THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, July 9, 1995 TAG: 9507110453
SECTION: SPORTS PAGE: C1 EDITION: FINAL
SOURCE: BY STEVE CARLSON, STAFF WRITER
LENGTH: Long : 202 lines
It took nearly 10 months of negotiation and a threat of litigation for Old Dominion to receive a $130,000 settlement from the University of Dayton on former basketball coach Oliver Purnell's contract buyout.
That's one-third of the $388,000 buyout provision stipulated in Purnell's last contract with ODU.
While that looks like a $258,000 loss at first glance, ODU actually might have come out a winner. Labor lawyers say the Monarchs would have had great difficulty fully enforcing the buyout.
ODU president Dr. James Koch and Dayton officials acknowledged in April that a settlement had been reached, but would not provide details. The Virginian-Pilot and The Ledger-Star obtained documents regarding the settlement by filing a Virginia Freedom of Information Act request.
Among the documents was a copy of the check from Dayton to ODU, dated Feb. 28, 1995.
The check concluded a process that began with a letter from ODU athletic director Jim Jarrett to Dayton athletic director Ted Kissell dated May 5, 1994. The settlement averted what ODU general counsel Patrick Kelly characterized as a ``pretty serious'' possibility that ODU would sue Dayton and Purnell.
Kelly said that from November 1994 until January 1995, ODU was preparing a civil suit.
Apparently it would have been a precedent-setting case.
Neither Kelly nor Dayton lawyer John Hart said they could find a legal precedent of two universities battling in court over a coach's buyout.
But it would have been more than precedent-setting. It would have been gut-wrenching.
Imagine Purnell - ODU's favorite son as player on the Division II national championship team and a coach who helped turn the program around - being dragged before a judge by the university.
``Here we are on one hand professing broken hearts for not having him here, and suing him on the other hand,'' Kelly said. ``You don't relish the thought of filing a lawsuit against somebody like that.''
It never came to that. Dayton bent, and negotiations progressed.
Among the reasons Kelly outlined why ODU preferred not to take the matter to court were questionable odds of winning and concerns over how it would play in the court of public opinion.
At the start of the process, ODU expected to receive $388,000 - Purnell's $97,000 annual salary over the remaining four years of his contract.
Dayton offered $40,000.
How was the $130,000 figure arrived at? ``Just the process of negotiation,'' Kelly said. ``It was a long, hard, sort of grueling process. I frankly don't know how we got to $130,000. I think it was the maximum we felt we could get without filing a lawsuit, and if we filed a lawsuit we might get a lot less.''
When Purnell left, ODU expected much more. In his initial letter, Jarrett asked for information on how Dayton and/or Purnell ``would suggest a plan for payment of the $388,000 buyout provision in Oliver Purnell's contract with Old Dominion University.''
Dayton took the financial responsibility off Purnell - but not to the extent ODU anticipated. Dayton's first salvo in response came in a letter to Jarrett from Dayton senior vice president for administration Brother Bernard Ploeger dated June 27, 1994.
Ploeger offered ODU $40,000 plus scheduling considerations. He proposed ODU host a game involving Purnell's Flyers with neither a monetary guarantee nor a return game required from ODU. Or, he offered a home-and-home with an ``above average'' guarantee when ODU came to Dayton.
``We haven't had any scheduling discussions with Dayton at this time,'' Jarrett said last month.
After the initial contacts, the university presidents and lawyers took over. Jarrett said he and Kissell played only nominal roles in the negotiations.
ODU refused to produce correspondence from Koch or general counsel Kelly, citing exemptions in the Freedom of Information Act code. The three-page settlement agreement between the two universities had a confidentiality provision and also was protected from disclosure. However, Kelly confirmed that the $130,000 payment was the only compensation.
Koch declined repeated requests to be interviewed, answering questions through university spokesman John Broderick. Broderick acknowledged the university contemplated legal action to enforce the $388,000 buyout.
``Sure it was considered, but to collect money in a situation like that you have to show injury,'' Broderick said.
How much injury did ODU suffer by losing Purnell?
The Monarchs hired Jeff Capel, who promptly led ODU to the Colonial Athletic Association championship. The Monarchs then recorded the biggest upset of the 1995 NCAA tournament by beating Villanova in triple overtime, arguably the school's most significant victory since it won the Division II national championship. Capel's first recruiting class was highly regarded, another sign the program is on the upswing.
OK, ODU, prove damages.
``It would have been pretty difficult,'' Broderick said.
Burt Whitt and Bill Rachels, two Norfolk lawyers who specialize in labor and employment law, agree.
