On November 26, 2012, the Atlantic Coast Conference (“ACC”) filed suit against the University of Maryland (“Maryland”) in Guilford County, North Carolina.    The suit relates to Section IV-5 of the ACC Bylaws, which pertains to the exit fee required to be paid by a withdrawing member of the ACC.  According to Section IV-5, a withdrawing member shall be subject to a withdrawal payment in an amount “equal to three (3) times the total operating budget of the Conference (including any contingency included therein), approved in accordance with Section V-1 of the Conference Bylaws, which is in effect as of the date of the official notice of withdrawal.”  On September 11-12, 2012, the Council of Presidents of the ACC met and discussed an increased withdrawal fee.  During such meeting, the Council of Presidents voted to increase the fee from 1.25 times the ACC’s operating budget to three times the ACC’s operating budget; however, Maryland did not vote in favor of such change.

On November 19, 2012, the Big Ten Conference published statements welcoming Maryland to the conference.  Subsequently, Maryland provided notice to the ACC of its intent to withdrawal.  In 2012-13, the ACC’s operating budget is $17,422,114.00.  According to Section IV-5, Maryland would owe the ACC $52,266,342.00.    Maryland has publicly questioned the validity and unenforceability of Section IV-5 and claimed the withdrawal fee is a penalty rather than liquidated damages.

Accordingly, the ACC has filed suit requesting the Court to declare as follows: 1) the provision of Section IV-5 of the ACC’s Constitution regarding the withdrawal payment owed by any member institution of the ACC that gives notice of withdrawal from the ACC is valid and enforceable; and 2) pursuant to Section IV-5 of the ACC’s Constitution, Maryland is subject to a withdrawal payment in the amount of $52,266,342.00.

The Baltimore Sun interviewed me about the suit.  The article can be found here.

For any questions, feel free to contact Christian Dennie at cdennie@bgsfirm.com.