[UPDATED] The Big East, in a clear effort to avoid having their dispute with West Virginia University decided by the state court in West Virginia has filed their own lawsuit in Rhode Island's Superior Court. The Big East is seeking an injunction barring WVU from leaving the conference without giving 27 months notice as well as monetary damages.
Big East commissioner John Marinatto continues to insist that West Virginia can be held to specific performance of their duties under the Big East bylaws. Saying in a statement, that:
"Today’s legal action underscores The BIG EAST Conference’s stated position that it will vigorously pursue the enforcement of its rights and West Virginia University’s obligations under the conference’s Bylaws which West Virginia formally agreed to and helped construct."
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Updated 11/4/2011
The Big East is carefully guarding its secrets. A request to the conference headquarters to obtain a copy of their corporate bylaws was met with a negative, but polite, response. The bylaws, a document that is key to determining the veracity and validity of the claims of either side in this case, is "pretty well kept under lock and key."
Undeterred, the lack of access to those bylaws mean that we must move forward assuming that any representations in the complaint regarding those bylaws are true.
Since the Big East has filed a new lawsuit rather than an Answer to the claims of WVU's suit, there are no responses in the Big East Complaint to some of the WVU allegations. There is no direct admission or denial of any of that pleading's allegations, including allegations that the Big East has waived the withdrawal provisions, that they have breached their duties to WVU under the contract, or that they accepted a settlement by cashing a check sent with the withdrawal notice.
Presumably, the Big East will still need to file something with the West Virginia court in connection to the suit there. It need not be an Answer to the claims, however, instead, I would expect the conference to file a motion attempting to dismiss that case in favor of allowing the issues to be heard solely in the Rhode Island court. Such a motion could be filed on the basis of a legal principal like forum non conveniens (where a court dismisses a case because another court is a "better" venue) or under the procedural laws of West Virginia.
Big East Claims
The Big East is claiming that WVU has breached its duties and obligations under the Big East bylaws and specifically under the withdrawal provisions of those bylaws. They further allege that as a result of the breach, the Big East will suffer irreparable harm (because of the effect on television deals and scheduling).
The Big East is seeking four things (plus anything else they or the judge can think of later):
- An order from the court telling WVU to perform the specific duties outlined in the bylaws (specific performance);
- An injunction barring WVU from withdrawing from the conference without giving appropriate notice;
- Monetary damages in an undisclosed amount to be determined at trial; and
- The costs and attorney fees incurred by the conference in this case.
Regarding the bylaws, the Big East notes that not only did WVU vote for the adoption of the current provisions, but that the former President of WVU, David Hardesty, and the former General Counsel of WVU, Thomas Dorer, were among the drafters of those provisions. It would be hard for the university, therfore, to argue that they were unaware of the provision or that they were somehow prejudiced in its enactment.
Injunctions: Can the Big East stop WVU's exit?
The conference further notes that the bylaws contain provisions wherein the members agreed that withdrawal without compliance with the notice provisions would cause irreparable harm to the conference and the remaining members. The bylaws also allegedly contain a provision that specifically provides that the conference is entitled to seek injunctive relief to enforce the withdrawal provisions against departing members.
Likely, however, neither of those provisions will have much legal effect. We can agree in a contract that the sky is purple, but that would not really change what we would see when we looked upward at midday. This provision is an attempt to lay the legal groundwork for the injunction provision.
Courts across the United States have frequently declined to enforce injunction clauses. The right to decide whether to grant injunctive relief lies within the discretion of a court, not with the parties to a contract. The court will recognize that parties often incorrectly characterize certain breaches as "irreparable" as might be the case here. Though a contract may contain an injunction clause, that language cannot magically create a right to an injunction where it would otherwise be inappropriate.
The use of such a clause, however, can influence a court toward granting the injunction if it were a close call otherwise. It can also make it difficult for WVU to claim that an injunction would be improper or unwarranted in the event of their breach.
That said, the law disfavors restraints on trade, and an injunction would do just that, if only temporarily.
Monetary Damages
The monetary damages claimed by the Big East could be massive, based on the complaint, but may be difficult to determine.
The main source of these damages would be the three television contracts entered into by the Big East. Two contracts with ESPN for football and basketball respectively that expire after the 2013-14 school year as well as an older contract with CBS for basketball that ends at the same time. All three contracts pay in the tens of millions of dollars annually, and all three contracts have provisions permitting the television partner to negotiate a reduction of television rights if any member leaves the conference prior to expiration.
If WVU gave the appropriate notice under the Big East bylaws, they would leave the conference in July 2014, after the expiration of those television contracts. That would mean that there would be no alteration of the television pay-outs to the conference in the final two seasons of the current contract if WVU leaves next season, and potentially, an undetermined reduction in all three deals otherwise.
Proving those damages will be a challenge, however, since the reduction is to be negotiated upon the departure of a member and is not a set amount in any case. Meaning, that the Big East cannot easily put a dollar value on the those television losses until WVU departs and the contracts are renegotiated.
