Penn State

Penn State attorney: Lawsuits involving NCAA fine put university ‘between the proverbial rock and a hard place’

The bell and Old Main on the Penn State campus on Saturday, June 23, 2012.
The bell and Old Main on the Penn State campus on Saturday, June 23, 2012. CDT file

Penn State leaders feel stuck in the middle of the legal battles between the NCAA and state officials over what becomes of the first payment toward the university’s $60 million fine and called on the warring sides to settle their differences — and even offered to help mediate.

A Penn State attorney sent a letter on Tuesday to lawyers for the NCAA and the state, saying that the NCAA’s lawsuit against the governor and a local senator’s lawsuit against the NCAA are preventing the money from being spent on child abuse awareness and prevention. The university offered to meet with the sides to help come to an agreement over the lawsuits, which the university has said it has no intention of joining.

“While we understand and appreciate your respective positions, your dispute over the use of the proceeds of the fine puts the (u)niversity between the proverbial rock and a hard place,” wrote Penn State outside lawyer Frank Guadagnino in the letter obtained by the Centre Daily Times.

“We note that a settlement of the dispute would permit the funds to be used for their intended purpose in an expeditious manner.”

The letter was drawn up after Penn State representatives met with both sides over the past few weeks about the issues in the lawsuits, Guadagnino said.

The offer for Penn State to be a third-party mediator comes after the lawsuits — all over that $60 million fine that was part of the sanctions against Penn State from the Jerry Sandusky scandal — were filed in separate courts.

In February, state Sen. Jake Corman, R-Benner Township, sued the NCAA to keep the $60 million from being spent outside the state. The same month, the NCAA sued Gov. Tom Corbett and other officials after he signed a law that that would require large fines against a university by outside organizations to be placed into the state treasury.

“We want to avoid the risk that the NCAA will claim that the (u)niversity has breached the (c)onsent (d)ecree by not paying the fine as directed by the NCAA, and we want to avoid the risk that the (c)ommonwealth will claim that the (u)niversity is in violation of the (a)ct by not paying the money to the (s)tate Treasury as may be required by the (a)ct,” Guadagnino wrote.

A spokeswoman for the NCAA and a spokesman for Penn State declined to comment, and a spokesman for the state’s general counsel said officials there were reviewing the letter.

In a statement, Corman said Wednesday that the issue over the money was not addressed in the consent decree and the NCAA was “only delaying the positive impact” from the money.

“Pennsylvania should be the location where the fine money is distributed and to challenge that does not make much sense to me,” Corman said.

Penn State has stayed quiet on the numerous lawsuits that have resulted from the Sandusky scandal, except to say that the university has no intention of joining the causes. However, the call to the NCAA and state officials offers hints of the nature of the closed-door conversations in Old Main that triggered the letter.

Penn State’s concerns are about the $12 million the university set aside as its first payment toward the unprecedented $60 million fine.

According to the consent decree, the document that outlined Penn State’s penalties, the university is to make five annual payments of $12 million to complete the full amount of the fine. The money would go into an endowment until a determination is made concerning how it is to be spent.

But the endowment was not set up in December, when the first payment was due, and so the university put the money in a separate account waiting for the endowment to be created.

So technically, Guadagnino said in the letter, the university has not really made its payment and therefore has not violated the law that Corbett signed, the Institution of Higher Education Monetary Penalty Endowment Act.

However, the university does not want to risk being in violation of the consent decree, although Guadagnino said the NCAA will not ask for the money until the cases are litigated.

Beyond the first payment, the university wants the NCAA and state officials to show “good faith efforts” to agree over the future of entire $60 million.

The lawsuit brought by Corman was joined by state Treasurer Rob McCord and is scheduled to go before a judge June 19 in Commonwealth Court in Harrisburg. The NCAA has moved to dismiss the lawsuit.

Corbett has moved to dismiss the countersuit filed by the NCAA in federal court. It has been assigned to Judge Yvette Kane, the same judge who last week dismissed Corbett’s lawsuit against the NCAA to overturn the slew of sanctions against Penn State.

Corman has also asked to join Corbett’s defense in the lawsuit bought by the NCAA.