Mountain West seeks to dismiss Pac-12 lawsuit over $55 million poaching penalty
Jon WilnerNov. 25, 2024 at 12:53 pm
Two months after the Pac-12 took the Mountain West to court over the legality of the so-called poaching penalty in the scheduling agreement between the conferences, the defendant fired back.
In a filing Monday in the Northern District of California, the Mountain West asked the court to dismiss the case and claimed the Pac-12 failed “to allege any harm to competition or to itself.”
The Pac-12 has until Jan. 13 to file its opposition to the motion, according to a case timeline approved by U.S. Magistrate Judge Susan van Keulen. A hearing on the motion to dismiss is scheduled for March 25.
At stake: Tens of millions of dollars in penalties the Mountain West believes it should receive from the Pac-12 after the latter approved membership in September for Boise State, Colorado State, Fresno State, San Diego State and Utah State.
The penalty was included in a scheduling agreement for the 2024 season that provided Washington State and Oregon State with six games each against Mountain West schools. (The option to extend the deal into the 2025 season was not exercised.)
According to the Mountain West’s motion, the scheduling agreement gave the Pac-12 three long-term options:
“(1) [M]erge with the MWC under the “Pac-12” banner; (2) offer membership in the Pac-12 to some, but not all, of the MWC’s schools; or (3) dissolve the Pac-12 and allow its members to join any other conference.
“The Pac-12 chose the second option, and now complains that the fees it unconditionally guaranteed to pay the MWC for damaging the integrity of the MWC by cherry-picking select MWC schools violate the law.”
According to the agreement, the Pac-12 owed the Mountain West a starting amount of $10 million for any school that joined the Pac-12 and an additional $500,000 for each subsequent school that made the jump.
The total amount for the five schools that are set to join the Pac-12 in the summer of 2026 is $55 million.
(Gonzaga, which is also joining the Pac-12, is not part of the lawsuit as a member of the West Coast Conference.)
Mountain West commissioner Gloria Nevarez defended her conference after the lawsuit was filed in September, stating: “The (poaching) provision was put in place to protect the Mountain West Conference from this exact scenario. … At no point in the contracting process did the Pac-12 contend that the agreement that it freely entered into violated any laws.”
A letter to Nevarez from Pac-12 commissioner Teresa Gould in September, and obtained by the Hotline through a court-record request, indicates the Pac-12 opposed the poaching penalty in real time.
Gould wrote that the Mountain West imposed the fees “over the Pac-12’s objection” during the fall of 2023, when WSU and OSU were “desperate to schedule football games” and “had little leverage to reject this clear restraint on competition.”
Gould added that the circumstances did not “make these penalties any less unlawful.”
In its complaint, the Pac-12 called the poaching penalty “anticompetitive” and asked the court to declare it “invalid and unenforceable.”
The lawsuit argues that the penalty was designed “to stifle” competition and create an “artificial barrier to entry” for schools to join the Pac-12 — a barrier that, the complaint states, also harms the Mountain West’s own members by limiting their market value in college football realignment.
The Pac-12 is not seeking damages.
Any reduction in, or elimination of, the penalties could clear cash for the Pac-12’s pursuit of an eighth football-playing school by July 1, 2026 to comply with NCAA membership requirements.
The Mountain West is counting on the poaching penalty to compensate its remaining schools for the damages caused by the defections of the five members.
The Mountain West’s motion rejects the Pac-12’s claims about competitiveness:
- “The Pac-12 does not allege the existence of any defined market”;
- “The Pac-12 has not alleged that the MWC exerts any power over any market”; and
- “The Pac-12 admits that Section 7.01 of the Scheduling Agreement is ancillary to a legitimate, pro-competitive purpose.”
“Accordingly, as a material inducement to MWC’s willingness to enter into and perform its obligations under this Agreement, the Pac-12 covenants and agrees that, if (A) at any time prior to the two year anniversary of the expiration or termination of this Agreement pursuant to Article IV (the “Withdrawal Fee Period”), the Pac-12 makes an offer to any MWC Member Institution … which any such MWC Member Institution accepts, or announces that it will accept, during the Withdrawal Fee Period … the Pac-12 shall pay liquidated damages to MWC in the form of the termination fee as set forth on Schedule 7.”
The complaint indicates the poaching penalty “saddles the Pac-12 with exorbitant and punitive monetary fees for engaging in competition by accepting MWC member schools into the Pac-12” and therefore violates California’s Unfair Competition Law. It also notes that “Schools have departed from the MWC for other conferences in recent years. In none of those instances did the new conference pay the MWC ‘poaching penalties.’ ”
Jon Wilner: jwilner@bayareanewsgroup.com
