Court sides with state Sen. Jake Corman, rejects dismissal of lawsuit

mdawson@centredaily.com September 4, 2013 

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State Sen. Jake Corman scored a significant victory over the NCAA on Wednesday, as the state’s Commonwealth Court rejected the NCAA’s arguments to dismiss the lawsuit he brought to keep Penn State’s $60 million fine money from being spent outside outside Pennsylvania.

The decision, outlined in a written opinion by Judge Anne Covey, had Corman feeling “vindicated” that the legislation that triggered the lawsuit is constitutional, the senator said. The law, dubbed the Endowment Act, was signed into law earlier this year, and it requires state universities and colleges that have been fined more than $10 million to deposit the money into the state treasury.

Specifically, the court’s decision determined that Corman and state Treasurer Rob McCord have the legal standing to continue the lawsuit and that they don’t need Penn State to litigate it, as the NCAA had argued. The court also ruled that the Endowment Act does not violate either the state or U.S. Constitution.

Writing the opinion for the majority, Judge Anne Covey said the consent decree, which serves as the contract between Penn State and the NCAA for the penalties such as the $60 million against the university, outlines how the money should be spent, but not where. The judges also agreed that the fine money is not to be considered the NCAA’s property.

“The consent decree does not contain a scintilla of language that suggests the NCAA will have ownership of or control over the fine paid by PSU,” Covey wrote. “To endorse the NCAA’s argument would require this court to speculate as to the intentions of the parties, which is not its role.”

Instead, Covey wrote, the consent decree mandates that the money from the fine be paid into an endowment that will fund programs that work to prevent child sex abuse or help victims of child abuse.

Judge Dan Pellegrini issued a dissenting opinion, saying that he would have dismissed Corman’s lawsuit. Pellegrini wrote that he does not think Corman or McCord have the standing and that Penn State is a required party in the lawsuit.

The NCAA was given 20 days to respond with its next course of action. According to a statement from the NCAA, officials there are reviewing the court’s opinion and will determine which way to go after evaluating all its options.

The $60 million fine was one of the harsh sanctions imposed on Penn State for the Jerry Sandusky child abuse scandal and what a university-commissioned investigation found was a conspiracy by administrators in 1998 and 2001 to hide abuse allegations.

Penn State put the first of five $12 million payments into a money market account in December, because the endowment hadn’t been established. Corman drafted the law and Gov. Tom Corbett signed it earlier this year.

The NCAA had allowed Penn State to hold off on making the payment while the lawsuit was litigated. Corman said Wednesday he hopes the judges’ decision will encourage Penn State to deposit the first $12 million into the state treasury and provide funding for child abuse prevention and services in Pennsylvania.

“We think now is the time to get this money flowing for its intended purposes,” he said.

Penn State spokesman David La Torre declined to comment because the disbursement of the money is subject to litigation.

The NCAA had contended that it wasn’t in violation of the Endowment Act because Penn State had not technically made the first payment, as the money had just been set aside.

But the judges found that argument was not valid. Instead, the judges said the law applies to any fine money that’s either been paid or is payable.

The judges disagreed with the NCAA’s assertion that Penn State was an indispensable party, or one that was necessary for the litigation that its absence would otherwise harm it. Covey wrote that Penn State waived its right to participate in any judicial processes that arise from the consent decree.

However, Pellegrini, writing the dissenting opinion, said Penn State should be considered an indispensable party because the money involved belongs to the university.

Another of the NCAA’s failed arguments was that the Endowment Act violated the state and U.S. constitutions because it would allow money to be taken from a private entity without fair compensation.

But the judges said there is nothing in the consent decree that says the money will become the property of the NCAA.

“Instead, the consent decree unambiguously mandates that the fine be paid ‘into an endowment for programs preventing child sexual abuse and/or assisting the victims of child sexual abuse,” Covey wrote.

The NCAA has scored the most significant victory in the legal wars that have ensued in the aftermath of the Sandusky scandal.

The governor sued the NCAA in January to reverse all the sanctions imposed on Penn State, saying they violated federal antitrust laws. The judge didn’t buy the argument, and likened the lawsuit as a Hail Mary pass in a football game.

The family of late coach Joe Paterno and numerous Paterno supporters have lodged another lawsuit against the NCAA. That one is being waged in Centre County, and their hope, too, is to have the sanctions reversed.

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