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For Cause or Not For Cause, That Is the Million Dollar Question

In February 2006, former Ohio State University men’s basketball head coach Jim O’Brien earned an Ohio Court victory. The Court ruled O’Brien did not materially breach his employment contract and that his termination was essentially “without cause”. Thus, the Court found O’Brien was potentially due millions of dollars.

O’Brien sued Ohio State for breach of his employment agreement after he was terminated for providing $6,000 in financial assistance to the family of a 7’3 professional Yugoslavian basketball player whose father had just passed away. O’Brien said the money “was a loan” and that his motives were purely humanitarian. Nonetheless, Ohio State terminated O’Brien stating the loan and failure to report it to school officials was a “material breach” of his contract requiring “for cause” termination. The Ohio Court found otherwise. Given the contract language, the Court found O’Brien’s act was a single, isolated incident, which did not rise to the level of a material breach and did not warrant for cause termination.

Language is key in the coach’s contract. “Termination for cause” typically means no compensation goes to the terminated coach. “Termination without cause” requires that the terminated coach receive compensation, usually the remainder of her contract salary. The label put on a coach’s termination can mean the difference between hundreds of thousands, even millions of dollars as evidenced by O’Brien’s case.

Coaches should pay special attention to their contract language justifying “for cause” termination. These provisions are negotiable and can be whittled down to a few specific items. In addition, when the contract is drafted by the University, “for cause” termination language is typically broad and ambiguous (i.e. personal conduct that materially impairs coach’s fulfillment of assigned duties and responsibilities). What is a material breach to one may not be a material breach to another.

Coaches can negotiate with their University to specify which infractions are a “material breach” and warrant “for cause” termination.” Coach resignations, when mandated by the University, should be deemed termination “without cause” to allow the coach to recoup her remaining salary. Finally, coaches who are unsatisfied with the University’s labeling of their termination can appeal to a higher authority. Often times, the result can mean salvaging thousands of dollars and the coach’s reputation.