Take My Coach and I'll Take You to Court (January 4, 2011)

Take My Coach and I'll Take You to Court (January 4, 2011)

TAKE MY COACH AND I’LL TAKE YOU TO COURT

By:  Martin J. Greenberg, Managing Member, Law Office of Martin J. Greenberg, LLC, Milwaukee, Wisconsin; Founder, National Sports Law Institute; and Adjunct Professor of Law, Marquette University Law School

 

On March 26, 2008, Matt Brady (Brady) became the men’s basketball coach at James Madison University (JMU).[1]  He was formerly the head coach at Marist College (Marist), compiling a 73-50 record in four years.[2]  Marist is a private institution located in Poughkeepsie, New York.  Brady was employed pursuant to a head coaching contract with Marist that was entered into on July 1, 2007 and was to expire on March 31, 2011.[3]

Brady’s contract contained two covenants with respect to termination of employment that are the subject of this article.  In the first instance, Brady was precluded from entering into any employment discussions with any other collegiate or professional basketball program and from accepting a head coaching position with any program without the prior written consent of Marist.[4]  In addition, if Brady’s contract was ultimately terminated for any reason, including Brady accepting another coaching position pursuant to such written consent, Brady agreed to (1) return all basketball program records and files, (2) end any and all contact with Marist basketball program recruits, and (3) not offer a scholarship to current Marist basketball players nor any persons that he or his staff recruited to play basketball at Marist.[5]

On or about March 17, 2008, Brady advised Tim Murray, the athletic director of Marist, that he wanted to be considered as the head men’s basketball coach at JMU.[6]  On or about March 20, 2008, Jeff Bourne, athletic director for JMU, inquired as to the terms of Brady’s employment contract with Marist.[7]  A telephone conference on March 20, 2008 ensued between Murray and Bourne wherein Murray advised Bourne that there was no buyout provision in the contract and that Brady was required to obtain Marist’s prior written consent to leave for another position during the period of the contract.[8]  Murray further advised Bourne that Marist would grant Brady permission to terminate his position only if and so long as Brady and JMU abided by all provisions of the contract relating to Brady’s obligations as previously discussed.[9]

On March 25, 2008, JMU announced the hiring of Brady as head basketball coach.[10]  On April 10, 2008, Murray again informed Bourne of the contractual obligations of Brady under the Marist contract and supplied Bourne with identification of then basketball players (19 players) who had been actively recruited by Brady and his assistant coaches when he was head basketball coach at Marist.[11]

Marist alleged that in direct contravention of the specific prohibitions set forth in the contract, Brady, upon being permitted by Marist to terminate the contract and become the head basketball coach at JMU, immediately and without knowledge of Marist, contacted basketball recruits in an attempt to direct those recruits to JMU’s basketball program.[12]

Marist further alleged that with JMU’s full knowledge and encouragement, Brady contacted Marist basketball recruits in order to entice them to join JMU’s basketball program.[13]  Marist also claimed that JMU offered scholarships to four Marist basketball recruits previously identified in Murray’s April 10, 2008 correspondence to Bourne (Julius Wells, Trevor Flores, Andrew Scmenov, Devon Moore).[14]  One of these scholarship recipients had already committed to play for Marist.  As such, Marist contended that JMU intentionally procured a breach of Brady’s contractual obligations to Marist.[15]

Marist commenced its suit in the Supreme Court of the State of New York, Dutchess County (trial level court) on July 9, 2009.[16]  On August 14, 2009, Brady filed an Answer and Notice of Removal to the United States District Court for the Southern District of New York.[17]  The federal court remanded the matter back to the Supreme Court of New York on December 28, 2009.[18]

Marist claims against Brady included breach of contract[19], breach of fiduciary duty[20], and breach of implied covenant for good faith and fair dealing.[21]

