By Robert T. Shannon
Hinshaw & Culbertson
On July 23, the NCAA issued "unprecedented sanctions" against Penn State University. Penn State commissioned former FBI Director Louis Freeh to conduct an investigation into the allegations leveled against former Penn State assistant football coach Jerry Sandusky and the university's interaction with Sandusky and its response to the allegations. The 267-page Freeh report, as it is commonly referred to, consumed eight months, involved about 430 interviews, analyzed at least 3.5 million pieces of electronic data and formed the basis for the historically harsh NCAA sanctions leveled against Penn State. Its conclusions were stark: Penn State officials, including former Athletic Director Tim Curley, former Vice President Gary Schultz, former President Graham Spanier and legendary head coach Joe Paterno, failed to take steps to protect the victims of Sandusky's crimes as far back as 1998.
When compared to punishments imposed on other universities for violating NCAA rules, the association moved fast. NCAA President Mark Emmert fast-tracked the investigation by obtaining approval from the NCAA Division I Board of Directors and the NCAA Executive Committee to sanction the university in an unprecedented manner and for actions that some acknowledged may not be NCAA rule violations. It has been reported that the NCAA rarely has, if ever, sanctioned a school for criminal conduct. In Penn State's case, the sanctions include a four-year bowl ban, five years of probation, significant scholarship reductions and the vacating of wins from 1998 to 2011 — 112 victories.
That period was apparently chosen to parallel the period between when Paterno allegedly first learned of the allegations to the end of his tenure. With that sanction, Paterno is no longer the NCAA leader in career football victories.
The sanctions also included a $60 million fine paid over five years and used for an endowment to prevent sexual abuse and to provide aid for victims. The amount was deemed to be equivalent to one year of gross revenue from Penn State's football program. With these sanctions, Emmert declared that no punishment will repair the damage.
While many have commented on the unprecedented and harsh nature of the penalties — even while acknowledging the awful nature of the acts — some suggested that the punishment did not go far enough. Such criticism has largely been focused on the fact that Penn State will be allowed to play football this and every season. Others claim that a "death penalty," like that imposed on Southern Methodist University in the 1980s, would have been too harsh. Penn State signed a consent decree accepting the sanctions and will not appeal. University President Rodney Erickson said in an op-ed piece in the Washington Post that the alternative was a potential multiyear football ban, an apparent acknowledgement of the difficulty involved with attempting to defend the allegations.
Not only was the speed of the NCAA's action noteworthy, but the basis of the sanctions was unique. The NCAA accepted and incorporated the Freeh report as its investigation. Normally, the NCAA spends considerable time investigating, obtaining a response from the school and conducting a hearing. This process can take years. Because of the fast-track process and the university's entering into the consent decree, the report essentially represents the last word.
Some civil complaints have been filed and many others are expected. Likely plaintiffs include the individual involved in the shower incident witnessed by assistant football coach Mike McQueary in 2001 and that McQueary testified he reported to Paterno. That incident eventually led to Paterno's firing. Penn State has not commented on the status of settlements with any victims, but there are reports that after Sandusky was convicted of 45 counts of sexual abuse, the university began reaching out to his victims in an attempt to "settle as many of these cases as quickly as possible," Erickson said. Many suspect that any complaints against Penn State will focus on allegations of negligent conduct on officials' part and the related claim that the school failed to protect children. The report and the criminal proceedings provide potential plaintiffs with plenty of information.
Coverage disputes — related to whether Penn State withheld information that was material to the insurable risk and to whether the allegations of abuse and molestation fall into covered claims — also are likely.
Commentators predict that the football program will suffer for years to come. New head football coach Bill O'Brien's contract provides him an opportunity to deal with the sanctions, at least on the football field. O'Brien negotiated into his contract the following:
"Any sanction by the NCAA of a) loss of scholarships or b) bowl eligibility due to the actions of the previous staff or lack of institutional control prior to 2012 will immediately result in an automatic extension of coach's contract at 2016 total compensation and bonus package in years equal to the number of years of the sanctions."
Only time will tell how this unfortunate chapter closes and whether any of it will continue to play out in the courts.