Arbitration Between Coaches and the NFL: Where Are We Now?

Although factually very different, there are currently two lawsuits involving former coaches in the National Football League (“NFL”), both of which involve the arbitration provisions of the NFL constitution. The one consistency between the two cases is that both underlying employment agreements provide they are to be governed by the NFL Constitution, which grants the NFL Commissioner “the full, complete, and final jurisdiction and authority to arbitrate” various forms of disputes between coaches and NFL teams.

The Gruden Case. On October 8, 2011, the New York Times released a series of racially inflammatory emails allegedly written by then-Las Vegas Raiders head coach Jon Gruden. Three days later, Gruden resigned his position; sometime later in October, Gruden and the Raiders reached a settlement agreement. On November 11, 2021, Gruden sued the NFL and League Commissioner Roger Goodell in Nevada state court for intentional interference with contractual relations, tortious interference with prospective economic advantage, and various other torts sounding in negligence. Gruden v. Nat’l Football League, No. A-21-844043-B (Clark County Dist. Ct., Nev.). The suit alleges that the NFL and Goodell released the emails, resulting in his forced resignation. The defendants filed a motion to compel arbitration pursuant to terms of Gruden’s employment agreement and the NFL Constitution. Gruden’s agreement provided that “all matters in dispute between Gruden and [the Raiders], including without limitation any dispute arising from the terms of this Agreement, shall be referred to the NFL Commissioner for binding arbitration, and his decision shall be accepted as final, conclusive, and unappealable.” The defendants argued that Gruden’s conduct fell within the type of dispute covered by the arbitration provision as it involved “conduct detrimental to the best interests of the League or professional football.”

In his response, Gruden initially argued that the NFL could not pursue arbitration for several reasons. He argued that the NFL was not a party to the employment agreement. He also argued that the employment agreement had been supplanted by his settlement agreement with the Raiders. Further, he contended that it was premature for the NFL to seek arbitration because there had been no requisite declaration or finding that Gruden had in fact engaged in the detrimental conduct upon which the NFL could compel arbitration. Gruden argued that the employment agreement was procedurally unconscionable as a contract of adhesion. And finally, he argued that it was substantively unconscionable for several reasons: 1) the Commissioner was not a neutral, independent factfinder; 2) the agreement lacked mutuality because only Gruden was bound by the arbitration provisions; and 3) the agreement was illusory because the Commissioner had unfettered discretion to determine the nature of the conduct prohibited by the agreement.

At a hearing on May 25, 2022, the court agreed with Gruden and denied the NFL’s motion. Specifically, the Court noted the employment agreement had been terminated before Gruden’s complaint was filed, and also that it did not cover claims by former employees. Additionally, the court found the agreement both procedurally and substantively unconscionable, explicitly noting that the Commissioner was vested with the sole and exclusive authority to rule on any dispute. Attorneys for the defendants have indicated an appeal will be forthcoming.

The Flores Case.

Flores v. The Nat’l Football League, No. 1-22-cv-00871 (S.D.N.Y), was filed as a class action by former Miami Dolphins head coach Brian Flores (and two other coaches as additional class representatives), asserting race discrimination against the League and various member teams arising from employment termination and/or failure to hire. The underlying employment agreements are substantially similar to Gruden’s regarding their arbitration provisions. Flores’s agreement with the Dolphins provided that “all matters in dispute” between the parties “including, without limitation, any dispute arising from the terms of this Agreement, Employee’s employment with [the Dolphins], or otherwise, shall be referred to the Commissioner of the NFL for binding arbitration . . . .” The agreement also stated that the sole purpose of the arbitration provision was to ensure that all disputes between the Dolphins and Flores “will be resolved through binding, conclusive arbitration as opposed to court or administrative litigation.”

Defendants’ moved to compel arbitration under Sections 3 and 4 of the Federal Arbitration Act. Based on the broad arbitration provisions in the individual employment agreements and the provisions of the NFL Constitution and Bylaws incorporated into the agreements, the defendants argued that the plaintiffs’ claims clearly fell within the scope of “any dispute” between a coach and an NFL team. The defendants further pointed to the plaintiffs’ allegations regarding violations of various internal NFL rules and argued that the court should avoid delving into complex matters that would best be left to the League’s arbitration process.

With respect to the plaintiffs’ claims against the NFL, defendants anticipated that plaintiffs would argue that the NFL was not entitled to enforce an agreement between the plaintiffs and individual NFL teams, but not the NFL itself. Defendants stressed that Commissioner Goodell signed and approved the employment agreements.

They also argued that under the doctrine of equitable estoppel, a signatory to an arbitration agreement cannot avoid arbitration with a third party where, as here, there is a close relationship between the parties and the issues in dispute.

Although the original briefing schedule provided for a response by the plaintiffs in July, that deadline was delayed by the plaintiffs’ request for discovery related to the NFL arbitration process in general and to potential bias by Goodell. The court has now adjourned all briefing deadlines relative to the motion to compel until the plaintiff’s motion for discovery is decided.