Marist also claimed that JMU as an agency of the Commonwealth of Virginia, through its employees, agents, and/or servants, were aware of the existence of the contract between Brady and Marist, and in particular, contract provisions in Section 14 which precluded Brady from contacting recruits that he and his staff pursued while he was head basketball coach at Marist.[22]  Marist contended that JMU intentionally procured a breach of said contract between Brady and Marist without economic justification and Marist sustained monetary damages as a result of such tortious interference with contract.[23]

In a decision dated June 30, 2010, New York Supreme Court Justice Charles D. Wood ruled that Marist had adequately articulated the elements for a claim of tortious interference of contract.[24]  Wood stated that to establish a cause of action for tortious interference of contract, plaintiff must show “the existence of a valid contract with a third party, defendant’s knowledge of the contract, defendant’s intentional and improper procuring of a breach, and damage.”[25]  Here, the plaintiff has met its burden. [26] A valid, enforceable employment contract with Brady had been alleged.  It had also been alleged that JMU as an agency for the Commonwealth knew of the existence of the contract.[27]  The complaint further claimed that JMU as agent for the Commonwealth intentionally induced Brady to violate his fiduciary obligations under the contract.  Lastly, the plaintiff alleged that it suffered damages as a result of the breach of those obligations.[28]  Wood further ordered the lawyers for Marist and JMU and the State to appear before him on July 26th to address the question of damages.[29]

The problem of tortious interference with contracts occurs not only at the collegiate level but at the professional level as well.

Tennessee Football, Inc. (Tennessee Football) owns and operates the NFL team known as the Tennessee Titans.[30]  Tennessee Football entered into a coach’s contract with Kennedy Pola (Pola) to become its running back coach commencing February 1, 2010 and ending February 14, 2011.[31]  Pola agreed in paragraph 4(a) of his contract that he would not “directly or indirectly, serve as an employee or do work for anyone else or any other firm or organization without the express prior written consent of the President and General Counsel [of Tennessee Football].”[32]  Furthermore, Pola agreed in paragraph 11(c) of his coach’s contract that he would not “under any circumstances solicit discussions or entertain employment with any other person or entity during the Term unless…given written permission to do so by [Tennessee Football] or by the Commissioner in accordance with NFL Rules.”[33]  Pola was not given any such written consent, and in July of 2010, while Pola’s contract was still in full force and effect, Lane Monte Kiffin (Kiffin), then head football coach of the University of Southern California, unbeknownst to Tennessee Football, contacted Pola in Nashville, Tennessee, and solicited his employment as the USC Trojans’ offensive coordinator and running backs coach, which Pola accepted July 24, 2010.[34]  Tennessee Football commenced an action in the Chancery Court for Davidson County, Tennessee, on July 26, 2010.

Tennessee Football claims that Kiffin, individually and in his capacity as an agent of USC, in furtherance of a culture of violation and avoidance of respect for the sanctity of contract,[35] induced Pola to breach his existing contract with Tennessee Football and that such breach occurred one week prior to the beginning of Tennessee Football’s training camp.[36]  As a result therefor, Tennessee Football was damaged.[37]

Tennessee Football pled in Count I an inducement of breach of contract pursuant to Tenn. Code Annotated §47-50-109,[38] which states that:

  • It is unlawful for any person, by inducement, persuasion, misrepresentation, or other means, to induce or procure the breach or violation, refusal or failure to perform any lawful contract by any party thereto; and in every case where a breach or violation of such contract is so procured, the person so procuring or inducing the same shall be liable to in treble the amount of damages resulting from or incident to the breach of the contract.  The party injured by such breach may bring suit for the breach and for such damages.[39]

Tennessee Football also, in Count II, pled common law tortious interference with contract.[40]  Tennessee Football maintained that Pola had a legally enforceable contract which Tennessee Football had fully performed,[41] that Pola breached the contract by discussing employment opportunities and ultimately accepting employment with USC offered through Kiffin,[42] that USC and Kiffin were aware of Pola’s contract[43] and that they intended maliciously to and did induce Pola to breach his contract without any legal justification therefor.[44]

Finally, the complaint alleged that Kiffin exercised a course and pattern of conduct to use improper methods and means to direct harm and damage of parties to contracts, to interfere with an existing contract, and to induce the breach thereof.[45]  As of the date of this writing, the afore-referenced case has neither been settled and/or adjudicated.

