NC Court of Appeals rejects Maryland's Motion to Dismiss 52 million lawsuit

[GFTakedown]

I think ND is simply too important long term. As for UConn, well you know the answer to that! West Va is simply too far down the academic ladder to suit UNC and UVA.

It also doesn't help that both of their marquee sports have fallen this year.

 

[Alsacs]

Actually Federal courts (in Md and elsewhere) are jammed at the District Court level (drug case, immigration, other matters where the US Attorney's office controls the flow, etc). Civil cases between private parties go to die on Federal court dockets. UMd might want this just as a delay strategy and ultimate settlement leverage once (and if) they cash a B10 check, but not sure it would survive a 12(b)(6) motion. Again, there's ALREADY a decision, and a ready avenue for the losing litigant to pursue in the state system.

No chance the case would be 12-b-6'ed.

I clerked for a Federal Judge for a semester in 1st circuit in Boston and she apologized to me after semester ended for how slow her and lack of court cases her calender had. While I don't know how active the federal courts are in Maryland from my time practicing the only federal court system I that I know that is really super active is the one in Washington D.C. and if this Maryland-ACC case was in federal court it would move faster than it would in state court just because of the sheer volume of civil cases in a state court versus federal court just because of the restrictions puts on cases that can be heard in federal court due to certain thresholds having to be met.

 

[PhatOrange]

Is there a scenario where Maryland can't leave? What the hell happens then?

I'd like to see Maryland stay just because it's a natural fit and good game for Syracuse (in all sports) but I also want LVille in the conference.

 

[SmilinBob]

Since the Big 10/11/12 has added PSU and Nebraska they need the cable boxes and patsies that both Rutgers and Maryland will provide. Michigan has to be able to beat somebody and this will help prop up Indiana, Iowa, Illinois and Minny as well.

 

[SmilinBob]

Is there a scenario where Maryland can't leave? What the hell happens then?

I'd like to see Maryland stay just because it's a natural fit and good game for Syracuse (in all sports) but I also want LVille in the conference.

There's another question to go with that, what if RU and Maryland can't go or are uninvited? Does the Big 10 go after UNC, GT and Virginia again? I'd love to see the ACC counter punch and land PSU. I know...I know it ain't happening but it would be a sweet punch to the Big 10 over sized heads.

 

[Crusty]

With the GOR nobody is going anywhere for awhile.

 

[PhatOrange]

There's another question to go with that, what if RU and Maryland can't go or are uninvited? Does the Big 10 go after UNC, GT and Virginia again? I'd love to see the ACC counter punch and land PSU. I know...I know it ain't happening but it would be a sweet punch to the Big 10 over sized heads.

I dont' think anyone would be uninvited nor do i think the big can get unc, gt or virginia. their overtures were already rebuffed once before by these schools. these schools also know they'd be outliers in the big and that their long term futures financially are right where they are.

the big is making wads of money right now but the acc (and everyone else) will catch them; or it will even out. there's no way the big10 model can sustain and continue to produce that kind of cash for the next 30 years - all built off their tv channel. the market will correct itself and technology tv viewing will continue to evolve. eventually people wont be forced to pay for a channel they dont want.

 

[IthacaMatt]

The question is pretty simple as I understand the law - is the $52 million a fair assessment of the ACC's liquidated damages flowing from MD's exit.

And I frankly wonder about that.

And, as somebody else mentioned a few weeks ago, what if MD suddenly decides "heck, it's too costly to leave - we're staying!"??

Does anybody have any insight on that possibility?

I said that months ago. The longer this goes on, the more likely Maryland will be playing in the ACC next year. The ACC is not going to budge on the fee. If they were willing to, they would have done so by now. Schedules have to be created for next season.

Personally, I'd rather keep Maryland in the ACC. I like the geographic continuity, and I think they could develop a good rivalry with SU in time, especially in football. Since the likelihood of ever getting Penn State to leave the Big 10 if ND joins the ACC for football at some future point is pretty slim, I prefer keeping Maryland as the other team.

For those who think the penalty is too high, the real point is not that the ACC quickly got Louisville to replace Maryland. That argument could be made with respect to any conference. Hell, the Big East replaced people several times when other members left. The real point is that the ACC was destablized and there was public discussion that UNC and UVA were also on the Big 10's radar. If the Big 10 could poach those schools, the ACC's value as a conference would collapse, from the standpoint of TV contracts. That's why the $52 million is reasonable. It's only 2 1/2 years' payout under the current TV deal.

