ACC vs. Maryland: And some reasons expectation is a win

[CuseLegacy]

I imagine it will wind up in US Court in Greensboro.I

And of course you can guess where the majority of lawyers/judges in Greensboro received their law degrees.

 

[OrangePA]

That is what concerns me, all my litigation was in NC. All of my attorneys have scoffed at the idea of a LD clause being enforced here. I have always been told that judges hate them and just won't uphold them. Because of that we wrote them as simply as we possibly could to no avail. Judges think they are God on earth and that they know best and damn whatever contract provisions they don't like. Sounds like a far fetched statement but it is pretty close to the mark.

Pardon me for being so jaded in my view but my experience with lawyers quoting me the law has made me understand that theory and practice in the court room are two different things. All too often. judges place greater weight on the arguments based on what decision they want to make. The argument that gives them the decision they want can get stretched to unbelievable length and the losing argument dismissed with a couple of sentences.

NC judges get paid very little - chief district judge in each county seat earns $113,000 about $4,000 more than district judges. The state's Supreme Court earn $137,000 annually, with the chief justice earning $141,000. Members of the court of appeals earn $132,000 ($135,000 for the chief judge). Needless to say, these guys are not the sharpest knives in the drawer and. since they are elected. they always have their ears real close to the ground.

I think you can count on this being a pretty political decision, which is really what the ACC has going for it rather than the actual legal argument, which could go either way. The rest is just wild legal guessing.

I think you're over generalizing a bit about "judges"

 

[Btstimpy]

Below is the link to the lawsuit...note that the President of the Univ of Maryland may have provided significant clout to the ACC case as noted:

• The members of the ACC are bound by the vote of the Council of Presidents...
  Specifically, defendant Maryland has agreed to be bound by votes taken by the Council of Presidents.​
  The lawsuit also states that:
• Dr. Loh, acting as the agent and representative of defendant Maryland,voluntarily consented to and participated in, without objection, in the discussion and voteby and among the Council of Presidents during the Sept. 11-12 [2012] meeting concerning the immediate establishment of the withdrawal payment at 3X the annual operating budget of the ACC (although defendant did not vote in favor).
• The Council of Presidents previously had addressed the issue of a withdrawal paymenton Sept. 13-14, 2011. Following discussion at that meeting of potential harm resulting from withdrawal, the Council of Presidents adopted a proposal by Dr. Loh at that meeting to establish the withdrawal payment at 1.25X the total operating budget of the ACC. The Council of Presidentsunanimouslyvoted on Sept. 13, 2011 to amend the Constitution to establish the withdrawal at the amount proposed in discussion by Dr. Loh. Not only was this Dr. Loh's idea, but he voted for the original formula of 1.25X the operating budget during the Sept. 2011 meeting.
• Following the Sept. 2011 vote, the potential harm to ACC member institutions in the event of withdrawal of one or more members of the Conference substantially increased. The Sept. 11, 2012 amendment to the Constitution increasing the withdrawal payment to 3X the annual operating budget of the ACC resulted from further assessment of the potential harm for Conference members in the event of withdrawal

Above is a basis for recouping minimally 1.25X operating budget...that would be $21,250,000



Now why should it increase to the 3X mentioned in last bullet point above:

• The ACC media rights payment per team had gone from $13 million to over $17 million per year.
• The new college football playoffs had been approved, guaranteeing a huge payout to all members of the ACC as long as the conference remains viable as a "power conference".
• Notre Dame joined the ACC on the same day that the exit fee was increased--and Notre Dame also agreed to the fee--; obviously that changed the potential harm if the ACC were to dissolve.

I believe that the compensation for University of Maryland to leave will be over the $21,250,000 and closer to the $50,000,000+ as the case is heard and determination made in the state of North Carolina...which happens to have been agreed to by all universities of the ACC. The fact that all universities in the ACC and their presidents agreed to "live" up to the by-laws of the ACC also weighs heavily on the final decision.

