Law 360, April 24, 2020

A lawsuit against the University of Kansas athletics department could be a test case for whether colleges can use NCAA investigations as a way to avoid huge payouts to fired coaches and may also unearth new details about a federal corruption probe into the school’s storied basketball program.

Former Kansas Jayhawks football coach Dave Beaty, whose teams went 6-42 over four seasons, is arguing that a relatively mundane NCAA infraction involving his staff is insufficient to show he breached his contract, particularly when the school has chosen not to fire others facing more serious allegations.

Beaty points specifically to national championship-winning men’s basketball coach Bill Self, who has kept his job despite his program becoming embroiled in a federal corruption investigation into illicit payments to recruits. The basketball program is facing severe NCAA infractions allegations, including that Self, the head coach, lacked control of the program.

While a Kansas federal judge declined to find that Kansas Athletics had breached Beaty’s contract as a matter of law by refusing to pay him the $3 million left on his deal, she has allowed the claims to continue and is giving Beaty latitude to probe the school about the basketball allegations during discovery.

The situation could force the school either to back down on its claim that it does not have to pay Beaty the $3 million or force it to have its dirty laundry aired in court. The dispute has potentially broad implications across the NCAA, where experts say schools facing pressure to win year in and year out are increasingly using misconduct claims to push out poor-performing coaches without having to pay them severance or other funds due upon termination of their contracts.

“What is alarming is that this is becoming a trend by universities to try to wiggle their way out of it,” said attorney Martin J. Greenberg, who has negotiated coaching contracts and now serves as an expert witness on sports law issues.

While most contracts will not make a team’s poor performance in competition a justification for a firing for cause, they usually include provisions providing cause if there is some sort of misconduct. Some only require suspicion of NCAA violations as a for-cause reason for termination. Others require there to be an actual NCAA sanction imposed or other material breach of the contract.

The problem arises from the seven-figure salaries for college football and basketball coaches across Division I, the highest level of NCAA athletics. Schools simply may not be able to afford to continue to pay a coach after he or she has been terminated, especially when the replacement hired to turn the program around will cost as much or more.

“It is almost ridiculous from the standpoint of maybe there is a better use of the money,” Greenberg said. Even so, he said termination-for-cause clauses in coaching contracts are often “very, very loosely drawn.”

Greenberg said Beaty’s case shows why schools and coaches should include language that clearly spells out when a coach can be fired and for what.

But although there have been other lawsuits by coaches seeking payouts that were withheld after their firing, Beaty’s raises the issue of whether KU treated him differently than its other coaches.

Just after firing Beaty in 2018, Kansas signed Les Miles, who led Louisiana State University to a national championship in 2007 after coaching at Kansas rival Oklahoma State for several years, to a reported five-year contract that will pay him $2.77 million a year.

Beaty has alleged Kansas initially promised to pay him the money left on his contract before telling him that it was reversing course because it had discovered the football program was under investigation by the NCAA.

The football program was later hit with allegations of so-called Level II infractions by the NCAA in September: that during Beaty’s tenure the program used an extra assistant coach to work with the team’s quarterbacks.

But in the same NCAA notice of allegations, the basketball program and Self were hit with multiple Level I allegations, the most serious under NCAA rules, over recruiting violations tied to former Kansas booster Thomas “T.J.” Gassnola, including an allegation of lack of institutional control.

The allegations came just over a week after Gassnola was sentenced to probation in the college basketball corruption probe. He testified during a 2018 trial that he paid recruits in violation of NCAA rules to steer them to Adidas-sponsored schools, including Kansas.

Both Beaty and Self are “presumed responsible” for the violations, according to the NCAA’s notice of allegations.

While denying the allegations against him, Beaty has argued that the more serious alleged misconduct in the basketball program has not been viewed by Kansas as a breach of Self’s contract and that allegations of academic misconduct against a prior football coach also did not trigger a breach.

A magistrate agreed, allowing Beaty to compel the athletics department to hand over more information about its handling of other athletics scandals, saying, “It is not far-fetched to believe a reasonable jury might find Beaty’s conduct did not constitute a true default of his employment contract because defendant did not consider similar actions by other coaches a default.”

The information, which Beaty has said he wants to present to a jury, includes employment decisions related to these coaches, communications it had with the Big XII Conference and the NCAA about them, and “any investigations they spawned,” potentially revealing even more than what is already known about the probes. The judge has been reluctant to allow Kansas to keep court filings under seal.

A spokesman for Kansas Athletics did not respond to a request to comment on this story. However, the university is vehemently denying the NCAA charges and filed an opposition to them last month. Both Kansas and Self have said Self had no knowledge of any payments to players.

“I think by default, ruling that they have to give up stuff on Self is, in a way, a big win for Beaty in and of itself … because Beaty will have more leverage,” said sports and entertainment attorney Glen Rothstein.

He added that the relevant parties have different goals and motives. Self has been very successful at Kansas as his basketball teams have won 15 Big XII regular season titles, made it to three Final Fours and won the 2008 National Championship.

“The NCAA wants to make an example of a high-profile program. Beaty thinks he was treated unfairly, and the basketball program wants to protect itself,” Rothstein said.

Rothstein further noted that Self is one of the few coaches that has negotiated his contract to provide him with a multimillion-dollar payout even if he is fired over an NCAA violation, which could be relevant to whether or not the allegations are a breach of his contract.

Still, the Beaty suit could drag Self and Kansas through the mud.

“At the end of the day, I think it is going to come down to whether Kansas wants to go to the mat to protect itself,” Rothstein said.

The case is Beaty et al. v. Kansas Athletics Inc., case number 2:19-cv-02137, in the United States District Court for the District of Kansas.

–Editing by Jill Coffey and Michael Watanabe.

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