Resolution of canceled games a murky proposition, legal experts say

The 10th bullet point on the third page of Indiana’s football game contract with UConn has words a casual fan wouldn’t necessarily expect.

There is a reference to war. An earthquake. Flood.

It’s under the heading “Force Majeure,” a common clause in many contracts laying out “acts of God,” or unforeseeable events, that could make a game impossible to play — and protects a school from having to pay damages for canceling.

Now the question across college football is whether these contractual lists of mayhem and destruction cover pandemics, because Big Ten and Pac-12 schools have pulled out of all non-conference competitions for this fall, technically breaching their contracts with those opponents.

According to the terms of the UConn-IU football deal, UConn owed IU a $300,000 payment for traveling to Storrs., Conn., this September. But either school would owe the other $750,000 if they pulled out of a game in the home-and-home series without 18 months’ notice.

But maybe not, if a court were to decide the force majeure clause sufficiently covers IU in the event of a pandemic.

“It all comes down to how good of a job the non-breaching school that’s trying to get money protected themselves,” said Nathaniel Grow, an associate professor of business law and ethics with IU’s Kelley School of Business.

None of IU’s non-conference football contracts for 2020 specifically list “pandemic” or “epidemic” in a force majeure clause. There are, however, mentions of “prohibitory or injunctive orders of any competent judicial or other governmental authority,” which could point to states’ limits on mass gatherings and social distancing guidelines, if those are in place when these games would have been played.

It’s one of many arguments rooted in “if,” which says something to a legal expert like Grow. He thinks the Big Ten must have calculated the financial risk when it set out to abandon existing game contracts, because it’s anything but certain that their member institutions can recoup money owed to non-conference opponents.

If this were in court a year from now, a judge would have the benefit of hindsight. But in early July, it’s not possible for IU to know if it would be truly unreasonable to play its regularly scheduled non-conference opponents in September. Same goes for the Western Kentucky contract, which also has a $750,000 forfeiture fee, unless it’s proven there was an “impossibility of performance” in fulfilling the contract.

“Legally the question would be would the court view the current pandemic as something that made it impossible or not,” Grow said. “Marshall University, a plane crashed and the whole team died. That’s impossible. If the stadium burned down, that’s impossible. Short of some sort of government order, would it be impossible to play?”

What a judge would consider unforeseeable is truly unknowable, which makes it all the more likely these disputes will be settled out of court. The existence of certain language in a clause just gives one side or the other a stronger argument at the bargaining table.

Grow knows all about lawyers’ clever arguments, penning a 2010 article for the Journal of College and University Law that examined the Duke-Louisville football saga of 2007. In that case, Duke could have owed Louisville $450,000 in penalties for abandoning a three-game series.

But per the terms of the contract, damages wouldn’t be paid if the non-breaching school made a good faith effort to schedule another team of “similar stature.” Duke was self-deprecating, arguing it was the worst football program in college football, and it would be impossible for Louisville not to find a team to replace the Blue Devils on the schedule.

The court sided with Duke.

The Big Ten may have decided to cancel all non-conference games, not IU. But that doesn’t necessarily let IU off the hook for breaching its contract, Grow said. And while the Ball State contract includes a force majeure that refers to unforeseen catastrophes, a judge could say IU should have listed “pandemic” or “global health emergency,” as other event contracts or collective bargaining agreements have.

An overly broad interpretation of “catastrophe” could open up unwanted loopholes in caselaw — at precisely a time when businesses around the country could look to exploit force majeure clauses for financial benefit.

“This will be a billions-of-dollars issue,” Grow said. “Movie theaters, restaurants, every industry. You can imagine, they aren’t going to want to create this giant loophole in the college football sector.”

Force majeure clauses are actually a lightly litigated item, according to Pamela Foohey, who teaches a contracts class for IU’s Maurer School of Law.

That’s partially because, over the years, the number of “unknowable” events has become fewer and fewer. So force majeure clauses have essentially become lists of specific items a party wants to protect against, rather than a broad catchall for unforeseeable events.

“The pandemic is not an example of how they are necessarily used anymore. It’s a vaguely unforeseeable event because it’s reasonable for a judge to say you could have foreseen a pandemic,” Foohey said, pointing to the existence of a U.S. pandemic response team during President Obama’s administration.

There are arguments on both sides, which makes it sensible for parties to come to a resolution outside of court.

“They could recognize this was unforeseeable — or America’s reaction to the pandemic was unforeseeable,” Foohey said. “Now everyone is in the same situation of having to split massive economic losses. No one’s going to win. Maybe we can all lose equally together.”

It is still interesting to play out arguments rooted in force majeure clauses, each more or less likely to succeed.

For instance, Louisville has a football contract with Western Kentucky that includes “epidemics” in its force majeure, which strengthens its argument. Then again, lawyers could still argue the definition and whether it applies to COVID-19.

