Guest Post: Clemson vs. the ACC

Yes, more lawsuits. But on the bright side, now we can use pictures of sad Clemson fans instead of FSU fans!

Ed note: Write For California is going to have to double our fee to Chief East Coast Media Rights Contract Law Correspondent TwistNHook, who was already covering FSU’s lawsuit against the ACC and the ACC’s lawsuit against FSU, because his workload has doubled with Clemson suing the ACC and the ACC suing Clemson! Should Cal sue the ACC just to fit in with our new conference mates? Only time will tell!

If you missed any of his prior coverage, here’s everything so far:

• Part 1: ACC Stability: Do Cal fans need to fear that the ACC will fall apart as quickly as the Pac-12 fell apart?

• Part 2: FSU vs. ACC Part 1: The first part of the Florida State vs. ACC lawsuit breakdown, focusing on the Florida State one-sided statement of facts.

• Part 3: FSU vs. ACC Part 2: The second part of the lawsuit portending to counts, or the specific bases for the lawsuit.

• Part 4: The ACC Strikes Back Part 1: The ACC filed its own lawsuit against Florida State, with its statement of facts.

• Part 5: The ACC Strikes Back Part 2: The second part focused on counts from the ACC.

• Part 6: Florida State's Amended Complaint: Changes to Florida State’s lawsuit after the ACC filed their lawsuit.

• Part 7: The ACC's Motion to Dismiss, Part 1: The ACC filed a motion to dismiss Florida State’s lawsuit, arguing jurisdiction and venue and some counts.

• Part 8: The ACC’s Motion to Dismiss, Part 2: Here the rest of the counts and the Motion to Stay.

• Part 9: Florida State’s Motion to Dismiss, Part 1: Florida State filed a similar motion in the ACC’s suit. This goes over the first causes of action.

• Part 10: Florida State’s Motion to Dismiss, Part 2: Here the last causes of action are discussed, and the motion to stay portion.

• Part 11: ACC Opposition Motion: The ACC filed an opposition to Florida State’s motion.

• Part 12: FSU reply to ACC Opposition: Florida State then replied.

• Part 13: The ACC’s Sur-Reply: The ACC then provided a sur-reply!

• Part 14: North Carolina court ruling: Breaking down a ruling in NC court.

We’ve been talking a lot about the ACC v FSU and FSU v the ACC.  However, now we have another lawsuit in a 3rd state.  Clemson v. ACC in South Carolina.  So, now we have both Carolinas and Florida with active litigation.  It appears that this lawsuit took the ACC by surprise, because there was nothing filed in NC at the time.  This differs from the FSU lawsuit where the ACC was able to file first.  Since I wrote this, btw, Clemson amended the complaint.  So, I have added some additional language in here to discuss the amended complaint.  

In this instance, the ACC did one day later file its own lawsuit in NC.  We will discuss that lawsuit in a separate post(s).  But now there are 4 separate lawsuits.  FSU v ACC, ACC v FSU, Clemson v ACC, and ACC v Clemson.  Today, we are focusing on Clemson v ACC filed in South Carolina.

As usual, the standard disclaimers apply.  I am not an attorney licensed in South Carolina.  There is actually some chance I could be a lawyer licensed in South Carolina in the future but that is unclear.  So, I am just doing the best I can to figure out what is going on here and provide a layman’s approach to it.  

VENUE

The first thing to understand is where it was filed.  The lawsuit was filed in Pickens County, SC.  Let’s get some stats for Pickens County, SC.  It is in the upper left hand corner of the state on the Georgia and North Carolina border.  The closest even major city is Greenville, SC (which is not really that major).  It is about 2 hours to Charlotte.  It is about 2 hours to Columbia, SC (which is the state capital).  It is about 2.5 hours to Atlanta.  It is 4.5 hours to Myrtle Beach, which sucks for all the people in Pickens County who want a great beach vacation for cheap!

So, while it is South Carolina-based, it is influenced by multiple different states.  Clemson itself, unlike FSU, doesn’t have a law school.  The entire county has a population of approximately 133,000 according to Google.  So, it is a small rural county in a somewhat rural state (SC really only has a handful of population centers).  This is exactly the type of location that could give some home cooking to Clemson, for sure.  The only issue is that since Clemson doesn’t have a law school, the Judges either have to come from the USC (not that one) law school or the Charleston Law School.  So, there won’t be any double Tigers (like our friend in Leon County FL being a double Nole apparently).  

