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“Deflategate” Decision Highlights Judicial Deference to Arbitration

On April 25, 2016, the Second Circuit Court of Appeals ruled in a 2-1 decision that NFL Commissioner Roger Goodell’s four game suspension of New England Patriots quarterback Tom Brady would stand. While the federal court’s decision is noteworthy for the impact it will have on the NFL (and its legions of fantasy league players) this fall, the decision also highlights an important aspect of arbitration that employers should be aware of – court deference to arbitral decisions and authority. Generally, courts will avoid vacating or modifying an arbitrator’s decision unless it falls under a few very narrow exceptions. Courts take the position that since the parties agreed to the arbitration process and to have an arbitrator decide their claims, the judicial system should not involve itself in that process unless absolutely necessary. The Brady case is an excellent example of this legal doctrine in practice.

For those who have not tracked the case closely, the basic details are as follows: Last year, the NFL suspended Tom Brady for four games, alleging he had known about, and encouraged, ball tampering by Patriots equipment officials and purposefully destroyed evidence (his cell phone) relating to these allegations. The decision to suspend Brady was made by Commissioner Goodell pursuant to the Collective Bargaining Agreement between the NFL and the NFL Players Association (NFLPA). Brady and the NFLPA appealed the decision and requested an arbitration.

Now this is where things get interesting; under the terms of the CBA between the NFL and the NFLPA, Commissioner Goodell can exercise discretion to serve as the hearing officer, i.e. the arbitrator. As such, Goodell had the authority to not only impose the discipline on Brady but also, when challenged, the exclusive authority to review his decision. Unsurprisingly, Goodell entered an award confirming Brady’s suspension. In September of last year, the NFLPA appealed this decision to federal court. The NFLPA was initially successful and the district court judge found in favor of the NFLPA and vacated Goodell’s award, holding that some of his decisions as arbitrator were fundamentally unfair and that Brady lacked notice of possible suspension based on the discipline provisions of the CBA.

However, the NFL appealed this decision and the appellate court sided with the NFL. The crux of the appellate court’s decision was that Commissioner Goodell was granted broad discretion under the terms of the CBA to not only investigate rule violations, but also to impose discipline, and preside at arbitrations challenging such discipline. As such, because Commissioner Goodell acted within the authority granted to him under the CBA, and because his award applied the contract, the lower court erred in vacating the award. The appellate court emphasized the deference given to Commissioner Goodell as the arbitrator, stating that “a federal court’s review of…arbitration awards is narrowly circumscribed and highly deferential – indeed, among the most deferential in the law.” Thus, “even if an arbitrator makes mistakes of fact or law, we may not disturb an award so long as he acted within the bounds of his bargained-for authority.” In other words, the NFLPA bargained for this process and granted the authority to Commissioner Goodell to act as both the police officer and judge – now it has to live with it.

While the Brady decision was made in the context of a labor contract, courts are equally deferential to decisions in non-labor arbitrations. Because of this, arbitrations are notably different from court proceedings in this way - if there is an adverse decision against the employer, in many instances, the employer is able to appeal the decision. However, in an arbitration, the arbitrator’s decision is essentially final and there is little hope for a second bite at the apple. Consequently, employers should review their arbitration agreements and CBAs and ensure they are drafted carefully and in consideration of this legal principle.

Image credit: pexels.com

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