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Giving It the "Old College Try"

By Joseph M. Hanna and Saleel V. Sabnis – March 4, 2013

For beleaguered Penn State students, alumni, football players, and fans (not to mention a wearied public) who are looking for closure on the sex scandal that has turned the university and its football program inside out, Al Pacino’s exclamation, “Just when I thought I was out, they pull me back in” from The Godfather: Part III must feel like an understatement. The scandal has engendered various investigations and legal proceedings that require their own flowchart and a pictorial “who’s who” just to keep track of all the drama’s players and implications. None of this is particularly helpful for those looking to move on—and a potentially historic lawsuit recently filed by Pennsylvania Governor Tom Corbett against the National Collegiate Athletic Association (NCAA) over the sanctions it has imposed on Penn State is about to bring it all back up again.

The question is: Can the commonwealth succeed in this uphill legal battle? Time will tell, but regardless of which side prevails, the legal conundrums posed by the case and its potential ramifications make it every bit as worth watching as one of the storied Penn State football team’s most thrilling victories.

To recap the scandal quickly: The Penn State child-sex-abuse scandal took the national spotlight in 2011 when it was revealed that longtime former university football assistant coach Jerry Sandusky had sexually assaulted underage boys, sometimes on university property. Adding to the outrage were alleged actions by some university officials to cover up Sandusky’s crimes. The revelations culminated in school president Graham Spanier’s resignation. Legendary head football coach Joe Paterno was fired and athletic director Tim Curley suspended. On October 9, 2012, Sandusky was sentenced to a minimum of 30 years and a maximum of 60 years in prison. The subsequent Freeh Report, which stemmed from an independent investigation conducted by former FBI director Louis Freeh, stated that Spanier and Paterno, among others, had known about allegations of child abuse on Sandusky’s part as early as 1998 and were complicit in the cover-up.

On July 23, 2012, a clearly galvanized NCAA imposed unprecedented penalties on Penn State, including a fine of $60 million, a four-year postseason ban, and the vacation of all football victories from 1998 through 2011. Penn State accepted these sanctions via a consent decree with the NCAA. Despite the debilitating penalties, the Nittany Lions overachieved with an 8–4 record in 2012 and seemed to be moving past the decimation of the Sandusky scandal.

The Best Defense Is a Good Offense
This, apparently, was just the calm before the second storm imposed by Pennsylvania’s Governor Tom Corbett. On January 2, 2013, Governor Corbett and the Commonwealth of Pennsylvania filed a civil-action complaint in the United States District Court for the Middle District of Pennsylvania against the NCAA. In the lawsuit, to which Penn State is not a party, the commonwealth’s ethos resonates as “When one of us hurts, we all hurt” (i.e., that the punitive scope of the sanctions was injurious to more than just the football program). The complaint alleges, in part, the following:

  • The NCAA is a trade association that bypassed its own internal rules in sanctioning Penn State and involved itself in a criminal case that was outside its regulatory powers.
  • The NCAA did not cite a single rule that the university violated and disregarded its own enforcement procedures.
  • Three distinct markets were harmed as a result of the NCAA sanctions: a market for postsecondary education at Penn State, for Division I football players, and for the sale of college football-related apparel and memorabilia.
  • The Commonwealth of Pennsylvania has suffered severe and irreparable harm as a result of the NCAA’s sanctions. Pennsylvania citizens who depend heavily on the Penn State football program for their jobs and livelihoods are economically injured and there has been harm to the state revenue base stemming from the decline in football-related revenue and reduced interest in the football program.
  • The NCAA’s unprecedented sanctions constitute antitrust violations and were imposed to cripple an already weakened university against the threat of the ultimate sanction, the “death penalty,” which would have banned football altogether for some years.
  • The sanctions violated the Sherman Act in that the conduct of the NCAA threatens to harm competition in relevant markets by depriving consumers of a robust and financially stable university and eliminating Penn State as a major competitor in Division I football.