Marist and Tennessee Football have one thing in common; that is, they both sought relief under the legal theory of tortious interference with contract.  The claim of tortious interference with contract is essentially based upon the "notion that the possessor of a contract or other property right is entitled to pursue a claim against an intermeddler who adversely affects those property rights."[46]  In essence, then, the legal remedy recognizes that a business relationship is a property interest worthy of protection from unjustified interference or tampering.  "The claim for tortious interference with contractual and other business relations was originally and first applied in an English case reported in 1853 where a singer under contract to sign at the plaintiff's theater was induced by the defendant, who operated a rival theater, to break her contract.[47]  The court held that the plaintiff was entitled to recover money damages form the rival theater owner for his interference with the singer's contract, which was essentially a form of unlawful competition."[48]

Since the finding in the 1853 case, this type of claim has been applied in a wide variety of business contexts including "inducing customers to breach a contract with a competitor, mass hiring of employees from a competitor, or making false statements about a competitor to lure customers or employees away." 

In order to make a claim for common law tortious interference with contract, several basic elements must be present, including: 

  1. The existence of a valid and legally enforceable contract subject to interference;[49]
  2. the defendant must have had knowledge and was aware of the contract;[50]
  3. the defendant intentionally and unjustifiably induced a breach of the contract;[51]
  4. in some jurisdictions a defendant must have acted purposely and maliciously with intent to injure;[52]
  5. the wrongful conduct of the defendant ultimately causes a breach of the contractual relationship;[53]
  6. the acts of the defendant must have been the proximate cause of the breach of the contract and claimant damage;[54] and 7) the plaintiff must have suffered compensatory and possibly punitive damages or losses.[55]

The burden of proof for a common law claim of tortious interference with contract is normally the preponderance of the evidence for compensatory damages, and clear and convincing evidence for punitive damages.  Obviously, common law tortious interference with contract claims are also subject to the statute of limitations.

There is an important limitation to the use of this tort as a remedy for the disruption of contractual relationships.  It can only be asserted against a stranger to the relationship, consistent with its underlying policy of protecting the expectations of contracting parties against frustration by outsiders who have no legitimate social or economic interest in the contractual relationship.[56]   Therefore, the tort cause of action for interference with a contract does not lie against a party to the contract."[57]

It should be noted that the law does recognize defenses and/or excusable interferences such as where the defendant "can establish a justification and privilege, good faith competition, protecting others, protecting the public interest, and statutory immunities, to name a few.[58]

In Tennessee Football it was noted that the State of Tennessee recognizes both a statutory and common law right of action for tortious interference with contract.  "As previously stated under Section 47-50-109 of the Tennessee Code, a third person will be subject to liability when by inducement, persuasion, misrepresentation, or other means the person induces or procures the breach or violation, refusal or failure to perform any lawful contract by any party.  The statutory and common law causes of action have basically the same elements.  There are several differences, however.  Where a plaintiff obtains successful recovery under the Tennessee statute, treble damages are mandatory.[59]  Another difference between the statutory and common law right of action in Tennessee is that the statutory remedy requires a clear and convincing showing for all elements, whereas the common law action permits the lesser burden of a preponderance of the evidence.[60]

 

COMPARISON[61]

Cause of Action:

Common Law Tortious

Interference with Contract

Statutory Tortious Interference with Contract -- Tenn. Code Ann. §47-50-109

Elements:

The existence of a legally enforceable contract

Same

 

Defendant's knowledge of the contract

Same

 

An intention to induce is breach

Same

 

Malice

Same

 

Breach of Contract

Same

 

Proximate causation

Same

 

Compensatory and, possibly, punitive damages

Treble damages

Burden of Proof:

Preponderance of evidencefor compensatory damages;

Clear and convincing evidencefor punitive damages

Clear and convincing evidencefor treble damages

Statute of

Limitations

Three- years under Tenn. Code. Ann. §28-3-105

Authorities are split on whether it is one-year under Tenn. Code Ann. §28-3-104 or three-years under Tenn. Code Ann. §28-3-105.

