Judge Weighs Arguments in FSU-ACC Fight

TALLAHASSEE — A Leon County circuit judge on Tuesday heard arguments about whether Florida State University’s lawsuit against the Atlantic Coast Conference should be allowed to continue, in the latest chapter in a series of legal fights playing out in Tallahassee and North Carolina.

Much of Tuesday’s day-long arguments focused on whether the lawsuit could be decided in Florida, as FSU challenges what it describes as more than $500 million in penalties as it seeks to exit the North Carolina-based conference. The ACC filed a lawsuit against Florida State in North Carolina a day before the school filed a dueling lawsuit in Leon County circuit court, creating a conflict about where the dispute involving media rights should play out.

In a verbal ruling Tuesday, Circuit Judge John Cooper pointed to a state law that says “operating, conducting, engaging in, or carrying on a business or business venture in this state or having an office or agency in this state” subjects entities to legal jurisdiction in Florida.

“I have found that the complaint sufficiently alleges that the ACC operates a significant business in Florida, regarding exercise of FSU’s media rights, using those media rights as a source of programming for the ACC Network and/or licensing to ESPN to use for certain payments,” Cooper said.

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After hours of legal wrangling, however, lawyers did not complete arguments Tuesday on other parts of the ACC’s motion to dismiss the lawsuit.

The legal clash centers, in part, on the ACC’s contract with ESPN, Inc. and ESPN Enterprises, Inc., originally signed in 2010. Through the contract, the conference collects media revenues and distributes money to member schools to support their athletic programs.

Cooper noted that the “nub of the dispute” in the lawsuit rests with the media-rights issue.

Paul Huck, an attorney for the conference, said FSU and other schools that are members of the ACC have granted the conference their media rights.

“That’s a contract. Then they (the ACC) bundle those all together and they market them. ESPN has purchased the rights to broadcast all the games of all of the ACC members, regardless of whether they’re home games or not,” Huck added. “The value of the games is not that they are played in Florida or any other particular state, or that they are broadcast in Florida or any other particular state, it’s that the games in their entirety belonging to the conference, can be broadcast nationally.”

A 2013 “grant of rights” agreement transferred the conference schools’ media rights to home games to the ACC, in exchange for a collective media-rights contract with ESPN, according to court records. The grant-of-rights agreement was modified in 2016 and lasts until 2036.

Florida State’s lawyers argued Tuesday that the lawsuit should move forward in Florida because that’s where the bulk of the activity covered in the agreement between the school and the conference takes place.

“This whole case is about the home games at Florida State and who owns them. This isn’t a dispute about bundled rights and what happens at Wake Forest,” Peter Rush, a Greenberg Traurig attorney who represents FSU, told Cooper. “Those games are played on the dirt, and on the wood, and on the rubber tracks and on the baseball diamonds here in Leon County. They’re not played anywhere else.”

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But Huck took issue with such arguments.

“I think FSU does want to frame this as somehow it’s a purchase of home games, right? That’s not what’s going on,” Huck, who is with the firm Lawson Huck Gonzalez PLLC, said.

If Florida State leaves the ACC, it would have to pay a $130 million to $140 million withdrawal fee, Jim Cooney, an attorney for the conference, said during a hearing in April.

Florida State’s lawsuit alleges that the withdrawal payment is an unenforceable and “punitive” penalty to coerce schools into staying in the conference.

“This is a nine-figure penalty. That’s the point. Why? Because nobody’s supposed to leave,” Rush argued, calling the contract “a one-way ticket in, with no way out.”

But Ray Treadwell, an attorney for the ACC, argued that Florida State’s lawsuit fell short.

“There’s a pleading failure here and FSU just did not present enough facts to show that this withdrawal payment is in fact disproportionate to the damages suffered by the ACC should a member like FSU withdraw,” he said.

While lawyers did not finish arguing other parts of the ACC’s motion to dismiss the lawsuit Tuesday, Cooper said he would rely on briefs in the court record. He said he plans to issue a ruling on the motion Friday.

The battle between the conference and FSU is being closely watched in college athletics, which is undergoing major conference realignments.

FSU filed its lawsuit Dec. 22 in Leon County, the day after the conference filed its lawsuit in North Carolina against FSU on many of the same issues.

The ACC filed a motion for a stay of the Florida lawsuit, but Cooper rejected the idea during an April hearing and followed up with a May 6 written order. He said he disagreed with the ACC’s arguments that the North Carolina case should take priority, in part because the conference rushed to file its lawsuit before FSU filed its case in Leon County.

Warning of a legal “collision course,” the conference asked the Tallahassee-based 1st District Court of Appeal to put a hold on the Florida lawsuit while the North Carolina case proceeds. The issue remained pending Tuesday at the appeals court.

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