Duke Wins Contract Case Due to Bad Football Team

Aug 1, 2008

By Mark Conrad
Duke University’s football team has lost many a game on the field. However, its poor record translates to a win in a Kentucky court of law by persuading a Kentucky trial judge that the failure of University of Louisville to find a “team of similar stature” to substitute for Duke negated any liability after Duke canceled two matches with its superior rival.
The case, University of Louisville v. Duke University, No. 07-CI-1765, demonstrates the proposition that the worse the team, the easier to replace it and Kentucky’s failure to do persuaded the court that it had violated the terms of a liquidated damages clause. The case provides an interesting question of interpretation of how bad a team Duke was.
In 1999, Louisville and Duke signed an athletic participation agreement whereby the two schools would compete in intercollegiate football at stipulated times. Games were scheduled for the 2002, 2007, 2008 and 2009 seasons. If this was basketball, then Duke would be a prized opponent for Louisville, given the Blue Devils’ success on the hardwood. However, unlike its basketball teams, Duke’s football team amassed a record that few would envy. Since 1999, the team won 13 games and lost 90. Over the last five years, Duke was 6-45. After a particularly one-sided 40-3 loss to Louisville in 2002, Duke decided to cancel the remaining three games in the contract package. It forfeited its obligations, resulting in a breach of contract.
Certainly, Duke’s action constituted a breach of contract. The remaining question would be the damages assessed for the breach, which was governed by a liquidated damages clause found in the participation agreement. The clause stated that the nonbreaching party may collect $150,000 for each canceled game, provided that the nonbreaching party cannot schedule a replacement game with a “team of similar stature.” That condition would turn out to be crucial.
Judge Phillip J. Shepherd agreed with Duke’s argument that it team was so bad that finding a replacement team of “similar stature” should have been a slam dunk (pardon the bad pun). Noting the plain meaning of the text, the judge stated: “To say that one thing is “of a similar stature” to another is to say that the two are on the same level. Nothing in the language of the agreement suggests that it is necessary or appropriate to conduct an in-depth analysis of the relative strengths and weaknesses of the breaching team and its potential replacements.”
What hurt Louisville’s case was the lack of specifics in the condition. The opinion noted that the liquidated damages clause failed to require that a replacement team be limited to an athletic conference or a particular division of the National Collegiate Athletic Association (NCAA). It continued: “The term ‘team of similar stature’ simply means any team that competes at the same level of athletic performance as the Duke football team.” It added: “Conceivably that could mean a Division II or Division III team. At oral argument, Duke (with a candor perhaps more attributable to good legal strategy than to institutional modesty) persuasively asserted that this is a threshold that could not be any lower. Duke’s argument on this point cannot be reasonably disputed by Louisville.”
But noting that Duke is a Division I school, the court interpreted Louisville’s obligation as a rebuttable presumption that any Division I team is a team of “similar stature” to Duke within the ordinary meaning of the language. It noted that Louisville failed to produce any evidence that the teams on its schedule for 2007 or 2008 could be considered to be inferior to Duke’s football team.
Since Louisville replaced Duke with Division I teams in both the 2007 and 2008 season, the court found that this satisfied the “teams with similar stature” requirement and no damages were awarded. Therefore, the court granted summary judgment for Duke for the 2007 and 2008 season, but did not consider the 2009 season since the claim was not ripe for adjudication.
I was struck by the brevity of the participation agreement between the two schools. It consisted of a two and a half page contract. Section 13, the liquidated damages clause at issues in the case, was a mere eight lines (it consisted of two subclauses, A and B, which were identical in language involving breaches by Duke and Louisville. In retrospect, the clause should have defined the key term “similar stature.”
But another argument, one made by a blogger under “The Cardinal Lawyers” Is intriguing. Say that Duke football’s reputation is a bad team is unique because its futility is in a class by itself (the 1962 Mets come to mind). As he states: “There is no adequate substitute for Duke football, a patsy nonpareil in college football. There simply is no other (1) Division I-A team (2) that plays such appallingly bad football (3) so consistently and persistently (4) all while maintaining its membership in a Bowl Championship Series conference.” If this is the case, then the substitution of a mediocre team or one not as bad is not adequate. Conceivably, a court could award money damages to Louisville, despite finding a substitute. It could go even further if it found Duke “unique” because of its horrible play, possibly granting a remedy of a negative injunction forbidding it to play another team. While that may be farfetched, it would be more likely than a 12-0 Duke football season.
Mark Conrad is Associate Professor, Legal and Ethical Studies for the Schools of Business at Fordham University.


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