A North Carolina judge has rejected Clemson University’s attempt to dismiss the Atlantic Coast Conference’s lawsuit against the school in a dispute involving athletic media rights. The decision marks the second ACC victory in a North Carolina courtroom in recent months, after the same judge ruled against Florida State.
The conference filed suit against Clemson in Mecklenburg County in March, one day after the university filed suit against the ACC in South Carolina. Those competing legal actions started after the conference already faced litigation with Florida State Universty in both North Carolina and Florida courts.
The ACC is based in Charlotte.
All four lawsuits or “pending actions” involve grant-of-rights agreements ACC schools signed for media deals involving their sports teams.
North Carolina Business Court Judge Louis Bledsoe’s 53-page order Wednesday granted part of Clemson’s request to dismiss the ACC’s legal claims. But Bledsoe refused to dismiss the lawsuit in its entirety. He also rejected Clemson’s motion to stay the proceedings in the North Carolina case.
“The only court that has jurisdiction over FSU, Clemson, and the ACC — and thus the only court that can assure a consistent, uniform interpretation of the Grant of Rights Agreements and the ACC’s Constitution and Bylaws, the determinations at the core of the Pending Actions — is a North Carolina court,” Bledsoe wrote.
“The Florida court in the Florida Action cannot bind Clemson in South Carolina. The South Carolina court in the South Carolin Action cannot bind FSU in Florida. Each of these courts and this Court could reach conflicting conclusions about the same terms of the same North Carolina contracts upon which the Pending Actions rest — and in so doing create procedural chaos and tremendous confusion at a time when the ACC, FSU, and Clemson need binding clarity concerning their rights under the ACC’s most important contracts with its Members,” the judge continued.
“Only a North Carolina court, most likely in a single consolidated action in North Carolina, can render consistent, uniform determinations binding the ACC, FSU, and Clemson concerning the documents that are at issue in all four Pending Actions,” Bledsoe added.
As Bledsoe addresses the Clemson dispute, the ACC is urging North Carolina’s highest court not to take an appeal from Florida State. FSU’s request is part of a “$700 million” legal dispute over the cost the school would face to leave the athletic conference.
The Florida school is asking the state Supreme Court to overrule Bledsoe’s decision not to stay proceedings in a lawsuit the ACC filed against FSU last December in North Carolina. Florida State wants the legal fight to play out in Florida courts instead.
ACC lawyers responded to FSU’s appeal in June. “[I]n 2013 and in 2016, FSU, along with every other Member of the Conference, signed a ‘Grant of Rights’ contract with the ACC which transferred all of its media rights to the Conference,” according to a court filing. “FSU further agreed that it would not challenge the validity of its Grant of Rights, warranting that it had the authority to enter into the agreements.”
The conference sold some of the rights to ESPN. “FSU’s share alone has amounted to hundreds of millions of dollars,” ACC lawyers wrote.
“By 2023, however, FSU had decided that it wanted more money, and sought an unequal share of Conference revenue based on its ‘value,’” the court filing continued.
The ACC went to Mecklenburg County court last December “seeking a declaratory judgment that the Grant of Rights, a North Carolina contract, was valid and enforceable under North Carolina law.” Florida State filed suit the following day in Tallahassee seeking to invalidate the grant of rights.
“Chief Judge Bledsoe of the North Carolina Business Court ruled that there was nothing improper with a North Carolina association suing one of its Members in North Carolina over a North Carolina agreement,” ACC lawyers wrote.
Bledsoe “found that FSU had failed to meet its burden of showing that litigating this case in North Carolina worked a ‘substantial injustice’ on FSU. To the contrary, he held that these factors ‘decisively weighed in favor of litigating this matter in North Carolina.’”
“[E]xpecting a Member of a North Carolina unincorporated association that has received hundreds of millions of dollars from the association to litigate the validity of North Carolina contracts in a North Carolina court does not work an injustice of any kind, let alone one that is so substantial that any contrary conclusion must be ‘manifestly unsupported by reason,” according to the ACC’s court filing.
In a court filing on May 17, Charlotte- and Tallahassee-based lawyers representing FSU asked North Carolina’s high court to step into the legal dispute.
