Guest Post: Clemson's Motion to Dismiss/Stay
Can Clemson come up with a better argument than Florida State? They're certainly gonna try!
Ed note: TwistNHook is continuing on with his legal analysis of lawsuits between Clemson and the ACC that started by looking at Clemson’s initial suit and the ACC’s counter suit. Meanwhile, here’s a link to all of his prior analysis of FSU vs. ACC posts.
Hello, friends, we are back! The Clemson case is starting to heat up. So, for all the haters out there who say I only talk about FSU these days, now I’m ready to only talk about Clemson. Today, we are talking about two motions that Clemson filed in Mecklenburg County, NC. These are the Motion To Dismiss and Motion To Stay against the ACC v. Clemson lawsuit in NC. FSU filed these as one joint motion, but Clemson filed it as separate motions. Apparently, there is a hearing set on July 2.
So, let’s dig into this. Firstly, it is important to note that Clemson is doing something very different from FSU. FSU got a high priced fancy pants law firm. Clemson did the exact opposite.
Who Is Alan Parry????
They hired Alan Parry:
Alan Parry is out of Chapel Hill, NC about 2 hours from Charlotte. Alan Parry is not a part of big law, he appears to be a small law firm. However, if you look at his website, he states that he is an expert in North Carolina Business Court. Given that North Carolina Business Court is where this lawsuit is located, it probably is better to get the best lawyer for this niche court. A lot of the bigger companies just go for the Big Law firm. Big Law is known for having attorneys who can handle anything and everything. Sometimes they are jack of all trades, master of none.
Clemson is going the specialist route, instead. Something interesting to watch. My experience with Big Law is that a) they try to intimidate you and overwhelm you with resources and b) they don’t always know the specifics of what they are handling. Alan Parry may not have the massive resources a Big Law firm has but he and his firm probably know this court and case type inside and out.
So, let’s dig into the Motion To Dismiss first. The most important thing to understand here is that Clemson saw what happened with FSU’s failed Motion To Dismiss and is desperately trying to differentiate themselves from FSU. They do not want to end up in the same situation and they do not want the judge to say “Another ACC team? I’ll just treat them exactly the same as I did that last ACC team!”
Is Clemson Florida State????
To do that, they emphasize a few things:
Clemson filed first. They keep referring to the lawsuits as the first filed South Carolina suit or the second filed North Carolina suit. Really hit that note hard.
Clemson alleges that they aren’t try to prove that the GOR or the withdrawal penalty is unenforceable/invalid. Clemson alleges that they are just trying to clarify the scope of rights assigned to the ACC per the GOR. This is a key insight that they repeat. They accept that the GOR is valid.
However, they interpret the GOR differently than ACC and under their interpretation, they argue that they couldn’t assign any IP rights to the ACC for a time period after they leave. I will get into this a bit more later, but they argue that there is no “actual controversy in this case as to the validity or enforceability of the grant of rights.”
But here is my comment to that: Isn’t Clemson arguing that the ACC cannot enforce the GOR against future IP rights for times that Clemson isn’t in the ACC? Doesn’t that undercut their argument here? But who cares what I say, let’s see what Judge Bledsoe says
Minor note: There is a typo on page 3 where they wrote March 19, 2023. You just know that they didn’t see the typo until literally right when they hit the “SUBMIT” button on the motion.
Doesn’t it always work like that? Also, nothing like that woulda happened in Big Law, bc 32 different lawyers would have read this before it got approved.
Sovereign Immunity
OK, so the first and main point Clemson wants to make here is that they cannot be sued in North Carolina. They really go #allin on this sovereign immunity item. FSU crashed and burned with it so Clemson has to differentiate themselves somehow.
First, they argue that the SC Constitution controls how people can sue Clemson (i.e. a state agency). They allege that SC Code Annotated 15-77-50 says that SC controls all legal controversies regarding the state agencies. The ACC cited to Code Of Laws Of SC 59-119-60, which states in relevant part:
“ It may sue and be sued and plead and be impleaded in its corporate name”
This may not seem like a lot, but it is a bit different from the relevant FL law, which said that FSU can be sued in “all courts.” FSU tried to argue that meant all FL courts only, but the NC Judge interpreted that as all courts, including NC Courts. Here, the language in SC doesn’t say “all courts.” Clemson argues that that does not provide explicit consent to be sued in foreign states, like the FL law does.
Farmer v. Troy University
Clemson then takes it one step further. They know that a case called Farmer v. Troy University sunk FSU. So, they dig deep into that case. First, they argue that it is not relevant. They argue that the facts are totally different from the facts here, so it cannot be applied.
Now, let me tell you something about legal briefs. If you are arguing that the facts are not the same as the relevant case, so the case cannot be applied to yours, you are near the end of your arguments. Judges apply cases with dissimilar facts all the time. This is not a major issue for anybody.
This is especially true given that the facts Clemson fights over don’t seem like a big deal to me. In Farmer v. Troy, Troy U from Alabama got sued in NC. The NC Courts allowed it to proceed, because Troy had many contacts in NC (leasing office space, hiring NC residents etc). Here, Clemson argues it never leased office space or employed NC residents etc.
