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.
Author
Kristi A. Dosh is the founder of BusinessofCollegeSports.com and has served as a sports business analyst and contributor for outlets such as Forbes, ESPN, SportsBusiness Journal, Bleacher Report, SB Nation and more. She is also the author of a book on the business of college football, Saturday Millionaires. Kristi is a sought-after consultant and speaker on topics related to the business of college sports and a former practicing attorney. Click to learn more
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Stacy Reeves (@stacyreeves)
September 9, 2011 at 3:48 pm
One would assume that the TV contracts are between the network and the Big 12, not the individual schools. If that’s so, how does that impact Baylor’s case? Can Baylor claim tortious interference if they are not a named party to the contract, but they are represented by a party?
Also, assuming that Baylor falls short of a TI claim, do they have any other grounds for a different kind of lawsuit, or is this really their only shot?
Tim Harb
September 12, 2011 at 5:03 am
Also how could Baylor say they lost x amount of money since they only get paid more if they have their game shown. Remember the uneven money system. How could they prove how much they would lose to be their part beyond the bare minimum.
Selin
May 23, 2012 at 3:10 am
I must say, as a lot as I enjoyed redniag what you had to say, I couldnt help but lose interest after a while. Its as if you had a excellent grasp around the subject matter, but you forgot to include your readers. Perhaps you should think about this from far more than 1 angle. Or maybe you shouldnt generalise so substantially. Its better if you think about what others may have to say instead of just going for a gut reaction to the topic. Think about adjusting your own thought process and giving others who may read this the benefit of the doubt.
Jim
September 9, 2011 at 3:56 pm
Nicely put. One thing regarding indemnification: A&M would not be permitted to indemnify any private party (SEC, Slive, or otherwise) because it would require a waiver of sovereign immunity. It would be an improper gift of public funds.
JD
September 9, 2011 at 4:35 pm
Is the A&M Atheltic Department a public entity? I would think they are private because I don’t think they would take government funds. But I could be completely wrong.
Keith
September 9, 2011 at 4:16 pm
You only talk about damages of lost TV revenue if aTm leaves and ESPN renegotiates the TV contracts. What about the damages if aTm leaves and the entire conference falls apart? In that case the entire contract is dissolved. I would think that is really Baylor’s concern, and the reason they do not want to give up their right to take legal action
Todd Ward
September 9, 2011 at 4:32 pm
If that’s the case, then Baylor has to sue the Pac12, B1G and SEC, as they will have to claim that B1G did it when grabbing Nebraska, PAC12 when getting Colorado and any others that might follow, the SEC for A&M. If Kansas and Kansas State go to the Big East as theorized, they would have to sue them as well.
Even if Baylor planned to go full out on this given how flimsy their case is, the have a major financial hurdle to go through. They are freaking out over the loss of a TV contract so they can afford to build a new stadium, how then can they afford the legal costs in this?
They will have to back down.
Don Truman
September 9, 2011 at 10:47 pm
Baylor is basing their actions on the recently negotiated $1.2 billion contract between Fox and the Big 12 for secondary broadcast rights. This contract was agreed upon subsequent to the departure of Nebraska and Colorado from the Bib 12. Perceived losses based a primary contract to be negotiated at a future date can be extrapolated from these secondary rights. Perceived losses have, in my opinion, little or no substantial bearing on this case but could influence a final decision.
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May 20, 2012 at 9:08 pm
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Chuck
September 9, 2011 at 4:28 pm
I think Baylor is just making strategic use of the legal system.
Looking three steps ahead…one of Baylor’s desired end games is to just make things extremely messy. Crazy ugly. Well, a great political compromiser so offended at the mess (this guy of course already knows his role and is part of the “plot”, will come in to save the day to keep this out of the courts. Of course, Baylor is a private institution and not a public one, but who cares. And of course, Baylor is irrelevant and doesn’t deserve a seat at the big boy table…see attendance and returning tickets 3,000 of the 4,000 tickets allocated to them to the A&M game 80 miles from their campus. Of course, Baylor knows these things.
They know that the threatened lawsuit is frivolous. They have no case against Texas A&M as the exit process and fees are determined in the Big 12 contract that Baylor and Texas A&M willingly entered. That is why they aren’t threatening suit against A&M.
They didn’t sue the Pac 10 or Big 10 last year because the suit is frivolous. Their “hail mary” here is that a white knight politician (already determined in the Baylor plan) swoops in to save us all from the mess and amazingly Baylor gets what they want…a seat somewhere at a big boy table that they don’t deserve.
Baylor knows they have no sway in politics in Oklahoma, Colorado, and Nebraska that is why they are silent in those situations. There is no pre-determined political white knight that can help them there.
JPC
September 9, 2011 at 4:38 pm
The question about the standing for an individual school to sue when it is part of the bigger conference’s contract is still very interesting. Baylor is saying that it has standing because it is a part of the whole, right? Well, that legal statement seems to be at odds with breaking from the letter sent from the Beebe on behalf of the Big 12 schools waiving claims. In that move, Baylor is saying it is *not* part of the whole. We have an unspoken courtroom rule around here: “don’t be chickensh*t.” Sounds like that would be a great rule to adopt here.
ragebot
September 9, 2011 at 5:13 pm
I don’t think element 1 is slam dunk. Baylor is not a party to A&M’s contract with the Big 12. And I haven’t seen anything saying that Baylor was intended to be given third-party beneficiary rights under A&M’s contract.