Obviously all contacts are negotiable; however, strength of by-laws as well as state that makes the decision leads me to believe...ACC wins. Only question is how much more than $21,250,000 will be determined by either court decision or negotiation.
http://apps.washingtonpost.com/g/documents/sports/acc-vs-university-of-maryland-college-park/154/[/quote]

Found this on another site. Apparently the ACC case in North Carolina focuses on having the court declare the By-Laws of the ACC binding under corporate law in the State of North Carolina, which is the governing law of the ACC membership contract. Once the North Carolina Courts declare the By-Laws binding under North Carolina law, then the ACC will sure Maryland for the money in the State of Maryland with the only proof needed being Maryland as a member of the ACC at the time and subject to the binding Corporate By-Laws.

Here's the piece:

A post by Abe Lincoln on the GT board ("The Hive")

"The lawsuit by the ACC against Maryland was well thought out.

The ACC is chartered under the laws of the State of North Carolina (that was surprising to me, I thought it would have been Delaware). The laws of the State of North Carolina govern the management of the conference. The exit fee is a corporate by-law of the conference.

The first count in the complaint filed by the ACC is a request for Declaratory Judgment on the issue of the validity and legality of the corporate by law providing for the exit fee under North Carolina law.

There is only one court in the land that has the power to determine if a corporate by law adopted by a North Carolina corporation is binding under North Carolina law. That court is the Supreme Court of North Carolina. The U.S. Supreme Court can act to supersede the decision of the North Carolina Supreme Court only if it finds the North Carolina statutes governing corporations and corporate by-laws violate the U.S. Constitution (in this case the Interstate Commerce Clause). Not likely to happen.

The ACC didn't sue Maryland for $50M, it sued to get a North Carolina Court to declare that the corporate by laws of the ACC relating to the exit fee were valid and binding on the members. The ACC lawyers anticipated that Maryland would argue that you have to sue the University of Maryland in Maryland, which is possibly true. Maryland would have had a lot easier time of it if they were on their home turf. So the ACC took this step. They'll have a judgment from a North Carolina Court declaring the exit fees binding under North Carolina law, (which will be a disincentive to UVA and GT and UNC and VT and Clemson and FSU to look anywhere else even if that thought came to them in a dream) then they'll sue Maryland in Maryland for the money, and they'll have to prove that Maryland was a member of the ACC and it joined the BIG, and under North Carolina law (ACC will attach the certified copy of the declaratory judgment of the North Carolina Court) that behavior by a member of a North Carolina organization entitles the other shareholders of the corporation to $50M, and that they owe the conference $50M. Maryland writes a check because there's not a lot of wiggle room in that set of facts.

That's why Maryland couldn't remove the case to Federal Court, the Federal Court would just have to submit the declaratory judgment question of the corporate by law to the North Carolina Supreme Court.

So you have a North Carolina judge making a decision on whether the ACC exit fee is legal and binding under North Carolina law. I'm pretty sure I know how that's going to come out. If s/he rules in favor of North Carolina it benefits the State of North Carolina, if he rules in favor of Maryland, s/he gets to explain that ruling in the next general election and nobody who benefits from the case benefitting Maryland gets to vote in said North Carolina election. The North Carolina Court is going to say corporations are free to run their business anyway they want unless they're out killing people, and maybe the standard will be its o.k. unless they're out killing people that didn't need killing.

I think Maryland had to leave the conference before the vote on the bylaw became final if it wanted to pursue this anti-trust claim. Otherwise, they were members of the ACC for 5 months while the ACC was engaged in all this illegal activity they're complaining about, so in other words, they were part of the illegal conspiracy that is the subject matter of the law suit they brought. I don't think a court is going to allow a lawsuit by the getaway driver in a bank robbery to recover from his fellow bank robbers, his share of the loot. Bank robbers usually have to use guns to settle disputes.

Maryland couldn't pull out of the conference before the by-law became a by-law because they couldn't extort the BIG bribe they received to join the conference if they were a free agent, they would have to have begged the BIG to let them join and would have needed to take partial payouts for the first 5 years to join the club. But that's what happens when you hire a bunch of incompetents to run your athletic program, you get yourself in a bad situation.

This lawsuit by Maryland is a plea to the ACC to come talk to them about settling for something less than $50M. The ACC probably needs to do that because they really need Maryland out of the conference sooner rather than later, every time Maryland's name comes up in connection with the ACC there is negative press for the conference. We need Maryland to get about its regular business of getting it's athletics teams beat by Illinois and Minnesota on a regular basis."

