Paterno et al v. The Pennsylvania State University

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE LAWRENCE F. STENGEL ON 2/25/16. 2/26/16 ENTERED AND COPIES E-MAILED.

Eastern District of Pennsylvania, paed-2:2014-cv-04365

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6 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA JOSEPH ("JAY") V. PATERNO,: CIVIL ACTION et al.,: Plaintiffs:: vs.: NO. 14-4365: THE PENNSYLVANIA STATE: UNIVERSITY,: Defendant: MEMORANDUM STENGEL, J. February 25, 2016 Two former assistant football coaches bring this action against the Pennsylvania State University alleging federal and state law violations in the termination of their employment. Specifically, they claim: (1) a violation of their civil rights for the deprivation of their liberty and property interests without due process of law pursuant to 42 U.S.C. § 1983; (2) intentional interference with prospective contractual relations; (3) civil conspiracy; (4) a violation of the Pennsylvania Wage Payment and Collection Law, 43 P.S. §§ 260.1, et seq.; and (5) breach of contract. The defendant has filed a motion to dismiss to which the plaintiffs have responded. For the following reasons, I will grant the motion to dismiss. 6 I. BACKGROUND1 A. The Sandusky Scandal and Penn State's Response Jay Paterno and William Kenney contend that in mid-January 2012, they were fired by the Pennsylvania State University ("Penn State") in response to the publicity surrounding the conduct of Gerald A. Sandusky, a former assistant football coach at Penn State. In November 2011, Sandusky was charged with various crimes, including aggravated criminal assault, corruption of minors, unlawful contact with minors, and endangering the welfare of minors. On June 22, 2012, a jury in Centre County, Pennsylvania found Mr. Sandusky guilty of forty-five of the forty-eight criminal charges filed against him. He was sentenced to thirty to sixty years in prison. On November 4, 2011, the Attorney General of Pennsylvania also filed criminal charges against Penn State's Athletic Director and its Senior Vice President of Finance and Business for failing to report allegations of child abuse against Mr. Sandusky to law enforcement or child protection authorities in 2002 and for committing perjury before the grand jury in January 2011. See Am. Compl., Exhibit F at 13. Almost a year later, Penn State's former president was charged by a grand jury with obstructing justice, endangering the welfare of children, perjury, and conspiracy. These three former Penn State officials have yet to go to trial. 1 The facts are gleaned from the amended complaint and the extrinsic documents upon which it is based. See GSC Partners, CDO Fund v. Washington, 368 F.3d 228, 236 (3d Cir. 2004). For the purposes of this motion, they are presented in the light most favorable to the plaintiffs, as the non-moving parties, and are accepted as true with all reasonable inferences drawn in their favor. 2 6 On November 9, 2011, the Board of Trustees of Penn State voted to relieve Joe Paterno of his responsibilities as head football coach effective immediately. See Am. Compl. ¶ 45. The Board of Trustees stated that Joe Paterno had demonstrated a "failure of leadership" by only fulfilling his legal obligation to inform another Penn State official, Penn State's Athletic Director Tim Curley, about a 2001 incident involving Mr. Sandusky and a minor, and by not going to the police himself. Id. ¶ 46. On November 11, 2011, two days after terminating Head Coach Joe Paterno, Penn State's Board of Trustees formed a Special Investigations Task Force, which engaged the firm of Freeh Sporkin & Sullivan, LLP (the "Freeh Firm"), to investigate: (1) the alleged failure of Penn State personnel to respond to and report to the appropriate authorities the sexual abuse of children by Mr. Sandusky, a former football coach, see Am. Compl. ¶ 47; and (2) the circumstances under which such abuse could occur in Penn State facilities or under the auspices of Penn State programs for youth. See Am. Compl., Exhibit F. Further, Penn State asked the Freeh Firm to provide recommendations regarding university governance, oversight, and administrative policies and procedures to help Penn State adopt policies and procedures to more effectively prevent or respond to incidents of sexual abuse of minors in the future. Id. ¶ 48. The plaintiffs note that Penn State, however, had not engaged the Freeh Firm, and had not granted any authority to the Freeh Firm, to investigate or even consider whether any of the actions under its review constituted violations of the NCAA's rules. In announcing the investigation, Trustee Kenneth C. Frazier made the following public statement: "No one is above scrutiny. [The Freeh Firm] has complete rein to 3 6 follow any lead, to look into every corner of the University to get to the bottom of what happened and then to make recommendations that ensure that it never happens again." See Am.Compl., Exhibit F. On November 17, 2011, Mark A. Emmert, President of the National Collegiate Athletic Association ("NCAA"), sent a letter to Rodney A. Erickson, Penn State's Interim President, expressing concerns over the grand jury presentments that were ongoing with the criminal investigation into the Sandusky scandal. Mr. Emmert asserted that the NCAA had jurisdiction over the matter and that the NCAA might take an enforcement action against Penn State. Id. ¶ 50. Mr. Emmert's letter stated that the "individuals with present or former administrative or coaching responsibilities may have been aware of this behavior;" and "if true, individuals who were in a position to monitor and act upon learning of potential abuses appear to have been acting starkly contrary to the values of higher education, as well as the NCAA." See Am. Compl., Exhibit B. The Emmert Letter also indicated that "the NCAA will examine Penn State's exercise of institutional control over its intercollegiate athletic programs, as well as the actions, and inactions, of relevant responsible personnel." See Am. Compl. ¶ 52. Mr. Emmert further asserted in his letter that the NCAA's Constitution "contains principles regarding institutional control and responsibility" and "ethical conduct," and that those provisions may justify the NCAA's involvement.2 Id. ¶ 56. He advised Penn State that it would need to "prepare for potential inquiry" by the NCAA. Id. ¶ 57. 