Corman v. National Collegiate Athletic Ass'n
2013 Pa. Commw. LEXIS 353
Pa. Commw. Ct.2013Background
- PSU entered a July 23, 2012 Consent Decree with the NCAA requiring a $60 million fine to be paid in installments into “an endowment for programs preventing child sexual abuse and/or assisting the victims.” PSU placed the first $12 million installment into a money market account on Dec. 20, 2012.
- The Pennsylvania Legislature enacted the Institution of Higher Education Monetary Penalty Endowment Act (Endowment Act) (effective Feb. 20, 2013), requiring monetary penalties (>= $10M paid under agreements between an institution of higher education and a governing body) to be deposited into a State Treasury endowment fund, with the State Treasurer as custodian and limits on use (generally for Commonwealth residents).
- Senator Jake Corman and Treasurer Robert McCord sued the NCAA seeking declarations and injunctions that the NCAA violated the Endowment Act and must direct the fine into the State Fund. Plaintiffs’ Count II was withdrawn; Count I alleges statutory violation.
- NCAA filed preliminary objections arguing (inter alia) lack of standing (AG exclusivity and no custodial funds yet), PSU is an indispensable party, Count I fails to state a claim, and the statutes are unconstitutional (Takings, Dormant Commerce Clause, Contracts Clause).
- The Commonwealth Court (Judge Covey) overruled NCAA’s preliminary objections: it held both plaintiffs have standing, PSU is not presently indispensable, Count I states a claim, and the challenged statutes do not facially violate the cited constitutional provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing (Treasurer) | McCord is statutorily designated custodian of the Fund and may enforce the Act even before monies are physically in the Fund because the fine is paid or payable. | Section 204(c) of the Commonwealth Attorneys Act vests collection authority in the Attorney General; absent deposit, Treasurer lacks injury/standing. | Treasurer McCord has standing: the Treasury is excluded from the Commonwealth Attorneys Act agency definitions and the Fund statutory custodial role gives him enforceable interests. |
| Standing (Senator) | As Chair of Senate Appropriations, Corman is a statutorily named recipient of 30-day notice and annual reporting on Fund expenditures and thus has legislatively conferred interest/oversight standing. | Corman's interest is no different than any citizen’s and does not show concrete impairment to his legislative functions. | Senator Corman has standing based on the legislature’s conferral of specific oversight duties under the Endowment Act. |
| Indispensable Party (PSU) | N/A (Plaintiffs sued NCAA only). | PSU is indispensable because the dispute concerns PSU funds and PSU’s obligations under the Consent Decree and Endowment Act; absent PSU, decree would affect non-party rights. | PSU is not presently indispensable: Consent Decree gives PSU no role over disbursement once funds are in an endowment; PSU waived rights to litigation under the Decree; joinder not required now (but court may order joinder later if needed). |
| Failure to State a Claim | Plaintiffs: the fine is paid or payable and the Endowment Act applies to require deposit into the State Fund; NCAA must be compelled to direct deposit. | NCAA: until NCAA demands/receives the funds, it has not violated the Endowment Act and lacks present control; premature. | Count I survives preliminary objection: accepting pleadings and inferences, the fine is paid or payable and the Act applies, so plaintiffs stated a claim for relief. |
| Constitutionality (Takings, Dormant Commerce, Contracts Clauses) | Plaintiffs: statutes validly protect Commonwealth interests; do not effect unconstitutional taking or interstate discrimination or impair contracts substantially. | NCAA: Act effects a taking of private property without compensation, discriminates against interstate commerce, and impairs contractual obligations (Consent Decree). | Court rejects NCAA constitutional challenges at pleading stage: no cognizable property interest shown in NCAA (no ownership in Decree); Act does not facially discriminate against interstate commerce; Act does not substantially impair contractual obligations (Consent Decree silent on endowment control/geography; Act applies prospectively or to payable fines). |
Key Cases Cited
- Pennsylvania State Lodge, Fraternal Order of Police v. Dep’t of Conservation & Natural Res., 909 A.2d 413 (Pa.Cmwlth.2006) (standard for reviewing preliminary objections: accept well-pled facts and inferences).
- City of Philadelphia v. Commonwealth, 838 A.2d 566 (Pa. 2003) (joinder/indispensable-party and Declaratory Judgment Act principles).
- Pennsylvania Game Comm’n v. Dep’t of Envtl. Res., 555 A.2d 812 (Pa. 1989) (legislatively conferred interests can create standing).
- Knoll v. Butler, 675 A.2d 1308 (Pa.Cmwlth.1996) (limits on Treasurer’s custodial claim where funds not yet legally owned).
- United Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330 (U.S. 2007) (Dormant Commerce Clause framework; facial discrimination analysis).
- Transp. Workers Union of Am., Local 290 v. S.E. Pa. Transp. Auth., 145 F.3d 619 (3d Cir. 1998) (Contract Clause test: impairment and substantiality).
- Lynch v. United States, 292 U.S. 571 (U.S. 1934) (valid contracts are property for takings analysis).
- Fumo v. City of Philadelphia, 972 A.2d 487 (Pa. 2009) (limits on legislative standing for generalized grievances).