Beaty v. Kan. Athletics, Inc.
| Decision Date | 14 April 2020 |
| Docket Number | CIVIL ACTION No. 19-2137-KHV |
| Citation | 454 F.Supp.3d 1096 |
| Parties | David BEATY and DB Sports, LLC, Plaintiffs, v. KANSAS ATHLETICS, INC., Defendant. |
| Court | U.S. District Court — District of Kansas |
Brent N. Coverdale, James D. Griffin, Scharnhorst Ast Kennard Griffin, PC, Kansas City, MO, Christopher W. Carr, Pro Hac Vice, Christopher J. Simmons, Pro Hac Vice, Michael P. Lyons, Pro Hac Vice, Stephen Higdon, Pro Hac Vice, Lyons & Simmons, LLP, Dallas, TX, for Plaintiffs.
Sarah Holdmeyer, Timothy J. Davis, W. Perry Brandt, Bryan Cave Leighton Paisner, LLP, Kansas City, MO, Eric Aufdengarten, University of Kansas, Office of the General Counsel, Lawrence, KS, for Defendant.
On March 12, 2019, David Beaty and DB Sports, LLC sued Kansas Athletics, Inc., alleging that defendant violated their written agreements when it refused to make certain payments after it terminated Beaty's employment as head football coach at the University of Kansas ("KU"). Complaint (Doc. #1). Plaintiffs bring claims for breach of contract (Count 1) and violations of the Kansas Wage Payment Act, K.S.A. § 44-313 (Count 2).1 This matter is before the Court on Plaintiffs’ Partial Motion For Summary Judgment On Their Breach Of Contract Claim (Doc. #60) filed December 20, 2019. For reasons stated below, the Court overrules plaintiffs’ motion.
The following facts are uncontroverted or, where controverted, viewed in the light most favorable to defendant.
On December 5, 2014, defendant hired Beaty to be KU's head football coach. On December 8, 2014, defendant and Beaty entered a five-year employment contract ("Beaty Agreement"), under which Beaty agreed to "serve as head football coach for the term of this Agreement and to devote his full time and attention and give his best efforts and skill exclusively to the duties required of him as the KU head football coach." Beaty Agreement (Doc. #61-1) filed December 20, 2019 at 1. On December 1, 2016, among other changes, defendant and Beaty amended the Beaty Agreement to extend its term to December 31, 2021. Amendments To Beaty Agreement (Doc. #61-2). In connection with the Beaty Agreement, defendant also entered an agreement with DB Sports ("DB Sports Agreement"), under which DB Sports would provide defendant educational, public relations and promotional activities and services (generally "multimedia activities") that involved Beaty. DB Sports Agreement (Doc. #61-3).
Pursuant to the Beaty Agreement, Beaty's "duties and responsibilities" included "competent and diligent performance of all reasonable duties as may be required by the Head Coach in connection with the supervision and administration of the KU football program," and the "undertaking of his reasonable best efforts to comply with and assure that all persons under his supervision, including coaches and student-athletes, comply with the rules and regulations" of the National Collegiate Athletic Association ("NCAA"). Beaty Agreement (Doc. #61-1) at 1-2. In connection with the latter obligation, the agreement provided that if Beaty became aware, or had "reasonable cause to believe, that violations concerning these rules may have taken place," he had to report them the Director. Id. at 2. The agreement reiterated this duty in a section entitled "NCAA and/or Big 12 Violations," which provided that Beaty "agrees that he shall report promptly to the Director any violations known to Head Coach of governing athletics rules, including NCAA ... by any person under the Head Coach's direct control or supervision, including but not limited to assistant coaches and student-athletes." Id. at 6.
Pursuant to the Beaty and DB Sports Agreements, if defendant terminated Beaty's employment before its term expired, Beaty and DB Sports were entitled to certain payments, depending on whether the termination was with or without cause. If defendant terminated Beaty's employment without cause, it had to pay him "a Liquidated Damages total payment of $420,000.00 payable in six equal installments," along with "all amounts due and owing under this Agreement up to the date of termination," which included installment payments over six months for a total of $2,580,000.00. Amendments To Beaty Agreement (Doc. #61-2) at 3. Similarly, the DB Sports Agreement provided that if defendant terminated Beaty's employment without cause, defendant had to pay DB Sports liquidated damages in an amount equal to 24 months of pay under the DB Sports Agreement. DB Sports Agreement (Doc. #61-3) at 2.
