Last Updated on June 5, 2014
The term “tortious interference” has become synonymous with conference realignment this week. Many believe Baylor is preparing to file a tortious interference claim against the SEC. What exactly does that mean?
Tortious interference is when a person or entity who is not a party to a contract (or business relationship, but we’ll stick with the term contract to cover both) intentionally convinces one of the parties to the contract to break that contract.
In the conference realignment scenario, Baylor could claim that the SEC is intentionally inducing Texas A&M to break its contract with the Big 12.
In order to be successful in their claim, Baylor (and any other schools who joined in) would have to prove certain “elements” in order for the case to go to trial. Before the case goes to trial, a judge could grant a motion to dismiss or a motion for summary judgment by the SEC if he/she doesn’t believe each of these elements is established.
The elements of a typical tortious interference claim, although it varies by jurisdiction, are as follows (first in legalese and then translated to English):
- The existence of a contractual relationship or beneficial business relationship between two parties.
- Knowledge of that relationship by a third party.
- Intent of the third party to induce a party to the relationship to breach the relationship.
- Lack of any privilege on the part of the third party to induce such a breach.
- The contractual relationship is breached.
- Damage to the party against whom the breach occurs.
The first two are easy hurdles for a plaintiff to clear. There is a relationship between Texas A&M and the Big 12, and the SEC is aware of that relationship.
By now most of you have heard there’s an issue with the third factor. A plaintiff would have to prove the SEC intentionally induced Texas A&M to breach the contract. All the evidence made public so far points to Texas A&M choosing to leave the Big 12 before the invite from the SEC.
However, there may be a wrinkle with regards to last summer’s conference realignment discussions. Did the SEC approach A&M then? If so, did they know A&M leaving the conference could result in current television contracts being renegotiated or canceled? I’m told Baylor could try and satisfy the third factor regarding inducement if they can prove the answers to those questions are yes.
Another issue the SEC could argue is whether any contract is really being breached. In terms of membership, the Big 12 is wholly governed by its Bylaws, which is a document that is not signed but is adopted by vote of the members. There is no other signed contract or agreement either between all of the members or between each member and the conference.
The Bylaws provide for a member to leave the conference upon notice and payment of a specified fee. If A&M gave the proper notice and agrees to pay the fee, what is A&M breaching by leaving? Baylor might argue the breach is with regards to the television contracts, but without a copy of the contracts I can’t comment on that. If what’s been made public is true – that there is a provision that allows for renegotiation in one or both tv contracts if the conference drops below ten members – Baylor could argue the breach exists there. Whether that’s enough to satisfy a judge is anyone’s guess.
The other factor I think the SEC might claim the plaintiff couldn’t prove is the last relating to damages. The plaintiff would have to claim actual damages, such as monetary losses. Now, if ESPN were to drop or renegotiate (for a smaller value) their television contract with the Big 12 because of A&M’s departure, then damages are easy to prove. Otherwise, I don’t think they have a case. There’s no reason to believe that the loss of A&M alone would cause these contracts to be renegotiated or dropped, especially if the Big 12 carries forward with the plan to add a team to replace A&M. Clay Travis wrote a great piece on why there won’t be any lost television money to claim as damages.
A plaintiff like Baylor wouldn’t be able to include what we call “speculative damages.” This would be items like lost ticket sales in the game that replaces A&M at Baylor or loss in value of future television contracts. So, without losses from existing tv contracts being renegotiated or canceled, this essential element will be tough to prove.
If the SEC believes the plaintiff can’t prove all of the elements of the case, they would have two opportunities to ask the judge to dismiss the case before trial. Once after pleadings are filed, meaning the plaintiff has filed a complaint stating their claim and the defendant has answered that complaint. The SEC could file a motion to dismiss where the judge would decide if the plaintiff has alleged sufficient facts with “reasonable plausibility to state a claim.
The next opportunity for the SEC would be after document production, depositions and interrogatories. The SEC would file a motion for summary judgment claiming the plaintiff can’t produce evidence to prove the third or sixth elements.
A motion for summary judgment is granted if it would be impossible for the other party to prevail at trial based on the undisputed facts presented and the law. The court must consider all materials in the light most favorable to the party opposing the motion for summary judgment, in this case the plaintiff. In order to prevail on the motion for summary judgment, the plaintiff would only have to show evidence that a dispute of material facts exists, regardless of the strength of that evidence.
Despite the fact that I think the SEC could prevail in a case like this, it’s not something they want to bring upon themselves. That’s why we’re in a holding pattern.
The SEC can no longer accept A&M and rely on the letter from Beebe to Slive (which said the Big 12 and its member institutions would not bring any legal actions against the SEC), because Bernie Machen of the University of Florida has already acknowledged publicly the SEC knows a school has withdrawn consent.
A lot of you have asked me if A&M could indemnify the SEC in order to get the deal done. Indemnifying the SEC means A&M would agree to take on any losses the SEC incurred. However, it doesn’t keep the SEC from getting sued and having to go through the court process. I don’t anticipate we’ll see this happen or that it would be enough for the SEC to complete the deal.
So what now? We wait to see who blinks first. I think the threat of legal action is only a temporary solution for the Big 12 schools opposed to A&M’s move and that A&M will end up in the SEC when all is said and done.
I’d like to thank my law firm colleagues Foy R. Devine and Eric S. Fisher for their invaluable assistance with this post.
Foy R. Devine: Foy Devine chairs the Taylor English Litigation and Dispute Resolution practice group. Since 1969, Mr. Devine has concentrated his practice in civil trial work. He has handled business litigation of all types, as well as catastrophic personal injury and death cases arising out of product related injuries. He has frequently appeared in state and federal appellate courts. He is AV rated by Martindale-Hubbell, and has been selected as a Georgia Super Lawyer for several years. For more on Foy Devine, click here.
Eric S. Fisher: Eric Fisher is a member of the firm’s Litigation & Dispute Resolution group, handling matters across the spectrum of litigation. He has represented individuals and companies in a wide variety of cases, including involving contractual and partnership disputes, business torts, fiduciary duties, and healthcare. Mr. Fisher is licensed to practice in California as well as in Georgia, and he has experience in federal and state trial and appellate courts and alternative dispute resolution proceedings in both states. For more on Eric Fisher, click here.
This article offers the personal observations of Kristi Dosh, Foy Devine and Eric Fisher and does not represent the views of their law firm or its clients. Any information contained herein does not constitute legal advice. Consult your own attorney for legal advice on these matters.BaylorBig 12SEC