Stacy Reeves (@stacyreeves)
September 9, 2011 at 5:23 pm
There isn’t a contract between A&M and the Big 12. The contract is between the Big 12 and the TV networks. Baylor is saying that the Big 12 represents both Baylor and A&M’s interests, meaning that if the SEC interferes with A&M’s involvement in the contract, it also interferes with Baylor’s.
Soxbadger
September 9, 2011 at 5:15 pm
Good read, but I believe that tortious interference would only be one of the potential claims. I assume in TX (or whatever law the Big 12 agreement is governed by) they allow for multiple and alternative theories of law to be plead in the same Complaint.
I would guess that in addition to TI, Baylor or other Big 12 schools would consider an equitable claim such a promissory estoppel. It would be based on a theory that A&M made a promise last year to stay in the Big 12, to which the other members detrimentally relied.
JPC
September 9, 2011 at 5:34 pm
Based on the statements, paperwork, contracts, bylaws and the like that have been made publicly available, nothing is clear. No one’s obligations are clear for sure. The negotiating power was the office of the Big 12 commissioner. The individual schools didn’t sign anything. If it’s true that the commissioner’s office doesn’t have the power to act in a legal capacity on behalf of the schools as Baylor is claiming per the communication to Slive, what good are the contracts? If, as Starr is claiming, that the B12 doesn’t fold with A&M leaving and if Fox stated that the contracts are good if A&M leaves, then were are the damages? The damage is really being done by the continued destabilization of the core/the commissioners office’s ability to act on behalf of the conference. Who would want to stay or join this mess?
Donavon
September 9, 2011 at 8:08 pm
A&M did stay in the Big 12, but did not agree to a term. Many people are misquoting A&M’s president, Dr. Loftin, and his statement that he made last year about remaining in the conference. Obtuse people are saying Dr. Loftin said A&M would remain in the conference. If someone would actually check the exact qoute and quit listening to rumors about said quote. His quote was stating the fact that Texas A&M would remain in the conference affiliation as it stood in that point in time. This was before NU and CU left the Big 12! So, it’s not the same conference now, IS IT!?!
Charlie
September 9, 2011 at 5:29 pm
Kristi, love the blog and look forward to your book as I share similar interest….though I’m not an attorney.
My question to you revolves around proving that the SEC’s actions caused the damages. Seems to me there are a lot a fingers to be pointed, including at Texas (beginning with their initiating contact with the Pac 10 in early 2010 that started this whole fiasco), NU and CU for leaving last year, OU, OSU, etc. for opening discussing having conversations with other conferences. Seems like it would be extremely difficult to prove that even if the SEC approached A&M that that act alone caused the damage.
Appreciate any follow-up you can provide.
Lary
September 9, 2011 at 5:46 pm
First of all, I love the blog. As an attorney, and college football fan, this blog provides thoughts, information, insights, etc. into two areas I am passionate about.
Second, Baylor is simply doing what any group, company or institution would do if it is in danger of losing millions of dollars in revenue each year. I applaud Baylor for not just rolling over while the Big 12 disappears.
Third, beyond the ramifications of Texas A&M leaving, what about TT, UT, OU, and OSU trying to leave? Certainly, if OU and/or UT leave, then the Big 12 is no more. Would schools like Baylor, KU, ISU, etc. sue the other schools in order to keep the conference together? Do they have a legal basis to force the conference to stay together?
Finally, is it really wise for Texas A&M, Texas, or Oklahoma to leave the Big 12 and join a mega-conference? Certainly, costs associated with athletics will go up if these schools join far-flung conferences. Then there is splitting the money pie 13 – 16 ways instead of only 12 ways. In addition, if Texas A&M thought winning the Big 12 and getting the automatic BCS birth was tough now, wait until you are in the SEC!
Some food for thought.
Nancy
September 10, 2011 at 12:31 am
“Baylor is simply doing what any group, company or institution would do.”
I must have missed those other instances in college athletics history including when the Southwest Conference disbanded and Baylor was involved in TCU, Houston, SMU, and Rice being send to various other conferences.
Steve from Cow Bayou
September 9, 2011 at 5:53 pm
Lary asks ” Is it really wise for Texas A&M, Texas, or Oklahoma to leave the Big 12 and join a mega-conference …”
It is wise to leave a parasite like Baylor. Baylor is a big reason why the Big XII can’t have nice things.
ragebot
September 9, 2011 at 9:39 pm
Stacy, it is EXTREMELY difficult to prove that someone is a third party beneficiary to a contract. The contract essentially has to say as much. I havent seen the tv deal, but i seriously doubt that the tv contract names the big 12 teams as beneficiaries. Not to mention that A&M’s departure is not a breach of the TV deal.
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