The document cited Bledsoe’s “erroneous denial of the FSU Board’s request for a stay of this action” as the competing case moves forward in the Sunshine State.
“This underlying dispute involves competing actions in separate states concerning the rights and obligations of FSU and the ACC under the 2013 Grant of Rights and the 2016 Amended Grant of Rights agreements (collectively, the ‘Grants of Rights’), though the Florida Action also encompasses causes of action involving the ACC Constitution and Bylaws, and other laws, with hundreds of millions of dollars at issue,” FSU’s lawyers wrote.
“The Grants of Rights are purported contracts whereby the ACC members allegedly aggregated their media rights for their respective ‘home games’ to the ACC so that it could allegedly market those rights and negotiate long-term media deals with third-party broadcasters, like ESPN, on the members’ behalf and for their benefit,” the court filing continued. “But the ACC had been doing much the same thing under its Constitution and Bylaws for decades.”
“Indeed, the ACC actually ‘entered into its first Multi-Media Agreement with ESPN … grant[ing] ESPN’ these aggregated media rights in 2010 (three years before the first ‘Grant of Rights’ was even executed) and then established the template for the still-controlling media rights agreements and payments in a 2012 amendment thereof (one year before the first ‘Grant of Rights’ was even executed). FSU contends the Grants of Rights add nothing to this pre-existing mechanism and were unnecessary for the ACC to negotiate and enter contracts with ESPN,” FSU lawyers wrote.
Florida State questioned a timeline of the ACC’s “preemptive” North Carolina suit. “On the morning of 21 December 2023, the FSU Board noticed a special emergency meeting for 10:00 am on 22 December 2023,” according to the court filing. “Just a few hours after this announcement, the ACC initiated the underlying litigation by e-filing its 33-page, 146-paragraph Complaint for Declaratory Judgment (‘Initial Complaint’) at 5:18 p.m. in Superior Court, Mecklenburg County, without providing any notice to its members or taking the ‘Required Vote’ mandated by its Constitution.”
The state Supreme Court document contrasted the ACC’s treatment of Florida State with two other legal disputes. “Unlike the ACC-Maryland and ACC-Clemson cases, the ACC neither pleaded that it complied with the ACC Constitution, nor that it had sought and obtained member approval prior to initiating the action against the FSU Board,” according to the court filing.
FSU filed its lawsuit against the ACC in a Florida court on the same day as the special trustees meeting. It challenges a “withdrawal payment” the university would face if it leaves the conference.
“In the Florida Action, the FSU Board seeks a declaration from the Florida Courts addressing among other things (i) whether the Grant of Rights transferred to the ACC media rights that are not necessary for the ACC to fulfill its obligations under the ESPN Agreements, (ii) whether the withdrawal payment called for by Article 1.4.5 is an unenforceable penalty, (iii) whether the ACC has committed multiple material breaches of the ACC Constitution and Bylaws just with respect to FSU, and (iv) whether under Fla. Stat. § 542.18, the ACC’s penalty apparatus amounts to an unenforceable restraint on trade under Florida law.”
Lawyers argued that the Florida lawsuit covers the same ground as the ACC’s case in North Carolina, along with other claims FSU makes against the conference. Those claims include “almost a dozen alleged breaches of contract by the ACC under the ACC Constitution and Bylaws with respect to FSU; as well as several claims that the ACC – as fiduciary of FSU – abjectly failed to manage the conference, including by not exploiting and maximizing the media rights of its members (years before the ACC first conceived the Grant of Rights), misrepresenting the terms of those media agreements as well as the scope of the Grant of Rights, and cloaking in secrecy and distorting not just its dealings with ESPN but the actual legal and monetary terms of the ACC agreements with ESPN.”
“Moreover, the Florida Action challenges the entire penalty structure of the ACC (not just the Grants of Rights), a multitude of ACC breaches of the ACC Bylaws and Constitution with respect to FSU, and reaches into matters of restraint of trade, public policy, breach of contract, and whether the ACC has fulfilled its contractual duties to FSU expressly set forth in the ACC Constitution and Bylaws,” the court filing added.
A Florida court issued a May 6 order denying the ACC’s request to block the Florida case from moving forward.
