Tuesday, November 1, 2011
West Virginia lawsuit one worth watching
By Kristi Dosh
West Virginia University didn’t hand out a Halloween treat to the Big East when it filed a lawsuit against the conference in a Morgantown, W.Va., court.
Full of legal claims like “breach of contract” and “breach of fiduciary duty,” the lawsuit seeks to allow West Virginia to escape to the Big 12 without having to serve a 27-month mandatory waiting period required by the Big East’s bylaws. I’ve explained previously why the Big East might enforce this provision.
Here’s what West Virginia claims:
1. That the bylaws are void because of any one of the following reasons:
There has been a “material breach” of contract. WVU alleges that the Big East and its commissioner breached their fiduciary duties to the university by failing to keep the Big East a viable football conference.
WVU’s performance under the contract has become “impossible or unreasonably burdensome” because the university contends it has always valued the strength of the Big East as a significant football conference.
The principal purpose of WVU entering into an agreement with the Big East has become “substantially frustrated.” This means that although WVU could still perform under the contract, its purpose in entering into the contract has been destroyed.
2. That a new conference agreement was made between WVU and the Big East when the Big East accepted a $2.5 million payout from West Virginia when it told the conference it was leaving.
3. That the 27-month exit provision is an “unreasonable restraint on trade,” meaning WVU believes the provision isn’t necessary to protect the Big East’s interests.
Here are the counter-arguments the Big East could be expected to make:
With regard to the material breach claim, one factor courts will examine is whether WVU is deprived of the benefit it expected to receive from its Big East contract. To this end, WVU states in its lawsuit that the material breach is due to the commissioner’s “failure to maintain a ratio of football-to-non-football universities of eight-to-eight and maintaining and enhancing the level of competition in the Big East football conference.”
However, the Big East can be expected to argue that during the 27 months WVU will remain a member of the conference there will be eight football members, as other defectors Pitt and Syracuse will also be held in the conference through the 2013 season as part of the 27-month requirement. In addition, the BCS has confirmed that the Big East will remain an BCS football conference through the 2013 season.
WVU’s claim that performance under the bylaws has become “impossible or unreasonably burdensome” relies in part on the assertion that the Big East is “no longer a viable and competitive football conference.” Again, the Big East will likely argue that there will be no change during the seasons WVU will continue to compete as a conference member, and the conference will operate the same in 2012 and 2013 as it did in 2010 and 2011. The same argument will likely be used to oppose WVU’s claim that its purpose in entering into an agreement with the Big East has been “substantially frustrated.”
Another argument by WVU is that even if the bylaws are valid, a new agreement was struck with the Big East for immediate withdrawal upon payment of $2.5 million. WVU claims the Big East accepted the new agreement by accepting the payment. However, the Big East requires such a payment be made when a school notifies the conference of its plans to exit, with another $2.5 million to be paid by the time a school exits. Without additional evidence from WVU on the new agreement it claims was reached, it appears the Big East could argue WVU was only remitting payment as required.
West Virginia’s final argument is that the 27-month withdrawal period is an unreasonable restraint of trade, one that is unnecessary in order to protect the Big East’s interests. Here, attorneys likely will point out that the Big East has already waived its right to enforce the 27-month notice period because it allowed TCU out of its commitment; essentially, the conference can’t hold one school to the 27-month period and not another. Big East Associate Commissioner John Paquette said Tuesday afternoon that the Big East had a separate agreement with TCU that stated if it left before competing, it would not be subject to the 27-month provision.
Paquette said Monday evening that he could not reveal whether WVU voted in favor of the 27-month withdrawal period in the bylaws when it was added. But he did point out: “David Hardesty, the former WVU president, helped write the current withdrawal policies.” Expect the Big East to bring this up in its response to the lawsuit.
The case is important, because it will likely decide the Big East fates of Pitt and Syracuse, which are bound to stay through the 2013 season before heading to the ACC. Although each of those schools could file suit in their respective states, Washington, D.C. law (where the WVU suit will be heard) would govern, according to the Big East bylaws. So any decision in WVU’s case would create precedent for any case filed by Pitt or Syracuse.
Additionally, any decision rendered by a court in this case could impact future conference realignment involving any other conference. Although the decision wouldn’t have to be followed by courts in other jurisdictions, it could be persuasive. No doubt WVU is gambling on the Big East settling the case before a decision is rendered which could impact conference realignment for years to come.