship/compensation limits as automatically actionable without market context, narrowly construed the American Express footnote on horizontal restraints, and faulted both “Ivy-only” and “Ivy-plus” market theories for failing to address substitutability and boundaries (with Regeneron Pharmaceuticals, Inc. v. Novartis Pharma AG and Brown Shoe Co. v. United States providing the pleading yardsticks). The order also uses National Collegiate Athletic Association (NCAA) v. Alston to underscore that conference-level restraints cannot be assumed to reflect NCAA-level dominance—making careful market pleading indispensable in college-athletics antitrust litigation.