A New York judge made international headlines recently for overturning the NFL's four-game suspension of New England Patriots quarterback Tom Brady. But while some New York football fans may criticize the outcome, the decision shed important light on the importance of arbitration, an often overlooked area of the law. A good deal ofNew York civil litigation, especially cases involving business contract disputes, are settled by arbitrators instead of traditional judges.
The Unusual Nature of NFL Arbitration
The NFL's dispute with Brady was hardly a normal arbitration. Typically, an arbitrator is a neutral third-party appointed under a contract to settle any disputes between the contracting parties. In Brady's case, the dispute was actually between the NFL Management Council—the group that represents the league's franchise owners—and the NFL Players Association. The Management Council and the Player Association signed a collective bargaining agreement in 2011, a contract that sets the terms of every player's employment by the league's teams. Under this agreement, the “arbitrator” in case of disagreement over issues of player discipline is Roger Goodell, the NFL commissioner, who is an employee of the Management Council.
Goodell is also in charge of investigating charges of player misconduct. Here, he directed NFL employees to help determine whether Brady violated the league's playing rules. This again is a departure from how arbitration usually works—the arbitrator does not exercise any sort of investigatory function.
And since arbitration is not a judicial process, the arbitrator normally has no authority to compel any side to produce evidence. Nor must an arbitrator follow all the same rules of evidence as would apply in a state or federal court. But an arbitrator must conduct a fair hearing and afford both sides ample opportunity to present evidence on their behalf.
Judges Look at the Process, Not the Outcome
So what happened in Brady's case? In brief, Commissioner Goodell, acting as arbitrator, upheld an NFL vice president's previous determination that Brady was “generally aware” of “the use of under-inflated footballs” during a playoff game, a “violation of longstanding playing rules.” This determination was based largely on an investigatory report prepared by the NFL's general counsel and another attorney hired by the league. During the subsequent arbitration, Goodell denied Brady's request to cross-examine the general counsel and review other documents related to the investigatory report.
Once an arbitrator issues a decision—known as an “award”—either party may seek judicial action to confirm or vacate the award. Here, both the Management Council and the Players Association sought relief. In his September 4decision, U.S. District Richard M. Berman of Manhattan granted the Players Association's motion to vacate Goodell's award.
It is important to understand Judge Berman did not rule on the merits of the underlying dispute—i.e., whether Brady violated NFL playing rules. The judge vacated the award because he determined Goodell exceeded his authority under the NFL's collective bargaining agreement andfederal law governing arbitration. With respect to the latter, Judge Berman said Goodell's refusal to allow Brady to cross-examine witnesses and conduct discovery unfairly prejudiced the arbitration proceedings.
Need Help With a Business Contract?Few businesses will find themselves in the situation Tom Brady faced. Still, this case is a good illustration of why it is important to understand how arbitration works. An experienced New York business attorney can help you negotiate an arbitration clause as part of a contract, or help you enforce such a provision in an existing agreement. Contact Waldhauser & Nisar, LLP, today if you would like to speak with an attorney right away.