Historical Implications
Corbett’s lawsuit could be historic. Certainly, there are no prior cases involving the NCAA that necessarily follow the same footprint as this one, but a few seminal lawsuits are worth consideration in the context of NCAA litigation. The case that arguably opened the door for more antitrust lawsuits against the NCAA was Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of the University of Oklahoma, 468 U.S. 85 (1984). There, the United States Supreme Court held that the NCAA could be subject to violations of the Sherman and Clayton Antitrust Acts. In Bd. of Regents, the University of Oklahoma and Georgia challenged the NCAA’s television broadcasting restrictions on the grounds that the television plan—which prohibited member schools from individually negotiating their college football broadcast rights and limited the amount of televised games for teams in a season—violated antitrust laws. Id. at 95. The Supreme Court held that the television plan was subject to antitrust laws because it intended to create price and output restrictions on competition and did not further the NCAA’s objective of furthering competitive balance among amateur athletic teams. Id. at 95, 120. Notably, Bd. of Regents did not involve antitrust claims in the context of sanctions as in Corbett’s lawsuit.

In Nat’l Collegiate Athletic Ass’n v. Tarkanian, 488 U.S. 179, 197–199 (1988), the United States Supreme Court held that the NCAA did not have to comply with due process when issuing sanctions because it was not a state actor for purposes of the Fourteenth Amendment. Due to this precedent, Corbett prudently did not articulate any due process violations in the complaint. Most analogous to the commonwealth’s lawsuit may be a decision rendered the same year as Tarkanian. That case was McCormack v. Nat’l Collegiate Athletic Ass’n, 845 F.2d 1338 (5th Cir. 1988). Finding that the football program of Southern Methodist University had improperly allowed some players to be compensated, the NCAA suspended the program for the entire 1987 season and imposed other penalties. Id. at 1340. A group of SMU alumni, football players, and cheerleaders challenged the so-called “death penalty” by contending that the NCAA violated antitrust and civil rights laws by imposing rules restricting the benefits that may be awarded student athletes. Id. The Fifth Circuit held that some of the plaintiffs lacked standing to bring suit and that the NCAA had not violated antitrust claims. Id. at 1342–1345 (noting that the alleged connection between the NCAA’s actions and the devaluation of a college degree presents “the sort of ‘speculative’ and ‘abstract’ causal chain that the Supreme Court has held insufficient to support antitrust standing.”). The court sided with Bd. of Regents that most of the regulatory controls of the NCAA are justifiable means of fostering competition among amateur athletic teams and were therefore actually “procompetitive.” Id. at 1344.

Tackling Legal Conundrums
The governor’s lawsuit faces various interesting legal conundrums. First, there is the issue of standing, which essentially addresses whether the commonwealth can even bring this lawsuit. The most rudimentary element of the standing argument is Penn State’s acceptance of the consent decree. The NCAA may certainly raise that Penn State was the only party with standing to challenge the sanctions and the university relinquished that right when it agreed to the consent decree. That may be a meritorious claim.

But the second layer of standing analysis may not be as self-evident. Enter parens patriae,referenced on page one of the complaint. Parens patriae, whichmeans “parent of the nation,” essentially allows a state to assume the role of a plaintiff on behalf of its citizenry in certain situations. This requires the state to assert an injury linked to some type of quasi-sovereign interest. Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, 458 U.S. 592 (1982). The court may consider, in assessing the appropriateness of parens patriae standing, whether the challenged conduct affects a “significantly substantial segment of the population”—and certainly the economic “well-being” of its residents is relevant to that consideration. Id. at 606–607.

