Personally I like the black and white.
I look at the agreed terms that they signed and would love to take it at face value. You agreed to these terms, so live with them. So at my core, I think all the fees should hold up. You should have to live with the decisions that you make.
Unfortunately the truth is that isn't how this works. Exit fees get negotiated down, and there seems to be a lot of chatter that the poaching fees will not necessarily hold up as well.
I agree, but you're right, it's never black and white. It's a civil matter and civil matters as large as these are always negotiated. In fact it's probably WHY the fees are as high as they are. I mean, legitimately think about the actual process of collecting on the different "fees" and it helps inform why they are the way they are.
The MW charged them an exorbitant rate for last season's scheduling agreement. None of that part of the agreement is contested, but it is part of the big picture here. Considering "fairness" of these contracts is contestable with these negotiations, this is for sure a part of the discussion.
With that heavily MW-friendly agreement, they shoehorned the poaching fees on top of that. The PAC had zero leverage and agreed to it. I still think they thought a reverse merger was likely at that point, and/or knew that this contract was a bit egregious and at the very least they could contest it later which of course is what is happening now.
So I look at what are reasonable fees in these cases. The PAC was taken advantage of, just with the base scheduling agreement alone. So what will a judge think is fair? How much is considered borderline extortion?
On the one hand you have "exit fees"... those fees are at least somewhat guaranteed because you are going to withhold payments to those institutions to secure them. In this case they give two years notice and you're going to withhold payments for 2 out of the 3 years they owe you, and they YOU'D have to sue them to get the other year, because nobody is just going to write you a check. Now if they only give one year notice the price doubles, not only because the harm is greater (which it is) but ALSO because you're going to have to sue them for almost the whole damn thing. The cost of litigating, waiting, etc is a huge factor, which necessitates a huge penalty.
Then you have the "poaching fees"... you go into these knowing you will have to litigate 100% of the time, because like I said, nobody is just gonna write THAT check. You equate the MW as having ALL the power in the negotiations, in a black and white world you'd be right, but in this world it would be incorrect. The MW had the power to make the agreement and it used that power to leverage against the PAC 2, but they knew the only collection mechanism would be to litigate, should the PAC 2 not honor the agreement... the PAC 2 made the agreement and was PAID IN FULL for what the MW offered them... And now the MW has to sue to collect and risk getting nothing even though IT IS THE INJURED PARTY.
The fact that it got to this point though was known all along and the MW never expected they would collect on all of it. So calling the fees "extortion", "egregious" or what ever is irrelevant since they were only what they were because they were never intended on being fully collected.
This is more akin to a bank agreeing to lend money to someone who is a credit risk. It was an unsecured loan, whereas the exit fees are at least partially secured.
They can make any case they want during their negotiations, but in my opinion this well never reach an actual courtroom for any judge to come into play.
Sure the MW is trying to protect themselves I get it. But how much is too much? What if your company demanded 3 times your annual salary as a non compete to go to competitor? And then demand another 2x's your salary on top of that to go to a specific competitor? Would a judge allow that? Even if you signed a contract, do you think that would hold up?
Employment law and contract law are two different things completely. As an employee you have certain rights and governmental protections that private entities do not.
A better example might be...
You and nine friends decide to go into business together and you craft an agreement that protects your business and the individual owners. For whatever reason, and no matter what the business is, all ten of you are necessary to make the whole thing work. Now maybe one of you is REALLY important, and a couple of you are KIND OF important, and the rest of you are necessary. Maybe one of you gets paid a tiny bit extra because you're REALLY important and everyone recognizes that... in my experience you're probably in sales lol. The KIND OF important members are quietly jealous and talk shit amongst themselves but ultimately accept that they're just cogs in the wheel and go along with things.
But you all craft the agreement that gives you all security and makes it so that your business can be successful, but part of that agreement is that if any of you leave you'll have to compensate the other members because the business will have to change and might ultimately crumble. Now the REALLY important member doesn't love it, and the KIND OF important members don't really like it either, but ALL OF THEM understand that they have NOTHING without it and the other members... so they agree to it.
Then along comes Chad and Jeremy and they tell company X that they'd like to do business with them. Well most of company X doesn't trust Chad and Jeremy, but the more "important" members lobby for Chad and Jeremy, and even though the rest of company X is beginning to not trust the "important" members either, they end up making a deal with a big penalty to protect itself from Chad and Jeremy.
Well as it turns out Chad and Jeremy had been plotting with the "important" members all along and now everybody is just being dicks about it.
