Guest Post: FSU vs. ACC legal update

TwistNHook is here to break down a ruling out of North Carolina

Ed Note: It’s been a month of calm in the legal waters, but courtrooms in North Carolina and Florida have released rulings in response to early motions in the FSU/ACC legal battle, which means that TwistNHook is back for more analysis! If you’ve missed his earlier work and want to catch up, here’s everything he’s written since December:

• 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!

Hello, friends!  I hope you are doing well.  Today I wanted to write about the new 75 page order from the North Carolina Business Court.  I first wanted to put this in the greater context of what does this mean overall and then go through the Order itself.  It may take a few posts to get through the whole thing.

So, the first thing here is what does this Order mean in the greater context.  It strengthens any negotiating position for the ACC.  When people file lawsuits, theoretically, they are intended to go to trial.  In reality, the vast vast vast vast vast majority of lawsuits end in settlement, either through direct discussion or mediation.  So, when rulings happen, it usually just goes to settlement leverage.  The likelihood of settlement in ACC’s favor increases the more positive rulings they get.  The likelihood of settlement in FSU’s favor increases the more positives they get.  

This is especially true given that the FL judge has set up this bizarre multi-state litigation situation.  Since the NC Court ruled that the NC lawsuit can proceed, the FL judge ruled that the FL lawsuit can proceed.  

If the FL judge had gone the other way and ruled that the FL case should be stayed, then FSU’s legal escapade would be DOA.  Since the FL judge did not rule that way on the Motion To Stay, FSU is still alive.  

Now, FSU has appealed the NC ruling and I anticipate that the ACC will appeal the FL ruling on the Motion To Stay.  So, these rulings could shift.  If FSU is successful with their appeal, their settlement leverage increases substantially.  Similarly, if ACC is successful, expect no settlement.  

In the interim, I do not anticipate any settlement.  I could be wrong, certainly, but they may want to wait to see how the appeals play out.  I genuinely have no idea how long appeals take in NC or FL, but I get the sense that they are not short.  For FSU to get out for the 2025 season, they have to announce withdrawal by mid August, 2024.  I do not anticipate that they will make that deadline, so expect for the 2025 season FSU will be in the ACC.  Honestly, I would not be surprised if this is not resolved before August, 2025 or even August, 2026.  However, I could be wrong and I will continue to track how this plays out.  FSU wants a quick resolution to this and I do not see that happening.  

This is especially true even if they win their trial in FL.  Let’s assume that they were to take the FL case to trial.  In CA, it can take over a year to get to trial.  FL may be similar.  I will note that they filed their lawsuit in December and the FL Court hasn’t even finished resolution of the ACC’s Motion To Dismiss/Stay and we are in April.  So, nothing is moving quickly here.  But let’s assume that FSU wins their lawsuit 100%.  That matter will then be immediately appealed, which could take more time.  Every August that goes by is one less season for FSU to not be in the ACC.  Whenever you are looking at litigation, look to see who the status quo helps.  Whatever side the status quo does not help will be in the worse negotiating position, because they want change now.  In this instance, that is FSU.  

The way things are right now, if the parties do go to mediation, I could see a settlement either with FSU paying 400+ million or alternatively, they get some sort of preferred status in the conference (like more media money) to stay.  I have seen some discussion that FSU may pay 80-200 million and that seems low to me given the current legal framework.  Before the FL ruling, I would have said no settlement was likely, but now it has gone from no to maybe.

BIAS

I also wanted to take a moment to reflect my bias in this matter.  I see a lot of people talking smack about the rulings online like they are an occurrence in a sporting game.  What I mean by this is when Cal scores a TD in the Big Game, I may talk smack to the Stanford fans.  Similarly, when the FL judge made his ruling, I saw a lot of smack talking from the FSU fanbase as if their team had just scored a touchdown.  I have also seen some sarcastic legal analysis from pro-ACC people.  

