A Viking, a Patriot, And Two Arbitrators Appear in Front of the Bar . . .

In Arbitration, Eighth Circuit, Litigation Process by Joe PullLeave a Comment

The National Football League won two high-profile legal battles against superstar players in 2016, in both cases winning on appeal after a federal district court judge ruled against them. The legal considerations that proved decisive in the Tom Brady and Adrian Peterson cases were not particularly complicated or new, and without celebrity and salient secondary issues swirling around them, the cases would neither have received nor deserved much attention.

But they do provide excellent examples of the process by which American courts handle an arbitration award.

The Facts

Anyone who paid even casual attention to the NFL during the period 2015-2016 likely knows the basic facts of the two cases:

  • In September 2014, Peterson was known as one of the top running backs, perhaps the top running back, in the league. He held the record for the most rushing yards in a single game. During the 2012-2013 season he nearly set the record for most rushing yards in a season and was named the league’s Most Valuable Player. The next season, 2013-2014, he was the fifth-leading rusher in the league despite missing two games. However, in September 2014 Peterson was criminally indicted on charges of child abuse. NFL Commissioner Roger Goodell subsequently suspended Peterson and fined him six games’ worth of salary. Peterson appealed this disciplinary action pursuant to the collective bargaining agreement between the NFL and the NFL Players Association (the union that represents NFL players); the collective bargaining agreement provides that an arbitrator must hear and decide disputes of this type. After the arbitrator ruled in favor of the NFL, Peterson sued, asking a federal district court to vacate the arbitrator’s decision.
  • In January 2015, Brady was known as one of the top quarterbacks, likely the top quarterback, in the league. He had won three Super Bowls, twice been named league MVP, and led the New England Patriots to an undefeated regular season in 2007. However, during a playoff game in January 2015 an opposing player complained to an official that one of the footballs used by the Patriots when Brady was in the game was not properly inflated as required by league rules. A subsequent investigation by a law firm retained by the NFL concluded it was more likely than not that prior to the game two Patriots equipment officials had conspired to deliberately deflate the footballs after the referee tested them for compliance with the rules – and that Brady had known and approved of the deflation. The NFL suspended Brady four games as punishment. Brady, like Peterson, appealed the disciplinary action pursuant to the collective bargaining agreement, and the arbitrator – Commissioner Roger Goodell himself – affirmed the suspension. Brady sued, asking a federal district court to vacate the arbitrator’s decision.

The Litigations

Both Peterson and Brady initially prevailed at the trial court level, convincing district judges in Minnesota and in New York to vacate the arbitration decisions and thereby reinstate them to play in NFL games. Both players essentially argued that they had not received fair treatment in their arbitrations. Peterson argued that the arbitrator improperly imposed a new disciplinary standard, different from the standard previously applied to other NFL players, and the new standard could not be applied retroactively to him because he lacked prior notice.[1] Brady argued that he, too, lacked fair notice that the allegations against him could lead to a suspension, and that the arbitrator’s hearing process unfairly prevented him from presenting certain evidence and from receiving certain attorney notes.[2]

On appeal, the federal circuit courts of appeal both ruled in favor of the NFL. They emphasized, “[i]n an arbitration case like this one, the role of the courts is very limited,” and “[w]e are therefore not authorized to review the arbitrator’s decision on the merits despite allegations that the decision rests on factual errors or misinterprets the parties’ agreement, but inquire only as to whether the arbitrator acted within the scope of his authority as defined by the collective bargaining agreement.”[3] Thus, so long as the arbitrator was “even arguably construing or applying the contract and acting within the scope of his authority,” his decision had to be confirmed by the court.[4]

Applying this law, the Eighth Circuit concluded in Peterson that the arbitrator had considered Peterson’s argument (that the Commissioner was bound to follow precedent established in the previous discipline of a different player) and rejected it, basing his decision on the Collective Bargaining Agreement between the players and the NFL. Therefore, the arbitrator “at least arguably” construed or applied the contract, and “[d]isagreement with his conclusion is not a valid ground on which to vacate the decision.”[5] The same logic applied to Peterson’s argument that the Commissioner wrongfully applied a “new” disciplinary policy; the arbitrator “relied on the Collective Bargaining Agreement” to reject this position and therefore his decision was “not subject to second-guessing by the courts.”[6]

Applying the same law, the Second Circuit ruled in Brady that the Commissioner’s interpretation of a provision in the Collective Bargaining Agreement to allow the suspension of a player for tampering with game equipment, was “at least ‘barely colorable,’ which, again, is all that the law requires.”[7] Brady’s challenges to the arbitrator’s rulings preventing him from introducing testimony from one specific witness and denying him access to attorney notes from the law firm’s investigation were rejected because “procedural questions” in an arbitration “should not be second-guessed by the courts” except for a “narrow exception” if “fundamental fairness is violated.”[8] The Second Circuit judges concluded the arbitrator’s decisions on both of these points were “comfortably within his broad discretion” and not unfair.[9]

The Upshot

The federal law of arbitration strongly favors judicial deference to the decision of an arbitrator. Once the arbitrators made their decisions in the Peterson and Brady cases, there was little hope for the players of obtaining judicial reversal of those decisions. At bottom, the appellate opinions in both cases paid little attention to the substance of the charges against Peterson and Brady and the evidence that supported or contradicted the charges. Under the law, the courts were not concerned with whether the arbitrators ruled correctly, or whether they interpreted the evidence in the most reasonable way. The only question was whether the arbitrators “at least arguably” acted properly. If there was an argument in favor of their decisions, the decisions had to be confirmed.

The power vested in the arbitrator is a two-edged sword. For the winning party, it means that arbitration can be quicker and less expensive than a court trial; defending an arbitration award on appeal will ordinarily be a (relatively) quick and easy task. Of course this reality also means that for the losing party, the arbitrator’s power means there is no second bite at the apple. After losing in front of the arbitrator, the losing party’s case is essentially over.

For those who are still on the front end of a potential arbitration — negotiating an agreement with an arbitration clause, or performing the initial steps in an arbitration — there are at least two basic lessons from Peterson and Brady:

  • Before agreeing to an arbitration clause, think through how the process terms would play out in real life if a dispute arose. The process for selecting an arbitrator may seem arcane and unimportant, but the process is what produces the arbitrator, and the identity of an arbitrator in an arbitration has even more importance than the identity of a judge in court litigation, since the arbitrator’s decision will receive a less exacting standard of review on appeal.[10]
  • When beginning an arbitration, don’t agree to an arbitrator about whom you have any reservations.

[1] National Football League Players Assoc. v. National Football League, no. 15-1438, sl. op. at 8-9 (8th Cir. 2016). Let’s call this one “Peterson.

[2] National Football League Management Council v. National Football League Players Association, no. 15-2801, sl. op. at 14 (2d Cir. 2016). Let’s call this one “Brady.”

[3] Peterson at 9; Brady at 12.

[4] Peterson at 9; Brady at 12.

[5] Peterson at 11.

[6] Peterson at 11-12.

[7] Brady at 17.

[8] Brady at 27.

[9] Brady at 29, 30.

[10] This is not necessarily a criticism of the NFL Players Association for agreeing to the arbitration clause in the NFL’s Collective Bargaining Agreement.  While the players were on the losing side in Peterson and Brady, there may be any number of players who have benefited from the Collective Bargaining Agreement arbitration clause by winning awards in other cases. Also, the negotiation of the larger agreement may have involved concessions given by one or both sides on other issues in exchange for agreeing to the terms of the arbitration clause.

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