NEW YORK, Aug 7 (Reuters) - Competitive cheerleading does not qualify as a sport under Title IX, a federal appeals court ruled Tuesday.

The 2nd U.S. Circuit Court of Appeals held that Quinnipiac University discriminated against women, after the Connecticut school eliminated the women's volleyball team and replaced it with competitive cheerleading.

While competitive cheerleading is "physically challenging" and requires competitors to possess "strength, agility and grace," Quinnipiac's program does not yet have the hallmarks of a varsity athletic sport, the court held.

The decision to categorize a varsity sport under Title IX -- a federal law requiring schools to provide equal opportunities in varsity sports to men and women -- is made by the U.S. Department of Education's Office of Civil Rights, which enforces the law. In 2008, the OCR issued two letters saying competitive cheerleading was presumed not to be a sport and its participants could not be counted as athletes under Title IX.

The case was brought by members of Quinnipiac's women's volleyball team, who claimed the university's decision to replace volleyball with competitive cheerleading during the 2009-10 season violated Title IX.

In determining Title IX compliance, the OCR will consider factors such as whether the number of men and women on sports teams is proportional to the respective numbers enrolled at the school.

In 2010, U.S. District Judge Stefan Underhill found that Quinnipiac had manipulated its team rosters by undercounting men and overcounting women to make it appear as if the genders were equally represented.

None of Quinnipiac's 30 competitive cheerleaders counted as varsity athletes, Underhill ruled, because the event was not recognized as a varsity sport by the OCR. He ordered Quinnipiac to reinstate the volleyball team.

Quinnipiac appealed, arguing that it had not miscounted its athletes and that competitive cheerleaders should have been included in the final tally.

The 2nd Circuit disagreed.

"(W)e do not foreclose the possibility that the activity, with better organization and defined rules, might some day warrant recognition as a varsity sport," U.S. Circuit Judge Reena Raggi wrote. "But, like the district court, we conclude that the record evidence shows that 'that time has not yet arrived.'"

Raggi was joined by judges Ralph Winter and Denny Chin.

"We're very happy -- it's a great victory," said Jonathan Orleans, a lawyer at Pullman and Comley representing the plaintiffs. "The 2nd Circuit goes right down the line and affirms Judge Underhill on every major point."

Sandra Straub, legal director for the American Civil Liberties Union in Connecticut, said that the decision could "finally persuade Quinnipiac and any other university in violation of Title IX to stop fighting gender equity and start providing meaningful and equal athletic opportunities for women."

Lynn Bushnell, vice president for public affairs at Quinnipiac, said in a statement the university was "disappointed" with the ruling. "Quinnipiac will continue to enhance opportunities for our female student-athletes," including volleyball.

The case is Biediger et al. v. Quinnipiac University, 2nd U.S. Circuit Court of Appeals, No. 10-3302.

For the plaintiffs: Alex Hernandez and Jonathan Orleans of Pullman & Comley, Kristen Galles of Equity Legal, and Lenora Lapidus and Galen Sherwin of the American Civil Liberties Union.

For Quinnipiac: Edward Brill and Andrew Rice of Proskauer Rose.

(Reporting by Jessica Dye)

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