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School faces difficult argument in saying Krause lacked authority to make contract with Prince
BY AUSTIN MEEK
July 24, 2010
Michael McCann has watched plenty of sports stars squirm.
As SI.com's sports law expert, McCann wrote about Roger Clemens on Capitol Hill and Barry Bonds in federal court. As a professor at Vermont Law School, he published an influential opinion on American Needle v. NFL, the recent Supreme Court case involving antitrust issues in professional football.
But no, he hasn't seen a case quite like this one.
"This is the first case of its kind that I'm aware of," McCann said, "in terms of an athletic director appearing to represent the university, executing a contract and the school trying to get out of it."
McCann was referring, of course, to Kansas State's lawsuit against former football coach Ron Prince. K-State is seeking to nullify Prince's $3.2 million buyout agreement, negotiated and allegedly concealed by former athletic director Bob Krause.
The case hinges on the validity of a two-page Memorandum of Understanding, signed by Krause and Prince, that calls for Prince to begin receiving a series of deferred payments in 2015. K-State contends the MOU is not a valid contract, a point that could be difficult to prove in court, McCann said.
"Under contract law, if it looks like a contract, it often is, particularly when there is something called consideration," McCann said. "If each party is giving up something, then normally the court will find that there is consideration between them. And if there's consideration, there's normally a contract.
"From what I can tell, coach Prince is saying, 'Look, in exchange for me giving up the pursuit of a different kind of contract, I'm agreeing to the memorandum, and you're getting financial stability. We're each giving something up.'"
The issue of consideration depends on the relationship between Prince's public employment contract and the MOU, said Washburn law professor Michael Hunter Schwartz.
"If both parties understood this was all part of one deal," Schwartz said, "that argument won't carry the day."
Krause's authority is another point of contention. K-State contends Krause was not authorized to negotiate on behalf of the university, though McCann considers that argument a tough sell.
"If it's absolutely clear that he didn't have authority, and everyone knew he didn't have authority, that's one thing," McCann said. "One would think that an athletic director has sufficient authority to represent the university in contractual negotiations for a coach."
When asked to document his authority during contract negotiations, Krause pointed to a provision in the by-laws of K-State's Intercollegiate Athletic Council authorizing him to "enter into any contract or execute and deliver any instrument in the name of and on the behalf of the Corporation" as CEO.
Even if Krause didn't have actual authority, Schwartz said, Prince's attorneys can claim he had apparent authority by virtue of his position.
"There are two ways a person can have authority," Schwartz said. "They can either have actual authority — someone said, 'You have power to do this' — or you can have apparent authority. Even if (Krause) wasn't actually given the authority to do it, his role at K-State made it look like he was in a position to make these kinds of decisions."
Still, McCann said, attacking Krause's authority could be K-State's best strategy.
"If K-State can somehow argue that coach Prince and his representatives knew with certainty that the athletic director had no authority to negotiate a contract, maybe their argument would have some weight," McCann said. "I think that would be their best play."
K-State has argued that Krause acted alone, though the former athletic director testified that he discussed the separate buyout agreement with aides Jim Epps and Bob Cavello. Epps and Cavello denied that claim in depositions.
Even if Krause was a rogue actor, McCann said, it doesn't absolve K-State of responsibility.
"Their argument might be, 'This was the renegade athletic director, and not only was he the renegade athletic director, but everyone knew that,'" McCann said. "That, of course, is kind of a weird argument. Why was there a renegade athletic director?"
Both sides have filed motions for partial summary judgment, essentially asking the court to rule in their favor without a trial. The case likely won't be resolved that easily, Schwartz said.
"Summary judgment is one of the least frequently granted motions in court," Schwartz said. "If there's even a question of credibility, you want a jury to decide that."