 

[Crusty]

I think you're over generalizing a bit about "judges"[/quote

I truly wish I was. NC is not DE or NY.

 

[orange79]

who is a judge to determine reasonable? it was reasonable to the majority. if i want to charge $100/person to come watch a game at my house, who's to say that's unreasonable. nobody has to come if they don't want to. fans should start suing for unreasonable ticket prices.

this is whats wrong with our legal system today. nobody made maryland join nor stay in the acc.

as a sidenote however, if what anti posted is true and their bylaws/constitutuion say amendments don't go into effect until a later date, then md may have a case.

That's my take. If MD was so offended by the adoption of the exit fee, they should have left them, or at least made their feelings publicly known.

 

[Crusty]

who is a judge to determine reasonable? it was reasonable to the majority. if i want to charge $100/person to come watch a game at my house, who's to say that's unreasonable. nobody has to come if they don't want to. fans should start suing for unreasonable ticket prices.

this is whats wrong with our legal system today. nobody made maryland join nor stay in the acc.

as a sidenote however, if what anti posted is true and their bylaws/constitutuion say amendments don't go into effect until a later date, then md may have a case.

Let's change your scenario a bit. If you also had a contract with someone for the $100 admission fee and it had a liquidated damages clause in it that said if the person did not show up they would have to pay $300 - would that be reasonable? What my lawyers always explain to me is that the courts would say not because you only suffered $100 damage in the worst case. In addition, the $100 loss was clearly determinable at the time of the contract. The $200 would be deemed a "penalty" rather than damages and since penalties are deemed "as against public policy" in NC, are unenforceable. That is what this is all about (at least the exit fee thing.)

However, IMO a NC judge (state or federal) will probably uphold the fee as reasonable and/or indeterminable at the time of the contract and that will be that. The judge can (and IMO will) get around all the other arguments in any number of different ways, including ignoring them. Since this would be a finding of fact and not a legal issue, the case would not be have grounds for appeal. Hey Maryland, welcome to North Carolina.

 

[IthacaMatt]

Actually, it would be better if the lawsuit forces Maryland back to the ACC. $50M might do that.

 

[OrangePA]

Actually, it would be better if the lawsuit forces Maryland back to the ACC. $50M might do that.

Don't think that's happening.

 

[DoctorBombay]

Also, let's not discount the effect of the ACC withholding MD's conference earnings while the case is being litigated.
You're talking about 2 years of postponed revenue for an athletic program that's in the deep red.
The B1G has already said they wouldn't pay off MD's debt and neither will UnderAmour.
If the ACC can drag this thing out for a number of years while MD bleeds, you can bet they'll wanna settle on terms much more favorable to the ACC.

 

[All4SU]

I don't understand why the conferences don't set the exit fees based on what the school will make in their "new" conference. Every departing school, from any conference, claims they will make more money. They use this with fans and alumni to help justify their move. If Maryland was making X in the ACC, and will be making 1.5X in the B1G, I think a reasonable exit fee is 3x 1.5X. That's apparently what they are worth over a 3-year period based on their own actions, and those of the B1G.

 

[xc84]

Let's change your scenario a bit. If you also had a contract with someone for the $100 admission fee and it had a liquidated damages clause in it that said if the person did not show up they would have to pay $300 - would that be reasonable? What my lawyers always explain to me is that the courts would say not because you only suffered $100 damage in the worst case. In addition, the $100 loss was clearly determinable at the time of the contract. The $200 would be deemed a "penalty" rather than damages and since penalties are deemed "as against public policy" in NC, are unenforceable. That is what this is all about (at least the exit fee thing.)

However, IMO a NC judge (state or federal) will probably uphold the fee as reasonable and/or indeterminable at the time of the contract and that will be that. The judge can (and IMO will) get around all the other arguments in any number of different ways, including ignoring them. Since this would be a finding of fact and not a legal issue, the case would not be have grounds for appeal. Hey Maryland, welcome to North Carolina.

Let's change your scenario a bit. If you also had a contract with someone for the $100 admission fee and it had a liquidated damages clause in it that said if the person did not show up they would have to pay $100 - would that be reasonable? Yes. In fact, that may not be my actual loss. Maybe my actual loss is $5. So this is, in fact, 20X my actual damages. But, we agreed on $100 so that is what they should pay.