My bias is that I want the ACC to survive (preferably with FSU and Clemson).  I don’t want Calford to lead the league in conference collapses!  However, my promise to you is that I am going to focus on this with the most analytical POV possible.  So, while I am “rooting” for the ACC in these legal processes, I want my analysis to be as neutral as possible.  I hope to build trust with readers that what I am saying is not painted by my bias.  Honestly, I am not your best source as I am not an expert in NC or FL law.  Now, they do have a South Carolina case now and I have looked into becoming a SC attorney, but I do not have sufficient knowledge to say I am an expert in SC law.  I do plan on doing an analysis of the Clemson lawsuit etc.  I am just doing the best I can to provide the best analysis I can and I may be wrong on a number of issues.  Please try to take any bias into account when reading any analysis of this lawsuit, mine or others.  

WHAT DOES THE ORDER SAY?

Having said that, let’s dive into the Order.  So, what is the motion about and what did the Judge say?  The motion is an attempt to stop the NC lawsuit in some manner.  FSU is frustrated that the ACC filed their lawsuit first, because it kills their leverage.  FSU wanted to get some home cooking with their local judge (where apparently he is a double Nole).  This worked out well for Washington State when the Judge assigned to their case was the former president of the Washington State fan club (although I will say that I thought he did a very good job, even though he ruled against Cal’s interests).

FSU want to somehow block this lawsuit so they filed a motion to dismiss/stay.  The Judge ruled partially in their favor and partially not in their favor on the motion to dismiss.  The Judge did dismiss the cause of action related to fiduciary duties.  However, the rest of the lawsuit stays.  Additionally, the Judge ruled in the ACC’s favor regarding the Motion To Stay, allowing the NC case to go through.  That is the top line to this.  However, the Order is 75 pages long, so there is a lot more detail here.  The Judge wanted to do an extensive Order, because he anticipated an appeal.  FSU has immediately appealed, so he was correct.

Judges have 2 bosses.  The presiding Judge of the County, who generally leaves them alone unless there are significant complaints.  Separately, the appellate Court.  Any good Judge is going to take the time to put together the strongest possible Order to protect against appeal.  That is why he took hours of argument and put together a 75 page Order with over 100 footnotes.  Nobody wants their boss to come down on them, whether it is an actual direct boss or the appellate division saying you messed up.  So, if Judges do things the right way, they can basically have no boss getting in their business.  No boss, isn’t that nice?????

FACTS

The Order opens with pages and pages of background facts.  I will not take the time to go through all of them, but the basic gist is that FSU entered into multiple contracts relating to the audio and visual distribution of their sporting events and FSU should have to follow the terms of the contract.  There is 10-15 pages of going through these facts that are taken from the ACC lawsuit.  

IS THERE A CONTROVERSY HERE?

Then, the Order goes into whether there is an “actual and justiciable controversy” that would justify the ACC’s lawsuit.  If there is no actual controversy, then lawsuit would not be justified.  FSU had argued that since the ACC filed before FSU filed their lawsuit, no controversy existed.  The Court did not agree with that analysis.  The Court noted that the GOR requires the ACC to take any action to protect the validity of the GOR.  The Court noted that FSU had been beating their chest about suing for some time prior to the lawsuit and a draft lawsuit had leaked.  From the Court’s POV, it was obvious that FSU was about to do something.

The Court notes that the ESPN media deals require the ACC to make commercially reasonable efforts to protect the ESPN contract.  The Court finds that filing this lawsuit is a commercially reasonable effort to protect the ESPN contract.  I am a bit surprised that FSU wants to antagonize ESPN so much.  If they do get out and go to the Big10, then they would be a Fox property instead of ESPN.  So, maybe they do not care.  And maybe their ratings are so high that they think that they can antagonize ESPN and ESPN will come crawling back to get some of those sweet, sweet ratings.  Both of these could be true.  ESPN does not want to lose FSU to Fox, so maybe they think that if they antagonize ESPN, ESPN will pony up more cash to keep FSU in the ACC.  

