Maryland alleges ACC violated its own rules over exit fee, tried to lure Big Ten schools away

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The state of Maryland filed a counterclaim against the ACC in a North Carolina court on Monday evening,  alleging that the conference broke its own rules when it increased the conference’s exit fee to $52 million and that it “ignored and breached the ACC Constitution in its urgency to punish Maryland and deter further withdrawals from the conference.”

The countersuit also alleges that two ACC schools — prompted by ESPN and motivated by the desire for more lucrative television contracts — attempted to persuade several Big Ten schools to switch conferences. The school is seeking $157 million from the ACC, plus punitive damages to be determined by the court.

The counterclaim, filed by the state attorney general’s office on behalf of the University of Maryland, its Board of Regents and the entire university system, was filed in response to the ACC’s lawsuit against the University of Maryland. In November 2012, the ACC sued Maryland, asking the same North Carolina court to enforce the conference’s $52 million exit fee as the school departs for the Big Ten after this academic year.

According to Maryland’s countersuit, a representative from Wake Forest and a representative from Pittsburgh “each contacted a Big Ten university in an attempt by the ACC to recruit at least two Big Ten schools to leave the Big Ten and join the ACC.” Maryland alleges that “these actions by the ACC were designed by the ACC to enable the ACC (and member universities) to extract more lucrative terms from potential broadcast partners, including from ESPN,” which provided “counsel and direction.”

The specific Big Ten schools were not named in Maryland’s counterclaim, although it did say that “the ACC did not attempt to recruit for membership in the ACC any university west of the Mississippi,” which rules out Nebraska, Minnesota and Iowa. A spokesman for the Maryland Office of the Attorney General declined to provide the names of the targeted Big Ten schools when asked via e-mail, citing privacy reasons but implying they could eventually be revealed during the discovery or trial phase of the legal process.

The claim cites a 2011 quote from former Boston College Athletic Director Gene DeFilippo, who told the Boston Globe: “You don’t get extra money for basketball. It’s 85% football money. TV — ESPN — is the one who told us what to do. This was football; it had nothing to do with basketball.” DeFilippo apologized two days later for those comments, saying he “spoke inappropriately and erroneously.”

Maryland’s claim also alleges that the ACC has withheld NCAA money, through the organization’s Grants in Aid, Sports Sponsorship and Student Assistance Funds, though “at no time has the ACC ever been entitled to assume ownership or control of Maryland’s NCAA funds or to withhold them from Maryland.” According to the claim, the ACC had previously acted as a middleman for these funds but was “obligated to and did pass those funds to Maryland.”

Other allegations — that the $52 million exit fee does not reflect the actual damages suffered by the ACC because of Maryland’s departure, that school president Wallace D. Loh has been excluded from ACC Council of Presidents meetings and that his request for added agenda items have been denied — have been repeated in other claims filed by Maryland. The $156,799,026 sought in damages represents “three times the amount of compensatory damages for the ACC’s violations of the Maryland Antitrust laws.”

The ACC officially declined comment, citing the ongoing litigation.

Maryland’s counterclaim represents the latest punch thrown in a prolonged legal battle between the two sides. Shortly after Maryland announced its intention to leave the conference for the Big Ten, the ACC filed a lawsuit in Greensboro, N.C., seeking roughly $52 million in withdrawal penalties. The conference also began withholding the distribution of conference funds from the school in December 2012.

Shortly before Maryland announced its intention to depart for the Big Ten, the ACC’s school presidents voted to increase the conference’s exit fee from around $20 million to around $52 million, or three times the conference’s operating budget. Loh was one of two ACC school presidents to vote against the increase, citing “legal and philosophical” grounds.

In its countersuit, Maryland alleges that, according to the ACC Constitution, the increased exit fee should not have gone into effect until July 1, 2013, and thus the conference should not have been allowed to withhold funds from the school starting in December 2012.

In January 2013, Maryland attempted to have the ACC’s lawsuit dismissed in Prince George’s County Circuit Court, saying “a North Carolina court has no jurisdiction over the sovereign state of Maryland and its public universities.” The courts in Maryland have stayed their decisions until the matters in North Carolina are resolved.

The state also attempted to get the ACC’s lawsuit dismissed in North Carolina court, an appeal that was rejected.

Stephen M. Chippendale, an attorney at McKenna Long & Aldridge in Washington who specializes in antitrust and unfair-competition issues, said the countersuit is simply the next logical step for Maryland as the case moves forward in North Carolina.

“When you’re representing a party in this case, it’s good to have your own allegations. It gives you leverage. It gives you a punch, if you think of it like a boxing match,” Chippendale said. “That case got stayed in Maryland, now they’re in North Carolina court, they’re facing these allegations from the ACC and they have to defend against them. This is part of their defense to their allegations against them.”

PDF: Read Maryland’s countersuit against the ACC.

Alex Prewitt covers the Washington Capitals. Follow him on Twitter @alex_prewitt or email him at alex.prewitt@washpost.com.
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