 

[Crusty]

Let's change your scenario a bit. If you also had a contract with someone for the $100 admission fee and it had a liquidated damages clause in it that said if the person did not show up they would have to pay $100 - would that be reasonable? Yes. In fact, that may not be my actual loss. Maybe my actual loss is $5. So this is, in fact, 20X my actual damages. But, we agreed on $100 so that is what they should pay.

Well, actually that would be reasonable because you did not have theopportunity to sell the seat to someone else for $100 so your lost opportunity cost was $100.

I don't like defending the law in this case as I prefer to let contracts speak for themselves in most instances. However, like it or not it's the law.

 

[IthacaMatt]

Don't think that's happening.

You don't know that. Who would have suggested all the cases of cold feet that struck the Big East. What happens if Maryland gets hit with a $50M penalty? Maybe they seek withdrawal from the Big 10 before they ever arrive. I think it's premature to say that anybody knows how this is going to turn out.

 

[xc84]

Well, actually that would be reasonable because you did not have theopportunity to sell the seat to someone else for $100 so your lost opportunity cost was $100.

I guess... but wouldn't that have to be proven too? And if it can't be proven that I could have sold that seat to someone else, what would the damages be? My $5 cost to provide the viewing? Seems like you are saying that the agreement itself to pay $100 has no bearing on what they really should pay once the break the contract. What if the $100 price had only one buyer...this particular customer? No one else is willing to pay that much (or any amount). What are the damages?

 

[OrangePA]

You don't know that. Who would have suggested all the cases of cold feet that struck the Big East. What happens if Maryland gets hit with a $50M penalty? Maybe they seek withdrawal from the Big 10 before they ever arrive. I think it's premature to say that anybody knows how this is going to turn out.

Yes, nobody can predict the future with certainty, but I am pretty confident that there is no way MD comes back - no way - not even worth considering the possibility.

The Big Ten will step in before that happens.

Comparing what has happened in the BE is not right - two totally different situations.

 

[Crusty]

I guess... but wouldn't that have to be proven too? And if it can't be proven that I could have sold that seat to someone else, what would the damages be? My $5 cost to provide the viewing? Seems like you are saying that the agreement itself to pay $100 has no bearing on what they really should pay once the break the contract. What if the $100 price had only one buyer...this particular customer? No one else is willing to pay that much (or any amount). What are the damages?

The point is that the liquidated damages clause must be reasonable - in the judge's eyes. All you have to prove is convince the judge that the LD clause was reasonable. In this case, if there is a no-show and you never had the opportunity to resell the seat, then it is fairly clear (reasonable) that the damages are $100. This example is not that difficult - the real case could be but again, I think the NC judge, who is known already, will decide that it is reasonable. BUT YOU NEVER KNOW WHAT A JUDGE WILL DO!

 

[xc84]

The point is that the liquidated damages clause must be reasonable - in the judge's eyes. All you have to prove is convince the judge that the LD clause was reasonable. In this case, if there is a no-show and you never had the opportunity to resell the seat, then it is fairly clear (reasonable) that the damages are $100. This example is not that difficult - the real case could be but again, I think the NC judge, who is known already, will decide that it is reasonable. BUT YOU NEVER KNOW WHAT A JUDGE WILL DO!

Thanks.

 

[SouthCampusHero]

Question:

If Louisville is brought into the lawsuit as a mitigating factor (keeping in mind that UL has a successful/profitable athletic department as well as the fact that ESPN didnt open up the media rights deal and decrease the payouts per team) did the ACC make a mistake in choosing Maryland's replacement so soon?

 

[Crusty]

Question:

If Louisville is brought into the lawsuit as a mitigating factor (keeping in mind that UL has a successful/profitable athletic department as well as the fact that ESPN didnt open up the media rights deal and decrease the payouts per team) did the ACC make a mistake in choosing Maryland's replacement so soon?

Well, that one is beyond me but the case at bar in NC is for a declaratory judgment to uphold the "exit fee" (the reasonableness test) - not the actual damages.

