Commonwealth v. National Collegiate Athletic Association

Jerry Sandusky, the football coordinator for Pennsylvania State University (Penn State), was convicted on multiple counts of child sexual abuse. Sandusky’s abusive behavior was covered up by numerous high-level Penn State officials. The National Collegiate Athletic Association (NCAA) (defendant), the governing body for college sports, sanctioned Penn State for violating the NCAA’s ethical code. The sanctions imposed included, but were not limited to, requiring Penn State to pay $60 million to a fund for sexual-abuse victims, and substantially reducing the number of football scholarships Penn State could offer. Penn State consented to the sanctions to avoid the alternative penalty: a four-year cancellation of its NCAA football program. Governor Tom Corbett, on behalf of the Commonwealth of Pennsylvania (plaintiff), sued the NCAA under the Sherman Antitrust Act, arguing that (1) the NCAA conspired to reduce Penn State’s revenue from the football program and limit the competitive standing of Penn State’s NCAA football program; and (2) the reduced revenue as a result of the sanctions would negatively impact Pennsylvania’s economy. The NCAA moved to dismiss, arguing that (a) NCAA sanctions were not a commercial endeavor; (b) the sanctions did not have nationwide anticompetitive effects; and (c) Pennsylvania did not have antitrust standing because its injuries were derivative.