Court Opinion

ID: 4967804
Source: CourtListenerOpinion
Date Created: 2021-09-24 16:25:17.454111+00
Date Added: 2024-06-11T08:16:19.859328
License: Public Domain

DISSENTING OPINION BY
President Judge PELLEGRINI.
Because Section 3(a) of the Institution of Higher Education Monetary Penalty Endowment Act (Endowment Act)1 imposes a duty upon the Pennsylvania State University (PSU) as the primary payor, to deposit the penalty funds into an endowment that complies with the provisions of Section 3(b) of that Act, PSU is an indispensable party because it is PSU funds in PSU’s possession that are to be paid under the “Binding Consent Decree Imposed by the National Collegiate Athletic Association [(NCAA)] and Accepted by [PSU]” (Consent Decree). Because PSU is an indispensable party and has not been sued by either Senator Corman or Treasurer McCord, we lack subject matter jurisdiction and I would sustain the NCAA’s preliminary objection and dismiss the Complaint.
A party is generally regarded to be indispensable “when his or her rights are so connected with the claims of the litigants that no decree can be made without impairing those rights.” City of Philadelphia v. Commonwealth, 575 Pa. 542, 567, 838 A.2d 566, 581 (2003) (citation omitted). The failure to join an indispensable party to a lawsuit deprives the court of subject matter jurisdiction and may be raised at any time or by the court sua sponte. Polydyne, Inc. v. City of Philadelphia, 795 A.2d 495, 496 (Pa.Cmwlth.2002).
The basic inquiry in determining whether a party is indispensable concerns whether justice can be done in the party’s absence. City of Philadelphia, 575 Pa. at 567, 838 A.2d at 581. The relevant analysis requires examination of the following factors:
1. Do absent parties have a right or interest related to the claim?
2. If so, what is the nature of that right or interest?
3. Is that right or interest essential to the merits of the issue?
4. Can justice be afforded without violating the due process rights of absent parties?
Id. at 567 n. 11, 838 A.2d at 581 n. 11 (citation omitted); Polydyne, Inc., 795 A.2d at 496 n. 2 (citation omitted). In *1173undertaking this inquiry, the nature of the claim and the relief sought must be considered. HYK Construction Co., Inc. v. Smithfield Township, 8 A.3d 1009, 1015 (Pa.Cmwlth.2010), appeal denied, 610 Pa. 623, 21 A.3d 1195 (2011). Moreover, in an action seeking declaratory relief, “all persons shall be made parties who have or claim any interest which would be affected by the declaration.” Section 7540 of the Declaratory Judgments Act, 42 Pa.C.S. § 7540(a).2
In this case, Senator Corman and Treasurer McCord ask this Court to declare that the Endowment Act requires that any and all of the penalty imposed by the Consent Decree be paid into the State Treasury. Under the Endowment Act, the “institution of higher education,” in this case, PSU, has the responsibility to deposit the money into the fund. See Section 3(a) of the Endowment Act, 24 P.S. § 7503(a).3 Even if PSU pays the penalty to the NCAA under the Consent Decree, it would not be relieved of that obligation under the Endowment Act, making PSU an indispensable party to the litigation.
Moreover, Senator Corman’s and Treasurer McCord’s own prayer for relief seeks to order PSU to pay the first installment of the penalty funds directly to the State Treasury or to order the NCAA to deposit the first installment into the State Treasury following payment by PSU. Because PSU is not a party in this proceeding, we have no authority to grant the requested relief. See generally Hansberry v. Lee, 311 U.S. 32, 40, 61 S.Ct. 115, 85 L.Ed. 22 (1940). (“It is a principle of general application in Anglo-American jurisprudence that one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process. A judgment rendered in such circumstances is not entitled to the full faith and credit which the Constitution and statute of the United States ... prescribe, and judicial action enforcing it against the person or property of the absent party is not that due process which the Fifth and Fourteenth Amendments requires.”) (citations omitted).
In response to this analysis, the majority goes to great lengths to ignore PSU’s *1174contractual and statutory duty to deposit the money owed by PSU to the NCAA that makes it an indispensable party. That position comes, in part, in its characterization of the agreement between PSU and the NCAA as a'“Consent Decree” and applying the law regarding true consent decrees, ones approved by a court, which seemingly accepts the NCAA’s position that it is some sort of non-state governmental actor. It is just a private contract between two parties — nothing more.
That analysis allows the majority to ignore that the requested declaration does impact PSU. Under the agreement, PSU agreed that it would pay $60 million in $12 million installments over a five-year period to the NCAA to be used for programs preventing child sexual abuse and/or assisting the victims of child sexual abuse. See Exhibit A to Second Amended Complaint at 5. If we were to grant the requested relief by issuing “[a]n order compelling the NCAA to ... direct payment of the first $12 million installment to the State Treasury....,” PSU would be required to deposit the first $12 million payment and future $12 million payments not as provided for in the agreement, but into the Endowment Fund created under Section 3(b) of the Endowment Act, 24 P.S. § 7503(b), for programs or projects preventing child sexual abuse and/or assisting the victims of child sexual abuse. Because the majority holds that the Endowment Act mandates do not unconstitutionally infringe on that agreement, PSU is bound by the mandates of the Endowment Act.
In addition, the NCAA falls within the definition of “governing body” and, as noted above, PSU falls within the definition of “institution of higher education,” as those terms are defined in Section 2 of the Endowment Act, 24 P.S. § 7502, and the NCAA’s and PSU’s obligations thereunder are an “agreement” and “monetary penalty” within the provisions of Section 3(a), 24 P.S. § 7503(a). Thus, under Sections 3 and 5, 24 P.S. §§ 7503 7505, PSU has an independent statutory duty to deposit the funds to be paid under the Consent Decree into the Endowment Fund.
Because PSU’s statutory and contractual liability with respect to funds in its possession are at the core of this ease, PSU has a clear right or interest that is essential to the disposition of the issues and its interest is not currently represented by any of the other parties. PSU must be deemed to be an indispensable party in this case and due process requires its participation before any meaningful judicial relief may be granted. See Columbia Gas Transmission Corp. v. Diamond Fuel Co., 464 Pa. 377, 379, 346 A.2d 788, 789 (1975).4
Accordingly, unlike the majority, I would sustain the NCAA’s preliminary objection based on Senator Corman’s5 and *1175Treasurer McCord’s failure to join PSU as an indispensable party and I would dismiss their Complaint because this Court lacks subject matter jurisdiction.6

