Williams v. Smith, Nos. A10–1802

• Citation: 820 N.W.2d 807
• Decision Date: 02 October 2012
• Docket Number: A11–0567.,Nos. A10–1802
• Parties: James R. WILLIAMS, Respondent, v. Orlando Henry “Tubby” SMITH, et al., Appellants.
• Court: Supreme Court of Minnesota (US)

820 N.W.2d 807

James R. WILLIAMS, Respondent,

v.Orlando Henry “Tubby” SMITH, et al., Appellants.

Nos. A10–1802, A11–0567.

Supreme Court of Minnesota.

Aug. 8, 2012.

Rehearing Denied Oct. 2, 2012.

Syllabus by the Court

1. Generally, the exclusive method for a prospective employee to obtain judicial review of the University of Minnesota's decision not to hire the person, on the ground that the decision is based on an error of law, is arbitrary and capricious, or unconstitutional, is by certiorari under Minn. Stat. ch. 606 (2010). Consequently, the failure of a prospective employee to timely seek judicial review by certiorari deprives the court of subject-matter jurisdiction over that claim. When, however, a prospective employee's claim against the University of Minnesota alleges tortious conduct such as fraud or negligent misrepresentation that is separate and distinct from the University's decision not to hire, the district court has subject-matter jurisdiction to address that claim.

2. When a prospective government employment relationship is negotiated at arm's length between sophisticated business persons and does not involve a professional, fiduciary, or other special legal relationship between the parties, the prospective employee is not entitled to protection against negligent misrepresentations by the representative for the prospective government employer.

Donald Chance Mark, Jr., Alyson M. Palmer, Fafinski Mark & Johnson, P.A., Eden Prairie, MN; Richard G. Hunegs, Hunegs LeNeave & KVAS, P.A., Minneapolis, MN; and Charles E. Spevacek, William M. Hart, Damon L. Highly, Meagher & Geer, P.L.L.P., Minneapolis, MN, for respondent.

Mark B. Rotenberg, General Counsel, Brian J. Slovut, Jennifer L. Frisch, Associate General Counsel, University of Minnesota, Minneapolis, MN; and David L. Lillehaug, Fredrikson & Byron, P.A., Minneapolis, MN, for appellants.

Susan L. Naughton, St. Paul, MN, for amicus curiae League of Minnesota Cities.

OPINION

DIETZEN, Justice.

The issue presented in this case is whether the court, as a matter of public policy, should extend the protection against negligent misrepresentation to prospective employees of the University of Minnesota, which is a constitutional corporation and agency of the state.

Respondent James R. Williams brought a claim against appellants the University of Minnesota (University) and Orlando Henry “Tubby” Smith for negligent misrepresentation, alleging that Smith, the University's men's basketball coach, offered him the position of assistant coach, that he negligently misrepresented that he had authority to hire Williams, and that Williams suffered damage. The University argued, among other things, that the district court lacked subject-matter jurisdiction over the claim. The jury found in favor of Williams and awarded damages. The district court granted the University's and Smith's motion to reduce the jury's award, but otherwise denied their motion for judgment as a matter of law. The court of appeals affirmed the district court. We conclude that the district court had subject-matter jurisdiction to address Williams' negligent misrepresentation claim. Additionally, we conclude that when a prospective government employment relationship is negotiated at arm's length between sophisticated business persons who do not have a professional, fiduciary, or other special legal relationship, the prospective employee is not entitled to protection against negligent misrepresentations by the representative for the prospective government employer. We therefore reverse.

In March 2007 Smith became the head coach of the University's men's basketball team. Shortly after he was hired, Smith considered a number of individuals as potentialcandidates for assistant coaching positions, including Williams. Williams had extensive coaching experience at a number of collegiate institutions, including as an assistant coach at the University from 1971 until 1986. During Williams' tenure with the University, the National Collegiate Athletic Association (NCAA) twice investigated the men's basketball program, found that Williams (among others) personally committed multiple violations of NCAA rules, and twice imposed penalties on that program. In the years since he left the University, Williams has not been found to have violated any NCAA rules and has obtained coaching positions with other teams. When the University hired Smith in March 2007, Williams was in the second year of a 3–year assistant coaching contract with Oklahoma State University (OSU), earning an annual salary of $158,000. He reported to Sean Sutton, who is the head men's basketball coach at OSU.

