Monday, October 28, 2013

Penn State Sex Abuse Scandal Costs Approach $200 Million Dollars Due To Digital Evidence

The Jerry Sandusky sex abuse scandal at Penn State was horrific.  More than 2 dozen young men were molested by former Penn State football coach Sandusky.  Their lives were forever changed because it appears that some members of the Penn State community tried to cover up the situation instead of stepping in to help those abused.

Last year, a jury found Sandusky guilty of 45 charges of sexual abuse and he will most likely spend the rest of his life in prison.  The fallout from the matter has included numerous lawsuits against Penn State.  Earlier today, Penn State announced that it had agreed to pay almost $60 million dollars to 26 plaintiffs who alleged they were molested by Sandusky.

It was also recently disclosed that Penn State has so far spent more than $50 million dollars in legal fees and fines defending its conduct in this matter and the university still owes $48 million dollars of a $60 million dollar fine to the NCAA. While it is too soon to speculate on the overall economic loss to the entire Penn State community, this cost may reach hundreds of millions of dollars.  While we may never be able to fully measure the precise human toll this scandal has caused, we can put a ball park figure on the economic toll so far and it appears to be north of $150 million dollars ($60 million dollars in settlements, $50 million dollars in legal fees/fines, etc.., $48 million dollars over the next 4 years in NCAA fines).

Strong eye witness testimony at trial that Sandusky was a sexual abuser appears to have swayed the jury.  Interestingly, there was not much evidence that appeared to demonstrate that Penn State knew or should have known that they were allowing a child molester to roam free throughout its football facilities.  The main evidence that appears to prove Penn State officials turned a blind eye to Sandusky's illegal activities was a handful of emails more than ten years old.

On November 10, 2011, I warned that the Sandusky scandal may cost Penn State more than $100 million dollars.  On June 30, 2012, I wrote, "[d]igital evidence from eleven years ago may be the smoking gun that demonstrates that Penn State knew about Sandusky but intentionally did nothing to stop Sandusky...."  On July 23, 2012, I stated, "[i]t appears that this scandal may end up costing Penn State closer to $150-$200 million dollars now that the NCAA has taken unprecedented action.

Many of the social media monitoring companies that approach schools lie about their founder's background/experience and/or monetize the personal student data they are collecting.  Schools that engage these social media monitoring companies may be on the hook for tens or hundreds of millions of dollars in legal liability if they continue to engage these companies.

The Obannon vs. NCAA case demonstrates that schools are very vulnerable to legal liability issues regarding a student-athletes' image and likeness rights.  The Obannon case along with the Penn State sex abuse scandal should put schools and the NCAA on notice that once they are aware of an issue but do not act to properly resolve it they may be liable for tens or hundreds of millions (or more) of dollars in damages. 

Schools that utilize social media monitoring services to track their student-athletes' and/or employees' personal digital activities are treading on thin ice.  Engaging these companies may not only lead to lawsuits, but to punative damage settlements that are designed to deter this behavior in the future.  Does every school need to experience a major scandal before realizing the legal liability issues inherent with digital evidence?
Copyright 2013 by the Law Office of Bradley S. Shear, LLC All rights reserved.

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