The $50M

[xc84]

"The distinction between a reasonable exit fee and an exorbitant exit penalty will be important in determining how much Maryland is legally obligated to pay, legal experts said."

Hmmm... does this sound like an exorbitant penalty when described later by this guy?:

“It’s possible we pay,” Brian S. Ullmann, Maryland’s assistant vice president for communications, said of the exit fee. “We took that into account and we were still far, far ahead.”

 

[Noexcuse]

"The distinction between a reasonable exit fee and an exorbitant exit penalty will be important in determining how much Maryland is legally obligated to pay, legal experts said."

Hmmm... does this sound like an exorbitant penalty when described later by this guy?:

“It’s possible we pay,” Brian S. Ullmann, Maryland’s assistant vice president for communications, said of the exit fee. “We took that into account and we were still far, far ahead.”

Rule number one in a lawsuit. Keep your mouth shut.

 

[Capt. Tuttle]

"The distinction between a reasonable exit fee and an exorbitant exit penalty will be important in determining how much Maryland is legally obligated to pay, legal experts said."

Hmmm... does this sound like an exorbitant penalty when described later by this guy?:

“It’s possible we pay,” Brian S. Ullmann, Maryland’s assistant vice president for communications, said of the exit fee. “We took that into account and we were still far, far ahead.”

Ummm, its a contract.

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[jsshap]

Rule number one in a lawsuit. Keep your mouth shut.

No doubt. If the case is litigated and he is deposed he will eat that comment. That said, I expect any meaningful discovery would quickly uncover an abundance of documentation that establishes that same point - that the 50 million was not a significant obstacle in the big picture and the decision was to go even accepting that it was due. I find it hard to believe capable lawyers did not draft this so it is enforceable.

 

[jsshap]

Ummm, its a contract.

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Contract provisions are found unforceable all the time, often on grounds that they run contrary to public policy of a particular state. For example most non competes out there today.

 

[690West]

The math just doesn't work for any judge to lower the amount one penny.

"your honor, Maryland is projected to earn $25 mil per year in their new position"

::gavel slams::

Court is adjourned...

 

[kyleslamb]

It's a contract, but I wonder how much is different because this is a contract with three parties involved instead of just two. For instance, in most contracts, you're signing with a second party where there's presumably no duress and the stipulations were mutually agreed upon. But in this case, the stipulation was not agreed upon by Maryland but rather voted on by other third parties. I realize that Maryland consented to the bylaws that govern the vote, but I just think it would give more of a case to such a fee being exorbitant when it's being used as a penalty to try to keep a team from moving.

 

[DoctorBombay]

It's a contract, but I wonder how much is different because this is a contract with three parties involved instead of just two. For instance, in most contracts, you're signing with a second party where there's presumably no duress and the stipulations were mutually agreed upon. But in this case, the stipulation was not agreed upon by Maryland but rather voted on by other third parties. I realize that Maryland consented to the bylaws that govern the vote, but I just think it would give more of a case to such a fee being exorbitant when it's being used as a penalty to try to keep a team from moving.

Yeah, but I would think implied intent can't be used to oppose a contract...any counselor's in da house??
No one can say what the intent was & different folks would have different interpretations.
Seems MD looked at the numbers and decided it was well worth it, & you can't blame them.
Kinda scary when you realize that FSU or Clemson might come to a similar conclusion should they decide to jump.

 

[JohnCuse44]

Should have made the exit fee $100 Million

 

[longtimefan]

Yeah, but I would think implied intent can't be used to oppose a contract...any counselor's in da house??
No one can say what the intent was & different folks would have different interpretations.
Seems MD looked at the numbers and decided it was well worth it, & you can't blame them.
Kinda scary when you realize that FSU or Clemson might come to a similar conclusion should they decide to jump.

But moving to the Big 12 is not nearly as lucrative.

Now, if the SEC were interested. . .

 

[Capt. Tuttle]

Contract provisions are found unforceable all the time, often on grounds that they run contrary to public policy of a particular state. For example most non competes out there today.

Not well drated non competes which are reasonable in scope, duration, time and serve a legitmate purpose (trade secrets, etc.). Also, unlike many non-competes, this isn't an adhesion contract with strict construction. MD is a voluntary member of an organization and agreed to abide by the rules of the ACC. It knew the $50M was up for a vote. It could have left before the vote. Also, given that it applies to all, and isn't an arbitrary amount applied only to MD, I would think it is enforceable.