However, those specific actions are not requirements of Farmer v. Troy but reflections of actions an out of state actor could do to create sufficient contacts to be sued in NC. In the FSU case, the NC Judge found that FSU did many, many things in NC (send employees there for ACC business, send athletes there for competitions etc) and so they consented to be sued there. What did Clemson do that was any different than FSU when it came to creating sufficient contacts to be sued in NC?
At worst, I would see the NC Judge approving this portion of the Motion To Dismiss with leave to amend. This happens all the time in the CA version of this motion (called a demurrer). This is exactly what the FL Judge just did in that case (i.e. dismiss and give FSU a third bite at the apple). So, worst case scenario here is ACC refiles with tons of allegations about how Clemson comes into NC. Then, they probably survive a second motion to dismiss. I’ve seen it happen myriad times in CA and it is probably about to happen in Leon County, FL.
Appellate Preparations
Next, Clemson argues something that honestly made me laugh out loud when I saw the header. They argue that even if the sovereign immunity thing doesn’t pan out and the Court thinks Farmer v. Troy isn’t distinguishable on the facts, then the Court should apply the dissent from Farmer v. Troy instead of the holding. Basically “The losers had it right there, please listen to them.” I am not sure I have ever seen a lawyer ask the Court not to follow precedent quite so bluntly.
They do note that it is for the “purposes of complying with the error preservation requirements of Rule 10a1 of the NC Rules Of Appellate Procedure.” What does that mean? That means that Clemson wants to protect its right to appeal. A good lawyer tries to win the case, a great lawyer makes sure the appeal is protected. 10a1 states in relevant part:
In order to preserve an issue for appellate review, a party must have presented to the trial court a timely request, objection, or motion, stating the specific grounds for the ruling the party desired the court to make if the specific grounds were not apparent from the context.
I have seen many instances in which somebody argues something at the appellate level and the Justices state that it is the first time the issue has been raised and so they deny it. You cannot just raise issues for the first time on appeal. Clemson’s NCBC expert lawyer is making sure that all appellate issues are raised. They can argue to the justices that Clemson pointed the judges focus on this issue and were denied, so the Appellate Court must overturn the denial. Smart lawyering, even if this issue seems like an instant loser on its face.
They cite explicitly to the dissent in arguing that the NC Court should apply the law of the foreign sovereign (i.e. SC). I do not see a NC Judge saying that they should apply non-NC law anytime soon.
Legal Deficiencies
Next, Clemson argues that even if sovereign immunity fails, there are other fatal legal deficiencies warranting dismissal. I thought that this brief was extremely well organized from a logical standpoint. Not sure how important logical structuring is in a brief but it makes it a lot easier for a Judge to track your arguments. If the Judge has trouble tracking your arguments, it will make it harder to sell your version of justice to the Judge. All lawyers are functionally sales people and they want to make the pitch as smooth as possible.
In this section, Clemson argues that, at times, the ACC complaint lacks subject matter jurisdiction (Rule 12b1). At other times, the complaint fails to state a cause of action (12b6). These are standard Motion To Dismiss codes and Clemson uses them to argue that each and every single ACC cause of action should be dismissed.
Is there an actual controversy?
The next section is consistently my favorite part of the arguments in all 4 of these cases. It is the one where the moving party states that there is “no actual controversy” in their non-preferred venue. They never mention that they argue in their preferred venue about how much there is an “actual controversy.”
For example, on page 16 of the Motion, Clemson states in a bolded headline: “The Court should dismiss the ACC’s first and second claims for lack of subject matter jurisdiction because no actual controversy exists as to the validity or enforceability of the Grant of Rights or Amended Grant Of Rights.”
Makes perfect sense, right? No controversy exists, so the ACC can’t sue poor little Clemson, just sitting there minding its own business.
Now, just for fun, let’s turn to page four (four!!!!) on the Clemson Amended Complaint. It has a header that states in bold: A live Justiciable Controversy Exists.”
This is why people don’t like attorneys. They think attorneys speak out of both sides of their mouth. This section opens with:
The ACC’s misconstruction of Clemson’s grant of media rights, its stated intention to impose a withdrawal penalty that has escalated to exorbitant levels in recent years, and its attempt to unilaterally impose non-existent fiduciary duties on Conference members each separately injures Clemson and its students, student-athletes, coaches, and faculty.
I actually have friends who are Clemson alums, I should ask them if they feel damaged. Anyway, this section goes on and on about how terrible the ACC is treating Clemson. So, how can Clemson say in the NC case that no controversy exists? Honestly, it’s not clear to me, because it seems clear on its face.
This is what they attempt. As noted above, they argue that Clemson never sued to overturn the validity or enforceability of the GOR. As such, they would stipulate to the first two causes of action (which are a declaratory judgment that the GOR is valid and that Clemson is stopped from attacking the validity of the GOR).
I think this is some ninja slice logic from Alan Parry and I am not sure how far it will go. Clemson is trying to fight the enforceability of the GOR as against all future IP assignments for after they leave the ACC.
