Antitrust Law Daily Wrap Up, ANTITRUST NEWS: NCAA Seeks Dismissal of Pennsylvania’s Suit over Penn State Sanctions, (Feb 11, 2013)

By Jeffrey May, J.D.

The National Collegiate Athletic Association (NCAA) has filed a motion to dismiss an antitrust action brought by the Governor of Pennsylvania, seeking to invalidate some or all of the sanctions imposed by the NCAA on Pennsylvania State University in response to the alleged misconduct of university officials with respect to the child sex abuse scandal involving former Penn State Assistant Football Coach Jerry Sandusky. The state's antitrust complaint was filed on January 2, 2013, in the federal district court in Harrisburg.

The state alleged that the NCAA and its member institutions conspired to restrain and suppress competition in violation of Sec. 1 of the Sherman Act by “using the Sandusky Offenses as a pretext to impose arbitrary, capricious, and unprecedented sanctions on Penn State for actions wholly unrelated to the mission of the NCAA.” According to the state, the NCAA's rules were arbitrarily enforced, and the sanctions lessened competition by “denying the benefits of participation to a single competitor.”

The state filed suit to obtain an injunction preventing the NCAA from imposing the sanctions set forth in a consent decree between Penn State and the NCAA. Under the consent decree, Penn State accepted, among other things, a four-year ban on postseason play, a reduction in football scholarships, and vacatur of football wins since 1998. It further agreed to fund a $60 million endowment dedicated to preventing child sexual abuse and assisting its victims, and to implement a series of recommendations aimed at reestablishing institutional control over the football program, according to the NCAA.

“The remedial measures that Penn State agreed to were controversial and elicited strong feelings on all sides,” according to the NCAA's February 7 filing. However, “none of those feelings have anything to do with the antitrust laws.”

The NCAA offered four reasons for dismissing the lawsuit:

(1) the NCAA's enforcement of rules relating to program integrity and eligibility for competition is not the regulation of commerce and is therefore outside the scope of the Sherman Act;

(2) even if the antitrust laws were applicable, the complaint failed to state a claim because the NCAA’s enforcement of its institutional control and ethical standards in this case easily satisfied the antitrust “rule of reason” and, therefore, the complaint can be dismissed on the pleadings;

(3) the complaint fails to allege anticompetitive economic harm—i.e., tuition increases, reductions in scholarship opportunities, or increases in apparel costs—injurious to consumers in the three, insufficiently-pled markets for higher education, athletic apparel, and football recruits; and

(4) the state governor lacks standing as parens patriae to challenge a decision by the university to enter into an agreement with the NCAA, because the state's citizens have not themselves suffered antitrust injury.

The case is 1:13-cv-00006-YK.

Attorneys: Thomas W. Scott (Killian & Gephart, LLP) for NCAA.

Companies: National Collegiate Athletic Association

News: Antitrust PennsylvaniaNews