Here, Corbett must be careful. Courts have nullified parens patriae lawsuits where the state can’t prove a direct damage to itself and where it is a mere nominal party representing the interests of private citizens. Pennsylvania v. New Jersey, 426 U.S. 660, 665, (1976) (declining to find the state the real party in interest for the purpose of original Supreme Court jurisdiction when the state was attempting to file a “collectivity of private suits”). And therein lies a problem with some of the alleged claims: The complaint invokes various economic injuries of businesses and citizens who appreciate a benefit from football at Penn State. These claims are not transparently “quasi-sovereign” just because they tangentially relate to economic interests of some residents. These claims may not necessarily involve a large number of residents, which may also invalidate parens patraie. See People v. Seneci, 817 F.2d 1015 (2d. Cir. 1987) (noting that attorney general could not recover monetary relief for 79 people under RICO statute because remedy sought would not compensate the state directly). The NCAA would be wise to at least challenge parens patriae standing on these grounds.

The complaint further highlights the “capriciousness” of the NCAA’s decision to sanction the university for conduct not apparently actionable by the NCAA. Indeed, Corbett’s main purpose in filing this lawsuit is to question the NCAA’s power to impose sanctions outside of the realm of student athletics. Corbett’s argument is valid but is not necessarily supported by the circumstances that intertwine Penn State and the NCAA. For one, Penn State may have authorized the NCAA to levy sanctions when it agreed to a consent decree (read: contract) with the NCAA. Less apparent is that Penn State is a voluntary NCAA member and must follow the rules and obligation of the NCAA’s bylaws including self-reporting any potential rules violations. As the Complaint cites, the NCAA blamed the “omnipotent” football program in enabling Sandusky’s actions by creating a “culture of fear.” It would be viable for the NCAA to argue that Penn State violated the terms of its membership agreement with the NCAA by enshrouding criminal conduct for the benefit of the continued success of its football program. Therefore, the sanctions were arguably reasonable and appropriate—even if the underling crimes were not per se actionable by the NCAA.

Even beyond standing is the issue of how Corbett will prove a causal connection between the NCAA’s sanctions and the damages alleged. This will be by no means an easy task. The complaint states that Penn State suffered a 10 percent decrease in revenue during 2011–2012, dropping from the second most profitable football program the year before to 11th place. But though the complaint extols the football program as an “important economic engine,” Corbett seemingly assumes the shocking nature of Sandusky’s actions and the other revelations stemming from the scandal were not enough alone to tarnish the football brand. And that is shortsighted, given that the scandal led to the firing of the iconic Joe Paterno, the discovery of sickening oversights by the university administration that enabled crimes against children, and the release of the Freeh Report, which lambasted the football culture that allowed a coverup. The NCAA’s sanctions are no doubt crippling, but Penn State was already “tarred and feathered” long before the penalties, which may explain lowered interest in the school and its football program. This all overlooks that Penn State is still playing the same number of games as it did pre-sanctions, and that attendance was still impressive during the 2012 season at an average of about 96,000 per game, fifth best in the NCAA.

The NCAA released a statement calling Corbett’s lawsuit an “affront” to all the victims of the Sandusky tragedy. That is debatable, as are Corbett’s political intentions. (He may be stirring the electorate for his reelection next year.) Corbett’s lawsuit will certainly never repair the damage done to the victims by the heinous acts of Sandusky and those who enabled him. But for Corbett, the lawsuit is seemingly about a new tier of justice—for the commonwealth, for Penn State, and for the university’s students, staff, alumni, and other supporters who reap the benefits of having football be deemed relevant. Moreover, Corbett is transparently questioning the regulatory authority of the NCAA to punish activity that does not clearly impinge on the interests of student-athletes. This will certainly be an important issue prospectively.

When the McCormack lawsuit was dismissed, the court credited the university’s alumni and students as at least having given it “the old college try.” That is precisely what the governor is doing here. Which means that for the foreseeable future, as Pacino would say, we are all being “pulled back in” to the Penn State drama just when we thought—and hoped—we were out.

Keywords: litigation, minority trial lawyer, Penn State, child-sex-abuse scandal, NCAA, sanctions, civil-action complaint, parens patriae lawsuits

Joseph M. Hanna is a partner at Goldberg Segalla LLP in Buffalo, New York, and is also a cochair of the Minority Trial Lawyer committee. Saleel V. Sabnis is an associate at the firm's office in Philadelphia, Pennsylvania.

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