Court Upholds $52M ACC Withdrawal Penalty

(CN) - The University of Maryland must face a $52.2 million lawsuit from the Atlantic Coast Conference for early withdrawal, the North Carolina Court of Appeals ruled.

Based in Greensboro, N.C., the ACC is a group of 15 universities that compete against each other in football, basketball and many other sports. Maryland has been part of the ACC since the conference was formed in 1953.

The conference established the withdrawal penalty in 2011 as 1.25 times the operating budget of the ACC. One year later, the ACC increased the penalty to 3 times the operating budget.

Maryland voted with other ACC schools on the original penalty amount but voted no on the increased penalty.

Two months after the penalty increased, Maryland informed the ACC that it was leaving the conference and joining the Big Ten Conference, starting with the 2014 football season.

Believing that Maryland would not pay the $52.2 million penalty, the ACC took the Terrapins to court to enforce it.

The university asked the trial court to dismiss the case for lack of jurisdiction, claiming sovereign immunity under the laws of Maryland. The trial court refused, and the North Carolina Court of Appeals affirmed on Nov. 19.

"Because the public policy of this state does not allow the state of North Carolina to avoid its obligations in contract, we cannot extend comity to defendants' claim of sovereign immunity," Judge Robert N. Hunter Jr. wrote for a three-judge panel.

"Furthermore, because we find that the extension of comity in this case would violate public policy, we decline to consider - as would be required if we had reached the opposite conclusion - whether defendants would be entitled to sovereign immunity as a matter of Maryland law," he added.

In addition to Maryland, the ACC also includes Boston College, Clemson University, Duke University, Florida State University, Georgia Institute of Technology, University of Miami, University of North Carolina at Chapel Hill, North Carolina State University, University of Notre Dame, University of Pittsburgh, Syracuse University, University of Virginia, Virginia Polytechnic Institute and State Tech University, and Wake Forest University.

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