DOES THE ACC VOTE MATTER?

The next issue for the Court is whether the ACC followed their “condition precedent.”  What this means in layperson language is “did they have that pesky 2/3rds vote?”  FSU argues that the ACC failed to have the vote and failed to plead that they had the vote.  Here, the Court castigates both sides by saying that “the Court observed that the parties appear to ‘conflate . . . standing related arguments with . . . arguments regarding the legally and conceptually distinct issue of whether the ACC’s actions were authorized under the ACC Constitution.”  The Court splits this into two different sections, one is whether the ACC had standing and the second is whether the ACC was authorized to bring the suit.  

DID ACC HAVE STANDING TO SUE?

Regarding standing, the ACC must show a legal injury, the traceability of the injury to ACC’s actions, and the probability that the injury can be redressed by the Court.  The Court finds that nothing requires the ACC to prove that they followed their bylaws to prove standing and concludes that the ACC does have standing.  What this means is that for standing purposes, the 2/3rds vote is meaningless.  

WAS THE ACC AUTHORIZED TO SUE?

Separately, the Court looks at whether the ACC was authorized to file its suit in December.  This is huge, because if FSU can successfully argue that the December lawsuit is invalid, then the NC lawsuit could go away and we are solely dealing with the FL judge.  

In this instance, the Court does what I actually thought it would.  It says that the 2/3rds vote doesn’t matter, because they had the vote in January and that vote can be retroactive.  The Court says that the ACC’s evidence of ratification is unrebutted.  The ACC had a secret meeting in January.  They did not tell FSU about it.  Clemson refused to attend.  The other 13 teams (including UNC) apparently voted for the Amended lawsuit.  This is sufficient for the Court to find that retroactive approval of the initial lawsuit did occur at that January lawsuit.  

Interestingly in footnote 93, the Court states that they find FSU has withdrawn from the ACC.  This is based on them filing the lawsuit.  Thus, excluding FSU from the secret January meeting is completely justified.  

DOES FLORIDA STATE HAVE SOVEREIGN IMMUNITY?

Next, the Court turns to Sovereign Immunity.  FSU had argued that solely FL courts could deal with any lawsuit involving FSU.  This is a highly technical argument involving cases with non-NC defendants.  The bottom line is whether the defendant consented to being sued in NC.  The Court finds that it did, in part, due to the fact that FSU has so many activities in NC.  The Order uses the phrase “continuous and systematic membership and government activities” regarding the ACC that occur in NC.  Some of these include attending board meetings in NC, for example.  FSU tried to argue that its actions were “governmental” in nature and not commercial in nature.  However, the Order states that the actions are commercial in nature and the exact type of matters that allow for a non-NC defendant to be sued in NC.  

DID THE ACC SUE THE WRONG PARTY?

The next section of the Order relates to suing the wrong party.  FSU argues that the ACC should have sued FSU, not the FSU Board.  The Order is fairly rude (as far as Orders go) in this analysis.  It states that the FSU analysis is “conclusory.”  It states that this argument is a non-starter.  This section is brief and the Court quickly denies it.  

DID THE ACC WRITE A GOOD ENOUGH COMPLAINT?

Next, the Court looks to see if the lawsuit itself fails to state its case.  This is complicated.  It is similar to a CA demurrer analysis.  That means that basically the Court has to take everything the ACC says as true.  In doing so, does that mean that the lawsuit still isn’t good enough to argue its case???  

This section is quite lengthy, because it goes through all of the arguments in the lawsuit one by one to determine if the lawsuit sufficiently argues its case.  The Court finds that the lawsuit sufficiently argued waiver.  The Court finds that the lawsuit sufficiently argued a declaratory judgment claim.  The Court finds that the lawsuit sufficiently argued a breach of contract regarding confidentiality.  

DOES THE ACC OWE A FIDUCIARY DUTY TO FSU?