. Act of February 1, 2013, P.L. 1, 24 P.S. § 7503(a). Section 3(a) states:
(a) General rule. — If an institution of higher education pays a monetary penalty pursuant to an agreement entered into with a governing body and:
(1) the monetary penalty is at least $10,000,000 in installments over a time period in excess of one year; and
(2) the agreement provides that the monetary penalty will be used for a specific purpose,
then the monetary penalty shall be deposited into an endowment that complies with the provisions of subsection (b).

. As this Court has explained:
While the Declaratory Judgments Act’s joinder provision is mandatory, it is subject to reasonable limitations. City of Philadelphia. For example, where a declaratory judgment as to the validity of a statute or ordinance is sought, it is impossible to join as parties every single person whose interests are affected by the statute or ordinance. Id. Requiring the joinder of all such parties would undermine the litigation process and render the litigation unmanageable. Id. Additionally, where a person’s official designee is already a party, the participation of such designee may alone be sufficient, as the interests of the two are identical, and thus, the participation of both would result in duplicative filings. Id.; see Leonard v. Thornburgh, [467 A.2d 104, 105 (Pa.Cmwlth.1983) ] (holding that the Governor need not participate in litigation involving a constitutional attack upon a tax statute, where his designee, the Secretary of the Department of Revenue, adequately represented his interests). Where the interest involved is indirect or incidental, joinder may not be required. See, e.g., Mid-Centre County Authority v. Township of Boggs, [384 A.2d 1008, 1012 (Pa.Cmwlth.1978)] (concluding that Pennsylvania’s Department of Environmental Resources was not a necessary party to a declaratory judgment action where its sole interest in the dispute concerned the identity of the party who would be responsible for complying with its regulations)....
HYK Construction. Co., Inc., 8 A.3d at 1015—16.

