Recent Judicial Rulings Regarding Language In Coaches' Employment Contracts Recent Judicial Rulings Regarding Language In Coaches' Employment Contracts

Recent Judicial Rulings Regarding Language In Coaches' Employment Contracts

This summer and fall, courts in Florida, Ohio and Pennsylvania made the rulings briefly summarized below about the meaning and effect of language in the employment contracts of college athletics coaches. When drafting and evaluating coaches' employment contracts, schools should consider several reminders from these rulings.

Circuit Court, Seventh Judicial Circuit, Florida
Case No. 2010-31638-CICI
May 22, 2013

Wyatt involved a bench trial of a former football coach's breach of contract and age discrimination claims against the university. The court rejected the discrimination claim but awarded more than $770,000 (four years' compensation) on the contract claim. As part of its ruling, the court interpreted three contract provisions.

Contract Extension Language

The court considered language in paragraph 5 of the contract stating that the contract extend one additional year for each year in which the coach "receive[d] a satisfactory evaluation of his job performance."

The coach argued that his contract had been extended by one year four separate times. Although the coach produced a written satisfactory evaluation from only one year, he testified that he received satisfactory evaluations every year, including an oral evaluation in the most recent year. No evidence of an unsatisfactory evaluation was introduced.

Based upon language in paragraph 29 of the contract requiring any contract extension to be in writing, the university argued that the coach's contract was not extended during the years for which written satisfactory evaluations could not be produced.

Despite the production of only one written satisfactory evaluation and the absence of any written and signed contract amendment, the court rejected the university's argument and ruled in the coach's favor. The court stated that the language of paragraph 5 "was specifically spelled out" without any reference to a written evaluation and that the "specific directives of paragraph 5 control over the more general requirements of paragraph 29."

This ruling provides reminders about (i) recognizing that a requirement for all contract extensions to be in writing and signed by the parties is superseded by the occurrence of contract-extension benchmarks set forth elsewhere in the contract and (ii) specifying that only written satisfactory evaluations trigger contract extensions.

Liability Limiting Language

The court considered language in paragraph 6 of the contract which limited the university's responsibility to pay the coach if the university terminated the coach's employment due to "the programmatic direction of the college."

The court determined that as a matter of law the language "programmatic direction of the college" meant a "programmatic change" to the football program. According to the court, such a programmatic change would encompass "broad and fundamental change to the entire football program, involving most if not all aspects of the program." Although the court did not specify what would meet this standard, the court stated that, "a personnel change, even a head coach change, alone isn't enough." The court also noted that the university's desire to win more games failed to demonstrate an intent for programmatic change. Furthermore, the court noted that programmatic change must be evaluated at the time a coach's employment is terminated, not a later date.

Because evidence indicated that the university's disappointment about a bitter loss and its desire for better on-field results prompted its decision to terminate the coach's employment, the court rejected the "programmatic direction of the college" limitation on what the university owed the coach.

This ruling provides reminders about problems with terms like "programmatic direction" or "programmatic change," which are found with surprising frequency in coaches' employment contracts.

(i) The threshold established by these terms is uncertain, but it requires change well beyond coaching staff replacement, must be demonstrated at the time a coach's employment is terminated and must be based upon more than a team's poor on-field performance (much like poor on-field performance does not justify "for cause" termination of a coach's employment in the absence of specific authorizing contract language).

(ii) These terms are almost always unnecessarily vague, leaving too much interpretive discretion to a third-party fact finder. In addition to including a standard Force Majeure clause, a contract provision intended to limit a school's liability to a coach in case of fundamental changes to the school, its athletics department or the coach's program should not rely on such vague terms but should, at minimum, cite non-exclusive examples of the foreseeable changes contemplated by the provision (e.g., specified decrease in school enrollment, specified reduction in athletics department funding, elimination of the coach's program, change in NCAA division membership, change in conference affiliation, etc.).

Coach's Duty to Mitigate Damages

The court considered additional language in paragraph 6 of the contract about the coach's duty to mitigate damages by seeking and obtaining other work after the university terminated his employment.

The court rejected the university's argument that the coach breached a duty to use his best efforts to obtain a new job. The court noted that although the contract required the coach to seek "reasonable and comparable employment" it also contained a post-employment confidentiality clause and a non-compete clause which were "specifically designed to make the coach's employment at another football program very difficult." The court observed that is was "a mystery not explained by the University" how the coach was to seek "reasonable and comparable employment" in light of the confidentiality and non-compete clauses.

The court also rejected the university's argument that the coach's eventual new job as an assistant football coach at a NAIA school ended the university's financial obligations to the coach pursuant to contract language about the coach becoming "employed again in the athletic arena." The court determined that the language about employment "in the athletic arena" had to be read in conjunction with the paragraph's prior language about "reasonable and comparable employment." Specifically, the court stated the following: "Neither party intended the coach to get [two] head coach salaries. However, to contend that the coach forfeits all salary and benefits because he gets a job at a small college is to pervert the meaning of the contract and ignore the reasonable obligations imposed on both parties by this provision."

This ruling provides reminders about mitigation of damages provisions:

(i) Duty to mitigate clauses and non-compete clauses in coaches' contracts usually apply in different circumstances: (a) mitigation clauses when a school owes a coach money after terminating his employment "without cause" and (b) non-compete clauses when a coach resigns prior to the expiration of his contract. In order to prevent language designed to protect a school when it terminates a coach's employment from impairing a school's contractual rights when a coach quits (or vice versa), a contract must clarify when each clause applies and make sure that the coach's obligations do not contradict each other.

