The Paterno family's lawsuit against the NCAA raises a number of important issues regarding the Penn State consent decree (the school's sanctions agreement with the NCAA) and could lead to a court setting aside that decree. There might have been some significant issues with Penn State's process entering into it, and school president Rodney Erickson should have to rebut some of the accusations leveled against him.
But the lawsuit has a glaring flaw -- it was filed against the wrong party.
The lawsuit (available here) alleges that the NCAA improperly forced Penn State to enter into the consent decree, which will hobble the football program for a decade. The NCAA certainly doesn't come away from the lawsuit looking good. It alleges that the NCAA forced Rodney Erickson to sign the decree on a tight timetable or else it would pursue the death penalty against the program. It provides plenty for those of us who argue that the NCAA enforcement arm is a starchamber that bends to the whims of its cruel and inept masters.
The plaintiffs want the court to set aside the consent decree and award damages for the various harms that they have suffered. But the lawsuit ignores a legal concept known as privity of contract.
The consent decree between the NCAA and Penn State was a contract, and when you have a contract, you don't want to be sued by someone related to your counterparty. We want to encourage parties to enter into contracts without having to worry about anyone related to the contract suing to have it voided.
If Quanta wants to sell servers to Facebook, it doesn't want to worry about you suing Quanta because you think it's making your profile load slower. But the concept of privity of contract means you can't sue Quanta because you are not a party to the contract -- Quanta only does business with Facebook, not all of its users.
So when the NCAA enters into a contract with Penn State, it doesn't want to worry about aggrieved Penn State fans suing it in turn. Allowing them to do so would set a terrible precedent, leading a flood of litigation and a wariness to enter into contracts in the future.
If parties within Penn State are angry about the contract, then their cause of action is not against the NCAA, or else it would discourage contracts and other commercial activity. Rather, the cause of action is against the parties at Penn State itself for entering into the contract, because these plaintiffs do have relationships (contractual and non-contractual) with the college.
The Paterno plaintiffs include some current members of Penn State's board of trustees. If the board members think that Erickson acted improperly -- and their complaint makes a compelling case that he did -- then they should be suing him, not the NCAA. A board member can sue a CEO for acting outside the scope of his duties, so there's nothing wrong with a lawsuit against Erickson. The only issue is when the Paterno plaintiffs will finally get around to suing him.
In a few months the NCAA will file a motion to dismiss the Paterno lawsuit. The judge will most likely grant that motion and dismiss the lawsuit unless the Paterno plaintiffs amend the complaint to include Erickson and Penn State as plaintiffs. So, after a few months of litigation delays, Paterno would eventually sue Penn State anyway. On its face, this initial lawsuit seems like a waste of time.
Now, Wick Sollers (lead attorney for the Paterno plaintiffs) is a smart man. He's one of the top lawyers in Washington, D.C. He probably charges around $1,000 an hour for his clients to pick his brain. He knows that this lawsuit should have been filed against Penn State and Erickson. So what's the strategy here? I've come up with a couple of possibilities.
- Dragging the NCAA into this makes the Paterno plaintiffs look better. The only people who like the NCAA wear pleated khakis. It's a cartel designed to rob college students of the compensation that they deserve, and it's run like a banana republic. Meanwhile, Joe Paterno's reputation has taken a massive hit in the past two years. So how better to prop it up than position him as a foe of the NCAA? For 40 years African strongmen used a similar strategy to get US/Soviet support and it WORKED.
- This is a warning shot to Penn State. The rogue Penn State board members who joined the Paterno lawsuit would prefer not to sue the colleagues that they have worked with over the years. This is a last-ditch attempt to get Penn State to resolve this internally before civil war erupts.
Again, Sollers is a smart man. Sandusky lawyer Joe Amendola was Barry Zuckerkorn, but Sollers is Bob Loblaw and Wayne Jarvis. He's got a plan. While we don't know what that plan is, we do know litigation is a drawn-out, costly process. Plenty of billable hours will die on this mountain. It's going to get expensive.
Joe Paterno probably built up a decent nest egg. He pretty much worked until he died, he didn't have any hobbies and he lived in a ranch house in a low cost-of-living area. But if Sandusky victims can prove that Paterno was involved in a cover-up, then their civil suits will eat into that estate pretty quickly. If you look at Catholic church abuse cases and factor in some light inflation, the back-of-the-envelope math comes out to about $1 million per victim. So expect the Paterno estate to defend itself in this case vigorously, and don't expect it to give any quarter until it disproves the Freeh Report or exhausts all of its appeals.
This is the beginning of what's going to be a nasty, drawn-out lawsuit. Just don't count on it to bring down the NCAA.