Civil Practice – Valid and Enforceable Contracts – Sovereign Immunity

Clemson University waived its sovereign immunity and is subject to this suit in North Carolina.

We granted in part and denied in part the motion to dismiss and denied the motion to stay.

In 2023, Atlantic Coast Conference (ACC) filed a complaint for declaratory judgment in Mecklenburg County Superior Court against Florida State University (FSU), another ACC Member Institution, seeking a declaration that the Grant of Rights Agreements are valid and enforceable contracts. The next day, FSU initiated its own lawsuit against the ACC in state court in Leon County, Florida, challenging the validity of the Grant of Rights Agreements along with other claims. In 2024, the ACC filed its first amended complaint against FSU in North Carolina, alleging “damages for breaches of the Grant of Rights [Agreements], the ACC Constitution and Bylaws, and injunctive relief for breach of FSU’s fiduciary duties to the Conference,” in addition to the same two declaratory judgment claims asserted in its original complaint.

While these parallel actions were pending, the ACC alleged “Clemson indicated a desire to work with the Conference regarding its own membership in the Conference and requested assurances of confidentiality and protections that the ACC would not file suit against it.” The ACC averred that it “agreed to work with Clemson, seeking a business solution rather than resorting to litigation.” According to the ACC, “[w]hile these assurances were being documented, and without provocation by the ACC,” Clemson initiated litigation against the ACC in March 2024 by filing suit in Pickens County, South Carolina, seeking a declaration regarding the scope of the Grant of Rights Agreements, the enforceability of the withdrawal payment provision in the ACC’s Constitution, and whether it owes the ACC fiduciary duties. The ACC initiated this lawsuit in Mecklenburg County Superior Court the following day.

In April 2024, the Court granted FSU’s motion to dismiss the ACC’s breach of fiduciary duty claim, but otherwise denied FSU’s motion to dismiss, including FSU’s argument that this Court lacked personal jurisdiction over FSU on sovereign immunity grounds, and denied FSU’s motion to stay. FSU appealed the Court’s denial of FSU’s motion to dismiss on sovereign immunity grounds and the Court stayed all proceedings in the FSU Action.

Clemson sought to dismiss the ACC’s Complaint under Rules 12(b)(1), 12(b)(2), and 12(b)(6) and contending that Clemson and FSU are “situated differently . . . both with respect to the propriety of proceeding in this Court and the fundamental nature of the claims at issue[ ]” such that “the basis for [the] claims that the ACC brought against FSU and the related arguments on motions should have little bearing in this case.” At the same time, Clemson filed a Motion to Stay this action in favor of its first-filed action against the ACC in South Carolina, arguing again that “the analysis here is different[ ]” from the analysis presented by the FSU Action.

Among other things, we concluded that the ACC’s activities, specifically the sponsorship of athletic events and the marketing of media rights for those events, are commercial in nature. We further concluded that, as a Member of the ACC, Clemson’s Conference-related activities in this State are also commercial, rather than governmental, in nature. Accordingly, Clemson waived its sovereign immunity and is subject to this suit in North Carolina. We therefore denied Clemson’s Motion to Dismiss to the extent it sought dismissal for lack of personal jurisdiction on grounds of sovereign immunity.

We determined that the stay that Clemson requested is not warranted and that proceeding with this action in North Carolina would not work a “substantial injustice” on Clemson. The nature of the case, the applicable law, the burden of litigating matters not of local concern, the desirability of litigating matters of local concern in local courts, and the practical considerations presented by the issues raised in the Pending Actions, when considered in combination, decisively outweigh Clemson’s choice of the South Carolina forum for the determination of the scope of the rights Clemson granted the ACC in the Grant of Rights Agreements, Clemson’s related, and later-added, claim for slander of title, and Clemson’s challenge to the enforceability of the withdrawal payment in the ACC’s Constitution. Accordingly, we denied Clemson’s Motion to Stay under N.C.G.S. § 1-75.12(a).

Granted in part, denied in part.

Atlantic Coast Conference v. Clemson University (Lawyers’ Weekly No. 010-044-24, 53 pp.) (Louis A. Bledsoe III, J.) 2024 NCBC 44. Womble Bond Dickinson (US) LLP, by James P. Cooney, III, Sarah Motley Stone, and Patrick Grayson Spaugh, for plaintiff Atlantic Coast Conference; Parry Law, PLLC, by K. Alan Parry and Neil A. Reimann, Ropes & Gray LLP, by John Paul Bueker, and Nelson Mullins Riley & Scarborough LLP, by Axton Crolley, David Dukes, and B. Rush Smith III, for defendant Clemson University. North Carolina Business Court