So, what can I do? The school has a requirement of 1.85 cumulative and semester GPA in order to be eligible for sports. He has a 2.2 cumulutive, but fell short in the last marking period, having only a 1.714 GPA. It seems to me that he did not get the help he needed. Can any legal action be taken? If so, how?
However, if your brother still has an IEP, and it says that he can should be getting special help from his teacher, then it was the teacher's responsibility to identify his problems and to provide (or get from special education) the help he needed. If the teacher has acknowledged that your brother needed help and has offered to have him come in during study halls or after school, and he has not taken advantage of these offers, then he has to share the responsibility for this situation. If he has an active IEP which calls for monitoring of his performance in the regular or inclusive classroom, there should have been someone designated to oversee his work and his progress and to consult with the classroom teacher. Check the IEP to see if this is the case (probably a special education teacher) and contact that person to find out why this situation wasn't dealt with earlier.
If your brother worked hard and did what he was supposed to do (got in all his homework, behaved in class, attended school regularly, and took advantage of extra help) and still failed the class, this may mean that he still needs some special education services, at least in that class. Since he was recently taken out of special education, it seems that someone should have been watching over his shoulder as he made the transition back into the regular program. Ask your brother's guidance counselor or perhaps his coach to help you with this situation. If no one has a good answer for you, contact the special education department in the school and issue a formal complaint in writing. It may very well be that your brother's rights to an appropriate education were violated.