``The program is in better shape,'' said Whitt, chairman of the labor and employment section of the Virginia Bar Association and head of the labor and employment section of the law firm Kaufman & Canoles. ``. . . They're going to see in this case a university that's better off. Judges are human. I think ODU's counsel must have recognized that.''
And Dayton recognized the buyout provision - that Purnell was liable for the remaining four years of his contract, at $97,000 annually - was unenforceable because it was designed to restrict movement.
The $350,000 buyout ODU paid coach Tom Young when he was fired in 1991 amounted to actual damages suffered by Young in lost wages. But Whitt said the $388,000 was not an accurate measure of damages suffered by ODU upon Purnell's departure.
To be enforceable in court, a ``liquidated damages'' provision must be a reasonable estimate of the monetary damages incurred by one party if the other party does not fulfill the contract.
Broderick said ODU spent between $10,000 and $20,000 on the search process to hire a new coach.
``I really think ODU did a better job of negotiating here,'' Whitt said. ``On one hand it's roughly one-third. But you look at the probability of success (in court), the cost of getting it and the negative public relations and I think they got a pretty good deal.''
Rachels, the head of the labor and employment law group at Willcox & Savage, agreed. Rachels estimated litigation would have cost each side at least $50,000.
``Dollar-for-dollar, I think they did OK,'' Rachels said. ``You add those other factors in, I think they did even better. If you could get this type of number they got out of this, I would take it and close the chapter.''
Purnell declined to comment. Dayton officials referred questions to Hart, who handled the negotiations for Dayton.
``I'd characterize it as long and complex,'' Hart said. ``I do not want to describe the relationship between the institutions as contentious, but the positions that were negotiated were strongly contested.''
Whitt said Dayton had reason to settle. Had Dayton not settled, ODU might have sued and the courts could have ruled Dayton was interfering with a contract by hiring Purnell.
``There was some risk there, too,'' Whitt said. ``It was sort of a gamble with both sides waiting for someone to blink. Both sides, there was a lot of incentive to settle.'' ILLUSTRATION: Color photos
Old Dominion athletic director Jim Jarrett, left, wanted to collect
the $388,000 the school had agreed to pay Oliver Purnell, right,
over the last four years of his contract. Although lawyers
considered a suit, ODU didn't want the bad publicity of suing the
popular coach, who had starred on the 1976 Division II champion
team. Dayton eventually sent Old Dominion a check, above, for
$130,000.
Graphic
DAYTON'S RESPONSE TO ODU
June 27, 1994
Dear Mr. Jarrett:
. . . As an institution which prides itself, as we do, on a
successful basketball tradition, we recognize and respect the right
of our coaches (as well as faculty and staff) to accept positions
elsewhere which they would consider to be an advancement of their
careers. Consistent with that principle, our lawyers have advised us
that employment law takes the position that an employee's mobility
is given precedence over an employer's ability to unreasonably
impose restrictions on it.
In the judgment of our lawyers the payments calculated in
accordance with the formula in the Old Dominion/Oliver Purnell
contract most probably constitute an unenforceable penalty rather
than compensation for liquidated damages. However, recognizing the
difficulty in establishing damages . . . we are motivated to make a
fair and reasonable financial settlement to ODU.
Having just gone through the hiring of a coach ourselves, I
recognize that you incurred costs associated with the travel of
staff members and candidates, legal and tax-consulting fees, and so
forth. In view of this, we would be willing to offer you $40,000
plus any additional value we can create for ODU without further
direct expense to UD (see the next section) as settlement of all
outstanding claims.
. . . we have speculated that there may be some things which UD
could do in athletic scheduling which would be at little or no
additional cost to us but create real value for ODU.
Specifically we know that the experience of other schools is that
when they can schedule the team coached by their former head coach
in the year following his departure, this can be a big
``homecoming'' or ``revenge'' game and a very attractive single game
offering with carry over into season ticket sales. Given Mr.
Purnell's success and regard by your community, this could be a very
positive thing for all parties. . . . In addition, we would be
willing to forego the customary guarantee, provided, of course, you
would recognize that we would need to consider this as an
out-of-pocket expense. Similarly, if a ``home-and-home'' arrangement
would be of interest to you, we would be willing to consider an
above average guarantee to you when you appear in Dayton the
subsequent year.
. . . It seems to me that in addition to the possibility of
creating some value for ODU without new costs to UD, if our entire
agreement were made in the form of a ``home-and-home'' game contract
and guarantees it would resolve any ambiguities about the taxability
of the transaction to the parties involved . . .
While I recognize that you would prefer that we simply accept the
provisions of the contract between Mr. Purnell and ODU as written, I
hope that you receive this letter as a sincere attempt to offer an
equitable resolution, arrived at through a minimum of
contentiousness. . . .
Sincerely,
Bro. Bernard J. Ploeger
by CNB