FACTS In December of 1990, Gerry DiNardo was hired as the head football coach by and for
Vanderbilt University under a five-year contract. Under this contract, “liquidated damage provisions” were outlined for both parties, with section 8 of the employment contract specifically detailing the liquidated damages he should owe to the plaintiff/appellee should he terminate his five-year contract with Vanderbilt and be “employed or performing services for a person or institution other than the University” within the five-year term of the aforementioned contract. In
August of 1994, the Athletic Director for the University, Paul Hoolahan, offered the defendant/appellant a two-year extension of the contract. An addendum was drawn up by
Vanderbilt’s Deputy General Counsel that would extend
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In November of 1994, at the discretion of Vanderbilt, Louisiana State University corresponded with DiNardo to recruit him as the head football coach for their team. Upon DiNardo’s acceptance of the position with LSU,
Vanderbilt requested liquated damages. DiNardo’s failure to comply led Vanderbilt to file a claim for breach of contract under section 8 for damages; the defendant removed the case to federal court where the proceedings were tried under summary judgment. The district court ruled in favor of the plaintiff, asserting the contracted damages were reasonable and lawful, that the plaintiff had not waived their rights to liquidated damages, and that the contract’s extension was legally binding. DiNardo appealed to the Sixth Circuit of the United States Court of Appeals.
ISSUE I) Do the liquidated damages outline in section 8 of DiNardo’s contract with
Vanderbilt University create an “unenforceable penalty” that violate Tennessee state law? Are the damages reasonable? II) Does the permission granted DiNardo by Vanderbilt to