The next section, however, benefits FSU.  This relates to fiduciary duties owed by the FSU Board to the ACC.  Again, these sections are highly technical with a lot of case analysis and footnotes (we are up to 165 footnotes now).  The Court does not find that the FSU Board owes a fiduciary duty to the ACC  As such, the Court does dismiss the count regarding fiduciary duty.  This is the main, if not only, pro that FSU gets out of this motion.  

DID FSU BREACH ANY CONTRACTS?

Next, the Court looks at the claim for breach of contract.  The Court again insults FSU’s lawyers stating that their analysis is “conclusory.”  The Court finds that contracting parties cannot do anything which injuries the rights of others to receive the benefits of the agreement.  The Court finds here that ACC pled sufficient facts to successfully argue that FSU breached the contract.  This is a fairly short section, because not a lot of analysis is required.  Again, this is merely whether the complaint sufficiently argued its case, not whether there may be disputed facts.  

SHOULD THE LAWSUIT BE STAYED?

Next, the Order turns to the Motion To Stay.  This could be a huge win for FSU if they are successful.  Outright dismissal is much harder to get than a stay.  In this instance, a stay and a dismissal are approximately similar.  Whatever FSU can get to slow the NC case down benefits them.  However, they were not successful in getting the stay.  There are myriad factors in the law for a stay that go to whether a substantial injustice would result if there is a denial, that the stay is warranted, and the alternative forum is convenient and fair.  

The Court does not find that allowing the case to proceed would create a substantial injustice for the FSU Board.  The Court does not view the ACC’s pre-filing as “procedural fencing” or “anticipatory.”  Except a very different answer when we get to analyzing the FL Court’s order on this, BTW.  That Judge spent a LOT of time speaking about how the ACC filing was clearly (in his mind) anticipatory.  

The Order indicates that FSU is “erroneous” if it views itself as the “natural plaintiff.”  To the NC Court, both sides are plaintiffs in their own ways and the ACC is actually the injured party.  The FL lawsuit is the breach.  The ACC knew a breach was en route and took action, which is fine.  Again, the FL judge wildly disagrees.  

The Court notes that the key contracts are NC contracts (presumably drafted by NC lawyers for the ACC).  The Court notes that the ACC has been in NC for 70 years and so it is proper to have an ACC dispute heard in NC.  The witnesses are in NC, the ACC servers/computers etc are in NC.  

Next Steps

This Order is well thought out, exhaustive, and almost entirely in the ACC’s favor.  When it rules in the ACC’s favor, it is also not close.  Nothing about this seems likely to be overturned on appeal to me.  I do not know how NC appeals go, so I am doing a bit of research on this.  The Notice Of Appeal is 2 pages long so it is brief.  It just requests an appeal of the Motion To Dismiss and then a writ of certiorari on the Motion To Stay.  A writ is a super quick appeal.  

More information on a writ appears here.

It appears that FSU has appealed directly to the NC Supreme Court.  They have skipped the intermediate appellate division.  My novice review of these NC statutes does seem to indicate (at least for the Motion To Stay) that this may be a requirement, but I am not 100%.  In CA, the Supreme Court tends to take a long time to do a thing.  So, I am not sure of the timing here.  I am not sure if the NC Supreme Court is going to take quick action here on this matter.  FSU hopes they do.  The ACC, obviously, doesn’t.

CONCLUSION

In this instance, if the ACC gets past this appeal section, then they are in for the long haul.  The NC Business Court just issued an Order basically stating that they want to try to push ahead on what is not appealed.  I am not sure what that exactly is BUT the NC Court is trying to push this forward. 

Given how the FL Court was on 4.9.24, I can understand why NC would try to push forward.  It may be a race to judgment here.  Having said that, we are getting ahead of ourselves a bit.  For right now, we have an impressive 75 page Order that the NC Supreme Court has to juggle.  Let’s focus on that and see how it goes.

Thanks for reading!