NCAA Wins Dismissal of Pennsylvania’s Sandusky-Fine Suit

Pennsylvania Governor Tom Corbett said the state is reviewing its options after a judge threw out a lawsuit challenging National Collegiate Athletic Association sanctions against Pennsylvania State University for its role in the Jerry Sandusky sex-abuse scandal.

Corbett failed to show a violation of federal antitrust law, U.S. District Judge Yvette Kane in Scranton, Pennsylvania, said today in her decision dismissing the case. Corbett, who had argued the fines restrained competition in the market for college sports, said he’s analyzing the ruling.

“I am disappointed with the court’s decision and believe the sanctions have harmed the citizens, students, athletes, alumni and taxpayers of Pennsylvania,” Corbett said in a statement. “I feel strongly that the claims we raised in this lawsuit were compelling and deserved a complete and thorough review by the court.”

Corbett, in a suit filed in January, accused the NCAA of violating antitrust law with sanctions that included a $60 million fine. The sanctions, which were outside the scope of the NCAA’s authority, unlawfully restrained competition in the markets for college sports and enrollment, Corbett said.

Kane rejected those arguments today, ruling that while the challenge to the NCAA sanctions raises important questions that are worthy of public debate, they are not antitrust questions.

‘Extraordinary Power’

“The governor’s complaint implicates the extraordinary power of a non-governmental entity to dictate the course of an iconic public institution, and raises serious questions about the indirect economic impact of NCAA sanctions on innocent parties,” Kane wrote in a 28-page opinion.

“In another forum the complaint’s appeal to equity and common sense may win the day, but in the antitrust world these arguments fail to advance the ball,” she said.

The NCAA sanctioned Penn State in July for its failure to prevent the sexual abuse by Sandusky, who was convicted of molesting boys when he was a football coach. Sandusky was sentenced to a minimum of 30 years in prison.

In addition to the fine, the sanctions stripped Penn State of 112 football wins from 1998 through 2011 and barred the Nittany Lions from bowl games for four years, matching the longest post-season ban in NCAA history.

The penalties followed an internal school investigation that faulted legendary football coach Joe Paterno and other school officials for covering up abuse allegations. Paterno, who wasn’t charged with a crime, died of lung cancer in January 2012.

Criminal Charges

Former Penn State President Graham Spanier and two other school officials face criminal charges tied to a 2001 abuse allegation against Sandusky.

The Paterno family last month also sued over the penalties and accused the NCAA of mishandling a criminal matter outside the scope of its authority.

Wick Sollers, a spokesman for the Paterno family, called Kane’s decision “disappointing,” and said in a statement that other litigation is pending and that the NCAA needs to provide more documentation for its actions.

Lawyers for the NCAA argued in a presentation to Kane last month that Corbett’s arguments were insufficient to serve as the basis of an antitrust claim.

“Each of defendant’s arguments is strong enough to render the governor’s action under antitrust law a Hail Mary pass,” Kane said. “These arguments are well-founded in the law and require that the governor’s complaint be dismissed.”

‘Thoughtful Opinion’

“We are exceedingly pleased with the court’s thorough analysis and thoughtful opinion,” the NCAA said in a statement. “The court found the allegations made by the governor to be implausible.”

Penn State agreed to the penalties and said in January that it was committed to full compliance with the consent decree. The school set aside the first of five $12 million payments toward the NCAA fine in December.

The payment was made by the school’s athletics department through an internal loan from the university’s reserves, Penn State said Dec. 20.

Corbett had argued that Penn State President Rodney Erickson was forced to agree to the sanctions under the threat of a death penalty to its football program. The NCAA used Sandusky’s offenses as a pretext to impose unprecedented penalties, the state said in the complaint.

Kane rejected those arguments, ruling that the state offered no facts to support them.

‘Economic Powerhouse’

At the hearing in May, lawyers for the state described Penn State’s football program as an “economic powerhouse” generating about $90 million in business in the local community, $5 million in tax revenue and about 2,200 jobs.

Attorneys for the NCAA countered that the alleged impact of the sanctions on state revenue from ticket sales, on jobs in the local economy and on the value of a Penn State education are indirect harms that are insufficient to advance the case.

Still pending is the NCAA’s own suit against the state filed in February. That suit accuses Pennsylvania of trying to confiscate the fine under a new law that allows the state to control the use of funds. The law violates the U.S. Constitution and can’t be enforced, the NCAA said in its complaint.

The case is Corbett v. National Collegiate Athletic Association, 1:13-cv-00006, U.S. District Court, Middle District of Pennsylvania (Harrisburg).

To contact the reporters on this story: Sophia Pearson in Philadelphia at spearson3@bloomberg.net; Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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