DECLARATORY JUDGMENT

So, lets get into what the lawsuit actually says.  It is titled as a “Declaratory Judgment” lawsuit.  We’ve heard this before in the other states and it means that the plaintiff is trying to get a judgment from a Judge that declares a thing.  Here, the thing is that Clemson doesn’t have to pay any money to leave the ACC (or at least as little as possible).  The ACC lists a $140 million penalty to leave the ACC.  This may be harmonized with the FSU’s $572 million penalty by noting that FSU may be lumping a few items in.  Those items would be the actual exit fee with the rights buyback fee.  The rights buyback is actually substantially higher than the exit fee.  Either one is 9 digits.  

Clemson’s story is much different than FSU’s story.  FSU’s story is one of true catastrophe as the big bad ACC wolf bullied the poor little FSU-ites into signing these terrible deals.  They need to be let out of these terrible deals because of how poorly the ACC treated them.  

In the Clemson lawsuit, life is not quite as catastrophically bad.  But they did sign some fairly bad deals and these bad deals are making it hard to get new deals with new conferences.  So, they want out.  The issue is not necessarily even the signing of the deals.  It is the “erroneous assertions” by the ACC that “hinder[.] Clemson’s ability to meaningfully explore its options regarding conference membership, to negotiate alternative revenue-sharing proposals about ACC members, and to obtain full value for its future media rights.”  

ERRONEOUS ASSERTIONS???

So, Clemson wants to leave the ACC or bully other ACC members into giving it more money but cannot do so because of assertions made by the ACC.  What are these assertions?  These assertions are apparently that the ACC owns Clemson’s media rights until 2036, that there is this large exit fee, and that members owe the Conference fiduciary duties.  The 3rd one was just knocked down in NC, so Clemson may get a freebie here in SC.  Let’s look at just the first two then.

VENUE/JURISDICTION

First, the complaint spends some time discussing venue and jurisdiction.  Obviously, this was a major issue with the FSU lawsuits.  FSU was unsuccessful in blocking the ACC suit.  Clemson may have more success blocking the ACC suit in NC, because they filed first.  I felt that the FSU lawsuit spent minimal time on the venue/jurisdiction issue, but Clemson learned from that and so they spend more.

In the amended complaint, FYI, Clemson really buffed up this section.  They go through everything the ACC does in South Carolina to promote Clemson and the ACC.  This is the mirror to what the ACC puts in their NC lawsuits about everything Clemson does in NC.  For example, they contact South Carolina residents to try to sell tickets.  They send ACC consultants to Clemson to help develop successful advertising campaigns.  

They also go through all the ACC events that occur in South Carolina and let me just say, THERE ARE MULTIPLE ONES IN THE GREATER MYRTLE BEACH METROPOLITAN AREA!!!  They even hosted the ACC Championship game for WBB at Coastal Carolina in 2017.  They gotta host more ACC events in Myrtle Beach so I can go there and cheer on Cal!!!!  

I think that Clemson does a strong job of going through all of the actions that the ACC does in SC and proving their point.  We will see how this plays out.  

BACKGROUND FACTS

Next, the Complaint goes through the background facts.  Instead of a long sordid history of how Clemson has been mistreated by Thanos 2.0, they basically just outline how the current media deal doesn’t work as well as other media deals. It’s much less whiny and much more “Look, we just want money and this contract we signed is kinda in the way of that.”  It’s just “It’s not you, it’s us, this just doesn’t work for us anymore.”  There’s a more respectable honesty to that in one sense.  Don’t pretend this is something it isn’t, it’s just a pure money grab and Clemson doesn’t try to hide that.

