Penn State

Commonwealth Court rules Endowment Act constitutional, questions consent decree, pulls Penn State into lawsuit

State Sen. Jake Corman talks with Penn State students in his office during Penn State Capitol Day on Tuesday, April 1, 2014.
State Sen. Jake Corman talks with Penn State students in his office during Penn State Capitol Day on Tuesday, April 1, 2014. CDT photo

The NCAA suffered a blow Wednesday when the Pennsylvania Commonwealth Court dismissed the organization’s challenge of a 2013 state law that would keep millions of dollars collected from sanctions against Penn State in the state.

But the bigger concern for the NCAA could be questions the justices raised about the validity of the consent decree, the agreement between the organization and Penn State that levied the sanctions — including a $60 million fine — against the university for the Jerry Sandusky scandal.

The court ruled that the NCAA’s challenge of a lawsuit brought by state Sen. Jake Corman, R-Benner Township, seeking enforcement of the Endowment Act, the state law he sponsored to keep the sanction money in the state, opened the door for an examination of the consent decree.

In its ruling Wednesday, the court forced Penn State to become a party in the lawsuit and said it needs more information about the consent decree before determining whether it was entered into legally.

Corman said he is interested in expanding his lawsuit to pursue questions about the legality of the consent decree.

“I’ve always been uncomfortable with the way the NCAA handed this consent decree on Penn State and the process they went through to do it,” Corman said. “Now that (the court) brought Penn State into the case and that they’re not sure that the whole consent decree is valid or constitutional, that’s an area that wasn’t part of our original lawsuit but clearly an area we want to explore now that the court has opened the possibility to do so.”

Penn State officials declined to comment on the court’s order. The NCAA did not immediately respond to a request for comment.

President Judge Dan Pellegrini said in a dissenting opinion that, like the majority, he was “bewildered” that the Penn State board of trustees would enter into the agreement because the matter “ordinarily would not be actionable by the NCAA.”

In the court’s opinion, the majority ruled that the Endowment Act is constitutional. The law was passed last year by the state legislation as a way to make sure the sanction money is spent on child-abuse prevention and awareness programs in Pennsylvania.

The court did not grant Corman’s motion that the law be enforced against the NCAA now, meaning the senator’s lawsuit will continue.

Penn State entered into the consent decree with the NCAA to pay the $60 million fine to avoid facing the so-called death penalty, halting football in Happy Valley for perhaps four years. The university also agreed to a postseason ban, scholarship reductions and the erasing of 111 wins from the Joe Paterno era.

The NCAA had argued the Endowment Act was unconstitutional because it pertained to one circumstance, the agreement between Penn State and NCAA.

The majority ruled that the NCAA opened itself to questions about the consent decree when the organization argued in court documents that it had privilege to enter the agreement, acted in good faith and imposed sanctions in response to conduct in violation of the NCAA’s constitution and bylaws.

“The children harmed by Sandusky, the children’s family members, the community, PSU and the Commonwealth were all seeking to uncover the truth behind these hideous crimes when ‘ordinarily ... not .. actionable by the NCAA,’ the NCAA involved itself in one of the most disastrous events in these children’s lives and that of the families as well as the history of the community, PSU and the Commonwealth,” Judge Anne Covey wrote in the majority decision.

Covey said the NCAA imposed sanctions designed to penalize Penn State and “change the culture,” but that they had other effects.

“The sanctions’ ‘Punitive Component’ removed $60 million from a state-related post-secondary educational institution which the NCAA asserts it is to control,” Covey wrote. “High school athletes who had no involvement in the criminal acts were prevented from obtaining a free college education.

“Student-athletes, trainers, coaches and support personnel who were taught and trained to be and do their best were stopped from competing and student-athletes from other colleges and universities were also precluded from competing against them by prohibition against post-season play,” she wrote. “Student-athletes, trainers, coaches, administrators and support personnel who had excelled in their jobs through hard work, practice, commitment, team work, sportsmanship, excellence and perseverance were told none of that mattered.”

The court’s ruling brought this response from the NCAA.

“We believe the court’s ruling is entirely without basis,” said NCAA Chief Legal Officer Donald Remy. “If this decision stands, it would mean that the Endowment Act does not violate the Pennsylvania Constitution, which it so clearly does. Sen. Corman wrote the act to interfere with the consent decree, and was not intended to be applied beyond the NCAA’s agreement with Penn State. We are even more surprised the court determined the consent decree itself is somehow at issue, although the validity of the agreement has not been questioned by the plaintiff. The NCAA will continue to vigorously defend the consent decree, an agreement with Penn State that both the NCAA and Penn State continue to support.”