By Daniel Rub

The most significant lawsuit currently in the National Collegiate Athletics Association Division I Football (“NCAAF”) is entering its ninth month, between the Atlantic Coastal Conference (“ACC”) and Florida State University (“FSU”).[1] Back in December 2023, the ACC, in a “race to the courthouse,” filed suit against FSU to prevent them from breaking their contract to find another, more profitable conference to realign with.[2] Unsurprisingly, each organization is trying to gain “home field advantage”  by filing their suits in courts from their home states – North Carolina and Florida.[3] This advantage is not negligible, as Peter Carfagna, the director of the Sports Law Clinic at Harvard Law School, explains, “[i]f cases are centered in the universities’ home towns they’re more likely to get a favorable ruling because the schools are what make these communities tick.”[4]

The crux of the litigation revolves around the Grant of Rights Agreement signed by Clemson and FSU and binds these universities as members of the ACC through 2036.[5] FSU believes their share of revenue from the ACC is inadequate.[6] After the ACC voted as a conference to add three new teams, FSU, who voted against the expansion, reached a breaking point. FSU has a point – after their undefeated season last year, they missed the playoffs – because the top two conferences of the NCAAF, the Big Ten and Southeastern Conference, dwarf the ACC in both performance and revenue.[8] Popular sports journal Bleacher Report even acknowledges FSU as “[one] of the most notable football programs in the country.”[9]

As such, FSU steadfastly plows forward with its lawsuit to break from its contract without the monstrous exit fees it would exact if FSU were to unilaterally decide to pull out from the conference.[10] The key issue in the outcome of the litigation is whether this exit fee provision is unconscionable – and therefore unenforceable.[11] A court can determine contract terms are, as a matter of law, unenforceable if there was a gross disparity in consideration, or weakness in bargaining power, like an adhesion contract, or whether the contact terms are so shocking that no reasonable person would accept them.[12] A determination of unconscionability takes many factors together in context, and weighs them against one another to determine if the contract was fair and entered into voluntarily and in good faith.[13] To determine a contract is unenforceable is a matter of public policy and not merely an intervention for a party that is unhappy with the outcome of its fair dealings.[14]

The North Carolina Business Court has already begun deciding key issues of the case, namely: denying FSU’s motion to dismiss the case for being premature, denying FSU’s motion to stay the action in favor of FSU’s case in Florida court, deciding North Carolina is the most proper venue, and granting ACC’s motion for equitable estoppel to prevent FSU from challenging the validity of its Grant of Rights Agreement with the ACC.[15] Parallel to this litigation, the case in Florida continues in a similar fashion, with the court refusing to stay the action or dismiss FSU’s claims and likely to move forward unadulterated.[16] Although the Florida court is attempting to facilitate an amenable settlement for both sides by mandating a non-binding mediation period, that period came and went without resolution.[17] However, discussions of creating a new revenue model have continued in hopes that a new deal may satisfy FSU to a degree that they will voluntarily end this controversy outside the court system.[18]  The ACC has already approved new playoff-performance measures, which may be uninteresting to FSU now that they have started the year 1-4, but both parties are now discussing possibly tying revenue distributions to media-based metrics, which would greatly favor the powerhouse school.[19]

Despite continued mediations, it is clear that the ACC does not want to encourage more colleges to follow FSU’s example and further risk the stability of conferences throughout the NCAAF.[20] ACC Commissioner Jim Phillips had choice words when interviewed on the matter, “[w]e’re going to fight,” he said, “[a]nd that’s the way it should be when you sign an agreement twice . . . .”[21] FSU’s success on the matter can threaten good business practice within the NCAAF community and can create problems for small market schools to contract with big market schools. Unhappiness with a contract is not equivalent to unconscionability within a contract. If a state university can use its own court system, with its own judges, to gain favor that would otherwise not be recognized in the law, then big market schools can exploit their size at the expense of fair and reliable business law.

[1] See Atl. Coastal Conf. v. Bd. of Trustees of Fla. State Univ., No. 23CV040918-590, 2024 WL 1462914, at *3 (N.C. Super. Ct. Apr. 4, 2024).

[2] See Atl. Coastal Conf., 2024 WL 1462914, at *26 (describing how the ACC filed its suit first after being on notice that FSU intended to file a claim in Florida courts). See generally Brief of Appellant-Defendant, Atl. Coast Conf. v. Florida State Univ. Bd. of Trs., appeal docketed, No. 1D2024-2386 (Fla. App. 1st Dist. Sept. 20, 2024), 2024 WL 4344723.

