Maryland And The ACC Are Set For Mediation

The North Carolina judge presiding over the ACC lawsuit against Maryland to enforce the $52 million dollar exit fee, and the subsequent counter claim that trebles the amount against the ACC has ordered mediation for the two parties.  The judge stated that the ACC and Maryland must meet with an arbitrator for mediation before July 10, so we have a definitive cutoff for the next event in this very messy civil suit.

The Lawsuits

For those living in a cardboard box and not aware of the lawsuit, the ACC has sued Maryland for the enforcement of a withdrawal fee from the ACC in the amount of $52 million dollars, or three times the annual operating budget at the time of withdrawal.  Without getting into the messy details (but we can in the comments if you want, I'm more than willing), the ACC hastily called for a vote in the summer of 2012 to increase the withdrawal fee from roughly $20 million to three times the annual operating budget at the time of withdrawal.  Maryland and Florida State voted against this measure, but all other schools voted for it.  As you all know, in November of 2012 Maryland, along with Rutgers, decided to leave their respective conferences in favor of the B1G and their lucrative TV deal with the BTN.  Maryland has submitted a counter claim in the amount of $157 million dollars for alleged anti-trust violations committed by the ACC in the enforcement of the withdrawal fee.  The $157 million is treble the amount of the claimed withdrawal fee, which I won't attempt to explain other than apparently when you are trying to enforce an illegal penalty the offended party can seek three times (treble) the damage caused.

Maryland claims that along with the alleged anti-trust violations committed, the ACC did not even follow its own Constitution in the process of establishing the vote for the increase in the withdrawal fee, nor in the enforcement of such.  The ACC Constitution dictates that the chairman shall give thirty days' notice to member institutions before a vote to change the Constitution in order to provide adequate time of review.  The Constitution also states that any changes to the Constitution do not become effective until the following fiscal year.  With regards to the anti-trust violations committed, I'm not going to pretend to be a lawyer, but I'll give a brief overview.  Maryland is alleging that the ACC is purposely harming Maryland by imposing the withdrawal fee as a penalty rather than actual damages incurred by Maryland leaving the conference.  In doing so, the ACC is restricting the competitive market of sports conferences within college athletics.  The ACC claims that the $52 million is damages caused by Maryland leaving.  Even though this is not evidence that you can submit, the ACC significantly weakened their case in my opinion by immediately going out and getting Louisville to join, which they have openly admitted increases their competitiveness among conferences.  If you can read middle school presentations, the ACC put this together, summarizing how they believe they are competitive with others.  If you want a laugh, that is the link out of all of this you should read today.

What happens now?

The ACC and Maryland must agree to a date to sit down at a table with the mediator and discuss the possibility of settlement.  Both sides mutually agreed upon using the Bethesda, Md. Based mediator Jonathan Marks, who has a law degree from Harvard and has participated in numerous mediations since 1981.

As stated above, both sides must meet prior to July 10, but what happens after that meeting is up to them.  My initial reaction to this was that the counter claim Maryland filed acted as it should, as a mechanism to force the ACC to come to the table and discuss settlement.  I think everyone's best interest here is to make this go away because as it drags on, no one is going to look good.  Well, whoever wins will, but that could take a while if this drags out.  I'm no lawyer though, so my opinion isn't entrenched in any experience, but lucky for us we have some legal experts on staff!  I asked around, and Chad Bell had this to say:

Arbitration can lead to settlement, but it doesn't necessarily do so all the time (or even a majority of the time).

Given the bad blood and the fact that the parties might be somewhat far apart on a number (plus the fact that Maryland/B1G may not want to set a precedent that a payout is required when you leave a conference without a grant of rights agreement), there's a lot of reason to suspect that this arbitration might fail.

That makes sense too.  There is way too much at stake on both sides, and they are far apart on what they think they are owed.  If they settle, both sides would set a precedent on the withdrawal fee and what it should cost in the future.  If they go to court, the bigger precedent would be set depending on who wins.  If Maryland pulls it off, the immediate return is going to be the money that has been withheld (wrongfully) by the ACC, no withdrawal penalty to pay, and the possibility of treble damages being awarded.  If the ACC wins, it is a win for conferences around the nation in that they have case evidence to point to that a withdrawal fee is legally enforceable.

Anyways, if there are any questions, feel free to ask.  I attempted to summarize this as best I could without getting into the gory details, but if you want them, ask and you shall receive.  There are a lot of procedural wrongdoings on the ACC's part, but how that will hold up in court is really a mystery to me.  On the face of it, you would think if they can't even follow their own rules to set the fee in place, there should be no way it is enforceable.  They started enforcing it before it was technically a part of the ACC Constitution as well, so there is that to debate too.  The judge could very well find that the fee is enforceable, but at the prior amount that was in place when Maryland decided to leave the conference.