Analysis: Sizing up Penn State's liability in abuse scandal

NEW YORK Fri Jun 22, 2012 3:48pm EDT

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NEW YORK (Reuters) - The Jerry Sandusky trial has been loaded with detailed allegations of child sex abuse against the one-time Penn State assistant football coach, but it has revealed little about the university's potential liability in the scandal.

That is likely to change in a related prosecution of two former university officials: athletic director Tim Curley and finance official Gary Schultz.

Both have been charged with perjury and failing to alert authorities to one alleged act of sexual abuse by Sandusky in a scandal that tarnished Pennsylvania State University's name and led to the firing of its president and its head football coach, the late Joe Paterno.

"Their trial will be much more an indictment of Penn State," said Max Kennerly, a Philadelphia lawyer who is not involved in the case.

A trial date has not been set in that case. The jury in Sandusky's criminal trial deliberated for a second day Friday. He has pleaded not guilty to 48 counts of abuse against 10 boys. After the jury had begun deliberating Thursday, Sandusky's adopted son, Matt, alleged he had also been abused by Sandusky.

DEEP POCKETS

With $4.6 billion in operating revenue reported for the last fiscal year and an endowment topping $1.8 billion, Penn State is the most flush civil litigation target for Sandusky's alleged victims.

At least one unidentified male already has filed a lawsuit against the university for failing to protect him from Sandusky. He initially is seeking more than $50,000 in damages, the standard amount in Pennsylvania courts to trigger a jury trial.

To hold the school liable, an alleged victim would have to show that Penn State - through its employees - owed the boys a duty of care and that they failed to uphold that duty.

Legal experts said they expect more civil suits to be filed soon against Penn State and media reports have suggested that the total number of alleged victims could be closer to 20. Victims of sexual abuse often wait until a criminal proceeding has concluded to initiate civil litigation.

Penn State President Rodney Erickson has been quoted as hoping to settle any potential civil claims out of court. Marcia Hamilton, a lawyer for the person who already has filed suit, said Penn State has not approached her about a settlement.

Penn State declined to comment for this story.

The situation Penn State faces has drawn comparisons to the sexual abuse allegations that have dogged the Roman Catholic Church and prompted calls for the university to set up a victims' compensation fund. So far, Penn State has not established such a fund.

In Sandusky's trial, the prosecution's case relied mostly on the testimony of eight of the 10 alleged victims, who described being molested by Sandusky in graphic detail.

ESTABLISHING RESPONSIBILITY

While a conviction of the former coach would bolster any civil case against Penn State by establishing that molestation occurred, a conviction of Schultz and Curley could help in establishing Penn State's responsibility, legal experts said.

A grand jury report made public in November found that Curley and Schultz, who oversaw the campus police, lied about their response to a 2002 report from Mike McQueary, then a graduate assistant for the football team. McQueary testified to he told Curley and Schultz he witnessed what he believed to be Sandusky having anal sex with a boy in a shower on campus.

NBC reported last week that newly obtained evidence includes emails showing Curley, Schultz and former Penn State President Graham Spanier discussing how to handle the McQueary report. Spanier and Schultz, according to NBC, agreed that it would be "humane" to not report Sandusky to social services agencies.

Prosecutors for the Pennsylvania attorney general alluded to the new evidence in recently filed court papers. They claimed that a grand jury had "long ago" subpoenaed evidence relating to Sandusky from Penn State, but that the university only recently provided a file that was maintained by Schultz.

In a statement following the NBC report, Penn State said the emails were discovered during the course of an independent investigation led by former FBI Director Louis Freeh and were immediately turned over to the state attorney general.

Lawyers for Curley and Schultz, meanwhile, said the files show the two men "conscientiously" considered McQueary's report and "deliberated about how to responsibly deal with the conduct and handle the situation properly."

UNKNOWN COST

It's impossible to know what the cost to Penn State ultimately might be. There is no formula for damages in sexual abuse cases and there are no caps on damages. Lawyers who specialize in sex abuse cases say damages can vary widely from case to case, depending on the harm done to the victim.

Last week, a jury in Northern California awarded $7 million in compensatory damages and an additional $21 million in punitive damages to a woman who claimed the Jehovah's Witnesses allowed one of its members to sexually abuse her when she was a child. Lawyers for the plaintiff say they believe the award is the largest ordered in the United States in a religious child abuse case for a single victim.

Another variable that could determine Penn State's liability is what portion of blame a jury assigns to it. If a verdict is returned in a civil case brought by one of Sandusky's alleged victims, a jury may be asked to determine how much of a judgment Penn State should be required to pay.

"That will be a big issue," said Stephen Estey, an attorney who has litigated sex abuse cases. "The defense is going to say we didn't commit the crime."

(Editing by Doina Chiacu)

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