Tuesday, April 10, 2012

Legal Glimpse: The Petrino Firing & Moral Clauses

Arkansas has fired Bobby Petrino, saying he "knowingly misled" and engaged in reckless behavior in a relationship with a female employee.

The 51-year-old Petrino was injured in an April 1 motorcycle accident. He was put on paid leave last week after admitting he lied about the presence of the 25-year-old employee, Jessica Dorrell, who had been riding with him.

Dorrell was hired by Petrino as the student-athlete development coordinator weeks ago.

"He made the decision to mislead the public, (and it) adversely affected the university and the football program," athletic director Jeff Long said at an evening news conference. There was a "pattern of misleading and manipulative behavior to deceive me."

He was 34-17 since he was hired in 2008 and was 21-5 in the past two seasons.

Petrino’s Employment Agreement

Petrino’s employment agreement issummarized in an engagement letter. At Section 9 of that letter, the University is granted broad powers to terminate Petrino for conduct or behavior that it does not agree with or approve of. In particular, it provides that the University reserves the right to terminate Petrino if he has engaged “in conduct, as solely determined by the University, which is clearly contrary to the character and responsibilities of a person occupying the position of Head Football Coach or which negatively or adversely affects the reputation of the University…in any way”. Here’s the actual clause:
This is broad since it allows the University to determine on its own the type of behaviour it doesn’t like. It needs to act reasonably – but nevertheless it still makes that assessment of right versus wrong.

By firing Petrino on the basis of his conduct, the University does so with cause. That means they don’t have to pay him out or offer him severance. That’s also significant.

Petrino will forfeit his salary, which averages about $3.5 million a year over the next 6 years. Here are the details:
Petrino could challenge the firing by arguing his behavior did not constitute just cause and that he is entitled to money. There is a lot of money at stake (about $21 million), so it would not be surprising to see some type of challenged materialize.

Moral Clauses

The University's clause in its contract is a moral clause. These moral clauses are usually pretty broad to give a company the option of cutting an employee if they engage in questionable behaviour. Don’t forget – employers are generally risk adverse as they don't want to associate themselves with a negative image.

Morals are shaped by the beliefs of a society, and so by implication, interpreting what’s moral can be a subjective exercise, at times elusive and constantly in flux.

The history behind moral clauses reveal their vagueness and how they are tied to the beliefs of a society. In the 1920s, the clauses became notorious during the McCarthyist era when they were used to terminate contracts of many writers, directors and producers who were accused of having communist leanings.

More recently, morals clauses have been used to terminate sponsor deals with Rashard Mendenhall (Twitter incident), Tiger Woods (adultery), Michael Vick (dog fighting), Kobe Bryant (sexual assault) and Randy Moss (photographed with cocaine).

This isn’t the first time Petrino has demonstrated peculiar judgement. On December 10, 2007, with the Falcons languishing in the NFC South cellar with a 3-10 record, Petrino resigned his position in Atlanta the day after pledging his commitment to owner Arthur Blank. Petrino informed his players of his decision with a short laminated note left at the locker of each player.

Now we wait and see if lawyers get involved.

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