GRANT OF RIGHTS LANGUAGE

The Complaint analyzes the key language in the GOR document.  This language states that ACC keeps Clemson’s rights even if they leave.  This would make Clemson leaving virtually worthless for another conference.  The language that Clemson focuses on states:  

“all rights necessary for the Conference to perform the contractual obligations of the Conference expressly set forth in the ESPN Agreement, regardless of whether such Member Institution remains a member of the Conference during the entirety of the Term”

Clemson interprets this to mean that they still retain the rights to all games between 2027 and 2036.  At least I think that’s what they mean, pages are redacted.  So, I am not 100%.  But my thought is that that is their argument.  Since the ESPN deal right now only goes to 2027, that is the extent of the ownership.  Now, ESPN can unilaterally extend in 2025 (and seem likely to do so IMO).  So, that would undercut Clemson’s argument here.  

Clemson also tries to thread the needle when discussing the “absurd” nature of this GOR contract.  They argue that they could pay an expensive withdrawal penalty to leave but not have the rights in their new conference.  That is technically true if they refuse to make any rights buyback payments.  However, everybody uses the phrase “withdrawal penalty” to include the rights buyback costs.  FSU insists on this, because they want to show how insane a $572 million withdrawal penalty is.  Clemson is trying to split this up to show how insane a $140 withdrawal penalty (without your rights) is.  However, no reality exists where an entity would pay to get out but not pay to get their rights back.  

Clemson also brings up a point that the ACC Constitution allows for members to be expelled by a 3/4ths vote.  Clemson argues that the ACC has the power to expel a member without their vote but retain that team’s rights.  Clemson argues that this is illogical.  That may be true, but I am not sure what their overall point is here.  Parties can contract to illogical items.  

Clemson states that ACC owns rights to any and all already played games, but did not convey rights to the ACC for any games played if and when Clemson is no longer a member of the ACC.  Clemson basically doesn’t know if this is true so it wants a Pickens County Judge to say that it is true.  That is the purpose of a Declaratory Judgment action.  Declare a thing we want to be true to be true!  

EXIT FEE

Next, the Complaint argues that the Exit Fee is too high.  They state that it is not a measure related to the ACC’s damages if Clemson leaves.  They state that it is actually just a penalty to try to keep Clemson from leaving.  Honestly, Clemson is right.  After Maryland left, they jacked up the exit fee to keep other teams from leaving.  Clemson signed off on this!  Now, they are unhappy about it.  This section (like the one before it) does not seem to have any codes or cases or laws that support Clemson’s position.  The underlying argument seems to be “We don’t like this, so please rule in our favor!”  

Even if we agree that the exit fee is unrelated to the real world damages and is designed to keep teams hostage, what does that mean?  Clemson explicitly agreed to the terms of the contract for the exit fee.  What are the reasons a party can get out from under a contractual exit fee?  What are the exceptions to the contract?  Nothing is discussed here.  FSU has the same situation.  

Next, Clemson discusses the fiduciary duties.  The ACC failed already in NC on this, so I do not think we need to spend a lot of time discussing it.

So, then they have their causes of actions and specific requests.  They are:

1. Declare that the ACC does not own any rights of Clemson after they leave the conference (meaning that the withdrawal penalty goes from 572 to 140)

2. Declare that the exit fee is void (which means that the withdrawal penalty goes from 140 to 0).  

3. There are no fiduciary duties that Clemson could breach.  

These are the 3 causes of action in the initial complaint.  In the amended complaint, they add some more causes of action.

New Causes Of Action

The first new one (which is the 4th cause of action) is “Clemson is not a joint venturer with the ACC”  This goes back to the fiduciary duties raised in #3 above.  Clemson argues that they are not in a joint venture with the ACC and so they have no fiduciary responsibility to advance that joint venture.  As noted above, the NC Court found that FSU has no fiduciary duty to the ACC and may find the same for Clemson.

Sovereign Immunity

The second new cause of action (which is #5) is Interstate Sovereign Immunity.  FSU raised this in their Motion To Dismiss/Stay in NC but actually didn’t raise it in their own amended complaint in FL.  Now, the FL Judge has dismissed the FSU FL Complaint so FSU may raise it in their 2nd Amended Complaint in FL.

Here, Clemson argues that they cannot be sued in NC and can ONLY be sued in SC.  They want a declaratory judgment that Clemson has sovereign immunity from the claims brought by the ACC against Clemson in NC.  This is a clear response to the ACC filing in NC against Clemson (which happened after the initial Clemson filing in SC).  I am not sure, honestly, how a SC Judge could rule on what a NC Judge can or cannot do.  I bet a SC Judge would not be happy with a ruling from a NC Judge on what the SC Judge can do.

