Buyer’s remorse: The Commonwealth of Pennsylvania vs. the National Collegiate Athletic Association

January 5, 2013

By Paul Bowen BDA Consigliere and Sports Editor Emeritus

2012 had barely been stubbed out in history’s immortal ashtray before the Penn State scandal was brought, once again, front and center into the national consciousness. It may be recalled, that as a result of the horrific crimes committed by former Nittany Lion assistant football coach Jerry Sandusky, the Penn State Board of Trustees (BOT) agreed to a consent decree with the NCAA in which it agreed to sweeping sanctions including a 60 million dollar fine, loss of scholarships, and ineligibility to participate in bowl games for 4 years, among other things.

On January 2, 2013, Thomas Corbett, the Governor of Pennsylvania brought a lawsuit in Federal Court against the NCAA under an anti-trust theory. Now I know enough about the law of anti-trust to be highly dangerous. But odds are I know more than you. So here’s a brief discussion of anti-trust and how it applies in the sports context.

The anti-trust laws, specifically the Sherman Anti-Trust Act, were placed on the books in the early 1900s as a reaction against the concentration of wealth in the hands of a few individuals or entities such as the Rockefellers and the railroad barons. The anti-trust laws strive to ensure competition in the marketplace and focus on entities whose actions may have an adverse action in the marketplace.

For example, Microsoft was sued by the Anti-Trust Division of the Department of Justice during the Clinton Administration. Another example of current use of the anti-trust laws is that when a newspaper seeks to enter into a joint operating agreement with a competing newspaper, it must seek the approval of the DOJ to do so.

The first attempt to apply the anti-trust laws in the context of professional sports was during the infancy of Major League Baseball. The case of Federal Baseball Club of Baltimore vs. National made it all the way to the United States Supreme Court in 1922. It also gave Justice Oliver Wendell Holmes the opportunity to render easily the most idiotic opinion of an otherwise distinguished career in letters and the law.

The act of playing baseball, Justice Holmes wrote, being “a personal effort, not related to production, is not a subject of commerce.” Therefore, the anti-trust laws did not apply to baseball. And baseball still enjoys the famous so-called “anti-trust exemption” for no good reason to this day. No other sport is so favored. And neither is the NCAA. More on that in a bit.

As an aside, the Supremes have had 2 opportunities to reverse Federal Baseball Club as having been “wrongly decided” as they say. They have declined on both occasions. Perhaps they are just embarrassed by it and would rather pretend that the damned thing doesn’t exist. The more likely explanation is that collective bargaining in baseball has rendered the case mercifully irrelevant.

Back to the future.

The lawsuit filed Wednesday by the Commonwealth alleges that the NCAA forced Penn State to sign away its rights under the NCAA manual in that Penn State had no practical alternative seeing as how it was threatened with the death penalty. Which constituted “concerted action” adversely affecting competition. The complaint alleges that the NCAA had no right to interfere in matters not strictly involving traditional issues involving intercollegiate athletics. Like cheating and stuff. Further, it states that neither the investigation commissioned by Penn State (the “Freeh Report”) nor the NCAA identified “a single concrete rule Penn State has broken. (Emphasis supplied.)”

The complaint seeks injunctive relief to avoid the allegedly irreparable harm that will be felt by Commonwealth citizens due to the economic harm to small businesses and the like if Penn State becomes weakened by the sanctions resulting in fewer ticket sales and such.

Well, where to start?

In the first place, in order to get injunctive relief you have to prove irreparable harm and a likelihood of success on the merits. And economic loss is hardly ever considered irreparable harm.

Turning to the merits, perhaps the NCAA did indeed overreach. Legitimate questions as to whether the NCAA had the authority to act in this fashion were raised at the time. And maybe Penn State should have told the NCAA to stick its proposed consent decree and see ya in court. But it didn’t. The Board of Trustees agreed to it. The Complaint certainly doesn’t suggest that the BOT didn’t have the authority to agree to it. (By the way, Penn State is not a party. It has said it would continue to comply with the Decree)

And guess who is an ex-officio member of the BOT and one who agreed with the settlement at the time? The Plaintiff. The Governor of Pennsylvania. I do not see any way on God’s green Earth they can get around that one.

And maybe the NCAA didn’t cite a concrete rule broken by Penn State. But see the ones they did cite here.

You will note the phrase “Institutional Control.” As in lack thereof. The Commonwealth may not view the requirement that the institution control the football program and not the other around as a “concrete rule.” But to the NCAA this is both the equivalent of the Commerce Clause of the United States Constitution and the Queen Mother of Infractions.

And the BOT agreed with the NCAA. And did I mention that the guy bringing the suit was on the BOT at the time?

Thomas Corbett

I’m getting tired I don’t want to go into the reasons why Corbett probably doesn’t have standing to bring a lawsuit over a facially lawful consent decree entered into by a state university on behalf of waiters, shopkeepers and other folks that allegedly stand to be affected if Penn State football becomes another Hofstra or Tulane.

I can see why they tried the anti-trust angle, as the NCAA has been rung up before over television rights, coach’s salaries and participation in “certified” basketball tournaments. They needed some theory to get them past the “laugh” test.

Too bad they didn’t think of all of these things before the BOT agreed to the consent decree.

Of which one of its members is the Plaintiff in the lawsuit seeking to enjoin its implementation.

Discovery should be fun.

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