 

[IthacaMatt]

I think you have seek removal within 30 days of filing.

I would guess that the reason this wasn't done was because MD consented to NC state court jurisdiction as part of the ACC bylaws.

 

[IthacaMatt]

I disagree with this because the 52 million dollar liquidated damages is what the 14 ACC schools agreed to and even if Maryland didn't like the exit fee increase the fact they claim its punitive is irrelevant IMO. The ACC By-laws require 75% for any change to get amended and 12 of 14 schools agreed to the increase. Somebody from FSU I was talking with told me that FSU voted no not because they disagreed with the increase, but because the ACC wasn't following the ACC bylaws and required a certain amount of days of notice before any vote to change the bylaws, and their reasoning made sense to me because if the ACC had to provide the schools 14 days notice of any votes to amend the bylaws and the ACC didn't follow that procedure and the vote occurred anyway then FSU was protecting themselves by voting no. My reading of the MD-ACC lawsuit MD hasn't made this very argument in their pleadings which if they did would clarify the matter and honestly is the only MD could win this lawsuit which would be on procedural grounds. The ACC could easily show the conference has lost 52 million dollars from MD leaving because they could cook the books by showing losses in sponsors from the MD area and TV markets for an ACC network.

MD can't stay they signed the B1G GOR and have B1G schedules released for 2014-2019 the ACC and B1G both know MD has announced where it plans to play in the future. MD can't stay because they would be worthless to ACC without GOR and the B1G would have a major headache.

I think that an argument can be made that emergency circumstances required them to waive the 14 day notice period. And typically under corporations law, any objection to lack of proper notice to a meeting is waived when one participates in the meeting and votes on the items up for a vote.

 

[IthacaMatt]

How does this help? The Federal Court would be applying state law. And there's a well reasoned decision already published that holds for the ACC under state contract law. I don't think, in fact I know, that Federal Courts are not too fond of overt forum shopping by losing litigants.

I think UMd needs to call their UnderArmor dude to get the checkbook out.

Except nobody in Maryland really wants them to leave the ACC, except for those few folks in the university administration who negotiated this secret deal behind the backs of most of the major boosters.

 

[Alsacs]

Maryland is GONE. Period end of story. The B1G has released schedules from 2014 till 2019 with Maryland on them. The ACC has released football schedules 2015-2024 and Maryland isn't on them. The ACC has been withholding Maryland's payments they should be receiving in anticipation of the court ruling that Maryland owes 52 million dollars. Maryland will lose 52 million and the windfall they were expecting from joining the B1G will take a long time for them to feel as the loss of 52 million likely be subsidized by the B1G.

 

[IthacaMatt]

As I understand it, the whole idea behind a GOR is that it is stronger and does not suffer from the LD issue. GOR is simply the purchase and sale of an asset. This ruling will have precedential value on certain of the issues already adjudicated and the LD issue but the latter will not be an issue to the GOR.

I don't quite follow the partnership liquidation point. Are you saying that "public policy" does not extent to partnership agreements? (Is the ACC in partnership form?).Why would LD clauses in a partnership (which is nothing more than a contract) be treated differently than any other contract?

If the ACC were a legal "partnership" entity, they would have to dissolve and reform if a partner left. I am 99% certain that's not the case, because South Carolina previously left the conference.

 

[OrangePA]

I said that months ago. The longer this goes on, the more likely Maryland will be playing in the ACC next year. The ACC is not going to budge on the fee. If they were willing to, they would have done so by now. Schedules have to be created for next season.

Personally, I'd rather keep Maryland in the ACC. I like the geographic continuity, and I think they could develop a good rivalry with SU in time, especially in football. Since the likelihood of ever getting Penn State to leave the Big 10 if ND joins the ACC for football at some future point is pretty slim, I prefer keeping Maryland as the other team.

For those who think the penalty is too high, the real point is not that the ACC quickly got Louisville to replace Maryland. That argument could be made with respect to any conference. Hell, the Big East replaced people several times when other members left. The real point is that the ACC was destablized and there was public discussion that UNC and UVA were also on the Big 10's radar. If the Big 10 could poach those schools, the ACC's value as a conference would collapse, from the standpoint of TV contracts. That's why the $52 million is reasonable. It's only 2 1/2 years' payout under the current TV deal.

But from what I have been told the assurance of stability is not a component of "reasonableness."

The fee should simply reflect the actual costs to the ACC resulting from MD's decision.

What you describe is a penalty rather than liquidated damages.

I agree with you that the fee is appropriate for that reason, but I wonder if it will hold up.