The other major source of monetary damages would come from scheduling. If WVU leaves next season, the Big East could have as few as seven football-playing members, meaning that the current 7-game schedule would be impossible to continue. Members are already trying to fill one extra spot on their schedules to compensate for the loss of TCU (it was originally expected to be an 8-game schedule in 2012), and it could be tremendously-expensive to fill an additional slot football schedules on short-notice.
Buy games can cost in the high-six figures and on short notice there may be a lack of FBS level competition for the remaining Big East schools to take on. That could mean scheduling FCS opponents that won't count toward bowl eligibility and that have limited television value.
The conference could also schedule home-and-home competitions for teams, meaning that Rutgers and UConn could play twice in one season, but that obviously has it's competitive downfalls.
How the Big East Can Prevail
Under contract law, specific performance and an injunction barring a breach are extraordinary remedies that are not granted lightly by the court. In order to gain access to these remedies, the Big East conference will need to prove that they will suffer irreparable harm if that relief is not granted.
Irreparable harm is a degree of loss that is greater than, "mere injuries, however substantial, in terms of money, time, and energy necessarily expended." The loss must be so great that it is unlikely that appropriate compensation would be available. Temporary losses of income, embarrassment, and inconvenience, are not sufficient. To prove an irreparable harm, it would take a showing that "the loss threatens the very existence," of the business.
That the Big East is on the verge of adding six new football members to replace the three lost ones. Though, at least in the case of the additions from Conference USA (and likely also the ones from the Mountain West conference) would have to give at least one year of notice to current conferences — meaning that they cannot join until the 2013 football season.
Navy could join immediately, but no matter when they join, they will need to buy their way out of games to clear enough room on their schedule. The Midshipmen have a complete schedule for 2012 already, however, and may not be able or willing to join the conference immediately. The rumored expansion candidate BYU, on the other hand, may not have completed its 2012 schedule, and with the assistance of Notre Dame and Boise State, they could potentially open enough dates to take on West Virginia's place in the Big East football conference next year.
That would certainly eliminate some of the harm to the Big East, but CBS and ESPN still may not value a school like Navy as highly as they did West Virginia for football. So the monetary damages from the TV deal may still be on the table, as would any cost incurred by Navy in potentially clearing its schedule.
In other sports the damages are less. The basketball television deal could also lose some value, and likely would. However, some of that value can be handled by adding additional home-and-home series for each member. A 15-team basketball league can still play the same number of conference games as a slightly-larger league.
The attorney fees, however, promise to be astronomical. The Big East has retained a large international law firm, Covington & Burling, LLP, as well as local Rhode Island counsel to represent them in this case. Billing rates could range from as low as $300 per hour to over $1,000 per hour and multiple attorneys are likely to be working on the case at both firms (three attorneys from the Rhode Island firm were listed on the complaint). If the Big East prevails in proving that WVU has breached their contractual obligations, it is very likely that WVU will be picking up both parties' tab.
If the Big East prevails, the amount of damages will have to be determined by the court at trial. Depending on how much television value is lost and how scheduling is affected for 2012, the Mountaineers could be on the line for a significant amount of money.
Can WVU prevail?
WVU will need to prove that the bylaws were invalidated or that the Big East had already breached its duties under those bylaws, which would excuse WVU from the withdrawal notice requirements. Essentially, WVU will have to allege and prove the claims presented in their own complaint.
Without proving those claims and obtaining a ruling from the court that their performance under the bylaws is not required, WVU will not prevail on the money damages. They would be forced to pay to the Big East, a sum of money determined by the court to be the equivalent of the money lost from the breach.
They can likely defeat the request for an injunction and for specific performance of the contract. This is because despite claims in the language of the contract, the Big East will still need to prove that there will be irreparable harm without the injunction issued — a standard that they likely can't meet, especially with expansion underway.
The scheduling and other issues created by the early departure of WVU will be just as easily be dealt with by way of an award of monetary damages as they will with the injunction. In contract law, the default remedy for a breach of contract is an award of money.
Will it settle?
The attorney fees provision is an interesting one. That is likely the biggest risk for the Big East in this litigation. The last raid resulted in a lawsuit that cost the conference millions of dollars, and they likely won't have the stomach to pay out such amounts yet again. However, if a victory on the merits seems likely, the Big East would have little reason to hold back and settle.
That suggests to me that the Big East will at least take this case through a discovery process to get a better feeling for where they all stand.
For WVU, however, the uncertainty of their potential damages could be a bit much. The Mountaineers would likely want the Big East to come to the bargaining table and agree to a sum of money they could pay to depart the conference on June 30, 2012. What exactly is the Big East's motivation, however?
Once the new additions are made official and the Big East has start dates set for them, it may be easier for the conference to reach a deal that would allow WVU to leave. They would have to do so in a way that did not cause Pittsburgh or Syracuse to be able leave next season as well, however.
Perhaps they could split the difference and have WVU stay for one more season rather than two? The Big XII might not be happy about that, but unless they plan to fund WVU in this litigation, their happiness may not be a primary concern.
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You can read the Big East's complaint here.
*note to other site-owners, please kindly link to this page and not directly to the PDF complaint.