Sunday, April 12, 2009

Court Approves MHSAA's Agreement for Payment of Damages Award

The Michigan High School Athletic Association is on the hook for $6 million dollars after federal courts determined that its scheduling of girls' sports in the nontraditional seasons violated Title IX and the Constitution's Equal Protection Clause. MHSAA's various appeals kept the litigation going for over a decade, but the final chapter in this case closed last week when the district court approved the parties agreement over the details of MHSSA's payment of the damages and attorneys' fees to parents and their attorneys who filed the successful suit.

Here are the details of that agreement, as reported in the local press:
The MHSAA must pay $2.5 million immediately, and $550,000 before May 1 from this year to 2014. The final installment of $200,000 is due May 1, 2015. The association can pay off the balance early and receive a discount of up to 10 percent, or defer up to $250,000 over the first three years at an interest rate of 10 percent.

As part of the agreement, National City Bank has a first priority lien and Communities for Equity has a judicial lien on the MHSAA’s headquarters. The association is allowed to receive a loan of up to $750,000 from National City.

The MHSAA can’t sell any of its assets without Communities for Equity’s written consent, and the association can’t get out of paying by filing for bankruptcy.
This payment schedule, which gives MHSSA flexibility and time to pay off its debt and which also reflects a total liability that is reduced from the initial $7.4 million dollar attorneys fee award, likely reflects concern on all sides (see this prior post) that the damages award against MHSSA not bankrupt the organization to the detriment of the student-athletes and schools who benefit from its continued existence.