## Facts

- In 2008, Kent State University hired Gene Ford as head coach of its men’s basketball team under a multiyear employment contract with a liquidated-damages clause.
- The clause stated that if Ford resigned before the contract expired and took employment elsewhere, he would pay Kent State an amount equal to his base and supplemental salary multiplied by the number of years remaining, based on the university’s “investment” in his continued employment.
- In 2010, Kent State and Ford negotiated a new five-year contract that increased Ford’s annual compensation to $300,000 and retained the same liquidated-damages provision.
- Ford understood the provision, attempted to negotiate changes to reduce or phase down the payment obligation, and nevertheless agreed to the contract as executed.
- In 2011, with four years remaining on the 2010 contract term, Ford resigned and accepted a head-coaching job at Bradley University for a higher salary (about $400,000).
- Kent State hired a replacement head coach almost immediately after Ford’s departure.
- Kent State sued Ford (and also sued Bradley and others at the outset) seeking damages tied to Ford’s departure; by the time of the appeal, the dispute centered on Kent State’s breach-of-contract claim against Ford and enforcement of the liquidated-damages clause.
- Kent State officials testified that a head coach’s departure can cause losses that are hard to measure in advance, including search and transition costs, disruption to recruiting and program continuity, and reduced ticket sales or fan interest.
- Kent State also presented evidence that similar contracts for other coaches used the same salary-based formula, and that the university used salary as its proxy for estimating the cost of a coaching departure even though it had not completed a detailed financial analysis to substantiate the estimate.
- The trial court granted Kent State summary judgment and awarded $1.2 million in liquidated damages, calculated as four remaining years multiplied by $300,000.

## Issues

1. Whether the contract clause requiring Ford to pay Kent State his remaining salary (base and supplemental) upon resigning early was an unenforceable penalty or an enforceable liquidated-damages provision under Ohio law.
2. Whether Kent State had to prove actual damages (or show damages beyond the cost of employing a replacement coach) to recover the liquidated amount.

## Decision

- The Court of Appeals of Ohio, Eleventh Appellate District, affirmed the trial court’s grant of summary judgment to Kent State.
- The court held the liquidated-damages clause was enforceable under Ohio law and was not a penalty.
- The court affirmed the $1.2 million award based on the contract’s formula (four years remaining × $300,000).
- The court rejected the argument that Kent State could not recover because it quickly hired a replacement or because its provable losses were limited.

## Legal Principles

- Ohio applies the three-part test from *Samson Sales, Inc. v. Honeywell, Inc.* to determine whether a stipulated-damages clause is enforceable: (1) at the time of contracting, actual damages from breach are uncertain or difficult to prove; (2) the amount is not so unreasonable or disproportionate as to show it does not reflect the parties’ intent to set damages in advance; and (3) the parties intended the stated amount to be damages, not punishment.
- Reasonableness is evaluated as of contract formation, not by comparing the stated amount to later-measured losses after breach.
- If a liquidated-damages clause satisfies the *Samson Sales* test, the nonbreaching party may recover the stipulated amount without proving actual damages.
- A salary-based formula tied to the remaining term of a coaching contract may be treated as a reasonable estimate where the expected harms from a coach’s early departure include items that are not readily reduced to a precise dollar amount at the time of contracting (such as recruiting disruption and effects on program continuity and revenue).
- Evidence that the clause was clearly stated, used in similar coaching contracts, and understood during negotiations supports a finding that the parties agreed to allocate the risk of early departure through liquidated damages.

## Conclusion

The Ohio Court of Appeals affirmed summary judgment for Kent State University, holding that the contract’s buyout provision requiring head coach Gene Ford to pay an amount equal to his remaining salary after resigning early was an enforceable liquidated-damages clause, and it affirmed the $1.2 million judgment calculated under the contract’s formula.


Kent State University v. Ford, 26 N.E.3d 868 (2015)