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Breach of Contract Debated in Coach Reassignment Case

Contract2 Feature

The most important decisions any athletic director will likely make are personnel decisions. Unfortunately, with the pressure to win greater than ever, most new coaching hires will be lucky to make it past their third year. As a result of the tenuous nature of the profession, it is essential that the language within coaches' contracts be as clear as possible, especially when a decision is made to terminate a coach's contract.

But what happens when, rather than terminating that coach, a school tries to reassign him or her to another position within the athletic department or university? This was the challenge Kent State University faced when it attempted to reassign former defensive coordinator James Fleming in the case of Fleming v. Kent State University, 2012 Ohio 6350, 2012 Ohio Misc. LEXIS 227.
 

COACH SACKED
In early 2010, James Fleming was hired by Kent State University as the school's defensive coordinator. His employment period was 28 months with a starting salary of $71,500. In addition, the contract provided that if the football team achieved certain accomplishments, Fleming would receive bonuses for specific months. Fleming would also receive a "suitable automobile" per the contract.

Finally, subject to Fleming's compliance with NCAA and KSU rules, if the contract was terminated prior to June 30, 2012, except for cause, the instigating party had to pay the other party an agreed-upon early termination penalty. If KSU was the instigator, the contract stated it should pay the balance of Fleming's then-in-effect base salary under the remaining terms of the contract.

In December 2010, following Fleming's first season, KSU fired its head football coach and hired Darrell Hazell. After interviewing for a position on Hazell's staff, Fleming was notified that football leadership was going in another direction, and he was being reassigned. Effective Feb. 14, 2011, he was to assume the position of assistant to the athletic director — a non-coaching position.

On February 18, Joel Nielsen, KSU's director of athletics, sent Fleming a letter stating that he would continue to receive the same salary and benefits in this position, but if he failed to report for work, it would be considered an act of insubordination for which he would be disciplined, and potentially terminated.

When Fleming refused to report to his new position, KSU president Lester Lefton sent him a letter March 7 terminating his employment as the assistant to the athletic director. He was paid through March 15, 2011. In an attempt to recover the rest of his salary under the contract, Fleming sued KSU for breach of contract.

The Court of Claims found that even though the contract did not address the issue of reassignment, Fleming could reasonably have anticipated the possibility, but not to a non-coaching position. The court equated Fleming's reassignment to a constructive discharge, thus breaching the contract and entitling Fleming to judgment. However, at the time it was signed, the contract contained no stipulated damages for breach of contract. Therefore, the court only awarded Fleming his court-filing fee of $25.
 

UPON FURTHER REVIEW
On appeal, Fleming argued that KSU breached the contract when he was reassigned to a non-coaching position. Fleming also stated that the change in his duties would have made working conditions so intolerable that any reasonable person would have felt compelled to resign. KSU, for its part, claimed that it could reassign Fleming since the contract did not address reassignment and his new duties were consistent with his qualifications. Therefore, the school argued, Fleming abandoned his employment by refusing to report for work and was entitled to nothing.

In reviewing the issues, the court ruled that under the present contract, the language plainly obligated KSU to employ Fleming as defensive coordinator and did not allow KSU to employ him in any non-coaching position. The court also agreed with Fleming that KSU breached the contract prior to his reassignment when he was informed there would be no coaching position for him under the new coach. The date Fleming was officially removed as defensive coordinator was unclear to the court, so the court deemed Feb. 14, 2011, the date of his reassignment, as the date KSU was officially in breach of contract.

Finally, Fleming contended that the Court of Claims erred when it found the contract's stipulated-damages clause provided for an unenforceable penalty instead of liquidated damages. The court found that when a stipulated-damages provision is challenged, it must examine it in light of what the parties knew at the time the contract was formed. If the provision was reasonable at the time of formation and it bears a reasonable relation to actual damages, the provision should be enforced.

Under Ohio law, the court applied a three-part test to determine if the stipulated-damages provision should be treated as liquidated damages and not as a penalty. First, the damages must be uncertain as to amount. Second, the contract as a whole is not so manifestly unconscionable, unreasonable and disproportionate in amount as to justify the conclusion that it does not express the true intention of the parties. Finally, the contract is consistent with the conclusion that it was the intention of the parties that damages in the amount stated should follow the breach thereof. The court found that the proper focus was on whether the damages the parties could anticipate Fleming would incur if KSU breached the contract were uncertain in amount at the time the parties entered the contract. Even putting the issue of raises and the automobile aside, at the time of contracting, the parties could not predict whether the football team would achieve any of the goals that would entitle Fleming to bonuses under the contract.

Thus, the court concluded at the time the contract was entered into, damages were uncertain. The court remanded the case back to the Court of Claims to determine whether the stipulated-damages clause satisfied the other two parts of the test and to award damages consistent with its determination.
 

READING THE DEFENSE
School and athletic administrators can learn some valuable lessons about coaching contracts and the value of reassignment clauses. First, as the court said, regardless of how tolerable KSU believed that Fleming's new position was, when you move a coach to a non-coaching position, it will generally be considered a breach of contract. To solve this problem, schools should include a reassignment clause, which would allow for the removal of the coach from the coaching position to a non-coaching position. If a coach were to refuse such an assignment, the school would be then legally entitled to terminate the contract.

Even though the wording in Fleming's contract did not include a reassignment clause, the court found that it did specify that he was to be employed as defensive coordinator — a coaching position, not an administrative role. Therefore, it is important for athletic directors, coaches and all other parties involved in a coaching contract to carefully determine the language within the contract, including different clauses outlining how different situations could result in numerous economic outcomes for either party. In this case, all legal problems would've likely been avoided with a simple reassignment clause.


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Attorney John T. Wolohan is a professor of sports law in the David B. Falk College of Sport and Human Dynamics at Syracuse University. Scott Kevy is a senior sport management student. This article originally appeared in the January/February 2014 issue of Athletic Business with the title "Blown Reassignment."

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