Nov 30, 2012
The Washington Post had a commercial litigation lawyer look at the case filed by the ACC seeking exit fees from the Terps after it announced its big move a few weeks ago. The attorney said the university could have a relatively good case in seeking a lesser withdrawal fee.
The University of Maryland earlier this month announced it would leave the ACC to join the Big Ten, a decision that has sparked controversy and discussion across the state and the sports world. Some argue the state’s flagship university betrayed tradition while others contend the move is fiscally smart for the financially-strapped school.
The ACC promptly filed a lawsuit Monday seeking more than $52 million in exit fees.
The crux of the case lies in whether the court thinks the amount the ACC is asking for is punitive.
The ACC is seeking three times the conference’s annual operating budget, an amount a majority of university presidents agreed on in September. (Maryland was one of the schools that opposed the measure. Maryland, the attorney said, needs to prove that this amount far exceeds the harm it is causing by heading to the Big Ten:
“Even if you made it three times Maryland’s contribution [to the ACC's coffers]. I think that’s still a hard case, but at least that’s an easier case to defend,” Charles E. Dorkey, a partner at McKenna Long & Aldridge LLP in New York told the Post. “But three times the budget of everybody? That’s a lot of money. The [ACC's] defense will be, ‘The bylaw says it’s liquidated damages.’ You can use liquidated damages as a way of compensating the party whose rights were breached for their loss. You cannot use it for punishing the rights who breached. Maryland will argue that any reference to the budget makes it a penalty and does not reflect the actual damages of the ACC.”
How the court case against the Terrapins proceeds remains to be seen. Dorkey said these kinds of cases are often settled, but can last anywhere from “five minutes” to months on end.