Donovan's Reef
University of Florida basketball coach Billy Donovan made a decision to work for the Orlando Magic, and then changed his mind. Maybe he should have been more certain of his preferences before signing the contract, but the fact is he wasn't. He made a mistake, and didn't know his own wishes until after the fact. So in a large fit of seller's remorse, he has asked to undo the deed and go back to the job at which he's been most successful, having won consecutive national championships.
Not an unusual story in the abstract. Employments are relationships, and relationships happen slowly, haltingly, with fits and starts. Yet the law doesn't allow for relationships to happen slowly. Employment relationships are formalized by contracts, the same kind of legal documents the law uses to schedule a yard maintenance service or join the health club. A decision is made, a document is signed, duties arise, and changes of mind can carry consequences. Interesting that the law tries to structure human relationships and club memberships in the same way.
In other words, the law is an ass.
1. Jay Bilas of ESPN sniffs that Donovan's conduct is "unprofessional" and calls for him to reimburse Florida for the costs of jet fuel it spent looking around for a replacement, take a cut in pay, and agree to a large financial penalty should he break the new agreement. Bilas is a smart guy and a nice writer, but here he's wrong from the start: coaching a basketball team isn't a profession. I'm not trying to put anyone down, but there are but three traditional professions: law, medicine and the clergy. (Yes, even TSLP, a mere teacher, missed out on this exclusive club.) Yet we throw the word "professional" nowadays to describe just about any occupation. I suppose it's a status thing (a friend of mine once introduced himself to a young lady as a "professional truck driver," apparently distinguishing himself from the amateurs out there on the highway), but really it's just sloppy talk. The problem with sloppy talk is that it leads to sloppy thinking. Professionals have a unique calling, required to act not in their own interests, but in the interests of another. Lawyers, for instance, have to make all kinds of personal and business sacrifices, and even turn away lucrative work, to serve their clients, even when those clients refuse to pay, ignore advice, and fire them. For the rest of us, the non-professionals, we are allowed and expected to act in our profitable self-interest, tempered only by the general norms of business ethics and good manners. We are not professionals (and proud of it).
2. So Donovan's not a professional and doesn't owe any professional duty to the University of Florida or the Orlando Magic. He's just an employee, with the ordinary employee duties of loyalty to his employer. Employees, even those whose employment is formed by a written contract, don't have to take or continue in any job. The freedom to work or not work is subject to even greater legal protection than the freedom of speech. (It's true: no court will make a person perform personal services, yet courts can and do enjoin speech and assess damages and even criminal penalties for wrongful speech.)
3. So if Donovan doesn't want to coach the Magic, he doesn't have to. He should be able to walk away. Should he pay a penalty for his indecision? No. Unquestionably the University of Florida expended money recruiting Donovan's replacement; probably the Magic also had recruiting costs. Reportedly the Magic's fans also bought season tickets, and perhaps some of those purchases were made because of Donovan's impending arrival and exceeded ordinary sales. But in effect Donovan already has paid for some of these costs. Although the check for the jet fuel and so forth was written on Florida's account, Donovan paid too in terms of diminished salary. Because there are only so many top-level basketball coaching jobs in the nation, coaches (even at their high salaries) actually make less than they might otherwise were substitute positions (such as football coaching) available to them. But Donovan can't leave Florida to go to the NFL, only to the NBA or some other top college program. As a result, the costs of recruiting new coaches is effectively shared by the employer and the new employee. This is a particular instance of the general phenomenon known as tax incidence.
4. Of course, the contention that basketball coaches bear at least some of their costs of recruitment is speculative: the answer would depend on the employer's and employee's comparative sensitivity to changes in the price of coaches. Admittedly, a coach like Donovan in very hot demand probably "contributed" little to the costs of his recruitment. But other coaches in less advantageous positions do bear some of these costs. My point is, Florida and the Magic do in effect pass some of these costs onto others, and so in the struggle between management and labor it's a mistake to assume that management's nominal costs are the actual measure of its losses. So paying back the school or the Magic for its recruitment expenses ignores the fact that those employers are often able to pass those costs on to others, including fans.
5. Finally, I've seen it discussed that the Magic will demand of Donovan that, in exchange for "letting" him out of his contract, Donovan must agree to a five-year (apparently the length of his broken contract) prohibition on coaching for any other NBA team. Billy, this is crazy. Why should Donovan have to sign a non-compete agreement for a job that he's not going to ever fill? Why should the Magic obtain, for the costs of its jet fuel, essentially a five-year exclusive option on the services of a in-demand young basketball coach? I can't imagine any judge who's awake enforcing such an agreement. The fact that the putative prohibition would be nationwide in scope only lessens its chances for judicial enforcement.
6. Occasionally courts will issue so-called "negative injunctions" in personal services cases. These are shameful. While paying homage to the traditional prohibition on involuntary servitude, these judges, although not requiring the employee to fulfill the contract, prohibit the employee from providing similar services to any other employer. These courts assume that people are stupid, that we'll perceive a genuine distinction here. Of course there is none, which is why few judges will issue them. An injunction prohibiting Donovan from working for another team or college for the duration of his Magic contract would in effect require Donovan to coach the Magic or quit the business. No way a court issues that injunction: how would the Magic be irreparably harmed by Donovan's refusal to coach? Are there no other coaches, such as Larry Brown, available who could coach a professional squad?
7. The Magic have only one "professional" choice here: cut Donovan loose and wish him well. Such tentative, provisional relationships like employment relationships don't mesh neatly with the formalistic exactitude of the law. Yes, Billy signed a contract and now wants to change his mind. The lesson we should all learn from this episode is that contracts shouldn't stand in the way of the freedom of a person to give his labor on terms to which the person agrees. Unfortunately for the Magic, that agreement is in essence renewable every day.