Additionally, per the terms of the GOR, signers cannot take any action to undercut it at all. Additionally, ACC has to take all commercially reasonable actions to protect the ESPN contracts. So, the SC filing (which occurred before the NC filing in this instance) is allegedly a breach of the GOR itself, per the ACC’s complaint. Thus, this would imbue the Court with a controversy and subject matter jurisdiction.
Clemson cites to NC Gen State 1-254 to argue that there is a difference between seeking construction or validity of a contract. After a review of the statute, I am not sure I agree with Clemson on this. It does say that a party to a contract can seek a declaration regarding the construction or validity of the contract. However, even if Clemson is only seeking a “construction” declaration instead of a “validity” declaration, the next sentence in 1-254 explicitly states that that declaration for construction of the contract can be sought “either before or after there has been a breach thereof.”
So, that explicitly states that the ACC can file this lawsuit (even if for construction and not validity) before a breach has occurred. Assuming that Clemson is right and they haven’t breached by filing the SC case and they are only seeking construction, the ACC can still sue them to confirm a construction of rights.
Estoppel And Waiver
Next, Clemson turns to the 2nd claim of estoppel. They already discussed this above in discussing the first cause of action. They return to it again and say that no NC law supports the claim of estoppel. Estoppel means that you got the benefit of the contract so you cannot fight to get out of the liabilities of the contract. IE Clemson got 9 digits worth of money here, so how can they complain?
How? Well, it’s quite easy, really. Clemson argues, in a very technical argument, that estoppel can only be raised on defense (i.e. as part of an answer/objection to a complaint). Here, ACC is using it on offense (i.e. as a cause of action in their complaint). Clemson argues that estoppel could solely be raised as a response to Clemson’s complaint, which, oh, by the way, just happens to be in Pickens County, SC. This is well argued. I have some memory that FSU tried this unsuccessfully, but I may be remembering wrong. Either way, Clemson’s specialist attorneys throw this in as another reason to boot cause 2. Usually, when you are trying a super procedural argument, it is too cute by half and the Judge does not follow it. We will see what happens here.
Breach Of Contract
Regarding causes 1, 4, and 6, Clemson next argues that the Court must dismiss those because “there is no material breach” of the GOR. Clemson argues that since there is no breach of the contract, a cause of action about the contract cannot lie. These 3 causes relate to breach of contract.
Clemson argues that all it is doing is seeking a determination that the IP rights assigned to the ACC are more limited than the ACC is telling people. Clemson argues that ACC fails to allege that Clemson engaged in any conduct that constituted a breach or interfered with the ACC’s rights to “exploit Clemson’s media rights.”
Firstly, again, Clemson’s best bet here is to get a ruling similar to the FL ruling where ACC gets another bite at the apple to fill in more facts. Putting that aside, ACC argues breach in the form of the SC litigation. If the Court buys that the SC filing is a breach, then this argument would fail.
Fiduciary Duties
The next argument relates to the fifth claim for relief, which requests a confirmation that Clemson owes a fiduciary duty to the ACC. Clemson seeks to have this dismissed arguing that it fails to state a cause of action since Clemson cannot owe a fiduciary duty to the ACC. Within the first 5 lines of this section, they explicitly cite to the Order from FSU’s Motion To Dismiss. This one is dead in the water for the ACC.
Motion To Stay
When I first saw the Motion To Dismiss, I was confused because there was no motion to stay. They filed it separately later that day. It is about a page long. I have no idea why it is so short. It basically just says “If the Motion To Dismiss fails, please look at the factors in the relevant law to show that it would be a substantial injustice to Clemson for the matter to proceed in NC.” Under the relevant law, there are 10 different factors to look at regarding a Motion To Stay. I would have thought that this lawyer (who is a specialist) would have provided some analysis regarding these factors and how they lie in Clemson’s favor. Instead, however, it just waives its hand to say “the factors support Clemson.”
Do I interpret the lack of analysis to show that Parry did not think that this would be a winning motion? Even if a lawyer thinks a motion might lose, they should file the absolute best brief, in my view. Was there some sort of deadline I am not aware of that Parry was racing to meet and just had to get something on file and he can supplement it later? Lawyers do that all the time, if they can. I hope that the attorneys for the ACC draft a complete brief that well analyzes these factors and helps us non-NC lawyers better understand the situation.
Conclusion
This was a completely anticipated filing. Clemson is trying to do anything possible to avoid the same fate as FSU (except for the fiduciary duty argument). They have two ways to do that. One is to go all in on the sovereign immunity and the other is to say that they will not seek to invalidate the GOR, just to interpret it. The first one did not pan out for FSU and I am not sure how Clemson is any different. In regards to the second one, their own complaint in SC seems to undercut it. If I, a complete layperson to this, can come up with ACC’s counter arguments (based on reading the Objection to the FSU Motion etc.), I am of the belief that the ACC will put forward a strong objection.
We will see what happens on July 2, 2024 and if the Judge does the same as before. Thanks for reading, I appreciate it!
Is there a reason we haven’t just given twist his own username to post? This guest series has seen him contribute a massive amount.
I went to high school with Clemson President James Clement. Randallstown High School in Baltimore County, Maryland. President Clement is completely wrong on all counts.