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

[Capt. Tuttle]

Listen, unless you understand Contract and Business Association Law what you are saying is the macro level argument.

While what you are saying is technically correct under law the court can always determine in either parties favor as to whether the fee represents a fair cost of loss argument. However,you are saying the ACC has to prove that MD withdrawal is worth 52 million dollars and that is not 100% correct. The Court would likely look at the fact the ACC is a partnership that each member willingly on its own joins and has a list of bylaws for joining or withdrawing from the partnership. Each member is treated to equal power, and has its own procedures for amending the withdrawal or joining bylaws. Since the ACC decided to up the exit fee then Maryland is screwed even though it voted against the increase the bylaws required 3/4 majority to amend, and unless the ACC violated its own procedures to amend them then Maryland's argument on its face will likely lose. If the ACC has to prove that MD withdrawing is worth 52 million dollars then what you are saying in the future is that GOR are worthless and can be breached because those penalties are punitive because GOR are way more powerful than a 52 million dollar fee. Anyway you slice this IMO, Maryland will be paying 52 million dollars to the ACC unless the ACC decides the billable hours to whichever firm they are paying aren't worth the hassle.

There might even be a provision for the payment of attorneys fees should anyone challenging the exit fee lose their challenge

Sent from my SCH-I200 using Tapatalk 2

 

[IthacaMatt]

Can't collect hypotehtical damages.

That's precisely why a liquidated damages clause would be upheld. Because it's damn near impossible to calculate the economic harm to the ACC if UNC and UVA left, or Duke for that matter. The damages are not hypothetical. Just look at what happened to the contract offers made to the Big East before ($11m) and after ($3M or less).

 

[Crusty]

That's precisely why a liquidated damages clause would be upheld. Because it's damn near impossible to calculate the economic harm to the ACC if UNC and UVA left, or Duke for that matter. The damages are not hypothetical. Just look at what happened to the contract offers made to the Big East before ($11m) and after ($3M or less).

They certainly are hypothetical rather than actual. What happened in the Big East did not happen in the ACC. UNC and UVA did not leave. Only actual damages can be recovered in court. If the court determines that the $52 million is excessive based on the impact of MD leaving they will view it as a penalty. Here is a test for you - what are the actual damages the ACC has suffered with MD leaving? If you can't answer that then the LD may very well be disproportionate to the actual damages and therefore a penalty.

Even if the worst happened and FSU had left for example, you could not necessarily attribute their decision to MD leaving. Everyone has courted FSU for a long time and it would be hard to convince anyone that FSU made a decision to leave based on what MD did. It would be pure speculation.

Now, I think MD is screwed and the NC judges will find a way to uphold the exit fee probably by declaring it reasonable. They might not even explain why.

 

[All4SU]

They may have to go back to their old uniforms.

I hope something can be worked out so Maryland stays. They are a natural rival, yet one we can beat. And we need all such schools we can get on our schedule.

Having UM back out of the commitment to the B1G would be epic...unprecedented. And I agree with you, I would much rather have Maryland in he he ACC than not. Just the same, I can't see it ever happening. Still...

 

[chakka3421]

What if UMAD declares bankruptcy?

 

[oldpinepoint]

What if UMAD declares bankruptcy?

Very very very very unlikely. Like slim to none. Not even sure they can


Sent from my iPhone using Tapatalk

 

[Crusty]

They are an instrument of the state and I never heard of a state filing bk.Besides, the state is not insolvent.

 

[Hoo's That]

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.

^^^This^^^

 

[OrangePA]

^^^This^^^

Fine with me.

 

[IthacaMatt]

They certainly are hypothetical rather than actual. What happened in the Big East did not happen in the ACC. UNC and UVA did not leave. Only actual damages can be recovered in court. If the court determines that the $52 million is excessive based on the impact of MD leaving they will view it as a penalty. Here is a test for you - what are the actual damages the ACC has suffered with MD leaving? If you can't answer that then the LD may very well be disproportionate to the actual damages and therefore a penalty.

Even if the worst happened and FSU had left for example, you could not necessarily attribute their decision to MD leaving. Everyone has courted FSU for a long time and it would be hard to convince anyone that FSU made a decision to leave based on what MD did. It would be pure speculation.

Now, I think MD is screwed and the NC judges will find a way to uphold the exit fee probably by declaring it reasonable. They might not even explain why.

You appear to misunderstand the purpose and application of liquidated damages clauses. They are intended to be a reasonable estimate of what damage might occur if a breach of contract were to occur. To be upheld, it must be difficult to estimate the actual damage that would ensue if the breach were to occur. The whole point is that you can't calculate the damage with specificity, or else you would simply sue for damages.

The use of liquidated damages clauses is to address the harm that might result from hypothetical situations. The entire ACC was considered to be at risk of blowing apart just a year ago and turning into the new Big East.

To say that the potential harm from a charter member of the conference leaving is equal to roughly 2 1/2 years' payout from the TV contracts is not punitive, in my opinion, because the contract is something like 18 years in length, and if certain schools left, the value of the revised contract would be substantially less for the remaining schools.

 

[IthacaMatt]

Very very very very unlikely. Like slim to none. Not even sure they can

That would be like the US refusing to pay its debts. Ha.

 

[Crusty]

[qunderstand="IthacaMatt, post: 814206, member: 405"]You appear to misunderstand the purpose and application of liquidated damages clauses. They are intended to be a reasonable estimate of what damage might occur if a breach of contract were to occur. To be upheld, it must be difficult to estimate the actual damage that would ensue if the breach were to occur. The whole point is that you can't calculate the damage with specificity, or else you would simply sue for damages.

The use of liquidated damages clauses is to address the harm that might result from hypothetical situations. The entire ACC was considered to be at risk of blowing apart just a year ago and turning into the new Big East.

To say that the potential harm from a charter member of the conference leaving is equal to roughly 2 1/2 years' payout from the TV contracts is not punitive, in my opinion, because the contract is something like 18 years in length, and if certain schools left, the value of the revised contract would be substantially less for the remaining schools.[/quote]
I understand it all too well over the last ten years. If a a judge deems it disproportionate to the actual damages it will be considered a penalty. Period.I am not sure the ACC has suffered a nickle of damages.

 

[BlazeOrange]

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.

Does membership in the conference constitute a committment to play a set of conference games each season? Or are they only "locked in" once a schedule comes out?

If the former, could a case be made that each game involving Maryland (8 FB games per season, 16-19 or so BB games, and maybe low- to non-revenue games) over a certain time period qualify as total losses since MD is reneging on them?

Using conservative and easy math numbers for one season:
8 games x 40,000 tickets x $50 apiece = $16 million loss for FB at the gate
16 games x 15,000 tickets x $100 apiece = $24 million loss for BB at the gate

There's $4o mill in gate revenue alone. You'd have to go further and deduct Maryland's share, but that could be balanced by adding in other losses (parking, concessions, etc.). Once you add in the price for TV rights of games that won't be shown, you're over the 52 mark easily (the TV contract alone may do this, might even dwarf it for all I know).

Sure the ACC got Louisville to fill those slots, but the loss was already incurred before that happened.