Guest Post: FSU vs. ACC - Florida State's Amended Complaint

FSU has gone back to the drawing board to find reasons why the ACC is bad. Did they turn up anything good?

Ed. note - Welcome back to TwistNHook, W4C’s esteemed legal correspondent. Here are all of his recent posts if you need a refresher:

Part 1: ACC Stability
Part 2: FSU vs. ACC Part 1
Part 3: FSU vs. ACC Part 2
Part 4: The ACC Strikes Back Part 1
Part 5: The ACC Strikes Back Part 2

Hello, friends!  We’re back with another installment of the ongoing legal saga between Florida State and the ACC.  As a Cal Berkeley fan, I have a vested interest in seeing the ACC not collapse.  If FSU leaves, it could lead to YET another of our conference to collapse.  Would like to avoid that, if possible.

Right now, we are discussing the amended complaint filed in Leon County, FL by FSU.  I previously wrote 2 posts on the initial complaint.  However, after FSU found out ACC beat them to filing lawsuits, FSU has now amended their complaint.  In this post, I want to discuss the changes in the new amended lawsuit and how it differs from the previous one.  There are now two competing motions to dismiss and I will discuss those later.

Same Causes Of Action

The top line of it is that FSU has not changed its causes of action.  The same ones remain.  This is different from the ACC when they amended their lawsuit.  There, the ACC went from 2 causes of action to 6.  A cause of action is a request from the plaintiff to the Court.  For example, one of the causes of action filed by FSU is called Declaratory Judgment.  This is just a request for the Court to provide a judgment declaring whether a fact is true (in this instance, that the Grant Of Rights is void etc).  

So, the amendment is less about fundamentally shifting the requests to the Court and more about providing additional facts/support for their complaint.  Almost all of the changes are in the statement of facts section.  

Seeking To Embarrass Swofford

In plumping up the statement of facts section, the new FSU complaint really really really really focuses on a potential conflict of interest between the previous ACC commissioner and his son, who ran a TV corporation.  The conflict of interest may have led the ACC to force Raycom, where his son worked, into the ESPN media deal inappropriately.  This may have led to ACC teams getting less money.  There could be some validity to this and I will discuss it further.  However, it also strikes me as really focused on trying to do anything to embarrass the people who were in charge and upset FSU.

Nothing precluded FSU from including these facts in the initial complaint.  In the reality they are trying to sell to the Court, these facts are directly on point.  Including them now seems more likely to try to leverage “avoidance of embarrassment” into getting a settlement.  

Going through the amended complaint, they have a very limited portion on jurisdiction/venue.  This is about where the lawsuit should be heard.  This is about to be the first major problem or issue with the lawsuits here.  If I were FSU, I would have done more on this.  They cite a few different basic-seeming Florida Statutes that just indicate that Leon County is the appropriate county.  This comes up in more detail in the ACC’s Motion To Dismiss, which I will discuss later.  

ACC spends page after page arguing why North Carolina is the appropriate venue etc. in their lawsuit, but FSU doesn’t really tell us why Florida is the appropriate venue.  

Swofford Is A Bad Guy

As noted above, starting on page 8, FSU has a new section regarding the previous commissioner, John Swofford, and his son Chad Swofford.  It alleges that the only reason BC is in the ACC is because Chad was working in the BC Athletic Department.  The amended lawsuit provides no further evidence relating to why this is relevant to the disputed GOR.  

It then tells a complicated story about Chad leaving for a company called Raycom Sports.  You can learn more about Raycom Sports at Wikipedia.

In 2008, Raycom lost its SEC rights to ESPN.  The amended lawsuit makes it sound as if Swofford forced ESPN to keep Raycom in on the ACC deal to help his son, Chad, out.  Chad, by this time was the director of business development for Raycom.  This is somewhat funny, because part of the amended lawsuit makes it sound like ESPN bullied ACC into bad deals.  

Here, however, the ACC bullies ESPN into a bad deal.  ESPN enters into a sublicensing arrangement with Raycom Sports.  ESPN sublicensed content to Raycom to produce and Raycom paid ESPN 50 mil per year.  

The amended lawsuit argues that the 50 mil Raycom paid to ESPN did not go to the ACC schools.  It seems like FSU is arguing that if Raycom had not been involved ESPN would not have sublicensed to anybody else and kept that content to produce on its own.  Then, ESPN would have paid profits from that content to the ACC schools.  Instead, Raycom got the profit from that content and ESPN got 50 mil.  The ACC schools apparently got nothing.  