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[Alsacs]

It's a contract, but I wonder how much is different because this is a contract with three parties involved instead of just two. For instance, in most contracts, you're signing with a second party where there's presumably no duress and the stipulations were mutually agreed upon. But in this case, the stipulation was not agreed upon by Maryland but rather voted on by other third parties. I realize that Maryland consented to the bylaws that govern the vote, but I just think it would give more of a case to such a fee being exorbitant when it's being used as a penalty to try to keep a team from moving.

This is incorrect, there was no duress because they consented to being a member of the ACC and were only given 1/14 a vote. The only way Maryland can win this lawsuit is if they show the damages done to the university are punitive rather than reasonable in a liquidated damages provision. The ACC will take its time replacing Maryland because if they go ahead and just replace Maryland with Louisville or UConn this week the damage done to the ACC in perception, prestige, and actual damages will not equate to 50 million dollars in damage and a court could rule that the 50 million dollar penalty is excessive and thus is punitive in nature and not a fair liquidated damages provision. Go read the court case DiNardo vs. Vanderbilt and you will see the argument Maryland will make. I doubt Maryland alone is worth 50 million dollars in damages, but if this starts the ball moving on the destruction of the ACC then Maryland will play the penalty. The third party argument means nothing in this case.

 

[kyleslamb]

This is incorrect, there was no duress because they consented to being a member of the ACC and were only given 1/14 a vote. The only way Maryland can win this lawsuit is if they show the damages done to the university are punitive rather than reasonable in a liquidated damages provision. The ACC will take its time replacing Maryland because if they go ahead and just replace Maryland with Louisville or UConn this week the damage done to the ACC in perception, prestige, and actual damages will not equate to 50 million dollars in damage and a court could rule that the 50 million dollar penalty is excessive and thus is punitive in nature and not a fair liquidated damages provision. Go read the court case DiNardo vs. Vanderbilt and you will see the argument Maryland will make. I doubt Maryland alone is worth 50 million dollars in damages, but if this starts the ball moving on the destruction of the ACC then Maryland will play the penalty. The third party argument means nothing in this case.

It means something when the point of the fee was institutions trying to make it nearly impossible for a school to get out of the deal... which is the point I'm making. Then it becomes punitive. Obviously the ACC won't admit as such, but the whole point of the fee was not a reasonable damage but to try to bind the institutions to the ACC. That's why, directly or indirectly, having other third parties could play a factor. If schools are voting for a punitive increase to make it hard for someone to leave, that would violate the spirit of the fee.

 

[Alsacs]

It means something when the point of the fee was institutions trying to make it nearly impossible for a school to get out of the deal... which is the point I'm making. Then it becomes punitive. Obviously the ACC won't admit as such, but the whole point of the fee was not a reasonable damage but to try to bind the institutions to the ACC. That's why, directly or indirectly, having other third parties could play a factor. If schools are voting for a punitive increase to make it hard for someone to leave, that would violate the spirit of the fee.

LOL and the Grant of Rights provision doesn't bind institutions. I explained the legal arguments both sides will use. Maryland will have to show the damage done to the ACC doesn't add up to 50 million dollars worth of damage and thus is punitive. The ACC will have to do due its dilgence and in replacing Maryland and not act quickly or a Court will likely find in MD's favor. Also, I am sure there will be a jurisdictional battle as well if MD files suit first in MD court or if the ACC sues first in a NC court. You are knowledgeable, but on this the 3rd parties have no factor.

 

[Toga]

It means something when the point of the fee was institutions trying to make it nearly impossible for a school to get out of the deal... which is the point I'm making. Then it becomes punitive. Obviously the ACC won't admit as such, but the whole point of the fee was not a reasonable damage but to try to bind the institutions to the ACC. That's why, directly or indirectly, having other third parties could play a factor. If schools are voting for a punitive increase to make it hard for someone to leave, that would violate the spirit of the fee.

That IS the spirit of the fee.

