Chelsea Football Club Limited v. Mutu, No. 10-24028, 2012 U.S. Dist. LEXIS 17364 (S.D. Fla. Feb. 13, 2012)

Petitioner is a soccer club in the English Premier League.  Respondent is a soccer player who was transferred from AC Parma in Italy to Petitioner in 2003, for a transfer fee payable to AC Parma of £22.5 million.  Petitioner entered into a five-year contract with Respondent that was to pay Respondent £2.35 million annually.  Respondent also received a signing bonus and his agent was paid a signing fee.  Just over a year into the contract, Respondent tested positive for cocaine and was temporarily banned from playing soccer worldwide by the Fédération Internationale de Football Association (“FIFA”), the world’s governing body of soccer.  As a result, Petitioner terminated Respondent’s contract and applied to FIFA for an award of compensation.

FIFA’s Dispute Resolution Chamber issued an award in favor of Petitioner for £17,173,990, plus 5% interest per annum.  This award amount corresponds with the unamortized portions of the transfer fee, the signing bonus and the agent’s fee.  Respondent appealed to the Court of Arbitration for Sport (“CAS”), arguing that English law was not correctly applied, which appeal was denied.  Petitioner then sought to enforce the award in the District Court for the Southern District of Florida.

Respondent argued that the award is an unenforceable penalty that violates Florida public policy because the transfer fee was paid to AC Parma, and far exceeds the salary or bonus paid to Respondent.  The court held, however, that an award of damages does not violate public policy where it was “reasonably related to the actual damages caused by a breach,” and here the damages award was reasonably related to the actual damages (i.e., the loss of the transfer fee) caused by Respondent’s breach of contract.