Why Maryland will have to pay the 53mil.

Feb 19, 2013, 6:05 PM

From a GT board.

The lawsuit by the ACC against Maryland was well thought out.

The ACC is chartered under the laws of the State of North Carolina (that was surprising to me, I thought it would have been Delaware). The laws of the State of North Carolina govern the management of the conference. The exit fee is a corporate by-law of the conference.

The first count in the complaint filed by the ACC is a request for Declaratory Judgement on the issue of the validity and legality of the corporate by law providing for the exit fee under North Carolina law.

There is only one court in the land that has the power to determineifa corporateby law adopted by a North Carolina corporation is binding under North Carolina law. That court is the SupremeCourt ofNorth Carolina. TheU.S. Supreme Court can act to supercede the decision of the North Carolina SupremeCourt only ifitfinds theNorth Carolina statutes govening corporations and corporate by-laws violate the U.S. Constitution (in this case the Interstate Commerce Clause). Not likely to happen.

The ACC didn't sue Maryland for $50M, it sued to get a North Carolina Court to declare that the corporate by laws of the ACC relating to the exist fee were valid and binding on the members. The ACC lawyers anticipated that Maryland would argue that you have to sue the University of Maryland in Maryland, which is possibly true. Maryland would have had a lot easier time of it if they were on their home turf. So the ACC took this step. They'llhavea judgment from a North Carolina Court declaring the exit fees binding under North Carolina law, (which will be a disincentive to UVA and GT and UNC and VT and Clemson and FSU to look anywhere else even if that thought cameto them in a dream) then they'llsueMaryland in Maryland for the money, and they'll have to prove that Maryland was a member of the ACC and it joined the BIG, and under North Carlolina law (ACC will attach the certified copy of the declaratory judgment of the North Carolina Court) that behavior by a member of a North Carolina organization entitles the other shareholders of the corporation to $50M, and that they owe the conference $50M. Maryland writes a check because there's not a lot of wiggle room in that set of facts.

That's why Maryland couldn't remove the case to FederalCourt, the FederalCourt would just have to submit the declaratory judgment queston of the corporate by law to the North Carolina SupremeCourt.

So you have a North Carolina judge making a decision on whether the ACC exit fee is legal and binding under North Carolina law. I'm pretty sure I know how that's going to come out. If s/he rules in favor of North Carolina it benefits the State of North Carolina, if he rules in favor of Maryland, s/he gets to explain that ruling in the next general election and nobody who benefits from the case benefitting Maryland gets to vote in said North Carolina election. The North Carolina Court is going to say corporations are free to run their business anywaytheywant unless they're outkilling people,and maybe the standard will be its o.k. unless they're out killing people that didn't need killing.

I think Maryland had to leave the conference before the vote on the bylaw became final if it wanted to pursue this anti-trust claim. Otherwise, they were members of the ACC for 5 months while the ACC was engaged in all this illegal activity they're complaining about, so in other words, they were part of the illegalconspiracy that is the subject matter of the law suit they brought. I don't think a court is going to allow a lawsuit by the getaway driver in a bank robbery to recoverfrom his fellow bank robbers, his share of the loot. Bank robbers usually have to use guns to settle disputes.

Maryland couldn't pull out of the conference before the by-law becamea by-law becausetheycouldn'textort theBIGbribe they received to join the conference if they were a free agent, they would have to have begged the BIG to let them join and would have needed to take partial payouts for the first 5 years to join the club. But that's what happens when you hire a bunch of incompetents to run your athletic program, you get yourself in a bad situation.

This lawsuit by Maryland is a plea to the ACC to come talk to them about settling for something less than $50M. The ACC probably needs to do that because they really need Maryland out of the conference sooner rather than later, everytime Maryland's name comes up in connection with the ACC there is negative press for the conference. We need Maryland to get about its regular business of getting it's athletics teams beat by Illinois and Minnesota on a regular basis.

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Why Maryland will have to pay the 53mil.

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