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Pac-12 Conference v. Mountain West Conference, No. 24-cv-06685-SVK, 2025 WL 2781313 (N.D. Cal. Sept. 30, 2025)

by Anjalee Behti

On September 30, 2025, the Northern District of California denied the Mountain West Conference’s motion to dismiss an antitrust action challenging escalating fees imposed on the Pac-12 for recruiting individual member schools.

Background and Contract Terms

The dispute arose from the rapid realignment of NCAA Division I athletic conferences during 2022 and 2023.  After ten of its twelve member schools left for rival conferences, the Pac-12 entered the 2024-25 season with only Oregon State University and Washington State University, leaving the conference with an incomplete football schedule and placing its Football Bowl Subdivision status at risk under NCAA bylaws that require at least eight active members within a two-year grace period. 

In December 2023, the Pac-12 reached a Scheduling Agreement with the Mountain West to secure six football games for each remaining school in the 2024-25 season.  The agreement required the Pac-12 to pay “Withdrawal Fees” if it recruited individual Mountain West schools instead of bringing all Mountain West institutions into the Pac-12 in a single, no-fee transaction.  Pac-12 Conf. v. Mountain W. Conf., No. 24-cv-06685-SVK, 2025 WL 2781313, at *1-2 (N.D. Cal. Sept. 30, 2025).  Fees escalated from $10 million for the first departing school to $15 million for the eleventh, with a total potential liability of $137.5 million.  After five MWC schools announced plans to join the Pac-12 in September 2024, the MWC demanded $55 million in fees.  The Pac-12 responded by filing suit under Section 1 of the Sherman Act, California’s Cartwright Act, California’s Unfair Competition Law, and California common law barring unenforceable contract penalties.

Antitrust Standing

Magistrate Judge Susan van Keulen’s order rejected each theory of the MWC’s motion to dismiss.  On antitrust standing, the court rejected the argument that the Pac-12 lacked standing because it voluntarily accepted the challenged terms.  Citing the Ninth Circuit’s decision in Epic Games, Inc. v. Apple, Inc. (67 F.4th 946, 982 (9th Cir. 2023) (citation omitted)), the court noted that Section 1 of the Sherman Act reaches “every contract” that unreasonably restrains trade, even when one party accepts the restraint under pressure.  Pac-12 Conf., 2025 WL 2781313, at *5.  The complaint’s allegations that the Pac-12 was “desperate” and had “little leverage” when negotiating, combined with the MWC’s demand for tens of millions in fees, sufficiently alleged both injury to the Pac-12’s competitive position and to competition among conferences more broadly.  Id.

Per Se vs. Rule of Reason Analysis

The court declined to resolve at the pleading stage whether the termination fees should be analyzed as a per se violation or under the rule of reason.  The MWC urged the rule of reason analysis, characterizing the fees as ancillary restraints that supported the procompetitive goals of the Scheduling Agreement.  It pointed to contractual language that described the fees as “essential” to protecting confidential information and preserving conference integrity while creating competitive opportunities for student athletes.  Id. at *6.

Judge van Keulen found that classification premature.  The case did not fit neatly within traditional sports league precedent or the employee non-poaching cases cited by the parties.  Although the agreement recited procompetitive purposes, the complaint alleged that such language resulted from the MWC’s superior bargaining position over the Pac-12, which was facing severe time constraints and limited alternatives.  Detailed allegations regarding the negotiation timeline and surrounding circumstances required further factual development before the court could determine whether the fees constituted naked restraints subject to per se treatment or ancillary restraints subject to the rule of reason.

The court acknowledged the MWC’s argument that it would be “rare” but not “unheard of” for courts to resolve this issue at the pleading stage, but it concluded that the Pac-12 adequately pleaded a plausible per se theory.  Id. at *7.  The complaint characterized the fees as horizontal market allocation between competing conferences that suppressed competition for member schools.  Whether that theory would succeed remained a question for a more fully developed record.

Having found the per se allegations sufficient, the court declined to dismiss the antitrust claims based on purported deficiencies in the Pac-12’s alternative rule of reason pleading.  The Pac-12 included those allegations in anticipation of an ancillary restraint defense, and the court found no reason to dismiss claims based on asserted weaknesses in a defensive alternative theory.

Unfair Competition Law Claims

The court also allowed the Unfair Competition Law claims to proceed.  The Pac-12’s “unlawful” prong rested on the same alleged Sherman Act and Cartwright Act violations and therefore rose or fell with the antitrust claims.  Id. at *8.  The “unfair” prong claim likewise survived because it rested on conduct that allegedly violated the policy and spirit of antitrust law.  Id. at *9.

Contract Penalty Analysis

On the contract penalty claim, the court rejected the MWC’s argument that California Civil Code §1671(b) presumptively made the fees enforceable or that the fees constituted alternative performance rather than liquidated damages.  Although California law presumes liquidated damages provisions valid, that presumption does not apply where the challenger plausibly alleges the provision lacked a reasonable relationship to anticipated damages at the time of contracting.  The MWC emphasized language in the Scheduling Agreement describing the fees as “fair, reasonable and appropriate approximations” of anticipated losses.  Id.

Judge van Keulen found premature a determination of enforceability on the partial record, particularly where the Pac-12 sufficiently alleged the fees “disproportionately penalized breach.”  Id.  (citation omitted).  California courts focus on substance over form when evaluating whether provisions constitute unenforceable penalties.  The complaint plausibly alleged that the language was pretextual and imposed through superior bargaining power, warranting further factual development.

The court also declined to resolve whether the fees constituted alternative performance.  The MWC argued the fees did not follow a breach but instead followed the Pac-12’s election to recruit fewer than all the MWC schools.  The Pac-12 countered that cases recognizing alternative performance arose in materially different contexts, such as consumer early termination fees.  The court noted inconsistencies in the Scheduling Agreement, which labeled the fees “liquidated damages” tied to “economic damages and losses,” yet never characterized the recruitment of individual schools as a “breach.”  Id. at *10.  Because of those ambiguities, the court held that factual development would better show the substance of the parties’ agreement.

Conclusion

The decision reflects the court’s view that traditional frameworks do not always fit a rapidly changing collegiate athletics market.  It confirms that voluntary contracts remain subject to antitrust scrutiny where unequal bargaining power and competitive harm appear, and that courts will examine substance and effects rather than labels.

Procedurally, the decision follows a broader trend of deferring classification questions, such as per se versus rule of reason analysis and liquidated damages versus penalties, until factual development occurs.  This approach allows claims to proceed past the pleading stage where plaintiffs have alleged sufficient facts to make their claims plausible.

The case is now proceeding to discovery and expert witness proceedings.  On November 18, 2025, the court held its initial case management conference and established a schedule for expert witness disclosures and Daubert motions, with a hearing set for March 30, 2027.  The litigation has also expanded beyond the Pac-12’s initial complaint with the MWC filing a counterclaim, which the Pac-12 moved to dismiss on December 5, 2025.  The MWC filed its opposition to that motion on January 16, 2026.

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The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

This article was originally published in the California Lawyers Association E-Briefs, News and Notes: February 2026