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National Collegiate Athletic Association v. Corbett

United States District Court, Third Circuit

October 15, 2013

NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Plaintiff,
v.
THOMAS W. CORBETT, JR., in his capacity as Governor of the Commonwealth of Pennsylvania, et al., Defendants.

MEMORANDUM

YVETTE KANE, District Judge.

Before the Court is State Senator Jake Corman's motion to intervene as of right as a party-defendant in the above-captioned action pursuant to Rule 24(a)(2) of the Federal Rules of Civil Procedure or, in the alternative, to intervene by permission pursuant to Rule 24(b)(1)(B). (Doc. No. 13.) The motion has been fully briefed and is ripe for disposition. For the reasons that follow, the Court will deny Senator Corman's motion.

I. BACKGROUND AND PROCEDURAL HISTORY

This action arises out of a dispute concerning the disposition of a $60 million fine that Pennsylvania State University ("Penn State") is required to pay pursuant to a consent decree it entered into with the National Collegiate Athletic Association ("NCAA"). (Doc. No. 1-4.) The consent decree requires Penn State to pay the fine over five years into an endowment for programs devoted to preventing child sex abuse and assisting the victims of such abuse. (Id. at 6.) About eight months after Penn State entered into the consent decree with the NCAA, Pennsylvania Governor Thomas W. Corbett, Jr., signed into law the Pennsylvania Institution of Higher Education Monetary Penalty Endowment Act, 24 P.S. §§ 7501-05. (Doc. No. 14 at 2.) Under this Act, the $60 million fine imposed on Penn State must be deposited into a trust fund in the Commonwealth Treasury, and the funds may only be used within the Commonwealth for the benefit of Commonwealth residents. (Doc. No. 1 at 11-12 ¶¶ 55-60; Doc. No. 20 at 7, 12.)

A. The Consent Decree

The background of the Consent Decree that triggers this Court's review of the Endowment Act is all too familiar. On November 4, 2011, after an extensive grand jury investigation into allegations that former Penn State assistant football coach Gerald A. Sandusky sexually abused children for over a decade, Sandusky was criminally charged. (Doc. No. 1 ¶ 29; Doc. No. 23 at 7.) That same day, charges were brought against senior Penn State officials for failing to report the allegations of abuse and for committing perjury before the grand jury; these officials included Penn State Athletic Director Timothy M. Curley and Penn State Senior Vice-President of Finance and Business Gary C. Schultz. (Doc. No. 1 ¶ 32.)

Shortly after the criminal charges were filed against various Penn State officials, the NCAA began evaluating Penn State's potential violations of NCAA rules. (Id. ¶ 37.) On July 23, 2012, Penn State entered into a consent decree with the NCAA. (Id. ¶ 38.) Among other sanctions contained in the consent decree, Penn State agreed to pay a $60 million fine over five years into an endowment for programs devoted to preventing child sexual abuse or to assisting the victims of such abuse. (Id. ¶ 42; Doc. No. 14-1 at 6.) On or about September 18, 2012, the NCAA appointed a task force to oversee the creation of the endowment funded by the $60 million fine. (Id. ¶ 45.) Members of the task force include the Dean of the College of Health and Human Development at Penn State, the Vice Dean for Clinical Affairs at the Penn State College of Medicine, and other individuals from national non-profit organizations, the federal government, and the NCAA. (Id.) The task force established that "[a]ll funds from the fine will follow the endowment guidelines established by the Child Sexual Abuse Endowment Task Force and flow to programs designed to prevent child sexual abuse or assist the victims of child sexual abuse nationwide." (Id. ¶ 47.) To date, Penn State has paid $12 million into an account scheduled to be transferred into the NCAA's endowment. (Id. ¶ 48; Doc. No. 14-2.)

B. The Commonwealth Court Action

On December 28, 2012, Senator Jake Corman, a State Senator from the 34th Senatorial District of Pennsylvania and the Chair of the Senate Committee on Appropriations, circulated a memorandum to other state senators entitled "NCAA Fine Endowment for Pennsylvania." (Doc. No. 1 ¶ 51; Doc. No. 14 at 3-4.) In the memorandum, Senator Corman stated that he planned to introduce legislation to direct funds from penalties placed on Commonwealth-supported institutions of higher education to Commonwealth causes and that "state policy should require the money be distributed for the benefit of the state and its residents." (Doc. No. 1-3 at 2.) Senator Corman further stated in the memorandum that the proposed legislation "seeks to impact the $60 million financial penalties placed upon the Penn State University." (Id.)

Prior to the enactment of the legislation envisioned in his memorandum, Senator Corman commenced an action against the NCAA in the Commonwealth Court of Pennsylvania on January 4, 2013, seeking declaratory and equitable relief to ensure that all of the funds paid into the endowment would be used for the benefit of the Commonwealth and its residents. (Doc. No. 14 at 1-2; Doc. No. 14-1.) In his complaint, Senator Corman alleged that the sanctions imposed in the consent decree violated the Pennsylvania Constitution and Pennsylvania law primarily because the NCAA, despite intending "to wrest such a large sum of Pennsylvania public funds, ... has refused to submit to any control by Pennsylvania elected officials." (Doc. No. 14-1.) Three days later, Senator Corman moved the Commonwealth Court to issue a preliminary injunction enjoining the NCAA from "disposing of, reducing, or otherwise dissipating outside of Pennsylvania" any of Penn State's first payment of $12 million. (Doc. No. 14-2.)

On February 7, 2013, the NCAA filed preliminary objections to Senator Corman's complaint in the Commonwealth Court. (Doc. Nos. 14-4, 14-5.) In its preliminary objections, the NCAA asserted that Senator Corman lacked standing to bring the action in the Commonwealth Court, that the Commonwealth Court lacked jurisdiction over the action because Penn State was not a party to the action, and that the relief sought by Senator Corman was unconstitutional in that his attempt to override the consent decree would violate the Commerce Clause of the United States Constitution as well as the Contracts Clauses of the Constitutions of the United States and Pennsylvania. (Doc. No. 14-4.)

On September 4, 2013, the Commonwealth Court issued an opinion overruling all of the NCAA's preliminary objections, including its objection challenging Senator Corman's standing. Corman v. Nat'l Collegiate Athletic Ass'n, No. 1, 2013 WL 4734606, at *18 (Pa. Cmwlth. Sept. 4, 2013).

C. The Pennsylvania Institution of Higher Education Monetary Penalty Endowment Act and Further Proceedings in the Commonwealth Court

Following Senator Corman's filing of his complaint and motion for a preliminary injunction in the Commonwealth Court, Governor Corbett, on February 20, 2013, signed into law the Pennsylvania Institution of Higher Education Monetary Penalty Endowment Act, 24 P.S. §§ ...


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