There are some similarities between Marist and Tennessee Football.  Both Marist and Tennessee Football contain consent provisions in their contracts; that is, in Brady's contract he was precluded from entering into any employment discussions with any other collegiate or professional basketball program, and further he was precluded from accepting a head coaching position with any program without the prior written consent of Marist.[62]

In Tennessee Football, Pola agreed that he would not under any circumstances solicit discussions or entertain employment with any other person or entity during the term unless he was given written permission to do so by Tennessee Football or by the Commissioner in accordance with NFL rules.[63]   Pola, according to the filed complaint, was not given express permission or consent by Tennessee Football or the Commissioner of the NFL to entertain employment with any other entity or to engage in discussions therefor.[64]

In Marist, on the other hand, there were discussions between the athletic directors of Marist and JMU, and at least tacit permission and consent to leave the Marist job so long as the terms of the Marist contract were heeded and complied with.[65]

Neither Pola's contract, as an assistant professional football coach, nor Brady's contract,[66] as a small Division 1 basketball coach, had clauses in the contract requiring the coaches to pay liquidated damages for early termination.  Buyouts or back-end agreed-to liquidated damages clauses for early termination by coaches have become popular for universities in the last several years as a deterrent to prevent coaches from leaving.[67]  A university's judicial remedies are limited to a negative injunction; that is, preventing the coach from working for another employer during the term of an existing contract.[68]  Buyout or back-end agreed-to liquidated damage clauses helps a university prevent a coach from jumping, allows the university to preserve its reputation, and provides it with an agreed-upon monetary amount in the event of an early termination.[69]  Buyout or back-end agreed-to liquidated damage clauses usually contain a host of protective covenants (see "Rich Rodriguez - Jumping has Legal Consequences," For the Record, Vol. 19, No. 4, October-December 2008, page 16).[70]

The whole area of buyout or back-end agreed-to liquidated damage clauses became a legal focus when Coach Rich Rodriguez prematurely left West Virginia University for the University of Michigan and failed to pay the four million dollar agreed-to liquidated damage amount upon his early termination pursuant to the West Virginia contract.[71]  By virtue of comparison, Marist and Tennessee Football have a much different set of circumstances.  There was absolutely no multi-million dollar buyout or back-end agreed-to liquidated damage clause in Brady's or Pola's contract.[72]  As a matter of practicality, an expensive buyout or back-end agreed-to liquidated damage clause may not be practical or feasible at a smaller Division 1 university such as Marist or for an assistant football coach under a one-year contract in the NLF.[73]  "However, Marist took an extraordinarily pro-active and protectionist approach to the Brady contractual relationship.[74]  In Marist losing Brady was palatable, but losing recruits was not."[75]

A tortious interference with contract claim would not be palatable where there is a buyout or back-end agreed-to liquidated damage clause.  The university and coach contractually invite an early termination providing that the coach notify the athletic director or chancellor prior to engaging in departure discussions with other institutions and the coach pays the departure fee.  In that case the university would not have a tortious interference claim against the new employer by virtue of the contract provisions.

In effect, then, a buyout or back-end agreed-to liquidated damage clause puts a price tag on a university's ability to have contract discussions with a coach already under contract.  As long as the departure fee is paid by the coach, there would be no breach, then, of that contract.