I am not an expert in TV production, but my question is whether ESPN would have kept all of the content or just sublicensed it out to somebody else.  It appears that Raycom then licensed its content out to Fox RSNs.  ESPN is not going to carry every single ACC game on its channels for a number of reasons.  These sublicense deals seem to provide value to the ACC schools by getting their games onto other channels, like the RSNs. 

So, if Raycom is just an example of one sublicensee and could have been a different sublicensee with a similar effect on the ESPN deal, I am not sure how this relates.  Paragraph 41 states that “The Raycom Sports Partnership has cost each ACC member several million dollars and continues to express the value of their media rights, and the cost and success of their prestige network through today.”  

I will note that if the ACC member schools are damaged by only several million dollars overall, this is not a really major issue.  A lot of sturm und drang for a dispute of “several million dollars” that may have gone to a sublicensee anyways.

Separately, the Wikipedia article states:

“Raycom's final syndicated ACC telecast was the 2019 ACC men's basketball tournament final”

So, this Raycom deal hasn’t been relevant for approximately 5 years.  It probably is not super relevant to the legal standards of the actual lawsuit.  However, FSU people got so upset by the pre-emptory ACC lawsuit (which messed up their legal strategy), that they wanted to “do something.”  It is very common in litigation that when a party gets upset, they want to “do something” and their lawyers come up with something to do.  This conflict of interest situation is perfect, because it plays into the Florida State victim complex on display here like it could be somewhat relevant.  

The statement of facts spends a lot of time discussing how the ACC could have negotiated its rights deals better.  However, I am not sure if that is a relevant factor here.  Putting aside the fact that such an argument would relate to breaches of the media deals (not before the Court here), the Court is not going to wade into discussions relating to whether the ACC could have negotiated this way or that way.  

If there are allegations of a breach, it requires a serious misstep (such as a failure to bring a reasonable TV deal altogether).  This story of how the ACC did this thing wrong or that thing wrong can sound bad, but the ACC still ended up with 10 digit TV rights contracts.  This can be contrasted with the Pac-12, which completely failed to get a TV deal its members would agree to. 

FSU is the true victim

FSU’s amended complaint continues with its victim mentality.  Starting on page 19, it discusses how the ACC bullied its poor highly paid professionals into signing the GOR.  This is because FSU willingly signed the contracts it now tries to get out of, so it has to come up with some reason or justification to do so.  

For example, paragraph 89 on page 19 states “Swofford and Dean Jordan double-teamed single members of the Florida State Board of Trustees in isolated individual meetings in an effort to coerce each member to accept the “Atlantic Coast Conference Grant of Rights Agreement” (the “Acc GofR”) to trap the members in the conference for the duration of the 2012 ACC-ESPN Amendment (i.e. through June 2027), hoping to make it absolutely impossible for members to withdraw like Maryland just had.”

Dear reader, you are not a Judge (most likely!) or a lawyer (maybe).  Does this sentence pass the sniff test?  Does it seem likely that Florida State was bullied into signing the contracts by these big bullies at the ACC?  The story that FSU tells here is so preposterous that it makes it difficult for the reasonable reader to take everything seriously.  

The story also indicates that Swofford lied to the ACC because they never got the same terms for the ACC network as the SEC got from ESPN for its network.  Sorry to burst your bubble, ACC, but no reality exists where you will get the same terms as the SEC on a TV deal.  Period.  If Swofford said that, he was using puffery.  If you believed him, that’s a you problem.  

No Consideration?

Next, the amended complaint tries to argue that FSU got no consideration for the GOR.  They argue this because one way to get out of a contract is to say you got no consideration.  Consideration is basically “something” in exchange for your signature.  If you get “nothing” you do not have a valid contract.  

The argument from the amended lawsuit is preposterous on its face.  The ACC schools got money for assigning their IP rights to the ACC per the GOR.  A lot of money.  Even internally, the document makes no sense.  In paragraph 95, it says that the GOR articulated no “valuable benefits.”  The next sentence says that the GOR recited consideration in the form of “media rights agreements.”  So, between those two sentences, no benefits somehow turned into money from media deals.  

Locked Up?

The amended lawsuit tries to argue that the “sole purpose” of the GOR was to “lock up” the ACC members.  Bluntly, that was one reason. However, it was not the sole reason or even the main reason.  The main reason for the GOR is that a combined ACC set of rights is more valuable than each school individually negotiating their rights.  Only ND individually negotiates its rights.  Alabama doesn’t.  Michigan doesn’t.  And if FSU gets its way, it will sign a GOR for the Big10 to assign its IP rights to the Big10.  This GOR will most likely be very similar if not exactly the same as the ACC one.  