IU’s contract with WKU specifies “catastrophe or disaster” in an “impossibility of performance” clause, but that’s less specific. WKU could argue it’s owed the $550,000 it had coming after this year’s game, or the $750,000 fee for breaking the terms of the contract.

What is unknown is how many conferences will join the Big Ten and Pac-12 in dropping non-conference opponents. If others hold out, such as the Southeastern Conference, Power 5 schools could have weaker arguments.

“That could come up if you see the SEC sticking it out, or if other schools are playing and the Big Ten in two months is the outlier,” Grow said.

Same goes for a school like Ball State. If the Mid-American Conference were to follow the Big Ten and Pac-12’s lead, it weakens Ball State’s argument to retrieve $700,000 from IU for this year’s third game of a three-game series.

Then again, IU’s force majeure clause doesn’t list pandemics, and Ball State could argue IU didn’t know what restrictions would exist as far as mass gatherings and social distancing in September when it canceled in July.

“A judge could do whatever he or she wants, but my gut would say you should have had the language in there,” Grow said. “Some of these contracts did have the foresight to include ‘global health emergency.’ The court will say you are sophisticated parties and other sophisticated parties anticipated this.”

Again, there are arguments on both sides. It seems unlikely IU would pay full damages for canceled games, though it would be somewhat surprising if they got off scot-free.

In the case of WKU, the series was originally slated to begin in 2019 and was pushed back to 2020. The series could be modified again. UConn could compromise on what either side owes. Ball State could receive part of its $700,000.

In general, it’s logical to think there’s a willingness on the part of Big Ten schools to pay out some lesser portion of what is owed to non-conference opponents, Grow said, especially given they didn’t wait until the last minute to call everything off.

“If the Big Ten looked at it and said ‘This will cost us $50 million,’ it’s not worth that. You hold off,” Grow said. “The Big Ten has probably done some analysis on ‘How much are we on the hook for? How many of these contracts can we get out of?’ That probably helped determine the timing.”

8 comments

  1. Probably end up having to pay UConn…That’s my guess. Consult davis…He’s the lawyer.

  2. my question than becomes if the Big Ten and the Pac-12 are playing only conference game, Who is the lucky or unlucky conference that gets to play Notre Dame?? Maybe now they are going to pay a penalty for not joining a conference. Do they still get paid television revenue if no football season??

    1. NDs ACC membership for everything but football still includes six ACC games annually. It will probably just be expanded by four or however many games the ACC decides to play.

  3. Here’s the problem everyone seems to be missing regarding sports. We need them.

    Not for the money, but for something far more important. There is no better indicator of this than our own debates on this forum, view it as a microcosm of something much larger that everyone of us should be very concerned about, virus or no virus. Our debates have devolved from arguments over which direction IU sports is going, or what Quarterback or Point Guard will best aid the cause, into petty partisan picking at each other. Sports has always had the benefit of helping to shift the debate away from other things which would divide along far more dangerous lines. It is much better to take out these natural divisions on the field of competition than on the field of battle.

  4. Agree …and disagree.
    I believe there can also be a dangerous complacency, a numbing of sorts in searching for accountability and equity in problems which plague a truly healthy society, when a multitude of distractions and addictions are designed and layered upon the mirage of equal pursuits to life, liberty and happiness.
    Sports creates a false premise for the disadvantaged locked into institutional poverty. Gambling and destructive internet compulsive behaviors suck away time with no productive outlet or opportunity to measure oneself or examine real societal mobility.
    Add another layer with social media distractions, gaming industry grips on are youth and technology addictions to elevate false perceptions of success allowing a warped form of gloat and more mirages to express exaggerations; all creating a way to appease the subjugated, underutilized and undervalued masses while only very few truly achieve anything approaching upward mobility or real “opportunity.”

    A healthy society cannot be built on distractions or false delights which a ruling or elite class may foster and design as more impediments to equality, justice and mobility for all. You may just distract your life away while working for a pittance, plunged into social media, gambling, gaming and sports, while never having a slice of the American dream.
    And that may be just what those holding the powers of Wall Street and Pennsylvania Avenue have designed to perpetuate the walling up of dreams that will never come true in your mirage of complacency.

    I believe many in power worry that without distractions we wake up from trance. We see how much of a robust vacuum sucking away trillions of dollars in our various economies goes into so few pockets. The pandemic has merely caused many to wake up from America’s 50-year trance cast upon the increasingly vast numbers of have-nots.

  5. Shouldn’t discriminate…I left out tech. It was not my intent.

    Correction:

    And that may be just what those holding the powers of Wall Street, [Silicon Valley], and Pennsylvania Avenue have designed to perpetuate the walling up of dreams that will never come true in your mirage of complacency.

  6. If its not settled, IU will have to pay if it plays any other games this fall. “Impossible to pay, UConn, your honor, but possible to play Mich St.?”

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