Governor Tom Corbett exceeded his reach when he sued the NCAA in an effort to stop the organization from enforcing sanctions against the Penn State football program that the school agreed to in the wake of the Jerry Sandusky scandal, the NCAA argued in a motion to dismiss filed last week.
Corbett’s antitrust claims are precluded by U.S. Court of Appeals for the Third Circuit and U.S. Supreme Court precedent and, beyond that, Corbett lacks standing to sue, the National Collegiate Athletic Association argued.
The terms of the NCAA’s sanctions against Penn State don’t directly affect commerce, the organization argued, so they are outside the scope of the Sherman Act, but, even if antitrust laws did apply, the organization is shielded because its role as the arbiter of ethics in college football satisfies the rule of reason.
The complaint, filed at the start of the year, claims the NCAA forced the university to agree to the sanctions back in July, thereby allowing it to avoid the so-called "death penalty" — a complete ban from a school’s participation in a given sport for a given time. Those sanctions included a $60 million fine, a four-year ban on postseason play, a drop off in scholarships, and the vacating of seasons worth of victories for the university’s storied football program.
Those sanctions are unprecedented, the complaint alleged, claiming that the NCAA sought to improve its reputation and enhance the position of competing schools compared to Penn State. The school didn’t violate any of the NCAA’s rules, according to the complaint, which also noted that there have been instances of criminal conduct at other universities that impacted their athletic programs and the NCAA did little in response.
The sanction agreement, called a consent decree, "is not about Jerry Sandusky; it is addressed to the behavior of senior university officials, including the former head football coach, who learned of evidence of Sandusky’s crimes and chose not to act — for reasons that, as Penn State has acknowledged, included an inappropriate culture of reverence for the football program and a desire to protect it," according to the NCAA’s motion to dismiss.
Corbett’s complaint contested the NCAA’s position that the sanctions would change Penn State’s "culture," a word used often in attempting to explain how the scandal unfolded for years without charges being brought against Sandusky and several university administrators implicated in its fallout.
The complaint said the NCAA, rather, has long contributed to the same culture it condemned the school for condoning, noting that premier football schools receive "deference" and "reverence" through lucrative television and apparel contracts.
Whatever incidental economic effects that the sanctions might have don’t raise them to the level of being an unreasonable restraint on trade or commerce, which would implicate the Sherman Act, the NCAA argued.
It relied heavily on the Third Circuit’s 1998 opinion in Smith v. NCAA, which "drew a sharp ‘distinction between [the NCAA's] commercial and noncommercial activities,’ holding that the Sherman Act has no application to NCAA rules and enforcement actions primarily addressing non-business aspects of college sports," according to the motion.
Several courts have looked to Smith when dismissing antitrust claims against the NCAA when it has made various changes to noncommercial aspects of its rules, the organization said.
The sanctions against Penn State are based on the school’s acknowledgment that it violated principles of the NCAA’s constitution and bylaws not related to business or commerce, the NCAA said. Those principles address "basic standards of honesty, ethical conduct, and institutional control that the NCAA’s members believe to be necessary to preserving the character and integrity of college athletics," according to the motion.
Although the NCAA contends that antitrust laws don’t apply at all, if they did, the suit should be dismissed on the pleadings because the "institutional control and ethical standards" that the NCAA is enforcing are "clearly pro-competitive," according to the motion.
The rules enforced by the NCAA preserve the character and integrity of the athletic system, which makes available a choice to consumers that they wouldn’t otherwise have, the organization argued.
It cited U.S. Supreme Court precedent, saying, "Because competition cannot exist at all without rules and enforcement, and because NCAA regulation makes possible a distinctive product that otherwise could not exist, there is a strong presumption ‘that most of the regulatory controls of the NCAA are … pro-competitive.’" There, it quoted from the high court’s 1984 opinion in NCAA v. Board of Regents of the University of Oklahoma.
The NCAA also argued that Corbett doesn’t have standing to bring the suit on behalf of Pennsylvania’s citizens.
The governor had argued that the sanctions would punish students and athletes, local businesses and the citizens of Pennsylvania, but the NCAA responded that those alleged injuries are too remote and speculative to pass muster as parties suffering harm as consumers or competitors.
"Courts regularly deny antitrust standing to parties who suffer harm only indirectly, as the result of antitrust violations directed by the defendant at a third party," the NCAA said.
"Allowing this lawsuit to go forward based on plaintiff’s novel and unfounded theories of collateral harm would not only undermine PSU’s desire to move forward, it would radically expand the scope of plaintiffs with standing to bring antitrust claims in future cases," the organization argued, pointing out that both the Third Circuit and the U.S. Supreme Court have been firm on limiting those who have antitrust standing.
The case is in front of U.S. District Chief Judge Yvette Kane of the Middle District of Pennsylvania.