2 The plaintiffs note that Mr. Emmert's letter failed to identify any specific provision in the NCAA's Constitution or Bylaws that granted the NCAA the authority to become involved in 4 6 B. The Hiring of a New Head Football Coach On January 6, 2012, Penn State announced that it had selected William J. O'Brien as Penn State's new head football coach. Id. ¶ 62. The amended complaint states, "[t]hereafter, O'Brien elected not to retain and otherwise released Plaintiffs as assistant football coaches with the Penn State football program."3 Id. ¶ 63. It further alleges that the plaintiffs both had exemplary reputations where they brought considerable distinction and acclaim to Penn State during their respective lengthy years of service. Id. ¶ 4. They even allege that there had been a widely-shared belief among professional and collegiate football organizations that, based upon the plaintiffs' reputations and successes as assistant football coaches, they would have been well-sought after and desired prospective coaches, either as head coaches or assistant coaches, had they decided to leave their positions with Penn State. Id. ¶ 19. The plaintiffs insist that because of the temporal proximity to the events surrounding the Sandusky scandal in conjunction with Penn State's subsequent execution of a Consent Decree, their termination had the effect of branding and stigmatizing the plaintiffs as participants in the Sandusky scandal and, by so doing, maligned the plaintiffs' stellar reputations by portraying them by implication in false light. Id. ¶ 69. criminal matters regarding the Sandusky scandal that resided outside of the NCAA's basic purpose and mission. See Am.Compl. ¶ 55. They also note that the letter did not identify any NCAA rule that Penn State or any of the individuals being investigated, including the plaintiffs and other coaches and administrators, had allegedly violated as a result of the Sandusky scandal. See Am. Compl. ¶ 54. 3 The plaintiffs do not dispute that every head football coach has the discretionary authority to determine his coaching staff, and could release an assistant coach from his coaching duties. See Am. Compl. ¶ 65. 5 6 In its press release on January 6, 2012 announcing Coach O'Brien's hiring, Penn State indicated that it had been looking "for someone with some very special qualities, beginning with a heart that beats to the values and vision of Penn State University and our Penn State football legacy and tradition," and that Coach O'Brien exemplified those traits. Coach O'Brien stated, "I am thrilled to be the head coach of the Penn State football program. I cannot tell you how excited I am to get started, meet the team, meet the football alumni and meet all of the people that make this University so special. As head coach of this special football program, it is my responsibility to ensure that this program represents the highest level of character, respect and integrity in everything we do. That includes my coaching staff, our players and everyone involved in the football program." See Am. Compl., Exhibit C. By mid-February 2012, Coach O'Brien completed the hiring of his assistant football coaches. Id. ¶ 75. On February 18, 2012, Penn State issued a press release, quoting the new head coach: "With the hiring of Charlie Fisher as quarterbacks coach, we have completed the Penn State football coaching staff," O'Brien stated. "This is a staff made up of men who care about the mission of Penn State University and being successful on and off the field. It is also a staff of winners, with five staff members that have been a part of national championship teams as assistant coaches. This is a staff that has won many games; some while being a part of the same staff, and is a staff comprised of former head coaches, coordinators and tremendous recruiting experience." See Am. Compl. ¶ 76; see also Am. Compl., Exhibit E. 6 6 C. The Freeh Report and the NCAA Sanctions On July 12, 2012, the Freeh Firm published its report. Id. ¶ 82. The report was not voted on or approved by Penn State's full Board of Trustees. Id. ¶ 84. According to the report, in order to avoid the consequences of bad publicity, the most powerful leaders at Penn State repeatedly concealed critical facts relating to Mr. Sandusky's abuse from law enforcement authorities, the University's Board of Trustees, the Penn State community, and the public at large. Id. ¶ 86. Within hours of the release of the Freeh Report and before all members of the Board of Trustees even had an opportunity to read the full Report, discuss it, or vote on its contents, certain Penn State officials held a press conference and released a written statement asserting that the Board of Trustees accepted full responsibility for the purported failures outlined in the Freeh Report. On July 22, 2012, the NCAA prepared a Consent Decree, resulting in the imposition of drastic sanctions against Penn State and its football program, including the imposition of over $60 million in penalties, a four-year post-season play ban, a loss of athletic scholarships, and a vacating of football wins since 1998. Penn State agreed to and executed the Consent Decree, which adopted the findings of the Freeh Report. Id. ¶¶ 89, 90. The amended complaint asserts that Penn State collaborated with the NCAA and the Freeh Firm, recklessly disregarding the plaintiffs' procedural due process safeguards by imposing sanctions against Penn State and issuing the Consent Decree in a criminal matter unrelated to recruiting and athletic competition (and thus outside of the NCAA's jurisdiction), and falsely accusing Plaintiffs with malice of enabling and acting with complicity with child sexual abuse. 7 6 Id. ¶ 91. In the Consent Decree, Penn State agreed to "waive[] any claim to further proc