On March 30, 2007, Williams and Smith, who were both at the NCAA Final Four basketball tournament in Atlanta, Georgia, had a two-hour meeting to discuss the University, the role Williams could play as an assistant on Smith's staff, and possible compensation for such a position. Williams believed that Smith already knew about the NCAA violations, and Smith acknowledged that the disciplinary history of Williams may have been mentioned at that meeting.

Williams and Smith spoke on April 1, 2007, again discussing the possibility of Williams becoming an assistant coach at the University. Smith asked Williams to fax his resume to the University's basketball office, and Williams did so the next day.

On April 2, 2007, Smith spoke with University Athletic Director Joel Maturi. Smith told Maturi that he wanted to hire Williams and two other individuals as his assistant coaches. Smith and Maturi discussed concerns raised by Senior Associate Athletic Director Regina Sullivan regarding Williams, but Smith reassured Maturi about Williams. Following this conversation, Maturi directed others at the University to work on “temporary housing, transportation, University paperwork, keys, [and] ID” for Williams and the other potential new assistant coaches. In response to Maturi's direction, the University prepared, but did not finalize, a Memorandum of Agreement between the University and Williams.

Later that same day, Smith called Williams and told him the University would pay the salary Williams had requested. Smith asked Williams if he was “ready to join him at the University of Minnesota,” and Williams replied, “[Y]es.” Williams believed that Smith had offered him a job and that he had accepted. They also discussed the upcoming collegiate recruiting period, scheduled to begin that weekend. Smith wanted Williams to travel to Arkansas or Texas to recruit for the University. Williams told Smith that he had a recruiting trip scheduled with OSU head coach Sean Sutton on April 5, and if Williams was going to join Smith's staff, he needed to call Sutton that night. Williams testified that Smith offered to call Sutton, but Williams believed that he should do so.

Williams spoke with Sutton on the evening of April 2, 2007, told him that Smith had offered him a job at the University, that he had accepted Smith's offer, and that he would resign from OSU. Sutton asked Williams to submit a resignation letter the next day. Williams also called his real estate agent that night and told her to put his house on the market.

The next day, April 3, 2007, Williams went to OSU to prepare and submit his resignation letter. Before Williams submittedhis resignation letter, Smith called Williams to tell him that Maturi's approval was needed for the offer to Williams.

Later that same day, Smith told Williams that Maturi strongly opposed hiring Williams because Maturi had learned for the first time that Williams had multiple major NCAA rules infractions when he was previously with the University. Given the University's history of NCAA rules violations in the men's basketball program, Maturi was concerned about maintaining a clean program and the potential media reaction if Williams returned. Smith also expressed concern about his own reputation and indicated that he did not want to get off on the wrong foot with his athletic director. Sutton received Williams' resignation letter on the afternoon of April 3, 2007. That same day, Sutton made arrangements to hire a new assistant basketball coach to replace Williams. By April 8, 2007, Williams knew that the University did not consider him to be one of its assistant basketball coaches. On May 29, 2007, the University notified Williams that the position of assistant men's basketball coach had been filled. Williams was unable to find another coaching position for the 2007–08 basketball season.

Subsequently, Williams sued the Board of Regents of the University of Minnesota and Maturi, asserting common law breach of contract, negligent misrepresentation, and estoppel claims (among others), and constitutional claims under 42 U.S.C. § 1983. The University moved to dismiss the common law claims, arguing that the district court lacked subject-matter jurisdiction over those claims because the issuance of a writ of certiorari is the only method by which a party can challenge the University's employment decisions. The University also sought dismissal of the claims under 42 U.S.C. § 1983 for failure to state a claim upon which relief could be granted. In March 2008 the district court granted the motions and dismissed all of the claims. Williams appealed.

The court of appeals affirmed the district court's dismissal of the common law, estoppel, and section 1983 claims, but reversed as to the negligent misrepresentation claim. Williams v. Bd. of Regents of Univ. of Minn. (Williams I), 763 N.W.2d 646, 651–55 (Minn.App.2009). The court of appeals held that the negligent misrepresentation claim was not “premised on an equitable or legal claim to employment,” and because different considerations were at issue with that claim, judicial review would “not intrude substantially on or challenge the university's internal decision-making process.” Id. at 652. The court of appeals remanded to the district court for trial solely on the negligent...