Guest Post: Florida State vs. the ACC - the ACC Strikes Back Part II

Let's more fully hear the ACC's side of the argument

Once again ladies and gentlemen, here’s TwistNHook - Nick

In part 1 of the ACC v. FSU lawsuit, we looked at the venue issues and statement of facts.  Now, we are looking at the causes of actions or counts.  The FSU suit had 7 Counts.  The ACC suit initially only has 2 counts.  The amended one has 6.  Let’s take them in turn.

Cause Of Action 1

The first one is Declaratory Judgment.  You may recall this from the FSU suit, because they had it in there, too.

What Declaratory Judgment is is basically a request for instructions from a Judge.  “Your Honor, declare what reality is.”  In FSU, they wanted the Judge to declare that the GOR was void.  Here, the ACC wants a judgment stating that the GOR is not void, that it is valid, and the approx. $572,000,000 withdrawal fee is enforceable.  That would keep FSU stuck in the ACC, teeth gritted and all.  

Here, the ACC argues that the GOR is a valid contract that is irrevocable and exclusively grants FSU’s intellectual property rights in its games to the ACC.  The ACC argues that the money FSU received for its rights was “good and valuable consideration.”  Consideration is something you receive in a contract to confirm it is a valid contract.

The ACC discusses that the GOR gives FSU’s rights to the ACC even if FSU is no longer in the ACC.  That is something that is important to remember.  If FSU were to prove that the withdrawal penalty is void, then they can leave the ACC anytime BUT they do not take their IP rights with them.  This makes them functionally valueless to the Big10 etc.  They would, thus, need to prove that the entire GOR is void, not just the withdrawal penalty.  

The ACC argues that they have not breached the GOR.  FSU tried to argue that ACC did breach (by not providing sufficient funds or not providing competitive opportunities for its sports teams etc.)  This would justify any FSU breach.  The ACC argues, however, that it has always provided everything required under the contract.

The ACC argues that any future lawsuit from the FSU (i.e. the one filed the next day) would constitute FSUs own unjustified breach.  They argue that FSU’s lawsuit would breach its warranties.  I am not able to track that argument 100% since the ACC redacted a significant amount of the warranties portion of the lawsuit.  The ACC states that, under the ESPN media deals, the ACC has to take “all commercial reasonable actions” to defend the GOR etc.  So, the ACC states it is legally required to sue FSU to block it from leaving the ACC.  

Cause Of Action 2

The second count is “Estoppel.”  This one is a bit more complicated, but I am happy to explain it.  The ACC is arguing that FSU, for years, has received the benefit of the GOR (i.e. money).  As such, they have waived any ability to challenge the GOR.

I find this argument to be much weaker than the first count.  The ACC does not cite to any code or case indicating that because you received benefits from a contract, you can never complain about the contract ever again.  The ACC wants a order that FSU is “estopped from challenging the validity or enforceability” of the GOR, but this count mostly just restates “THEY TOOK THE MONEY” over and over again.

Cause Of Action 3

The third cause of action is that FSU has breached the GOR/amended GOR contract.  Here, the GOR explicitly states that FSU will not take any action that would affect the validity and enforcement of the ACC’s rights under the GOR/amended GOR.  The filing of the lawsuit (done a day after the filing of the initial ACC lawsuit) is a clear breach of the GOR.  

The ACC is seeking money damages from this.  Presumably, FSU filed its suit to try to get leverage and work a settlement out with the ACC.  Instead of paying $572,000,000, they may pay $100,000,000 (which is what Texas/Oklahoma paid to get out of the Big-12 early).  I personally think that this is unlikely, but this ACC lawsuit cause of action is seeking to push the needle the other way.  Increase leverage for the ACC with financial damages and keep any buyout high.  

Cause Of Action 4

The 4th cause of action is breach of confidential information.  We discussed this before, but apparently both the ACC and ESPN are upset that FSU attached confidential media deals as attachment to the lawsuit.  FSU spent significant time in their lawsuit discussing the details of the agreements.  ACC, btw, called the numbers “Cherry picked” and designed to downplay the funds received by FSU.  

Either way, ACC views these as trade secrets.  In this cause of action, ACC goes through all the issues with the release of this private information.  Then, they want a permanent injunction barring FSU from disclosing confidential information on the ESPN media deal.

Cause Of Action 5

The fifth cause of action is FSU has breached their fiduciary obligations under the ACC Constitution.  This basically is designed to keep FSU from operating in ACC business while the lawsuit is going on.

In the Pac12, there are/were 2 teams left behind (Oregon State/Washington State).  They sued in rural Washington State to basically say that they were the only two teams left in the Pac12 and all other teams shouldn’t be involved in conference business.  They were completely successful.  The ACC is trying that blueprint here.  This would maximize leverage in any settlement here, because FSU would be in a weakened position.  

Under the proposed permanent injunction from ACC, the ACC could withhold information from FSU and exclude them from meetings.  Now, FSU claims it has not withdrawn from the conference, but they did kinda request that in their lawsuit.  They requested a weird time travel provisions where, if the Court found that the withdrawal penalty was void, FSU had given notice to withdraw as of August, 2023.  TIME TRAVEL!

So, under FSU’s logic, they have withdrawn and the ACC can exclude them.  I am not sure how strong this really is.  The difference in the Pac-12 situation, 10 of those teams (including Cal Berkeley) had accepted invites to other conferences.  In this instance, that is not the case.  FSU remains squarely in the ACC with no clear invite and acceptance elsewhere.  This may not be as strong as the Pac-12 situation and the ACC may not have much success with this.  

If FSU is successful in getting out of the ACC, then they would have that weird year long period where they are still in it.  Then, they would most likely be excluded etc.  Until then, I think this is just about leverage etc.  

Cause Of Action 6

The 6th and last cause of action is a breach of obligation of good faith and fair dealing.  This is a brief cause of action that isn’t super detailed.  They basically say that by filing the lawsuit in Florida, FSU is not acting in good faith and being fair.  That makes sense in a general sense, but this is only a few paragraphs long so they do not go into extreme detail.  They ask for more money damages, which they claim will be substantial.  Again, this is all about moving the needle in a settlement.  

Conclusion

In conclusion, the ACC lawsuit seems much stronger to me than the FSU suit.  It is a fairly basic lawsuit, i.e. they signed the contract, please force them to follow it.  They spend a lot of time on pre-emptive venue issues, which may put them in a strong position for the anticipated motion to transfer venue.  

Another thing to note is that FSU’s actions make little sense from one key angle.  They want to get out of the ACC to the Big10, because they want more opportunities to make the playoff.  However, the playoff is expanding from 4-12 teams next year.  If FSU is as good as they say, FSU would dominate the ACC for years to come and get the auto-bid every year.  They would make more money based on the success fees they get AND the playoff payoff!  Going to the Big10 would be objectively worse given the level of teams they have to beat there to get the auto-bid.  

Functionally, they could argue that they are getting millions of dollars less a year in contract payout, which is true.  That is partially mitigated by the payoffs outlined in the prior paragraph.  However, if they have to pay 300+ to get out of the ACC, how many years would it take to make that back.  So, they are getting not much additional value, if any, by leaving.  This does not make any sense from a rational perspective.  Makes the FSU actions seem more foolish than ever.  

I will stay focused on this and once we start getting filings etc., I will work to provide additional analysis.  Thanks for reading!