(ii) It is important to define what constitutes "reasonable and comparable employment" or similar terms. Issues about a coach's future employment that should be clarified include coaching title, level of competition, gender coached, work with professional teams or leagues, coaching overseas, work as an athletics administrator and work as a sports broadcaster. For example, "reasonable and comparable employment" for a "low-major" head coach might include an assistant coach position in a "high-major" program or a scouting job with a professional team; however, for a "high-major" head coach, "reasonable and comparable employment" might not even extend as far as a head coach position at some "low-major" schools.

Court of Common Pleas, Portage County, Ohio
Case No. 2011 CV 0511
July 24, 2013

This ruling concerned Kent State's $1,600,000 claim against Bradley University for tortious interference with an employment contract between Kent State and its men's basketball coach. The court granted summary judgment in Kent State's favor but declined to award damages pending proof at trial. (The opinion includes an interesting analysis of why the court determined that Bradley intentionally procured the coach's breach of his employment contract and lacked legal justification for doing so.) As part of its ruling, the court discussed contract language regarding the coach's authorization to speak with other schools about coaching vacancies.

The relevant language was in paragraph 7 of the coach's employment contract with Kent State:

"7. GENE A. FORD recognizes that his promise to work for the UNIVERSITY for the entire term of this five (5) year Contract is of the essence of this Contract…

c. If, however, he is sought for a job prospect outside of the MAC, GENE A. FORD will not respond to such inquiries without permission of the [Athletic] Director, with such permission not to be unreasonably withheld…"

Evidence established that in early March 2011, Kent State's athletics director gave the coach permission to talk with other schools about coaching vacancies. Later that month, the coach talked with Bradley about its vacant coaching position. The coach agreed to become Bradley's new coach and did not return to Kent State.

Bradley argued that no underlying breach of the coach's contract with Kent State occurred because Kent State authorized the coach to discuss vacant coaching positions with other schools, including Bradley. The court rejected Bradley's argument and noted that, "consent to interview is not consent to hire." The court elaborated - "Provision 7.c. simply allowed [the coach] to talk with programs which had sought him out. But that provision did not void or take priority over the five year term of the contract and specified damages for a breach."

This ruling provides a reminder that "consent to interview" is different from "consent to hire." A school that hires a coach under contract with a second school faces potential liability to the second school even if the second school granted permission for the coach and the hiring school to discuss the coach's possible employment. Consequently, a hiring school should consider language in a new coach's contract addressing not only payment of any liquidated damages owed by the coach to his previous school but also indemnity from the coach to the hiring school regarding potential tortious interference claims brought by the previous school against the hiring school.

U.S. District Court, Western District of Pennsylvania
Sept. 30, 2013

In Haywood, a former football coach sued the university for breach of an employment contract, breach of an oral agreement to pay liquidated damages the coach owed his previous school and violation of the coach's 14th Amendment procedural due process rights. Having already dismissed the coach's due process claim, the court granted summary judgment for the university denying the coach's two other claims.

For purposes of considering the university's motion for summary judgment regarding the coach's claim for breach of the oral agreement, the court established that (i) the university and the coach entered a valid oral agreement outside the scope of the coach's contract whereby the university agreed to pay the liquidated damages the coach owed his previous school and (ii) the university subsequently terminated the coach's contract for "just cause."

The question of whether the termination of the coach's contract relieved the university of its obligation pursuant to the oral agreement depended upon the meaning of the following language in paragraph 14.1 of the contract:

"The University may at any time, with just cause, terminate this Contract or suspend Employee with or without pay. In the event of such termination, the University shall be relieved of all further obligations (financial and otherwise) to Employee."

In making its ruling, the court discussed whether the language "all further obligations" meant only obligations under the contract or any obligations between the coach and the university, including agreements separate from the contract. The court first noted that the language "all further obligations" is "not limiting, but all encompassing." The court next noted that other paragraphs in the contract use "words of limitation" regarding the parties' obligations to each other. For example, paragraphs 14.4 and 14.10 use the word "hereunder" to specify the parties' obligations arising under the contract. The court concluded that the parties could have limited the breadth of the phrase "all further obligations" in paragraph 14.1, and their choice not to do so meant the phrase "can only be read to indicate the parties' intent that 'all further obligations' applies to obligations both under and apart from the employment contract." Consequently, the court ruled that the university's "just cause" termination of the contract ended the university's obligation to the coach pursuant to the separate oral agreement.

This ruling provides reminders about (i) the basic contract interpretation principle of discerning the parties' intent from the agreement as a whole, which means that the language of a seemingly unrelated contract provision can influence the interpretation of a provision in dispute and (ii) the potential importance of the inclusion or absence of a single descriptive word in a contract provision, such as in this case where the absence of the word "hereto" after the phrase "all further obligations" resulted in summary judgment in the university's favor.

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To further discuss issues involving employment contacts for athletics coaches or administrators, NCAA compliance issues, or sports-business matters, please contact Ice Miller's Collegiate Sports Practice team.

This publication is intended for general information purposes only and does not, and is not intended to, constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

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