 

[IthacaMatt]

Maryland is GONE. Period end of story. The B1G has released schedules from 2014 till 2019 with Maryland on them. The ACC has released football schedules 2015-2024 and Maryland isn't on them. The ACC has been withholding Maryland's payments they should be receiving in anticipation of the court ruling that Maryland owes 52 million dollars. Maryland will lose 52 million and the windfall they were expecting from joining the B1G will take a long time for them to feel as the loss of 52 million likely be subsidized by the B1G.

Well, the closer we get to June 30, 2014, the more likely UMD pays the full $52M. If I'm the ACC, I string this out and put the pressure on UMD.

 

[IthacaMatt]

But from what I have been told the assurance of stability is not a component of "reasonableness."

The fee should simply reflect the actual costs to the ACC resulting from MD's decision.

What you describe is a penalty rather than liquidated damages.

I agree with you that the fee is appropriate for that reason, but I wonder if it will hold up.

Stability is an economic cost when you are discussing the revenue from long term television contracts. The ESPN agreements have clauses in them that the fees get renegotiated for changes in membership.

 

[Alsacs]

I think that an argument can be made that emergency circumstances required them to waive the 14 day notice period. And typically under corporations law, any objection to lack of proper notice to a meeting is waived when one participates in the meeting and votes on the items up for a vote.

I have read the ACC bylaws and their is no emergency circumstances exception if the ACC didn't notify the teams 14 days before the day of the vote to amend the bylaws then a court would easily find that to be violation of procedure and would likely rule that the ACC violated proper procedure and would likely only hold the school to a 20 million dollar exit fee. Florida State voted no to the change not because they were looking to leave, but because the FSU Prez was advised by his BOT and attorneys the ACC violated proper procedure and they wanted some protection in case the SEC offered them,.

 

[IthacaMatt]

I have read the ACC bylaws and their is no emergency circumstances exception if the ACC didn't notify the teams 14 days before the day of the vote to amend the bylaws then a court would easily find that to be violation of procedure and would likely rule that the ACC violated proper procedure and would likely only hold the school to a 20 million dollar exit fee. Florida State voted no to the change not because they were looking to leave, but because the FSU Prez was advised by his BOT and attorneys the ACC violated proper procedure and they wanted some protection in case the SEC offered them,.

It doesn't have to be in the by-laws. It's an equity argument. And that doesn't negate the point of waiver. UMD participated in the meeting and voted. That's a waiver under NY BCL. Obviously NY law doesn't apply here, but that is a pretty typical provision under model corporations statutes.

 

[Alsacs]

If the ACC were a legal "partnership" entity, they would have to dissolve and reform if a partner left. I am 99% certain that's not the case, because South Carolina previously left the conference.

This is incorrect a partnership doesn't dissolve completely when one member withdraws. The partnership becomes restructured and bylaws of the partnership dictate how the matter will resolve when the partner leaves and how new partners can join.

 

[IthacaMatt]

This is incorrect a partnership doesn't dissolve completely when one member withdraws. The partnership becomes restructured and bylaws of the partnership dictate how the matter will resolve when the partner leaves and how new partners can join.

North Carolina General Statutes - Uniform Partnership Act
§ 59-59. Dissolution defined.

The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business. (1941, c. 374, s. 29.)

 

[KaiserUEO]

Is there a scenario where Maryland can't leave? What the hell happens then?

I'd like to see Maryland stay just because it's a natural fit and good game for Syracuse (in all sports) but I also want LVille in the conference.

theres 1 scenario where they cant leave...

 

[Alsacs]

North Carolina General Statutes - Uniform Partnership Act
§ 59-59. Dissolution defined.

The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business. (1941, c. 374, s. 29.)

Well I guess the ACC isn't a partnership then. I thought it was.

 

[OrangePA]

Stability is an economic cost when you are discussing the revenue from long term television contracts. The ESPN agreements have clauses in them that the fees get renegotiated for changes in membership.

I hope so but I wonder whether "stability" alone is sufficient.

Economic loss through TV renegotiations is a tangible cost.

 

[Crusty]

Stability is an economic cost when you are discussing the revenue from long term television contracts. The ESPN agreements have clauses in them that the fees get renegotiated for changes in membership.

Can't collect hypotehtical damages.

 

[Crusty]

Stability is an economic cost when you are discussing the revenue from long term television contracts. The ESPN agreements have clauses in them that the fees get renegotiated for changes in membership.

Can't collect hypotehtical damages.