Not an unusual story in the abstract. Employments are relationships, and relationships happen slowly, haltingly, with fits and starts. Yet the law doesn't allow for relationships to happen slowly. Employment relationships are formalized by contracts, the same kind of legal documents the law uses to schedule a yard maintenance service or join the health club. A decision is made, a document is signed, duties arise, and changes of mind can carry consequences. Interesting that the law tries to structure human relationships and club memberships in the same way.
In other words, the law is an ass.
1. Jay Bilas of ESPN sniffs that Donovan's conduct is "unprofessional" and calls for him to reimburse Florida for the costs of jet fuel it spent looking around for a replacement, take a cut in pay, and agree to a large financial penalty should he break the new agreement. Bilas is a smart guy and a nice writer, but here he's wrong from the start: coaching a basketball team isn't a profession. I'm not trying to put anyone down, but there are but three traditional professions: law, medicine and the clergy. (Yes, even TSLP, a mere teacher, missed out on this exclusive club.) Yet we throw the word "professional" nowadays to describe just about any occupation. I suppose it's a status thing (a friend of mine once introduced himself to a young lady as a "professional truck driver," apparently distinguishing himself from the amateurs out there on the highway), but really it's just sloppy talk. The problem with sloppy talk is that it leads to sloppy thinking. Professionals have a unique calling, required to act not in their own interests, but in the interests of another. Lawyers, for instance, have to make all kinds of personal and business sacrifices, and even turn away lucrative work, to serve their clients, even when those clients refuse to pay, ignore advice, and fire them. For the rest of us, the non-professionals, we are allowed and expected to act in our profitable self-interest, tempered only by the general norms of business ethics and good manners. We are not professionals (and proud of it).
2. So Donovan's not a professional and doesn't owe any professional duty to the University of Florida or the Orlando Magic. He's just an employee, with the ordinary employee duties of loyalty to his employer. Employees, even those whose employment is formed by a written contract, don't have to take or continue in any job. The freedom to work or not work is subject to even greater legal protection than the freedom of speech. (It's true: no court will make a person perform personal services, yet courts can and do enjoin speech and assess damages and even criminal penalties for wrongful speech.)
3. So if Donovan doesn't want to coach the Magic, he doesn't have to. He should be able to walk away. Should he pay a penalty for his indecision? No. Unquestionably the University of Florida expended money recruiting Donovan's replacement; probably the Magic also had recruiting costs. Reportedly the Magic's fans also bought season tickets, and perhaps some of those purchases were made because of Donovan's impending arrival and exceeded ordinary sales. But in effect Donovan already has paid for some of these costs. Although the check for the jet fuel and so forth was written on Florida's account, Donovan paid too in terms of diminished salary. Because there are only so many top-level basketball coaching jobs in the nation, coaches (even at their high salaries) actually make less than they might otherwise were substitute positions (such as football coaching) available to them. But Donovan can't leave Florida to go to the NFL, only to the NBA or some other top college program. As a result, the costs of recruiting new coaches is effectively shared by the employer and the new employee. This is a particular instance of the general phenomenon known as tax incidence.
4. Of course, the contention that basketball coaches bear at least some of their costs of recruitment is speculative: the answer would depend on the employer's and employee's comparative sensitivity to changes in the price of coaches. Admittedly, a coach like Donovan in very hot demand probably "contributed" little to the costs of his recruitment. But other coaches in less advantageous positions do bear some of these costs. My point is, Florida and the Magic do in effect pass some of these costs onto others, and so in the struggle between management and labor it's a mistake to assume that management's nominal costs are the actual measure of its losses. So paying back the school or the Magic for its recruitment expenses ignores the fact that those employers are often able to pass those costs on to others, including fans.
5. Finally, I've seen it discussed that the Magic will demand of Donovan that, in exchange for "letting" him out of his contract, Donovan must agree to a five-year (apparently the length of his broken contract) prohibition on coaching for any other NBA team. Billy, this is crazy. Why should Donovan have to sign a non-compete agreement for a job that he's not going to ever fill? Why should the Magic obtain, for the costs of its jet fuel, essentially a five-year exclusive option on the services of a in-demand young basketball coach? I can't imagine any judge who's awake enforcing such an agreement. The fact that the putative prohibition would be nationwide in scope only lessens its chances for judicial enforcement.
6. Occasionally courts will issue so-called "negative injunctions" in personal services cases. These are shameful. While paying homage to the traditional prohibition on involuntary servitude, these judges, although not requiring the employee to fulfill the contract, prohibit the employee from providing similar services to any other employer. These courts assume that people are stupid, that we'll perceive a genuine distinction here. Of course there is none, which is why few judges will issue them. An injunction prohibiting Donovan from working for another team or college for the duration of his Magic contract would in effect require Donovan to coach the Magic or quit the business. No way a court issues that injunction: how would the Magic be irreparably harmed by Donovan's refusal to coach? Are there no other coaches, such as Larry Brown, available who could coach a professional squad?
7. The Magic have only one "professional" choice here: cut Donovan loose and wish him well. Such tentative, provisional relationships like employment relationships don't mesh neatly with the formalistic exactitude of the law. Yes, Billy signed a contract and now wants to change his mind. The lesson we should all learn from this episode is that contracts shouldn't stand in the way of the freedom of a person to give his labor on terms to which the person agrees. Unfortunately for the Magic, that agreement is in essence renewable every day.
posted by TSLP at 6/05/2007
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