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Penn State Counterclaims Dismissed In Spanier Lawsuit

by Geoff Rushton

Penn State’s breach of contract claims against former university President Graham Spanier have been dismissed.

The university filed the counterclaims in Spanier’s own breach of contract suit against Penn State in December 2016. Last week, specially-presiding Judge Robert Eby dismissed all four of the university’s claims.

Eby’s opinion stated that the university waited too long to file its suit, with the statutes of limitations on the claims having expired, and that for some of Penn State’s claims, Spanier did not violate a 2010 employment contract and 2011 separation agreement.

Penn State had been seeking return of the money and benefits it paid Spanier since the separation agreement, as well as legal fees and interest, claiming he breached his employment contract and fiduciary duties and misled the university about the extent of his knowledge about the child sexual abuse investigation of Jerry Sandusky.

The separation agreement provided Spanier with 18 months salary, a $1.2 million retirement plan equivalency payment, a $700,000 payment during a one-year sabbatical, five years as a tenured faculty member at a salary of $600,000 a year and contributions to a retirement annuity.

Spanier, the school said, was obliged by his employment contract to act in good faith to the university’s interests, and before and during the negotiation of his separation agreement was obliged to disclose everything he knew about the investigation into Sandusky. Penn State would not have entered into the agreement had it known that Spanier had not fully disclosed all he knew.

Eby sustained Spanier’s objections that the breach of contract claim had passed the four-year statute of limitations.

Spanier was forced out as president in November 2011 following the charges against Sandusky and against former administrators Gary Schultz and Tim Curley for their handling and testimony about the 2001 incident reported by former football assistant Mike McQueary of seeing Sandusky with a boy in a locker room shower.

Spanier was charged in November 2012.

The university waited more than five years after Spanier’s termination and more than four years after he was charged in the case before making its claims. Spanier was convicted earlier this year of one misdemeanor count of endangering the welfare of a child and is appealing. Curley and Schultz pleaded guilty to the same charge.

Eby also wrote that Spanier’s fiduciary duties under his 2010 employment contract ended when he was terminated on Nov. 9, 2011 and that there is no language in the separation agreement to suggest otherwise. In fact, the university chose to bear the risk in the separation agreement of what more Spanier might know, Eby wrote.

“PSU’s argument that Spanier should have ‘confessed’ his involvement to the University is ludicrous,” Eby wrote. “Spanier had not yet been charged; it was folly for PSU to assume (and ridiculous for it to argue) that he would confess and invite criminal indictment before such indictment was inevitable.

“PSU could have protected itself; it could have insisted on a provision that provided it with an escape clause in the event that Spanier were ever implicated in the Sandusky cover up. It did not do so.”

Eby also noted that Penn State continued to meet its obligations under the separation agreement for years after Spanier was charged, waiving any claim to rescission of the agreement.

In Spanier’s lawsuit, Eby tossed most of the former president’s claims against Penn State in October 2016, but Spanier was allowed to file an amended complaint. Spanier claims Penn State violated a non-disparagement clause in his separation agreement, failed to reimburse him for legal fees and other expenses, and failed to provide administrative support once he moved to a faculty position.

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