On the other hand, defendant could terminate Beaty's employment for cause "at any time." Beaty Agreement (Doc. #61-1) at 12. Pursuant to the Beaty Agreement, if defendant terminated Beaty's employment for cause, defendant had to pay Beaty "all amounts owing up to the date of termination only," and "[a]ll obligations of [defendant] to make further payments and/or to provide any other consideration, under this Agreement or otherwise, except to the extent already vested, shall cease immediately." Id. Similarly, under the DB Sports Agreement, if defendant terminated Beaty's employment for cause (as defined in the Beaty Agreement), defendant had to pay DB Sports "all amounts which have accrued under the [DB Sports Agreement] as of the termination date," and DB Sports "shall not be entitled to any further compensation." DB Sports Agreement (Doc. #61-3) at 2. Under the Beaty Agreement, "cause" for termination included the following:
Beaty Agreement (Doc. #61-1) at 12-13.
Pursuant to the Beaty Agreement, if defendant terminated Beaty's employment for cause, he was entitled to certain procedures. Specifically, the Beaty Agreement provided that "[p]rior to any termination for cause, [defendant] shall provide written notice to Head Coach in accordance with Exhibit A that shall specify the grounds for termination and provide Head Coach with an opportunity (not less than five (5) calendar days) to respond to any allegations against him." Id. at 13. Under Exhibit A to the Beaty Agreement, prior to termination for cause, Beaty was entitled to written notice, an appeal and a stay on his termination during the pendency of that appeal. Id. at 18.
By November of 2018, defendant's CEO, Jeff Long, had decided to terminate Beaty's employment without cause. On November 4, 2018, Long informed Beaty in a private meeting that defendant was terminating Beaty's employment without cause, and that Beaty would not be returning for the fifth, sixth and seventh seasons under the Beaty Agreement. Because the termination was without cause, Long promised Beaty that defendant would honor its obligation to pay him $3 million. At Long's request, Beaty agreed to finish the season as head coach.
On November 4, 2018, Long announced Beaty's termination at a press conference, at which Long explained that he had reached the decision "after a thorough and thoughtful evaluation of our football program over the last three months." Long Press Conference (Doc. #61-7). Long complimented Beaty's "willingness to complete the season in support of our student-athletes," and thanked Beaty for his "hard work and dedication" to the football program, which had "not resulted in the number of wins we desire[d]." Id. Long concluded that he knew that Beaty "will be leaving the program better than he found it." Id. Beaty then completed the 2018 football season as head coach.
On November 29, 2018, six days after the final game of the 2018 season, Long sent the following memorandum to Beaty:
As discussed in my office on November 4, pursuant to Section 12 of your Employment Agreement, your Agreement with [defendant] was terminated without cause effective November 4, 2018. All liquidated damages payments owed to you will be paid out consistent with Section 12 of your current amended Employment Agreement and Section 7 (D) of your current amended Professional Services Agreement. I appreciate your contributions to the University of Kansas, [defendant], and Kansas Football during your time as Head Football Coach and wish you success in your future endeavors.
Long Memorandum (Doc. #61-8).
On December 13, 2018, KU General Counsel, Brian White, sent a letter to Beaty which informed him that "over the past several days," defendant had learned about "conduct and behavior" of Beaty's former subordinate, which indicated that "a possible NCAA rule violation occurred in the football program as early as December 2017." White Letter (Doc. #61-9). Moreover, the letter stated that "the information indicates that you might have knowledge of or been directly involved with the possible rule violation." Id. White stated that defendant had notified the NCAA of its initial review, and that the NCAA had agreed to allow it to conduct an investigation. White requested an "investigatory interview" with Beaty, and asked that he and his attorney contact defendant's outside counsel. Id. White explained that based on the revelations, "we will have to suspend any upcoming severance payments to you until completion of the investigation." Id. White concluded that "[o]nce the NCAA rules investigation is complete, we will evaluate the findings and determine whether your separation will be treated as a for cause or without cause separation." Id...
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