By V. John Ella of Jackson Lewis
The $1.247 million jury verdict in favor of former Oklahoma State assistant basketball coach Jimmy Williams in a lawsuit against Tubby Smith, the head coach of the University of Minnesota (“U of M”) Men’s Basketball team (See “Asst. Coach Wins Million-Dollar Verdict; University Will Appeal”, Legal Issues in Collegiate Athletics, June 2010 at 7) highlights the importance of treating contract negotiations for coaches and other employees in collegiate sports with the same level of formality that any other business would devote to discussions with a high-level executive. The case is also notable from a legal standpoint because of what claims were pled, what claims were dismissed, and what claims were successful.
By way of background, Williams claimed that Smith offered him an assistant coaching job with the Minnesota Golden Gophers in April of 2007 paying an annual salary of $200,000. Williams testified that, in reliance upon this offer, he immediately quit his job at Oklahoma State and put his Stillwater, Oklahoma house up for sale. Smith, however, testified that he never finalized the deal, and the next day Joel Maturi, the U of M Athletic Director, decided not to hire Williams after determining that he had been connected to recruiting violations while serving as an assistant with the Gophers in the 1970s and 80s. Williams sued for lost wages in 2007. After a trip to the Minnesota Court of Appeals and back, the case went to trial in June and a jury awarded Williams $1.2 million on June 23, 2010.
The verdict was a surprise to some. After all, Williams did not have a signed contract, or even a letter. He based his reliance solely on a single April 2, 2007 telephone call with Smith. Not one to let any moss grow, Williams quit his Oklahoma job and listed his home within an hour and a half after the call. Apparently the jury felt these were reasonable actions to take in reliance on what he was told in the call. (One explanation proffered for his haste was that the “critical recruiting season” was about to begin in earnest in early April.) Williams was then informed that he did not, in fact, have a job offer within a day or two. His old job had been posted, but not filled, yet he did not even bother to apply.
In his initial lawsuit, Williams pled everything but the kitchen sink. His complaint listed over a dozen counts, including breach of contract – specific performance; breach of contract – money damages; promissory estoppel; equitable estoppel; intentional interference with contractual relations; negligent misrepresentation; negligence; defamation; vicarious liability/respondeat superior; and violation of 42 U.S.C. § 1983. Few would have predicted that negligent misrepresentation would be the only claim that to survive and yield a million dollar verdict. Promissory estoppel would appear to be the claim that best fits the facts. But as a quasi-state entity, the U of M enjoys special statutory protections in employment disputes, which can only be reviewed on a writ of certiori and a Hennepin County (Minnesota) trial court judge threw out all of the claims on this basis in 2007. Williams appealed, and in 2008 the Minnesota Court of Appeals affirmed dismissal of all but one of the counts, negligent misrepresentation, because it was a “common law cause of action not premised on an equitable or legal claim to employment.”
Negligent misrepresentation is usually a difficult tort to prove under Minnesota law, because it requires all the standard requirements of fraud, including a false statement of material fact, reasonable reliance, causation and damages, and, in addition, a duty of care. According to the Restatement of Torts (2d), as adopted by the Minnesota Supreme Court, negligent misrepresentation may only lie where a person “who, through his or her profession, business or employment, or in any other transaction in which he or she has a pecuniary interest, fails to exercise reasonable care or competence in obtaining or communicating information, and thereby supplies false information while guiding others in their business transactions[.]” Bonhiver v. Griff, 248 N.W.2d 291 (Minn. 1976).
In this case, both the Minnesota Court of Appeals and the jury felt that the circumstances created a duty for Smith, who was then in his first week on the job as head coach, to speak with reasonable care. What is more difficult to understand without having sat through the eight-day trial is why the jury considered Williams justified in relying on a mere phone call and did not hold him responsible for quitting his old job before receiving a written offer from the athletic director. The case is very likely to go up on appeal again, possibly with regard to damages, mitigation and/or the scope of the duty of care, but it offers a cautionary tale. It is a cliché to say that collegiate athletics is big business, but why are important contracts still done on a handshake, or less? Anyone involved in a negotiation of this nature needs to document either the deal, or the lack of a deal, just as a Fortune 500 corporation would when recruiting a Vice President. To do otherwise is to risk the unpleasant consequences now faced by Tubby Smith.
