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Penn State could pay $100 million in civil damages to Sandusky's victims and lose public funding

Eric Adelson
Yahoo Sports

Penn State supporters likely felt the university hit rock bottom Thursday with the release of the Freeh Report, with its damning litany of evidence that school leaders ignored and concealed horrific crimes against children.

But the cost to Penn State could be more severe than anyone imagined. The university could eventually fork out more than $100 million to victims of Jerry Sandusky's child molestation, experts say.

Although the Freeh Report is not a legal document, its findings following the conviction of Sandusky, a former Nittany Lions defensive coordinator, on 45 counts of child molestation would make any civil trial difficult for the school to win. Penn State already has encouraged victims to come forward and settle, but now the victims will be encouraged (and many will say justified) to come forward asking for millions of dollars.

"Penn State could get clobbered," said Norm Pattis, a leading trial lawyer based in Connecticut who specializes in civil suits. "The plaintiff's theory is not just that people were injured but that lives were ruined. It's not uncommon to see behavioral problems. I think the damage claims could be very significant."

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Graham Spanier's decisions might cost Penn State millions. (AP)

How significant?

"Five million apiece is a conservative estimate," Pattis said. "If I had one of these plaintiffs, I'd hold out for a $10 million settlement and it would take a lot of work to get me to do less."

Some experts feel that number is excessive, that six-figure settlements are more likely. "Somebody said $10 million per victim," said legal expert Michael McCann, director of the Sports Law Institute and professor of law at Vermont Law School and a contributor for Sports Illustrated. "No, I don't see where that number is from. When somebody dies, it's not that high."

[Related: Dan Wetzel: Joe Paterno ignored helpless boys, protecting Jerry Sandusky]

But McCann acknowledges the real possibility that new victims could come forward, emboldened by the courage shown by the victims who testified against Sandusky. Fewer than a dozen took the stand, but one study found that men who molest boys average 150 victims. "Let's face it," McCann said. "There must be other victims. That's why Penn State should get closure."

Chicago-based attorney Andrew Stoltmann believes the cost to Penn State could soar past $100 million in settlements – a number Pattis agrees with. And that's the preferred path for the university because a trial not only likely would lead to more ugly evidence against Joe Paterno and the school, but could outrage a jury enough to award a victim tens of millions of dollars in damages (though a legal procedure called remittitur allows a judge to reduce a jury award deemed excessive).

University insurance could cover a large award, but the school's inaction over the course of the past 14 years in stopping Sandusky's behavior may threaten the coverage. "If you found high-level officials knew what was going on," Drexel law professor Richard Frankel said, "it could give rise to punitive damages. Then the university is on the hook for itself."

Asked by Yahoo! Sports columnist Dan Wetzel on Thursday if civil claims could run into the hundreds of millions, Victim 1’s attorney, Michael Boni, said, "I don't think that's out of the question."

[Related: LaVar Arrington talks Joe Paterno on Y! Sports Radio Wetzel to Forde show]

Nor is further investigation out of the question. In fact, experts say, it's likely. The Freeh Report showed evidence of a clear violation of the Clery Act, which mandates a school report crimes on campus to the federal government. That could cost Penn State tens of thousands of dollars in fines. And then there's the possibility of NCAA violations, specifically articles 2.4 and 10.1 of the NCAA constitution, which insist on proper ethical behavior on the part of coaches and school officials: "These values should be manifest not only in athletics participation, but also in the broad spectrum of activities affecting the athletics program."

The NCAA sent a letter to Penn State asking for answers to four key questions related to the Sandusky scandal, and sports law expert Alan Milstein thinks it's a foregone conclusion the NCAA will get involved. "If Penn State is smart," he said, "they're going to self-punish and eliminate the program for one year to avoid the death penalty."

Others believe that because this is a criminal issue and not a sports concern, the NCAA will avoid interfering. Milstein vehemently disagrees. "This is all about sports," he said. "All about protecting your sports empire."

He predicts Penn State will "shut down" its football program temporarily and allow athletes to transfer without penalty. If that happens, the school obviously would suffer a serious financial hit.

Would all this irreparably damage the university? Probably not, as Penn State's endowment is $1.8 billion. But unfortunately for the school, there's another frightening scenario to think about, and it involves Title IX.

Most of us think of Title IX as federal legislation that ensures gender equality, and that's true. But in a well-argued article for Justia.com last year, Hofstra professor Joanna Grossman and Pittsburgh professor Deborah Brake pointed out "Title IX's ban on sex discrimination clearly encompasses sexual harassment, whether it is opposite-sex or same-sex, and sexual assault and rape each constitute a severe form of sexual harassment, as well as being criminal acts."

The authors cited a 1992 Supreme Court case, Franklin v. Gwinnett County Public Schools, which allows a sexual harassment victim to sue for damages based on Title IX. (It's difficult to argue the Sandusky victims were not harassed.)

Grossman and Brake then tackled the issue of whether Sandusky victims can sue under Title IX since they are not affiliated with the university. But they noted the use of the word "person" in Title IX language: "No person in the United States shall, on the basis of sex, be … subjected to discrimination under any education program or activity receiving Federal financial assistance …"

Since some of Sandusky's crimes occurred on university property, and were enabled by his affiliation with the school – bowl trips for Second Mile children – Grossman and Brake argued that "Title IX covers all programs of a school, even when such programs take place away from school facilities, including on a bus, field trip, or at another location."

In an interview with Yahoo! Sports, Grossman said, "There is going to be some pressure on the Office of Civil Rights to investigate [a possible Title IX investigation]. The Freeh report really calls upon them to look into it because of what it says about the institutional culture."

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Joe Paterno, right, and other Penn State officials were part of the problem. (AP)

Grossman and Brake concluded that Penn State is liable, citing Gebser v. Lago Vista Independent School District, another Supreme Court case in which it was ruled "a school is only liable for damages for harassment (or assault) by a teacher if an official with authority to address the harassment has actual notice of the harassment and responded with deliberate indifference."

The Freeh Report went a long way to establish "deliberate indifference" by several Penn State officials with the authority to address the harassment. Paterno, then-athletic director Tim Curley, then-university president Graham Spanier and then-vice president Gary Schultz were found to have "repeatedly concealed critical facts relating to Sandusky's child abuse."

[Audio: Dan Wetzel provides an overview of the Freeh Report]

Title IX has not been applied to a situation quite like this because there hasn't been a situation quite like this. But now there is, and the U.S. Department of Education already is investigating. Penn State, as with all public universities, relies on government money. And a violation of Title IX could have implications beyond civil suit payouts.

"They could lose federal funding," said one attorney in the counsel's office of a major university, who requested anonymity. "It will bury the institution. There will be no university without financial aid."

Is Penn State in jeopardy of surviving as an institution? Most experts say no. But there is a price to pay for a total failure of leadership at one of the nation's top universities. And that price will be enormous.

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