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Friday, February 17, 2006

Jim O'Brien v. Ohio State University: Materiality, Honesty & Breach of Contract

Doug Lederman of Inside Higher Education explores Judge Joseph T. Clark's holding in O'Brien v. Ohio State University (Ohio Court of Claims, 2006). (Lederman, "Court Win a Rule Breaker," Inside Higher Education, 2/16/2006). The case concerns a breach of contract claim: O'Brien alleges that Ohio State breached his employment contract by firing him after learning of O'Brien's past NCAA recruiting violations. Specifically, back in 1998, O'Brien gave (or, in his words, "loaned") $6,000 to Alex Radojevic, a 21-year old, 7'3 center from Serbia and Montenegro, in order to help pay for Radojevic's father's funeral. O'Brien never bothered to report this "loan"--which, unsurprisingly, was never repaid, even though Radojevic was selected 12th overall in the 1999 NBA Draft, after which he immediately signed a multi-million dollar contract with the Raptors. O'Brien felt that it wasn't important enough to mention, since he was doing it out of charity, and that he suspected that the NCAA would rule Radojevic ineligible anyway, since Radojevic had likely earned income playing basketball in Europe. And that is exactly what happened: the NCAA would later rule Radojevic ineligible because he had earned income playing hoops in Europe.

But when O'Brien told his athletic director about the loan six years later, he was fired. O'Brien sued the school for $9.5 million in lost wages and other damages, contending that Ohio State couldn't discharge him until the NCAA had ruled on the violation. Although Judge Clark held that O'Brien did, in fact, violate NCAA rules, that violation--giving $6,000 to a potential recruit--wasn't sufficiently serious to warrant his dismissal. O'Brien's contract with Ohio State did not specify that an NCAA violation could trigger a termination of the contract, and absent that specific language, Judge Clark reasoned that Ohio State could not terminate it. A future hearing will determine how much Ohio State owes O'Brien in damages.

Duke Law Professor Paul Haagen and I were interviewed for Lederman's article:

Experts on college sports law had mixed assessments of potential impact of the Ohio State decision.

Michael McCann, an assistant professor of law at Mississippi College School of Law and a contributor to Sports Law Blog, characterized as “interesting” Clark’s conclusion that a “clear NCAA violation by Jim O’Brien” does not constitute a material breach of his employment contract. He added: “By implication, the judge seems to be diminishing the importance of NCAA recruiting rules, and the idea that a rule violation should not constitute a material breach could — in theory — create deleterious incentives for coaches when recruiting players.”
Paul T. Haagen, a professor of law at Duke University, took a narrower view, saying the case in no way “goes to the authority of the NCAA to regulate or of the authority of Ohio State to regulate” college sports or the behavior of coaches. “This is not judicial activism,” he added. “This is what judges are supposed to do — using basic contract law to decide whether” Ohio State followed the contract it had with O’Brien. ("Whether the judge got it right from a factual standpoint,” he said, “is a different matter,” on which he did not offer a judgment.) But the lesson for Ohio State and other colleges, he said, is that “institutions should be incredibly careful about putting themselves in a position in which a judge, doing what a judge is supposed to do, will hold them liable for things they believe with good reason — whether or not it’s sufficient reason — that they need to do.”

Should we really believe O'Brien when he says that the $6,000 gift to a potential recruit wasn't important enough to mention to his employer? Or that he actually thought that Radojevic was going to be ruled ineligible by the NCAA, but that he still wanted to give him $6,000 anyway? Maybe O'Brien was genuinely moved by Radojevic's plight--his father had just died, after-all, and the family apparently had little money. Plus, Radojevic was 21-years old and not 17-years old, so a suspicion that he had earned compensation playing hoops in Europe wasn't implausible. But even if we believe that O'Brien knew all of this, it still doesn't explain why he would keep the "loan" a secret for six-years or why his charity would just happen to go to a 7'3 center (there is no apparent evidence that O'Brien was otherwise charitable). As to the significance of the employment contract's lack of specificity, you can expect, as Paul Haagen notes, that we'll now be seeing more carefully-tailored deals between colleges and coaches.

-- Posted by Michael McCann @ 2/17/2006 04:34:00 PM -- Comments (6) -- Post a Comment

6 Comments:

Prof McCann,
It just makes me wonder how many violations nobody hears about. How often do you think these violation occur? At the college level i wonder how many things we do not hear bout that go on frequently. I once heard Rick Majerus got in trouble for buying a player a piece of pizza. Now, there should be nothing wrong with that. But how far can these coaches go, should they be able to go, and how far do they actually go?
Does this behavior happen in just the major conferences or even in the mid major conferences? Another question is which sports does it occur more in, basketball or football? Or even other ones?

tommie -- 2/18/2006 5:56 AM

Michael,

Interesting case. Reading the contract language in the opinion, I think the judge made the right decision. The contract permits termination "for cause" which is defined as:

1. material breach;
2. an NCAA violation that results in a "major" infraction investigation and which results in a finding of a lack of institutional control or sanctions imposed upon Ohio State; and
3. any improper conduct that, in Ohio State's reasonable judgment, reflects adversely on O.S.

Provision No. 2 is clearly not met here and the provision obviously evidences an intent of the parties not to permit such a drastic remedy of termination for just any NCAA rule violation. Ohio State didn't assert the right to terminate under No. 3, and I don't believe this situation arises to the level of the legal definition of material breach (especially in light of the language in No. 2).

So what is the real motivation behind Ohio State's termination?

Rick Karcher -- 2/18/2006 8:04 AM

Tommie,

I think I've talked about this before but I work on my campus with people in athletics and let me explain that there are so many rules that every school volates the rules at some point over the year. You only hear about some obscure and bad violations (like you said the pizza and this O'Brien's money).

I think Ohio State should have a right to terminate O'Brien as coach if they could prove something else against their institutions mission statement which they failed to do. And also, just to suggest, does this case create the problem of what is a firable offense?

Ryguy -- 2/18/2006 3:30 PM

Speaking on the comments of people suing people, the LA times reports that Cade McNown will sure insurance companies.
Story link: http://www.latimes.com/sports/la-sp-mcnown18feb18,1,6114561,print.story?coll=la-headlines-sports

Where I found it (my webpage link):
http://www.footballoutsiders.com/2006/02/18/extra-points/3674/

Ryguy -- 2/18/2006 3:32 PM

I think the judge got it wrong -- I think it was a breach of the agreement. The agreement clearly included a requirement that O'Brien comply with NCAA rules and regs. He did not. That was a breach; and in my mind it is material.

That being said, Ohio State clearly made a mistake too, by not mentioning #3 in its termination letter.

One interesting thing -- given the judge's opinion, Ohio State would have been better off not including a separate termination clause (#2) for the violation of NCAA rules and regs.

john -- 2/21/2006 4:55 PM

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Halk Bilimi -- 1/31/2009 6:27 AM