[Third Update, June 6, 2013: Judge Kane has dismissed the lawsuit. Here’s the order, concluding:
The Governor’s complaint implicates the extraordinary power of a non-governmental entity to dictate the course of an iconic public institution, and raises serious questions about the indirect economic impact of NCAA sanctions on innocent parties. These are important questions deserving of public debate, but they are not antitrust questions. In another forum the complaint’s appeal to equity and common sense may win the day, but in the antitrust world these arguments fail to advance the ball. Plaintiff’s complaint fails on all prongs: it fails to allege commercial activity subject to the Sherman Act; it fails to allege that Defendant’s activity constituted a violation of Section 1 of the Sherman Act; and, it fails to allege that Plaintiff suffered an antitrust injury. On thorough review, this Court can find no basis in antitrust law for concluding that the harms alleged entitle Plaintiff to relief.
The Court thus dismissed the claims on standing, on their merits, and on even the factual predicate that antitrust law was implicated. Like I had said before, “Pennsylvania still has problems showing a nexus between that antitrust violation and a viable claim, regardless of whether we phrase it as a matter of standing, pleading, or causation,” and that’s essentially what the Court held.]
[Second Update, February 8, 2013: The NCAA has filed its brief arguing that the NCAA’s enforcement action was not subject to antitrust law, that it was procompetitive, that the complaint fails to allege anticompetitive effects in a relevant market, and that the plaintiff lacks standing.]
[Update: Obviously, there’s been plenty of coverage. See this post at SB Nation, this report at Reuters, and this story at Morning Call, the latter two of which quote me. Others differ on the standing issue (in essence, they assume a State always has standing to challenge any alleged antitrust violation), but most everyone agrees the case is a tough sell. See my comment at SB Nation — even if we begin by assuming the NCAA violated antitrust laws, given the indirect nature of the claim here, Pennsylvania still has problems showing a nexus between that antitrust violation and a viable claim, regardless of whether we phrase it as a matter of standing, pleading, or causation.]
I spent plenty of time on this blog discussing Penn State’s civil liability following the Jerry Sandusky abuse scandal, with most of my thoughts in this post. At this point, the Freeh report was rightly damning, and PSU has, as I hoped they would, brought in outside help (Ken Feinberg, the most prominent mediator in the country) to try to resolve the claims.
I didn’t dwell on the consent decree Penn State entered into with the NCAA sanctions — as they say, a deal is a deal, and that’s just as true for a university and an athletic association, except to point out that there was no reason for the NCAA to care that a minority of the Penn State’s Board of Trustees disagreed with the decision to enter into the consent decree. Corporations act through their management, chosen by their Board of Trustees; the thoughts and feelings of a minority of trustees aren’t relevant to anyone dealing with the party.
Earlier today, the issue returned with a vengeance, as Governor Corbett announced his intention to file, on behalf of the Commonwealth of Pennsylvania, an antitrust lawsuit against the NCAA. When a reporter at the press conference asked how the Governor could have standing, his chief counsel responded they were using parens patriae standing. Here’s a PDF copy of the complaint. In essence, Corbett, claiming to act on behalf of Commonwealth of Pennsylvania (I write “claiming” because, as described below, federal law authorizes the attorney general, not the governor, to act) alleges the NCAA’s sanctions against Penn State violate federal antitrust law. The real meat of the lawsuit starts on page 30. The claim is, in essence:
[T]he sanctions against Penn State do not even ostensibly serve the NCAA’s stated goal of protecting the fairness of intercollegiate athletic competition. Rather, they were taken for the purposes of debilitating a once-powerful football program, enhancing the NCAA’s own reputation, and boosting the competing football programs of cetrain member colleges and universities by removing from competition one of the leading competitors.
Grab a cup of coffee, we have a lot to talk about here.