The amended lawsuit fails to discuss any of these issues and just focuses on the fact that a GOR locks rights up and that this is bad.  This is the problem that the FSU lawsuit runs into again and again.  It paints this incredibly one sided picture in an attempt to figure out a way to get out of the GOR contracts etc.  However, by being so one sided, they lose credibility with a reasonable reader.  

Cal Sucks At Viewership!

An astute reader may recall that FSU insulted your beloved California Golden Bears in the original complaint.  That is still there, but it gets even worse.  They put in viewership rates to show how many more people watched FSU than Stanford, Cal Berkeley, or SMU.  Even an insane Cal fan like me would admit that FSU has higher viewership rates than Cal.  They’re kicking us while we’re down!  Oy!

I will also note that they took out the ACC Network viewership numbers, which would have lowered the FSU viewership.  So, yes, FSU has more viewership, but they are cherry picking numbers to make us look even uglier than we are!  Y’all don’t have to cheat to win!  You can just win!  

Access To Contracts

One thing that confuses me is whether the ACC allows FSU to have a copy of the relevant contracts here.  FSU alleges that they have to fly to NC to personally read them.  However, it appears that they attached the contracts to their initial complaint and ESPN got mad at them for breaching confidentiality.  The copy of the amended lawsuit I received does not have anything attached, so they may have not attached anything to keep ESPN happy.  

Childish Antics

Another section that is new relates to the “Unprovoked ACC Complaint.”  That is the title that the FSU Lawsuit uses repeatedly when referring to the North Carolina action.  Does it reminds you of one of those old Bruins Nation insults that they would use?  Childish and repeated?  Generally, if something seems childish in a complaint, it is not a great approach.  Here, continually referring to the other lawsuit as the “Unprovoked ACC Complaint” strikes me as stupid.  FSU spends significant time talking about how they have to do something to fight back against the ACC. How “unprovoked” is this complaint given all the actions taken by FSU up to that point?  

One of the complaints that FSU has about the “Unprovoked ACC Complaint” is that it whines about FSU breaching the confidentiality of the media contracts here.  It states that this is foolish because the Unprovoked ACC Complaint also disclosed many terms and conditions. However, the quotes that it uses are vague and not specific.  

For example, one of the quotes the FSU complaint uses to show that the Unprovoked ACC Lawsuit disclosed confidential terms is “Florida State...will receive [monies] through 2036.”  Another is “these agreements were not possible without the Media rights ceded by the Grant Of Rights.”  

These are vague statements that do not provide any specifics and are generally known by anybody.  The FSU complaint publicly provides specific dollar amounts and information on the monies distributed etc by these ESPN media deals.  So, this complaint about the Unprovoked ACC Complaint releasing confidential information is off base.

Although many of the sections in the FSU complaint do not seem relevant, there is a new portion here that could be relevant.  It states that 2/3rds of the Directors of the schools have to vote to approve litigation.  It cites a section in the Bylaws, 1.6.2.  I double checked that section and FSU appears to be correct here.  

I am not sure what this would lead to.  Does it mean that FSU will file a motion in North Carolina to dismiss the ACC complaint for lack of following the bylaws?  Does it mean that there was a secret vote FSU wasn’t invited to that led to the litigation being approved in North Carolina?  Does it not mean anything genuine?  We shall see!  

Count III

In Count III of the lawsuit, FSU listed a series of alleged breaches of the contracts by the ACC.  They have added a new one:  the ACC’s filing of a lawsuit without the 2/3rds vote.  This is discussed above and may be a valid argument.  I am not sure how this relates to whether the GOR is invalid and/or whether the withdrawal penalties are void, however.  

Conclusion

I know we’ve gone over a lot, but there have been substantial changes in this first amended complaint. Most of them either relate to potential conflict of interest with the former commissioner and his son or the “Unprovoked ACC Complaint.”  The Unprovoked ACC Complaint issue here is not super relevant.  As far as the information with the former commissioner, it could be relevant.  However, I am not seeing the connection as to why the withdrawal penalty is void or the GOR is void.  It seems to relate more to the ESPN Media deals than the GOR issues.  

There are currently two pending motions to dismiss.  We will see the arguments raised there by each side and see how things play out in March.  Next, I will analyze those motions.