## Facts

- Following a widely publicized child sexual abuse scandal involving a former Penn State assistant football coach and alleged failures of institutional oversight, the NCAA imposed sanctions on Pennsylvania State University’s football program.
- The sanctions included a $60 million payment to a child-abuse prevention and victim-assistance fund, scholarship reductions, and a multi-year postseason ban.
- Penn State accepted the sanctions through an agreement with the NCAA and waived any legal challenge to the sanctions or the process used to impose them.
- The Commonwealth of Pennsylvania, through its Governor, sued the NCAA (Penn State was not a party) seeking to enjoin enforcement of the sanctions.
- The Commonwealth alleged the NCAA and its members agreed to restrain trade by diminishing Penn State’s football competitiveness and revenues, which would in turn harm Pennsylvania’s economy.
- The Commonwealth brought a single federal claim under § 1 of the Sherman Act; the NCAA moved to dismiss under Rule 12(b)(6).

## Issues

1. Whether the Commonwealth had antitrust standing, including “antitrust injury,” to challenge NCAA sanctions imposed on Penn State.
2. Whether the complaint plausibly alleged concerted, commercial conduct by the NCAA that restrained trade in a relevant antitrust market.
3. Whether the complaint plausibly alleged market-wide anticompetitive effects (as opposed to harm to one institution) and an adequately defined relevant market.

## Decision

- The court granted the NCAA’s Rule 12(b)(6) motion and dismissed the complaint.
- The court held the Commonwealth lacked antitrust standing because its alleged economic harms were indirect, derivative, and not the type the antitrust laws are designed to prevent.
- The court also held the complaint failed to state a plausible § 1 claim because it did not plead anticompetitive effects on competition in a relevant market, as opposed to alleged harm to Penn State and downstream economic effects in Pennsylvania.
- The requested injunctive relief barring enforcement of the sanctions was denied.

## Legal Principles

- Antitrust standing requires “antitrust injury”: injury of the type the antitrust laws were intended to prevent and that flows from the allegedly unlawful conduct.
- Remote, derivative, or downstream economic harms generally do not confer antitrust standing when more direct market participants would be the proper plaintiffs.
- A § 1 Sherman Act claim must plausibly allege harm to competition in a relevant market, not merely harm to a single competitor or institution.
- Allegations challenging internal association discipline, without plausible market definition and market-wide anticompetitive effect, do not satisfy federal antitrust pleading requirements.

## Conclusion

The court dismissed Pennsylvania’s antitrust suit because the Commonwealth was not a proper antitrust plaintiff and because the complaint did not plausibly allege that NCAA disciplinary sanctions on Penn State harmed competition in a defined market, rather than causing only institution-specific and derivative economic effects.


Commonwealth v. Nat’l Collegiate Athletic Ass’n, 948 F. Supp. 2d 416 (M.D. Pa. 2013)