 

[oldpinepoint]

LOL and the Grant of Rights provision doesn't bind institutions. I explained the legal arguments both sides will use. Maryland will have to show the damage done to the ACC doesn't add up to 50 million dollars worth of damage and thus is punitive. The ACC will have to do due its dilgence and in replacing Maryland and not act quickly or a Court will likely find in MD's favor. Also, I am sure there will be a jurisdictional battle as well if MD files suit first in MD court or if the ACC sues first in a NC court. You are knowledgeable, but on this the 3rd parties have no factor.

couldnt you use the argument that the difference between the income received via the big ten and acc makes the $50M reasonable. For example if the difference is $25M hypothetically the payback would be 2 years. to me that not that bad, but then again im a banker and look at everything in terms of payback

 

[Alsacs]

couldnt you use the argument that the difference between the income received via the big ten and acc makes the $50M reasonable. For example if the difference is $25M hypothetically the payback would be 2 years. to me that not that bad, but then again im a banker and look at everything in terms of payback

I am sure that is a factor the Court would look at. However, the main issue is whether a 50 million dollar exit fee is punitive in nature and whether or not the loss of MD to the ACC equals up to close to 50 million dollars. That is why it is key for the ACC not to add a 14th team until after going through all potential options so as Maryland can't claim our loss wasn't that damaging to the ACC TV contract and thus we shouldn't have to pay 50 million dollars its punitive.

 

[kyleslamb]

That IS the spirit of the fee.

I agree, but that's what makes it punitive. If the fee is meant to be restrictive, it might not be enforceable. The fees are supposed to be about compensating the ACC rather than imposed to force schools to stay.

 

[kyleslamb]

LOL and the Grant of Rights provision doesn't bind institutions. I explained the legal arguments both sides will use. Maryland will have to show the damage done to the ACC doesn't add up to 50 million dollars worth of damage and thus is punitive. The ACC will have to do due its dilgence and in replacing Maryland and not act quickly or a Court will likely find in MD's favor. Also, I am sure there will be a jurisdictional battle as well if MD files suit first in MD court or if the ACC sues first in a NC court. You are knowledgeable, but on this the 3rd parties have no factor.

I understand what you're saying but we'll have to agree to disagree. To emphasize, my point about the third party is simply that the third parties are essentially trying to force all schools to stay because of the fee and because of that dynamic, it might well matter that it's not just two parties. This is something I've seen asserted from a few contract attorneys, so it's not just solely my own opinion.

I've drawn up a few contracts and had them vetted before due to my work in freelance and it's always been explained to me that for a clause to be enforceable, it has to be mutually beneficial to all parties involved. If a clause is being imposed by other signors in order to put one or other parties at a disadvantage, that to me is very relevant.

 

[rrlbees]

With all the moves that have taken place over the years, I can't think of one school that has gotten out of paying full exit fees. Time yes (for additional cost), but not exit fees.

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[xc84]

It means something when the point of the fee was institutions trying to make it nearly impossible for a school to get out of the deal... which is the point I'm making. Then it becomes punitive. Obviously the ACC won't admit as such, but the whole point of the fee was not a reasonable damage but to try to bind the institutions to the ACC. That's why, directly or indirectly, having other third parties could play a factor. If schools are voting for a punitive increase to make it hard for someone to leave, that would violate the spirit of the fee.

So, if a contract is nearly impossible to get out of, it's punitive?


I say it is a well written contract. In addition, it was not even enough "penalty" for Maryland to stay. They are saying it is more lucrative for them to leave and pay the fine.

 

[Crusty]

This is most likely going to be heard in Greensboro US Circuit Court before a NC judge that will probably have graduated from Chapel Hill.

 

[Alsacs]

This is most likely going to be heard in Greensboro US Circuit Court before a NC judge that will probably have graduated from Chapel Hill.

Most likely a Duke graduatw. I know the US District Judges up there. Charlotte district court judges are filled with UNC/Wake graduates. Greensboro mainly has Duke Law School graduates, but venue will most likely favor the ACC if it got to that point.

 

[syr02esq]

Not well drated non competes which are reasonable in scope, duration, time and serve a legitmate purpose (trade secrets, etc.). Also, unlike many non-competes, this isn't an adhesion contract with strict construction. MD is a voluntary member of an organization and agreed to abide by the rules of the ACC. It knew the $50M was up for a vote. It could have left before the vote. Also, given that it applies to all, and isn't an arbitrary amount applied only to MD, I would think it is enforceable.

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There is no public policy concern here. Even so, public policy rarely negates a contractual provision. Never heard it in my ten years of practice as a corporate lawyer. This is not an unconscionable provision either.

 

[Alsacs]

There is no public policy concern here. Even so, public policy rarely negates a contractual provision. Never heard it in my ten years of practice as a corporate lawyer. This is not an unconscionable provision either.

SyrEsq what is your opinion of what I have said and what KylesLamb has said as it pertains to this lawsuit?