The Tom Brady Decision - Arbitration Lessons for Employers

The Second Circuit’s decision to reinstate the NFL’s four game suspension of Tom Brady has been in the news this week. To those of us who handle arbitration on a regular basis, it came as no surprise. However, employers who arbitrate cases pursuant to a collective bargaining agreement, or who have or are considering arbitration programs, should not be overly concerned. 

First, it is important to remember that this ruling has absolutely nothing to do with the underlying facts of the case.  I have written about the flaws in the case against Brady elsewhere but they are no longer legally relevant. The only issue before the court was whether Roger Goodell had the authority under the NFL Collective Bargaining  Agreement to impose the penalty that he did, a four game suspension. Reversing the lower court, the Second Circuit ruled that he did have the authority. The Court held:

Our review of the records yields the firm conclusion that the Commissioner properly exercised his broad discretion to resolve an intramural controversy between the League and a player. Accordingly, we REVERSE the judgment of the district court and REMAND with instructions to confirm the award.

The key to this case is the extraordinary power given to Goodell by the NFL’s collective bargaining agreement:

The Commissioner was authorized to impose discipline for, among other things, "conduct detrimental to the integrity of, or public confidence, in the game of professional football." In their collective bargaining agreement, the players and the League mutually decided many years ago that the Commissioner should investigate possible rule violations, should impose appropriate sanctions, and may preside at arbitrations challenging his discipline. Although this tripartite regime may appear somewhat unorthodox, it is the regime bargained for and agreed upon by the parties, which we can only presume they determined was mutually satisfactory.

As a result of this broad authority, the Commissioner does not need proof of wrongdoing by Brady, only his subjective conclusion that his conduct was “detrimental.”  To those who might call for a flag, the Court responded: “Had the parties wished to restrict the Commissioner's authority, they could have fashioned a different agreement.”

All of this is perfectly consistent with the oft cited rule regarding the deference given by Courts to an arbitrator’s decision: “the sole question for us is whether the arbitrator (even arguably) interpreted the parties’ contract, not whether he got its meaning right or wrong.” Oxford Health Plans LLC v. Sutter (U.S. S.Ct. 2013). In other words, the parties bargaining for an arbitrator’s decision and they got what they bargained for; that the decision might be wrong is a risk the parties must accept.

There are a couple of reasons why none of this should keep employers who arbitrate awake at night. First, Brady and the NFL Players Association lost this case not in arbitration or the courts but at the bargaining table. The provision empowering Goodell would be the equivalent of allowing the CEO of a company the absolute authority to decide all grievances involving issues of discipline and discharge. In other words, it would never happen in the real (non-sports) world. The same holds true for non-union employers with arbitration programs. Typically, those programs are administered by a third party organization, e.g. JAMS or the American Arbitration Association, and are subject to rules that guarantee a minimum level of fairness to avoid claims of unconscionability. As a result, the arbitrator will be a neutral third party expected to apply applicable law rather than his or her subjective views.

Arbitration continues to have tremendous benefits for employers and the NFL’s drama over “deflategate” should not discourage those considering it. 



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