[3] Alex Elbert, Florida State, Clemson Test Antitrust and Contract Attack on ACC, Bloomberg l. (Apr. 1, 2024), https://www.bloomberglaw.com/product/blaw/bloomberglawnews/bloomberg-law-news/X15LEAM4000000.

[4] Id.; see also Jim Henry, Circuit Judge John Cooper Will Preside Over FSU-ACC Lawsuit in Leon County. Who Is He?, Tallahassee Democrat (Apr. 8, 2024, 4:15 PM),

https://www.tallahassee.com/story/sports/college/fsu/2024/04/08/fsus-lawsuit-vs-the-acc-will-be-heard-by-circuit-judge-john-c-cooper/73241668007/ (finding that the Leon County Circuit Judge John C. Cooper earned both his undergraduate and graduate degree from FSU).

[5] See Atl. Coastal Conf., 2024 WL 1462914, at *2.

[6] Alex Ebert, Florida Sues Atlantic Coast Conference Over ESPN TV Contracts, Bloomberg l. (Apr. 25, 2024, 11:51 AM), https://www.bloomberglaw.com/product/blaw/bloomberglawnews/bloomberg-law-news/XFLBF1BO000000 (describing one of the reasons FSU filed suit was to determine how much money the team lost out on in ESPN earning by being left out of the College Football Playoffs).

[7] See Ralph D. Russo, Clemson Joins Florida State, Becomes Second School to Sue ACC as It Seeks to Exit Conference, Associated Press, Mar. 19, 2024, https://apnews.com/article/clemson-sues-acc-ec231745cfe4690ec282050c33c144ed (identifying Stanford University, University of California, Berkley, and Southern Methodist University as the three Universities added to the ACC).

[8] See Russo, ACC Eyes Revenue Distribution Models That Could Quell Disputes With FSU, Clemson, AP Sources Say, Associated Press, Sept. 17, 2024, https://apnews.com/article/acc-lawsuit-florida-state-clemson-0f5726ebcbebb688cc0978326e09970b (describing how the Big Ten and Southeastern conferences can bring in as much as forty million dollars more in revenue than the ACC); Eric Olson, Big Ten and SEC Are Again the Top Conferences in Revenue With Athlete Pay Plan On Horizon, Yahoo! fin. (May 24, 2024), https://finance.yahoo.com/news/big-ten-sec-again-top-185640176.html; see also Scott Polacek, ACC Considering New Revenue Structure to Resolve FSU, Clemson Lawsuits, Bleacher Rep. (Sept. 17, 2024, 3:56 PM), https://bleacherreport.com/articles/10135791-report-acc-considering-new-revenue-structure-to-resolve-fsu-clemson-lawsuits (suggesting FSU could have had more favor in making a playoff appearance had they been in a different conference).

[9] Polacek, supra note 8.

[10] See Atl. Coastal Conf., 2024 WL 1462914, at *3 (describing the exit fee as an “unconscionable penalty provision[]” that would make the Grant of Rights Agreement unenforceable); Ralph D. Russo, Florida State, ACC Complete Court-Ordered Mediation as Legal Fight Drags into Football Season, Associated Press, Aug. 22, 2024, https://apnews.com/article/florida-state-acc-lawsuit-24cc17b86e4d3f013a3f42f44753a0dc (totaling the possible fees for FSU at half a billion USD and Clemson at 140 million USD).

[11] See Atl. Coastal Conf., 2024 WL 1462914, at * 3.

[12] See Restatement (Second) of Contracts § 208 (Am. L. Inst. 1981).

[13] See id.

[14] See id.

[15] See id., at *12, *29, *19 (giving deference to ACC’s choice of forum as a result of its first filing).

[16] See Russo, supra note 10; see also Liam Rooney, Florida State, ACC to Continue Settlement Talks in Lawsuit After No Agreement in Mediation, Tallahassee Democrat (Aug. 22, 2024, 4:31 PM), https://www.tallahassee.com/story/sports/college/fsu/2024/08/22/fsu-acc-settlement-talks-to-continue-after-unsuccessful-mediation/74907629007/.

[17] Russo, supra note 10.

[18] See Polacek, supra note 8.

[19] See Russo, supra note 8 (describing the ACC’s recently adopted “success initiative”).

[20] See Russo, supra note 10 (explaining that Clemson has been along the backdrop of this entire controversy, filing their own suit in South Carolina); see also Elbert, supra note 3 (detailing Clemson’s lawsuit against the ACC).

[21] Russo, supra note 10.

 

As a heads up, AP articles are BB R16.6(d), so the date is different than 18.2.2