CONCLUSION

Professional and college sports are currently experiencing unprecedented levels of popularity and success.  Teams are generating more revenue than ever before.  Because of this success, teams are under extreme pressure to perform on the field.  Winning is the name of the game.  In most instances, better performance on the field leads to better financial performance off of it.  For this reason, coaches, particularly head coaches that are contracted for the longer term, are in extremely high demand.  It used to be an unwritten rule of sorts that coaches could leave a team even if they were in the midst of their contract without consequence.  Litigation wasn’t used to enforce the contract or obtain damages as a result of a breach.  It was the backroom rather than the courtroom that was used to avoid conflict. 

This has all changed.  Litigation is the name of the game.  Enforcing the terms of these agreements may cause some coaches to stay at their current job and avoid the expense and time that comes with litigation.

"Marist filing of their lawsuit could have far-reaching implications.  Litigation arising from coaching contracts may expand beyond those cases in which millions of dollars are at stake.  Smaller schools may consider litigation to emphasize to prospective coaches that contracts will be enforced and long-term commitments are sought."[76]  A contract is a contract.  It must be respected as such and given sanctity by contracting and third parties. 

Paul O. Sullivan, Marist attorney said in a released statement, "Coaches have to abide by contracts and other institutions have to respect those agreements.  If that contract is breached, damages will be assessed.  It's a simple lesson in fiduciary responsibility and contractual obligation."[77]

The decision in Marist is "a ruling that should be a warning to all college coaches and schools pursuing college coaches that almost every contract has fine print, and that the days of violating the fine print without repercussions are over if the school being left ops to pursue damages."[78]

  • So let this be a lesson for all coaches in every school that will spend next March and April pursuing other schools' coaches.  Sports contracts have details about what can and cannot be done that are ignored annually, but, turns out, those details do not have to be ignored.  What Marist has shown is that if a strong president and athletic director want to seek damages for breach of contract by a coach, they can seek damages for breach of contract by a coach.  What Marist has also shown is that the case be won."[79]

 

  • The notion that coaches can routinely break their contracts and strong-arm universities into letting them go -- taking top recruits with them, even if that violates a line or two of previously ignored fine print -- is one that now faces some scrutiny.  Whether that's a good or a bad thing, it's a thing.  Coaches and the schools that hire them might actually have to honor the conditions of their contracts, lest they face legal repercussions.  Radical concept, huh?[80]

 

Thank you to third-year law student Ben Scott for his research, writing, footnoting, and attention to detail in this article.

{© Copyright, January 4, 2011, Martin J. Greenberg, all rights reserved}




[1]Matt Brady Biography, http://www.jmusports.com/ViewArticle.dbml?DB_OEM_ID=14400&ATCLID=1420099 (last visited Dec. 21, 2010).

[2]Ken McMillian, Men’s Basketball: Judge Sides with Marist after Brady Fled in 2008, Times Herald Record, (July 10, 2010) http://www.recordonline.com/apps/pbcs.dll/article?AID=/20100720/SPORTS36...

[3]See Matt Brady Biography, supra note 1.

[4]Complaint, Marist College v. Matt Brady, et. al, No.: 709CV07262 at ¶ 13 (S.D.N.Y. 2009).

[5]Id. at ¶ 14.

[6]Id. at ¶ 15.

[7]Id. at ¶ 16.

[8]Id. at ¶ 17.

[9]Id.

[10]Id. at ¶ 18.

[11]Id. at ¶ 19.

[12]Id. at ¶ 20. 

[13]Id.

[14]Id.at ¶ 21, Gary Parrish, Marist-JMU Case May Alter Handling of Coaching Deals, CBSsports.com, (July 20, 2010), http://www.cbssports.com/collegebasketball/story/13656382/maristjmu-case....

[15]Id. at ¶ 38.

[16]Marist College v. Matthew Brady et al., 2009-5006 (N.Y. Sup. 2009).

[17]Id. at 2.

[18]Id.

[19]Complaint, Marist College v. Matt Brady, supra note 4, at ¶ 26.

[20]Id. at ¶ 31.

