Sunday, July 25, 2010

When an Athletic Director is or is not an Athletic Director: The Strange Saga of Bob Krause, Ron Prince, and Kansas State

Austin Meek of the Topeka Capital-Journal interviews me and Washburn law professor Michael Hunter Schwartz for a piece on an unusual lawsuit brought by Kansas State against its former football head coach Ron Prince over a $3.2 million buyout that was negotiated and signed by then Kansas State's athletic director, Bob Krause. Kansas State claims that Krause was not acting on behalf of Kansas State at the time, even though the relevant by-laws express that he had the authority to do so.

Here are some excerpts:

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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."

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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?"

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In terms of the litigation's status, both sides have filed motions for partial summary judgment. It will be an interesting case to follow. To read the rest of the piece, click here.

Update: Sports attorney Don Jackson lets me know of a similar case that he litigated. The case was John L. Williams v. W. Curtis Williams and Alabama State University. Here are the details:
The KSU case is similar to a case that I tried against Alabama State University in 1999. The University isolated the Athletic Director. He, in turn, claimed that he did not have the authority to enter into a contract with my client, the Interim Head Men's Basketball Coach despite the fact that he made on formal offer on Athletic Department letterhead (which prompted my client to resign his job at another HBCU and accept the Alabama State University job). We sued the A.D. under a theory of promissory fraud and received at $350,000.00 jury verdict against the A.D.. It was clear that he did have authority to act on behalf of the University but he mistakenly assumed that he could escape liability under the doctrine of sovereign immunity or discretionary function immunity. He was mistaken. Ultimately, the A.D. wound up declaring bankruptcy (as a result of the verdict) and the university terminated him.
Good stuff, and my thanks to Don.