As indicated in Friday's Thread: ACC-Maryland moving toward Settlement

[jgeorge322]

My answer would be - if Maryland thought the exit fee was truly excessive and punitive then what was the benefit and thought process in making their decision to leave the ACC?

honestly, i dont get the point of your post.

 

[NKR1978]

Ahhh, if Maryland's "stranglehold" was so secure, they wouldn't have been in the financial straits they were in that forced them into the B1G.

You are overdoing that. Beside, there is lots of support in the DC area for both Virginia and VT. Maybe not as much as there is for Maryland, but there is still a lot.

With Maryland in the ACC the ACC had the entire state of Maryland under its umbrella. It also had a stranglehold on DC due to the presence of Maryland, Virginia and Virginia Tech. It probably had a strong foothold in Delaware as well. Losing the University of Maryland also loses the State of Maryland and weakens the grasp of the conference on DC. This is how the ACC can easily show damages. Has nothing to do with Maryland's strength on its own state.

 

[JOC44]

No, they don't. That's the point of liquidated damages clauses - the amount of damages in the event of a breach must be hard to prove, hard to figure out. If you could easily put a dollar amount on it, then liquidated damages are not appropriate - you would just measure the actual harm caused.

I don't think the doctrine of liquidated damages is the right lens through which to view this. For the non-lawyers on the board, when someone breaches a contract, the plaintiff ordinarily has to prove how much it was damaged by your breach. To use an easy example, if we have a contract for me to sell you my house for $100,000 and you don't come through, and then I try to sell it to someone else and the best I can get is $80,000, my damages are $20,000 (plus any additional costs from trying to make a second sale, etc.).

Liquidated damages is a concept whereby you don't have to prove your actual losses when someone breaches your contreact. Instead, the contract has a clause that says, basically, "if you breach your obligations, you will pay me ___ in damages." These types of clauses are usually enforced only if it would be difficult to prove the amount of actual damages. So, ordinarily, you couldn't get liquidated damages in the home-sale example I used above, because actual damages are reasonably calculable. The law disfavoring liquidated damages clauses makes sense because liquidated damages provisions are usually drafted by the contracting party with more bargaining power, so the law protects the weaker party.

Here, while acknowledging that I haven't seen the exit fee clause in the ACC bylaws, I don't see this as a liquidated damages issue. I don't believe Maryland breached the ACC bylaws by withdrawing. It did what it was contractually entitled to do, but that contractual entitlement comes with a set cost. That's not liquidated damages for a breach, but an agreement that schools can withdraw but have to pay a set amount to do so. Looking at it that way, where there's not a breach but a set cost for defined conduct, I think the only defense is unconscionability, which is NOT a favored defense in the law and one that is almost never available to a sophisticated party. That's how I'd pitch this if I were the ACC and I think I'd be right about this.

 

[Cheriehoop]

honestly, i dont get the point of your post.

If the exit fee is truly excessive, why commit to leaving the conference if the monetary benefit wasn't well worth it? If paying the exit fee is truly excessive, wouldn't any fiscally responsible university resolve any exit fee issue before they committed to the Big10 not after?

Wouldn't proving whether its excessive and punitive be Maryland's responsibility and based on their ability to recoup those exit fees? $50 million might be punitive and excessive to Maryland if they had committed to join the A10 but not the Big10. Why would it have anything to do with damages to the ACC? Are they saying exit fees should be variable depending on a university's value to a conference? The logic of this suit seems backwards and strange to me. Of course I readily admit I'm a simpleton too.

 

[Toga]

I think the Big East should pay Rutgers for getting the hell out.

 

[jgeorge322]

If the exit fee is truly excessive, why commit to leaving the conference if the monetary benefit wasn't well worth it? If paying the exit fee is truly excessive, wouldn't any fiscally responsible university resolve any exit fee issue before they committed to the Big10 not after?

Wouldn't proving whether its excessive and punitive be Maryland's responsibility and based on their ability to recoup those exit fees? $50 million would be punitive and excessive if they had committed to join the A10 but not the Big10. Why would it have anything to do with damages to the ACC when Maryland left? The logic of this suit seems backwards and strange to me. Of course I readily admit I'm a simpleton too.

Cherie - i doubt there is a strong legal precedent in this case so were all simpletons. Thats why its fun to discuss. I think punitive aspect would be if acc wasnt really harmed by losing maryland or the loss was minimal while the exit fee is $52 m. I dont think how much maryland makes in the bigten has anything to do with it. However, maybe one argument you could make is how enriched the bigten is for having added maryland. Maybe that would be a good way to measure the harm.

 

[DoctorBombay]

If the exit fee is truly excessive, why commit to leaving the conference if the monetary benefit wasn't well worth it? If paying the exit fee is truly excessive, wouldn't any fiscally responsible university resolve any exit fee issue before they committed to the Big10 not after?

Wouldn't proving whether its excessive and punitive be Maryland's responsibility and based on their ability to recoup those exit fees? $50 million might be punitive and excessive to Maryland if they had committed to join the A10 but not the Big10. Why would it have anything to do with damages to the ACC? Are they saying exit fees should be variable depending on a university's value to a conference? The logic of this suit seems backwards and strange to me. Of course I readily admit I'm a simpleton too.

Maryland was probably 80% out the door by the time the exit fee was put in place. Indeed, rumors of defections are one of the main reasons Swofford acted so quickly. The only recourse they had was to vote against the fee, lest they give any indication they were knee-deep into the B1G. They were between a rock & a hard place, and did what they had to.

 

[IthacaMatt]

honestly, i dont get the point of your post.

Her point is they KNEW what the exit fee was when they decided to leave and did so anyway. It wasn't put in place later, like the Big East tried to do. If they knew the fee and decided to go to the Big 10 anyway, what basis do they have to object? They could have stayed after all. Nobody FORCED them to leave the ACC. It was their decision, knowing these facts.

 

[Cheriehoop]

Cherie - i doubt there is a strong legal precedent in this case so were all simpletons. Thats why its fun to discuss. I think punitive aspect would be if acc wasnt really harmed by losing maryland or the loss was minimal while the exit fee is $52 m. I dont think how much maryland makes in the bigten has anything to do with it. However, maybe one argument you could make is how enriched the bigten is for having added maryland. Maybe that would be a good way to measure the harm.

Maryland was probably 80% out the door by the time the exit fee was put in place. Indeed, rumors of defections are one of the main reasons Swofford acted so quickly. The only recourse they had was to vote against the fee, lest they give any indication they were knee-deep into the B1G. They were between a rock & a hard place, and did what they had to.

I'm just confused why determination whether an exit fee is excessive would be measured by the damage suffered by the ACC and not the benefit to the departing member who's claiming its excessive. Saying it's punitive also seems pretty obvious - of course it is, it's supposed to be punitive and a deterrent to membership hopping without penalty. How secure would other members be in a conferences' stability if a member can negotiate down exit fees to a level they unilaterally want?

UMD could have said "no" to the Big10 invite after the conference vote if it was truly excessive and punitive for Maryland- they didn't. Unless UMD is a totally irresponsible university who didn't vet the impact of their actions, they decided it was a fiscally beneficial move regardless of the fees. Still being a member of the ACC, Maryland was also privy to the upcoming vote on exit fees and conference efforts to prevent members from jumping ship. Swofford alone didn't act quickly, it was the conference membership who did. UMD took the risk and put themselves in the rock and a hard place situation and did what they wanted to do for their own benefit.