When Penn State hastily accepted the NCAA's sanctions for the school's involvement in the Jerry Sandusky scandal, the NCAA's authority to punish its members for off-field criminal conduct seemed assured. But Pennsylvania governor Tom Corbett has decided to stand up and challenge the authority of college sports' governing body by filing a lawsuit on behalf of the state in federal court. The lawsuit will be mainly based on antitrust law, with the core argument that the NCAA and its member institutions -- which compete on the field and in recruiting student-athletes -- conspired to punish Penn State on grounds outside the NCAA's regulatory authority. Reading between the lines, Corbett -- who in a press conference on Wednesday morning described the sanctions as "overreach and unlawful" -- may imply the NCAA and its members took advantage of the Sandusky scandal to embarrass Penn State and disadvantage its football team.
The lawsuit sets the table for what many Penn State supporters and NCAA critics have sought: judicial review of the NCAA's broad power to punish schools as it sees fit. If successful, the lawsuit could erase some of the unprecedented penalties against Penn State -- which include a $60 million fine, a four-year postseason ban, significant scholarship reductions and vacating 112 wins from 1998 to 2011 -- and force the NCAA to pay Pennsylvania taxpayers millions of dollars.
Penn State, which contractually waived the right to sue the NCAA as part of its consent decree, is not a party to the lawsuit.
Assessing the lawsuit
A state government challenging the NCAA's power to regulate a matter only loosely connected to sports represents a worrisome alignment of litigants, facts and law for the NCAA.
Foremost, the lawsuit emerges from unique circumstances that do not readily fit NCAA precedent and thus make application of law hard to predict. Legal challenges to NCAA regulatory power have normally involved an athlete, coach or university seeking redress for a distinctly "sports" related issue. Those issues have included unauthorized conversations between a student-athlete and player-agent (Andrew Oliver v. NCAA); recruiting violations (NCAA v. Jerry Tarkanian); restrictions on broadcasting of games (NCAA v. Board of Regents of University of Oklahoma); or, as is currently being litigated, compensation to players for the licensing of their image or likeness (Ed O'Bannon v. NCAA).
The sports nexus between the NCAA and its punishment of Penn State, in contrast, is dubious. Even the NCAA acknowledged in its Penn State consent decree that "the circumstances involved in the Penn State matter are ... unlike any matter encountered by the NCAA in the past." There's a reason for that. Punishing a school (and consequently its student-athletes) because its leaders failed to prevent an ex-coach from sexually abusing children does not clearly fit within the NCAA's purview. Consider NCAA president Mark Emmert's own view of the NCAA's mission: "to be an integral part of higher education and to focus on the development of our student-athletes." To be sure, Penn State's behavior implicated criminal and civil laws. But that doesn't answer the relevant question: Did it implicate the development of student-athletes in a way that warrants NCAA penalty?
To further advance his argument, Corbett has to show the NCAA and its members were unreasonable in sanctioning Penn State. Sanctions that undermine competition more than they promote it may be characterized as unreasonable. Corbett will likely need to show it is anti-competitive to punish Penn State for a criminal, non-sports matter since the sanctioned conduct is arguably outside the NCAA's scope and the penalty impairs Penn State's ability to compete on and off the field. Corbett might also argue it is anti-competitive for the NCAA to assert that 112 wins never happened when it and its members are still profiting from them through DVD sales of those games.
It won't be an easy argument for Corbett. Antitrust claims are often complicated and fact-intensive, often with expert witness economists conducting original research to promote or oppose legal arguments. Antitrust cases also regularly take years to litigate -- consider that O'Bannon v. NCAA was filed in 2009 and a trial still hasn't been scheduled.
The NCAA's track record in antitrust cases is mixed, but it does have a number of key victories. For instance, in McCormick v. NCAA, the NCAA prevailed over an antitrust challenge brought by members of the Southern Methodist University football team after the team received the death penalty for players receiving money under the table. The NCAA's bylaws prohibiting player compensation were viewed as more pro-competitive than anti-competitive because they promote amateurism. The NCAA, however, lost in NCAA v. Board of Regents because it's prohibition on football teams negotiating their own TV contracts did not advance competition and punished some schools at the expense of others.
If the state of Pennsylvania can produce a sufficiently persuasive argument to defeat a motion to dismiss and enter the pretrial discovery stage, the NCAA would suffer a "loss." The NCAA would be required to comply with potentially invasive requests for documents, emails and phone records related to its investigation of Penn State -- and by extension its use of the Freeh Report -- and could subject NCAA officials to difficult depositions and interrogatories. O'Bannon's antitrust lawsuit against the NCAA, which is in pretrial discovery and which has unveiled evidence unflattering to the NCAA, is a powerful illustration of this effect.
Money matters here, too. Litigation is often influenced by the financial wherewithal of the litigants. Pennsylvania has essentially limitless resources to wage a long battle in court. This is unlike a student-athlete or coach who sues the NCAA and who might be tempted to accept a settlement in order to close his or her legal tab. This is the government suing; the only real check is political will, and here the government is suing an unpopular defendant in a state where the NCAA is probably more disliked than in any other state.
The NCAA's likely defense
The NCAA can attack the lawsuit on several grounds.
First, the NCAA can insist the Commonwealth of Pennsylvania lacks standing to sue the NCAA. This argument would be simple: Corbett does not work for Penn State, and the Pennsylvania government's relationship to Penn State is mainly based on financial assistance rather than in direction. Therefore, they lack the right to file a lawsuit over Penn State's sanction.
In response, Pennsylvania can assert it has a legal duty to protect Pennsylvania taxpayers who, by funding Penn State with $214 million a year, theoretically pay part of the $60 million fine. There may be no other party but Pennsylvania to sue on behalf of taxpayers' interests. Pennsylvania, moreover, can claim it has a duty to protect its largest public university and the thousands of residents who are Penn State students or who work for the school. These individuals probably had little to no input in the university accepting the consent decree.
Second, the NCAA can argue it was contractually authorized to sanction Penn State, which is a member of the NCAA by voluntary choice, not by requirement. The NCAA can cite at least two contracts: the membership agreement between Penn State and the NCAA which requires Penn State to follow the NCAA Constitution and Bylaws, and the consent decree in which Penn State clearly accepted sanction for violating specific provisions of the Constitution and Bylaws. The NCAA could thus argue that it has explained its grounds for sanction and that the only party who can commence challenge -- Penn State -- has relinquished that right.
Pennsylvania could respond by asserting the NCAA provided Penn State with a contract of adhesion (false choice) since the NCAA reportedly threatened Penn State with the death penalty if the university didn't "choose" to accept. Plus, given that there is no alternative to the NCAA for top-level intercollegiate sports, opting out of the NCAA is an implausible remedy.
Lastly, the NCAA may go after Corbett for his action -- or inaction -- in prosecuting Sandusky as Attorney General of Pennsylvania from 2005 to 2011. There was a three-year gap between a grand jury charged with reviewing Sandusky and Sandusky's indictment in November 2011, with a suspicion that Corbett, running for governor in 2009 and 2010, proceeded slowly so as to avoid alienating Penn State alums. The NCAA could maintain Corbett's own behavior contributed to the injury for which he now seeks redress. Corbett's supporters, however, contend he proceeded deliberately in order to develop the most airtight case against Sandusky, who would be convicted on 45 of 48 counts.
However the arguments play out, this is poised to become a landmark case in NCAA legal history.