 

[OrangePA]

The point is that the liquidated damages clause must be reasonable - in the judge's eyes. All you have to prove is convince the judge that the LD clause was reasonable. In this case, if there is a no-show and you never had the opportunity to resell the seat, then it is fairly clear (reasonable) that the damages are $100. This example is not that difficult - the real case could be but again, I think the NC judge, who is known already, will decide that it is reasonable. BUT YOU NEVER KNOW WHAT A JUDGE WILL DO!

Wow.

You have had bad experiences with "judges"

You seem very skeptical of them.

I work in the business - I have for nearly 30 years - and I don't feel as jaded.

My experience is that judges or juries generally do the right thing and generally follow the law.

 

[Crusty]

Wow.

You have had bad experiences with "judges"

You seem very skeptical of them.

I work in the business - I have for nearly 30 years - and I don't feel as jaded.

My experience is that judges or juries generally do the right thing and generally follow the law.

That is because you are in the Northeast.

 

[HtownOrange]

Question:

If Louisville is brought into the lawsuit as a mitigating factor (keeping in mind that UL has a successful/profitable athletic department as well as the fact that ESPN didnt open up the media rights deal and decrease the payouts per team) did the ACC make a mistake in choosing Maryland's replacement so soon?

You only get to that question if the judge rejects the LD clause. Remember, on its face the contract is binding. If the judge rules the contract binding (in this case, nothing is disputed except the damages clause and related issues). If the judge rules the LD clause is valid, then the LD is valid and nothing else needs to be done except order payment. The judge may then determine the language is valid, but want to see whether the amount is excessive, but often they will simply invalidate the clause (anecdotal experience, not absolute) and then run an analysis. Generally, if the judge finds the LD clause valid, they will not touch it, saves them a lot of headaches. If the LD is upheld, the mitigating factors mean nothing unless they are included in the LD. The whole purpose of an LD is to remove all analysis of actual damages from the court.

Remember also, at this point, the ACC needs to only prove the league agreement is in force and that Maryland breached it. Those are probably not even going to be contested in a serious manner. Maryland must prove that the LD clause is not valid or punitive. At this point, the burden is on Maryland.

Crusty is dead on that the ACC must prepare defensively, but they are on offense at the moment.

Crusty is also dead on that elected judges, whether we like it or not, are prone to keep an eye towards the political impact of their decision.

 

[OrangePA]

That is because you are in the Northeast.

I am in the NE- true.

 

[Crusty]

I just got off then phone with one of my attorneys in Raleigh and we started talking about the ACC/MD case and he just started laughing and said he thought that MD was going to get hosed badly. Just his opinion but he has dealt with these judges off and on.

Here are the judges for the Superior Court of Guilford County where ACC vs University of Maryland will be heard. Six of the judges went to undergraduate school, law school or both at an ACC school. The seventh went to North Carolina Central University School of Law in Durham.

Judge, Undergrad, Law School
Lindsay R. Davis, Jr. Davidson College 1968, UNC - Chapel Hill
Stuart Albright, Duke University 1991, Wake Forest University
John. O. Craig, III, Davidson College (1978), UNC - Chapel Hill
Patrice A. Hinnant, Spelman College, North Carolina Central University
Susan E. Bray, Wake Forest (1983), SMU
A. Robinson Hassell, UNC - Chapel Hill (1983), UNC - Chapel Hill

 

[rocklloyd]

I just got off then phone with one of my attorneys in Raleigh and we started talking about the ACC/MD case and he just started laughing and said he thought that MD was going to get hosed badly. Just his opinion but he has dealt with these judges off and on.

Here are the judges for the Superior Court of Guilford County where ACC vs University of Maryland will be heard. Six of the judges went to undergraduate school, law school or both at an ACC school. The seventh went to North Carolina Central University School of Law in Durham.

Judge, Undergrad, Law School
Lindsay R. Davis, Jr. Davidson College 1968, UNC - Chapel Hill
Stuart Albright, Duke University 1991, Wake Forest University
John. O. Craig, III, Davidson College (1978), UNC - Chapel Hill
Patrice A. Hinnant, Spelman College, North Carolina Central University
Susan E. Bray, Wake Forest (1983), SMU
A. Robinson Hassell, UNC - Chapel Hill (1983), UNC - Chapel Hill

I'm an engineer, not attorney, but based on information above could Maryland push for a different venue? Don't see how they can get a fair court case.