. See also Section 5 of the Endowment Act, 24 P.S. § 7505 (”[T]his act shall apply to all monetary penalties paid or payable under agreements between institutions of higher education and governing bodies regardless of the payment date.”).

. See also Mains v. Fulton, 423 Pa. 520, 523, 224 A.2d 195, 196 (1966) (holding that a declaratory judgment action brought by subdivision developers to determine whether a public utility possessed an easement across the lots in the development would not lie where all of the lot owners in the development had an interest and all of the owners were not joined in the proceeding).

. While I agree with the Majority’s determination that Treasurer McCord has standing to obtain relief under the Second Amended Complaint, I do not believe that Senator Cor-man has legislative standing in this case. As the Pennsylvania Supreme Court has explained:
An individual can demonstrate that he has been aggrieved if he can establish that he has a substantial, direct and immediate interest in the outcome of the litigation. A party has a substantial interest in the outcome of litigation if his interest surpasses that "of all citizens in procuring obedience to the law.” "The interest is direct if there is a causal connection between the asserted violation and the harm complained of; it is *1175immediate if that causal connection is not remote or speculative.”
Fumo v. City of Philadelphia, 601 Pa. 322, 336-37, 972 A.2d 487, 496 (2009) (citations omitted). Senator Corman claims that he has a direct interest in the Endowment Act’s enforcement and administration because, as the Senate Appropriations Committee Chair, he one of the numerous members of the General Assembly listed in Section 4(b)(1) and (2) of the Endowment Act, 24 P.S. § 7504(b)(1) and (2), that compose a panel that is entitled to notice of the Pennsylvania Commission on Crime and Delinquency's proposed disbursements from the Endowment Fund and to receive the Commission's annual report of all such expenditures. (Second Amended Complaint ¶51.) Under Fumo and Pennsylvania Game Commission v. Department of Environmental Resources, 521 Pa. 121, 127-28, 555 A.2d 812, 815 (1989), the Pennsylvania Commission on Crime and Delinquency has standing in this matter as the agency the General Assembly statutorily invested with the direct duties and responsibilities in disbursing the Endowment Fund. However, the panel, of which Senator Corman is a member, does not have the substantial, direct or immediate interest to support legislative standing with respect to the instant action involving the deposit of the penalty funds in the State Treasury under the Endowment Act because it only has review and comment powers on the Commission’s actions under Section 4(b)(1) and (2) to propose corrective legislative action. See, e.g., Fumo, 601 Pa. at 347, 972 A.2d at 502 (”[I]n this claim, the state legislators allege only that the City did not act properly in exercising its statutory authority to license. The claim reflects nothing more than the state legislators’ disagreement with the way in which the Commerce Director interpreted and executed her duties on behalf of the City. The claim does not demonstrate any interference with or diminution in the state legislators’ authority as members of the General Assembly. As such, Claim II is only a generalized grievance about the conduct of government that all citizens share. Thus, we conclude that the state legislators lack standing to pursue Claim II.”). Even if the panel would have the requisite interest, Senator Corman is merely a member of that panel and one member of the body does not have standing to enforce. Accordingly, unlike the majority, I would sustain the NCAA's preliminaiy objection with respect to Senator Corman’s standing in this matter.

. Because we lack subject matter jurisdiction, I would not reach the merits of the claims raised in the Complaint.