N.C. Business Court Opinions, March 27, 2024 – April 9, 2024

By: Rachel E. Brinson

Atl. Coast Conf. v. Bd. of Trs. of Fla. State Univ., 2024 NCBC 21 (N.C. Super. Ct. April 4, 2024) (Bledsoe, C.J.)

Key Terms: Atlantic Coast Conference; Florida State University; ESPN; motion to dismiss; motion to stay; media rights agreements; 12(b)(1); 12(b)(2); 12(b)(6); 12(b)(7); declaratory judgment; breach of contract; standing; condition precedent; sovereign immunity; confidential information; breach of fiduciary duty; breach of implied duty of good faith; first to file

Following months of rumblings that Florida State University was considering leaving the Atlantic Coast Conference because it believed it was entitled to an unequal distribution of revenue from the ACC, and upon learning that FSU’s Board of Trustees (“FSU”) intended to file a lawsuit the next day to challenge the enforceability of two media rights agreements (the “Agreements”) between the ACC and its members, the ACC filed this action in Mecklenburg County seeking a judicial determination that the Agreements were valid and enforceable and a declaration that FSU is estopped from challenging or has waived any right to challenge the Agreements by accepting the benefits thereunder. FSU filed suit against the ACC in Florida the following day, allegedly breaching the Agreements. Thereafter, the ACC amended its complaint to assert additional claims for monetary relief. FSU moved to dismiss the amended complaint under Rules 12(b)(1), 12(b)(2), 12(b)(6), and 12(b)(7), or, alternatively, to stay the case in favor of the pending Florida action.

12(b)(1) and 12(b)(2)

FSU challenged the ACC’s standing to bring suit based on (1) lack of a justiciable controversy, (2) failure to satisfy a condition precedent, and (3) sovereign immunity. The Court found that a justiciable controversy existed because at the time of filing, FSU’s initiation of litigation over the Agreements was unavoidable and a practical certainty and FSU presented no evidence to the contrary. The Court also rejected FSU’s contention that the ACC failed to plead that it had taken all necessary steps prior to bringing suit because the ACC was required only to “make an affirmative averment showing its legal existence and capacity to sue,” which it did. The Court also found that the ACC Board of Directors’ ratification of the initiation of the lawsuit cured any alleged defect in the ACC’s authorization to bring suit. Lastly, the Court concluded that although FSU was entitled to sovereign immunity as part of the executive branch of the state government, it had explicitly waived its sovereign immunity to suit in North Carolina by choosing to be a member of a North Carolina unincorporated nonprofit association subject to the Uniform Unincorporated Nonprofit Association Act and its sue and be sued clause and by engaging in extensive commercial activity in North Carolina. For each of these reasons, the Court denied the motion to dismiss under Rules 12(b)(1) and 12(b)(2).


FSU also argued that the action should be dismissed for failure to join Florida State University as a necessary party. However, since “Florida State University” has no independent corporate existence and since Florida courts have held that the FSU Board is the proper party to answer claims against “Florida State University,” the Court denied the motion to dismiss pursuant to Rule 12(b)(7).


Breach of Agreements. The ACC alleged that, by initiating the Florida Action, FSU breached its obligation under the Agreements. In response, FSU did not challenge that it breached the Agreements but instead contended that it never entered into the Agreements in the first place. The Court, however, concluded that the ACC had sufficiently pleaded that FSU approved the execution of both Agreements and should be estopped from challenging the Agreements by its conduct in accepting the benefits of the Agreements for years without protest. Thus, the Court denied the motion to dismiss the claim for breach of the Agreements.

Declaratory Judgment Claims. The ACC sought a judicial declaration that (i) the Agreements were valid and enforceable contracts; and (ii) FSU was estopped from making or has waived by its conduct any challenge to the Agreements. FSU sought dismissal of these claims on the same basis that it sought dismissal of the ACC’s breach of contract claim. Because the Court concluded that the ACC’s claim for breach of the Agreements should survive, the Court also allowed the ACC’s declaratory judgment claims to proceed.

Breach of Obligation to Protect Confidential Information. FSU next sought to dismiss the ACC’s claim that FSU breached its obligation to keep confidential the terms of certain ESPN Agreements by disclosing some of those terms at its December 22, 2023 meeting and by publicly filing the complaint containing some of those terms in the Florida Action. FSU argued that it was never a party to the ESPN Agreements and had not entered into any confidentiality agreement with the ACC, and, furthermore, that FSU does not owe any duties to the ACC beyond those reflected in the ACC’s Constitution and Bylaws. The Court found that the ACC had alleged that it made a legally binding, conditional offer to FSU, which FSU accepted by its counsel’s reviewing the agreements, and thus, although FSU was not a party to the ESPN Agreements or the confidentiality provisions contained therein, the ACC sufficiently pleaded at least an implied-in-fact contract between the ACC and FSU to maintain the confidentiality of the terms of the ESPN Agreements as well as FSU’s breach thereof. Accordingly, the Court denied the motion to dismiss this claim.

