Sports Law Blog
All things legal relating
to the sports world...
Wednesday, July 09, 2008
Rich Rodriguez settles with WVU

Michigan football coach Rich Rodriguez and West Virginia University, his former employer, have settled the school's lawsuit over the $ 4 million buyout. WVU will receive the entire $ 4 million, $ 1.5 million from Rodriguez in three annual payments beginning in January 2010 and $ 2.5 million from the University of Michigan. Reports and commentary, including a statement from UM, here, here, and here. And the College of Law's Legal Perspective Blog has details on everything that as happened in the case up to this point. So the case illustrates one final principle of civil litigation--most cases settle in the end.

As for long-term consequences, the fact that WVU will receive the full buyout, and that the real quibble was over who would pay it and when, suggests that schools may well be able to get away with including and enforcing steep buyout clauses in contracts as a way to at least slow the coaching carousel.


Where is the negative injunction this Blog continues to advocate in these situations??

Anonymous Anonymous -- 7/09/2008 3:00 PM  

Rodriquez made out like a bandit! If he wins a national championship for UM, then I'll forgive him....

Blogger Rick Karcher -- 7/09/2008 3:00 PM  


Why would a negative injunction be applicable when there was a liquidated damages clause in the contract?

Blogger Rick Karcher -- 7/09/2008 3:02 PM  


I think the negative injunction was an available remedy, WVU simply chose not to pursue it. The negative injunction should be enforceable until the liquidated damages are paid.

Anonymous Anonymous -- 7/09/2008 3:28 PM  

I have no dog in this fight, but I am sorry: you can throw out all contract law principles, you can throw out negative injunctions, you can throw out the fundamental purposes of contracts and contract law. In reality, what college football and basketball coaching contracts has become is a conduit for funneling other people's money (fans, athletic departments, universities) this way or that way while college presidents and athletic directors are more concerned about their OWN jobs. The liquidated damages clauses, etc., have no "ooomphf" whatsoever. Yes, "ooomphf". Meanwhile the college coaches and their agents laugh all the way to the bank. If you really want to laugh, look at the new deal that Phillip Fulmer got at Tennessee. It is so one-sided in his favor that even first year law students would have to laugh. Anyway, good post as always.

Anonymous Anonymous -- 7/09/2008 6:02 PM  

Would have been interesting if Rodriguez had gone through with his challenge of this buy-out not as coerced or fraudulently induced (claims which seeme sort of silly to me), but as a penalty. Hard to believe that WVA incurred anything close to $4 million in damages as a result of him leaving.

Anonymous john -- 7/10/2008 12:30 PM  

Well my friend, he did claim that the buyout clause was illegal as a penalty because WVU did not suffer actual damages in an amount of $4 million. The problem with that claim, however, is that liquidated damages clauses is not meant to measure actual damages. That is why the correct interpretation of contract law is that you do not look at the actual damages to determine if the clause is a penalty but you look at whether the measurement of damages was reasonable at the time the parties agreed to the liquidated damages. Looking at actual damages as the measurement destroys the whole purpose of having a liquidated damages clause in the first place which is to set an amount of damages when it is very difficult to measure the amount of damages that occur when a breach happens. Judge Stone actually alluded to the fact that this is the way he believed the law should be interpretted in the hearing for the motions to dismiss. That is probably why Product Rodriguez gave up on that argument so easily. That and the University of Michigan saw how bad the attorneys representing Rodriguez truly were and threw a lot of money out because they knew only bad things can happen.

Anonymous Anonymous -- 7/10/2008 7:34 PM  

My guess is that this thing settled because people were getting close to being placed under oath in depositions. Surely, UM's AD and President didn't want to have to go on the record indicating when they first started negotiating with R-Rod.

Anonymous Anonymous -- 7/11/2008 9:13 AM  

Agents and coaches have the upper-hand in all of this until someone with guts (an A.D. or president) says "no" or "enough is enough" with regard to the size of these contracts and the game of "who pays when I leave."

Anonymous Anonymous -- 7/11/2008 9:21 AM  

Sorry, that was my point. That the $4 million was not a reasonable estimate of WVA's damages even when they entered into the contract. What damages could they have anticipated -- the cost of hiring a new coach? They're actually saving money, because they're paying the new coach less than they were to pay Rodriguez.

As for the perceived negotiating strength of schools versus coaches, very few coaches have an upper hand in these negotiations. For the most part the schools have the upper hand because there are very few openings. But anyway, I guess I don't understand those who think coaches shouldn't get paid what the market bears. Why sghould they be any different than anyone else. Would the posters on this blog who were complaining turn down more money if it was offered? I don't blame these coaches from trying to make as much money as they can, while they can. That's what I would do, that's what University presidents do, that's what University professors do, and that's what you would do too.

Anonymous john -- 7/11/2008 3:31 PM  

University professors are not under long-term contracts--we are under one-year, renewable contracts (tenure simply means renewal becomes automatic). A coach leaving is doing more than leaving one job for another job; he is breaking a contract.

And, by the way, it is a contract that the coach probably demanded. We know the sequence: Coach gets hired w/ initial 5-year contract; wins big in, say, year 3, demands (and receives) renegotiation of contract to add 10 more years to the original deal; leaves for a better job in year 6 (i.e., one year into the extended period).

Blogger Howard Wasserman -- 7/11/2008 10:54 PM  

Dear John, the large schools do have the upper hand you are so correct. However, they play the wrong cards with the upper-hand over, and over, and over because no one at the university has the guts to enforce the contract which, as you know, is not worth the paper it is written on. I say get what you can get, John, like you say: however, be real and recognize that the "market" for coaches is not really a market at all-it is a personal services carousel with virtually unlimited resources and no real accountability (speaking only for the largest schools here). Again: Presidents and A.D.'s have no guts, period. Unfortunately, it's going to take a Gordon Gee-type to make change (or an act of Congress) because the NCAA can't protect itself from itself (or its members).

Anonymous Anonymous -- 7/12/2008 6:57 AM  


Are you the same john I've been arguing the ATP case with? You really don't believe in restraints in sports do you? -- even when a party expressly agrees to the restraint with smart lawyers/agents representing him. I don't think RR could argue it's a "penalty" because he and his lawyer should have thought about that before he signed it. He would get no sympathy from a judge or jury if he took that position either.

Not sure why you are so certain that WVU has not been damaged by RR's breach. And that the damages would merely be based on the difference between RR's contract and the new coach's contract (thus "saving" money). I have no idea how much or to what extent WVU has been damaged by the breach.

Blogger Rick Karcher -- 7/12/2008 8:54 AM  

It is very naive to think WVU's damages are merely the amount they spent in searching for a new coach (though I believe Rodriguez's lawyers actually made this argument at some point). We will see what the damages are to WVU over the next few years. . . seems like a good situation for liquidated damages.

Anonymous Ryan -- 7/12/2008 11:56 PM  

Rick --

I am the same one! I'm fine with buy-out clause, and I agree that the damages are had to detremine, my only point is that at some point the liquidated damages amount becomes excessive. At least, in my mind. Other posters might disagree. But if not, then the liquidated damages clause could be $20 million or $100 million. Just an interesting line-drawing exercise, and I was interested to see what the court would do. Guess we'll have to wait for the next case, which will eventually come, because I assume schools will continue to push the limits on these liquidated damages amounts.

Anonymous john -- 7/14/2008 1:07 PM  

Post a Comment