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August 31, 2016 Articles

Tom Brady, Roger Goodell, and Your Next Arbitration

Legal lessons learned from Deflategate

By Theresa W. Parrish

What do Tom Brady and Roger Goodell have to do with your next arbitration? Plenty, perhaps. The extraordinary and recently concluded dispute between the New England Patriots legend and the NFL commissioner included some interesting arguments about the fundamentals of arbitration and the need for confidence in a system increasingly utilized to decide not only traditional labor disputes such as grievances over disciplinary action but also commercial, employment, and virtually any other dispute that might otherwise end up in traditional litigation.

Admittedly, the way the dispute arose was unusual. A claim that footballs had been improperly and maybe deliberately underinflated in a playoff game in which Brady played led to an investigation and a decision by Goodell to impose discipline. The proceedings were pursuant to the collective bargaining agreement between the NFL and the NFL Players Association. That agreement allowed Goodell to oversee the initial imposition of discipline after an investigation and then serve as the arbitrator of an appeal of that discipline. Where the matter escalated into Brady literally making a federal case out of it (NFL Management Council et al. v. NFL Players Association et al.) was when Goodell arguably abandoned the original grounds for discipline and made new findings while he served as the arbitrator.

Brady appealed first in U.S. District Court in New York, where he succeeded in challenging the suspension. But the matter then proceeded to the U.S. Court of Appeals for the Second Circuit, where a three-judge panel, in a 2-1 vote, reversed the district court. Brady then petitioned for an en banc rehearing, which would have involved 13 appellate judges from the circuit.

Theodore B. Olson, attorney for the NFL Players Association, explained in a television interview that “Our two primary arguments are that the commissioner in the first place conducted an investigation and then the commissioner imposed discipline. Then the commissioner appointed himself as an appellate judge or an arbitrator and then decided something new in the appellate process, abandoning the grounds that were the original basis for the supposed discipline.” Olson continued: “That’s number one, and an appellate judge is supposed to look at the record and make a decision on the basis of what happened before. He departed from what happened before. Secondly he ignored important provisions of the CBA [collective bargaining agreement] about discipline that might be imposed for equipment violations. He departed from that completely and went off the track.”

The proceedings in the Second Circuit attracted some major players who weighed in with amicus briefs. Two of the briefs were filed by the Patriots and by a group of scientists who addressed how the underinflation of footballs could be explained by the application of “ideal gas law.” The final two amicus briefs filed were perhaps the most significant in the attempt to establish major ramifications for arbitration proceedings everywhere. The first came from the country’s largest labor union federation, the AFL-CIO. In its filing supporting Brady, the AFL-CIO told the Second Circuit that it had a “significant interest” in making sure that union contract arbitration clauses are properly applied. Most of the employees in the AFL-CIO’s unions have arbitration built into their labor contracts with employers. “While the NFL and [NFL Players Association] bargained to allow the Commissioner to hear appeals of disciplinary decisions, they did not agree to let the Commissioner, sitting as an appellate arbitrator, to act in a manner that is arbitrary and capricious,” the AFL-CIO said in its brief. “Regardless of who hears appeals, labor arbitration always must be fundamentally fair.” The AFL-CIO asserted that Goodell acted more as an employer “seeking to justify his own disciplinary decision” than the neutral arbiter Brady deserved under his union contract.

Kenneth R. Feinberg, a high-profile attorney and arbitrator with 35 years of experience who oversaw compensation funds for the victims of such noteworthy tragedies as the September 11 terrorist attacks, the Deepwater Horizon oil spill, and the Boston Marathon bombing also entered the fray with his own amicus brief in support of Brady. Feinberg said the case had major implications for the role of arbitration. “This case is of exceptional importance to arbitrators in light of the issues it raises about the power of arbitrators to disregard relevant portions of the parties’ arbitration agreement in issuing their judgments, and to rely on new grounds in affirming employer discipline,” he wrote.

On the first page of his brief, Feinberg wrote that “[he] comes before this court not to support the unfettered aggrandizement of arbitral powers for [him] and his fellow arbitrators—but to caution against it.” He added, “If the restrictions on arbitrators acting outside the scope of their authority, imposing their own industrial justice, or acting with bias are weakened so greatly as to permit the enforcement of the Commissioner’s award, it will fundamentally erode the public’s trust and confidence in arbitration.” Feinberg argued that Goodell’s decision “lacked even the basic hallmarks of due process—a fair process, before a fair tribunal” and that Goodell’s actions were “simply beyond the bounds. Feinberg said this “must be recognized as such to preserve the public’s faith in the arbitration process.” Feinberg next argued that the decision from Goodell exceeded the scope of his authority under the CBA, and that he acted with bias. He claimed that the primary problem arose from Goodell’s changing of the basis for the suspension, creating “new violations” and imposing discipline “far in excess of that previously prescribed.”

Finally, Feinberg stated that the decision to select someone who isn’t neutral to handle an arbitration does not eliminate the obligation of that person to act without bias. The primary evidence of bias, according to Feinberg, comes from Goodell enforcing the NFL’s ability to gather potentially relevant information by finding that Brady had obstructed the investigation, while also limiting Brady’s ability to gather potentially relevant information that could have helped him prevail, by denying access to materials generated by the investigation. “The notion that only one side would be entitled to the materials of the independent investigator is so egregious that it cannot be the result of a good faith mistake,” Feinberg wrote. “It is instead yet another clear indicia of the bias that permeated this proceeding.”

What is the point for litigators everywhere who are handling arbitration proceedings and enforcement of arbitration awards in court proceedings? Always go back to the basics. Know what was bargained for by the parties. Review the agreement to arbitrate and all of its rules carefully. Do a thorough vetting of your arbitrator. Make a complete record in the arbitration hearing for any subsequent review. Keep in mind the often-limited scope of that subsequent review. Watch for fundamental fairness throughout. Enforce the boundaries of the arbitrator’s authority. And if you have to challenge the proceedings, check out the briefing in this extraordinary case that almost went to the United States Supreme Court.

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