Can Arizona Avoid Paying Basketball Coach If He Bribed Star Recruit?

Arizona Head Basketball Coach Sean Miller was allegedly caught on multiple FBI wiretaps talking about offering a recruit $100,000 to commit to Arizona, according to ESPN.

Miller has about $10 million left on his employment contract.

But there is something odd and disturbing about this agreement. Arizona bargained for the right to fire Miller for cause. While cause is not defined, there is no doubt that violating the law and NCAA rules would be sufficient cause to terminate the contract.

And it is—BUT, a report in Forbes (https://www.forbes.com/sites/darrenheitner/2018/02/24/drafting-error-that-could-cost-university-of-arizona-millions-if-sean-miller-is-fired/#674facdc522d) 
shows that his contract also provides for “liquidated damages” for Arizona’s right to exercise this clause. In this case, Arizona could be on the hook for 85% of the unpaid contract—close to $8 million.

Yes, that is crazy. It shows just how desperate some schools are to hire star coaches.

Currently, I am teaching an employment law course that deals with terminating employment relationships, including discharge for cause.

We will discuss this case soon. For now, I offer two thoughts on how Arizona might deal with this situation. Both involve withholding payment.

1. Arizona is in a tough spot because courts uphold contracts, even bad bargains. There are rare instances where a party can ask a court to go beyond the four corners of a contract. This involves the doctrine of “good faith and fair dealing.” This means that every contract creates a presumption that the parties to a contract will deal with each other honestly, fairly, and in good faith, so as to not destroy the right of the other party or parties to receive the benefits of the contract. It is implied in every contract in order to reinforce the express covenants or promises of the contract. Often, it comes into play when technical or strict compliance with a contract would create a manifest injustice; or alternately, where one party (here, Miller) violates the contract in bad faith. Make no mistake: This is a longshot strategy. Again, if courts intervened every time a deal turned sour, the value of contracts would be greatly diminished.

2. Arizona can seek to avoid payment on grounds that the contract, as applied to Miller, is illegal (the doctrine of illegality). This, too, would be a really tough sell to a court. The employment contract has no illegal terms. An example might be a New York billionaire who sells condos at far above market value to Russian oligarchs in order to launder money and avoid U.S. tax laws. If a Russian breached the contract, the New York real estate mogul would have no recourse to collect on the contract. For Arizona, they would need to argue that payment of $8 million to Miller would reward illegality—IF, that is, he were indicted or convicted (and he is neither). But again, the contract itself is not an illegal bargain—so I have strong doubts.

If Arizona fires Sean Miller, and if they bargained this insanely stupid “for cause” termination clause, they will likely need to pay up.