I am not sure how far this cause of action will go.  The Judge in NC was pretty clear that he found FSU waived sovereign immunity due to all of FSU’s contacts in NC.  Clemson has reasonably similar contacts in NC, so I do not see the NC Judge having a different resolution here.  

No Violation

The next cause of action (#6) is that there is no violation of Section 6 of the GOR.  Clemson wants the Court to confirm that they have not breached anything by filing the lawsuit.  I like this lawyering.  They are looking at what the ACC filed and trying to get a SC Judge to say “Nuh uh!”  Now, again, I am not sure how much stock the NC Judge puts into a SC Judge ruling BUT it’s good to get everything tied down.  

In NC, the ACC argued that by filing the lawsuit, it creates a breach of the GOR and this justifies the ACC’s lawsuit there.  SC is trying to do an end around on that.  This section is fairly short and general.  

Slander Of Title

Lastly, the final new cause of action (#7) is slander of title.  I honestly didn’t/don’t really understand this one from a “is this a thing?” level.  I understand the basic argument of Clemson.  The ACC is LYING about what the GOR says about their rights.  This lying makes it difficult for them to shop their rights around.  As such, the ACC has damaged Clemson by this lying.  

A few thoughts:

1. My read of the GOR is not that the ACC is lying.  So, I am not sure how Clemson approaches this with such confidence.  The truth appears to be a solid defense to this cause of action.  At absolute best, the GOR is somewhat vague and the ACC has a reasonable interpretation.  Not lying, though.   

2. Clemson can as much tell the world how their rights work as the ACC.  Nobody stops them from speaking on it.  They argue the media repeats the ACC’s lies, but the media can Clemson’s stark truths, also. 

3. I have always understood slander on title to be towards real property.  IP rights are not real property.  However, I do not understand SC law and it appears that SC may have a law that allows slander of title against IP rights.  

Now, I did some research here and found a South Carolina Appellate Court (from the Greenville Circuit which could include Pickens County appeals).  The name of the case is “Pond Place Partners, Inc., American Federal Bank, FSB, as trustee for Mary M. Pearce, and Edwin P. Collins, (respondents) v. David C Poole, Mary T. Cruikshank, Estate Of Robert J. Maxwell, Jr, Faust Nicholson, through his Guardian Ad Litem, Laurens C. Nicholson, II (defendants).”

Wow, quite a mouthful.  Also, it’s a probate adjacent case, YAY!!!!!  

This 2002 case expands slander of title to “intangible things.”  Please see this line:

“The rules on liability for the publication of an injurious falsehood stated in § 623A apply to the publication of a false statement disparaging another's property rights in land, chattels or intangible things, that the publisher should recognize as likely to result in pecuniary harm to the other through the conduct of third persons in respect to the other's interests in the property.”

The case notes the following elements to prove slander of title for intangible things (such as IP rights):

“Therefore, to maintain an action for slander of title in South Carolina, the plaintiff must establish: "(1) the publication (2) with malice (3) of a false statement (4) that is derogatory to plaintiff's title and (5) causes special damages (6) as a result of diminished value of the property in the eyes of third parties”

I do not see Clemson obtaining evidence to prove #2, #3, #5, and #6 here.  They 100% cannot prove 2 or 3.  Here is a link to the case.

4. Clemson argues that the ACC lied with intention to harm Clemson’s interests.  This is tough to prove.  You put a ACC executive on the stand and ask “Did you make these statements with intention to harm Clemson?”  “No, I was repeating the ACC interpretation of the GOR language.”  Again, you have to prove malice above.  

So, I do not know how far they can push this slander of title cause of action.  

CONCLUSION

That is basically the thrust of their complaint.  Turn 572 into 0!  Magic!  ACC immediately (like the next day) sued them in NC.  Expect a flurry of motions in both jurisdictions about how the other side has filed a completely fraudulent lawsuit.  Then, we will see how things play out from there.  The main focus here is that nothing is happening quickly.  I will keep doing what I can to do what I can to help illuminate the situation here!