Breach of Fiduciary Duties Owed by FSU to the ACC. FSU next sought dismissal of the ACC’s claim that FSU has breached, and continued to breach, its fiduciary obligations to the Conference under the ACC’s Constitution and Bylaws as well as under North Carolina law. The Court determined that the UUNAA does not contain provisions imposing fiduciary duties on members of an unincorporated nonprofit association, and an unincorporated nonprofit association does not qualify as a joint venture preventing the ACC from establishing the existence of a de jure fiduciary relationship with FSU under a joint venture theory. The Court also found that the ACC had not alleged sufficient facts to establish either the existence of a de facto fiduciary relationship or a contractual imposition of fiduciary duties under the ACC’s Constitution and Bylaws. The Court therefore dismissed with prejudice the ACC’s claim for breach of fiduciary duty.

Breach of Implied Duty of Good Faith and Fair Dealing. Finally, FSU sought dismissal of the ACC’s claim for breach of the implied duty of good faith and fair dealing under the ACC’s Constitution and Bylaws. The Court found that the ACC sufficiently alleged the existence of a valid contract (the ACC’s Constitution and Bylaws), breach of the same by FSU, and that FSU’s actions violated its duty to deal in good faith with the ACC. Thus, the Court denied the motion to dismiss the ACC’s claim against FSU for breach of its obligation of good faith and fair dealing.

Motion to Stay

FSU moved in the alternative to stay this first-filed action under N.C.G.S. § 1-75.12 in favor of its second-filed Florida Action because the Florida Action was more comprehensive, and in the true proper forum for this case, and also because the ACC deserved no first-filing deference as a result of its improper forum shopping. The ACC responded that a North Carolina court, not a Florida court, should determine the claims of a North Carolina organization concerning the validity and breach of contracts governed by North Carolina law and further that FSU had failed to offer any evidence that FSU would suffer “substantial injustice” should this litigation proceed in North Carolina. The Court found that the nature of the case, the convenience of the witnesses, the relative ease of access to sources of proof, 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 ACC’s choice of the North Carolina forum decisively outweighed FSU’s choice of Florida for the determination of the enforceability of the Agreements and the resolution of the ACC’s damages claims against FSU. Accordingly, the Court, in the exercise of its discretion, denied FSU’s motion to stay under section 1-75.12(a).


Atl. Coast Conf. v. Bd. of Trs. of Fla. State Univ., 2024 NCBC 22 (N.C. Super. Ct. April 5, 2024) (Bledsoe, C.J.)

Key Terms: Atlantic Coast Conference; Florida State University; ESPN; motion to seal; confidential information; trade secrets; third-party harm; public record

The ACC sought to seal excerpts from or relating to certain agreements to which the ACC and ESPN were parties, which contained historical and prospective financial data and other material terms. The FSU Board opposed sealing arguing that (1) the agreements were public records because the terms had been shared with the ACC’s members, including nine public universities, (2) the agreements did not qualify for the trade secret exemption under North Carolina’s or Florida’s public record laws, (3) the information was already public, and (4) the ACC’s proposed redactions were overbroad and inconsistent. The ACC and ESPN opposed the FSU Board’s arguments. The ACC argued that disclosure would harm the ACC’s ability to compete with other conferences by allowing them to use the information as leverage in negotiations, thus gaining an unfair advantage.

The Court concluded that partial sealing as requested by the ACC and ESPN was appropriate for several reasons. First, financial information, pricing terms, and internal business strategies are included within the categories that North Carolina courts have treated as confidential and proprietary trade secrets that may warrant protection. Second, the ACC and ESPN contended that the terms of the Agreements were trade secrets, which N.C.G.S. § 66-156 requires the court to protect. Third, numerous other courts, when considering requests to seal these and similar agreements, have concluded that they constitute trade secrets that warrant sealing. Fourth, the privacy interests of non-party ESPN deserved special consideration and weighed in favor of sealing. The Court concluded that sealing the excerpts of the agreements and those portions of the pleadings in the North Carolina action and the Florida Action that quote from or refer to the agreements was appropriate but found that certain of the ACC’s redactions were arbitrary, inconsistent, and overbroad. Accordingly, the Court predominately granted the motions to seal but ordered the ACC to revise certain inconsistent redactions.


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The information in this article is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.

Posted 04/09/24 in Business Court Blast