[21]Id. at ¶ 35.

[22]Id. at ¶ 38.

[23]Id. at ¶ ¶ 39, 40.

[24]Marist, 2009-5006, at 8.

[25]Id.

[26]Id.

[27]Id.

[28]Id.

[29]Id. at 11.

[30]Complaint, Tennessee Football, Inc. v. Lane Monte Kiffin et al., No.: 10-1192-II, at ¶ 4 (Tenn. 2010).

[31]Id. at ¶ 9.

[32]Contract between Kennedy Pola and Tennessee Football Inc., ¶ 4 (a), Jan. 1, 2010.

[33]Id. at  11.

[34]Id.at ¶ 15.

[35]Id.

[36]Id.at ¶ 18.

[37]Id.

[38]Id. at ¶ 23.

[39]Tenn. Code. Ann. § 47-50-109 (2010).

[40]Complaint, Tennessee Football, Inc. v. Lane Monte Kiffin et al., supra note 30, at ¶ 25.

[41]Id. at ¶ 13.

[42]Id. at ¶ 20.

[43]Id. at ¶ 21.

[44]Id. at ¶ 22.

[45]Id.

[46]Erin Shane Stone, Interference with Contractual or Business Relations: The Business Claim, 1 FindLaw, http://library.findlaw.com/1999/Jul/1/127204.htm (Nov. 30, 2010).

[47]Id.

[48]Id.

[49]Steven W. Feldman, Tortious Interference with Contract in Tennessee: A Practicioner’s Guide, 31 U. Mem. L. Rev. 281, 292 (Winter, 2001).

[50]Id.

[51]Id. at 302.

[52]Stone, supra note 45, at 1. 

[53]Intentional Interference Torts, LectLaw.com, http://www.lectlaw.com/def/i084.htm (last visited Nov. 30, 2010).

[54]Id.

[55]Stone, supra note 45, at 2.

[56]Intentional Interference Torts, LectLaw.com, http://www.lectlaw.com/def/i084.htm (last visited Nov. 30, 2010).

[57]Id.

[58]Stone, supra note 45, at 2.

[59]Tenn. Code. Ann. § 47-50-109 (2010).

[60]Feldman, supra note 48, at 286-87.

[61]Tom Shumate’s Tennessee Non-Compete Law Blog, http://tennesseenoncompetelaw.typepad.com/tennessee_noncompete_law/gener... (last visited Nov. 11, 2010).

[62]Complaint, Tennessee Football, Inc. v. Lane Monte Kiffin et al.,supra note 30, at ¶ 17.

[63]Contract between Kennedy Pola and Tennessee Football Inc., supra note 32, at ¶ 11(c). 

[64]Complaint, Tennessee Football, Inc. v. Lane Monte Kiffin et al., supra note 30, at ¶ 12.

[65]Complaint, Marist College v. Matt Brady, et. al, supra note 4, at ¶ 17.

[66]See contract between Kennedy Pola and Tennessee Football Inc, supra note 32..

[67]Martin Greenberg, Rich Rodriguez – Jumping Has Legal Consequences, For The Record (national Sports Law Institute), Vol. 19, No. 4, 14.

[68]Id.

[69]Id.

[70]Id. at 16.

[71]Second Amendment to the Employment Agreement for Richard Rodriguez, Aug. 24, 2007.

[72]Dan Fitzgerald, MaristCollege Sues Former Basketball Coach and James Madison University (Aug. 6, 2009), Ctsportslaw.com. http://ctsportslaw.com/2009/08/06/a-more-detailed-look-at-marist-v-brady/.

[73]Id.

[74]Id.

[75]Id.

[76]Fitzgerald, supra note 71. 

[77]Parrish, supra note 14.

[78]Id.

[79]Id.

[80]Eamonn Brennan, Marist Wins Coaching Suit Against JMU, College Basketball Nation Blog, ESPN.com, (July 21, 2010)