Thursday, April 28, 2016
Even if you are Tom Brady, and even if you and your team of some of the best lawyers in America already convinced a federal district court judge that the arbitration conducted by your employer was extremely unfair, you still cannot overcome the massive hurdle necessary to convince a court to overrule a flawed arbitration ruling. This is the lesson that can be seen from the Second Circuit’s opinion on Monday reinstating Brady’s four game suspension
after a federal district court judge reversed the arbitration ruling because of numerous problems
Arbitration is a term used to refer to a binding contractual dispute resolution mechanism that requires that a dispute be decided by an “arbitrator,” rather than courts and juries. There is generally no right to public access for arbitration, so the arbitrators essentially act in secret, and have wide control over the rules for the proceeding. These arbitrators are paid by the hour and do not even have to possess legal training. Their decisions are binding on the parties and are almost entirely unchallengeable, meaning that even if you can show that the arbitrator clearly made the wrong decision, that is not enough to change it. In contrast, if a judge makes a mistake at trial, a party can appeal the outcome of the trial to a higher court.
In the NFL, players are bound by a collective bargaining agreement that governs their relationship to the NFL, and that collective bargaining agreement has an arbitration provision that means disputes are resolved through arbitration conducted by the league, rather than in court. When Tom Brady disputed the league’s decision to suspend him for four games for his alleged involvement in a scheme to deflate balls to give the Patriots a competitive edge, he had no choice but to go to arbitration where the arbitrator, of all people, was the league’s Commissioner, Roger Goodell. Goodell imposed the four game suspension in his role as an arbitrator.
Dissatisfied, Tom Brady asked for the federal courts to step in and reverse the arbitrator’s (Goodell’s) decision. Judge Berman, of the U.S. District Court for the Southern District of New York, took the extraordinary step of vacating Goodell’s arbitration ruling, agreeing with Tom Brady and his lawyers that the arbitration was “fundamentally unfair” because Brady was not permitted access to all of the materials gathered by the NFL’s investigators upon which the decision to suspend Brady was based and because he did not have any prior warning that such a severe punishment could be imposed for his behavior.
The NFL appealed Judge Berman’s decision, and the Second Circuit reversed. The Court noted that judicial review of arbitration rulings is “among the most deferential in the law” and that the parties are stuck with the arbitrator’s rulings on facts and the law, “however good, bad, or ugly.” The Second Circuit determined that the arbitration would stand because the arbitrator “arguably” tried to follow the law and concluded that the case was “not an exceptional one that warrants vacatur.”
If that seems wrong – that the results of arbitration cannot be attacked “however good, bad, or ugly,” you may be horrified to learn that you likely have entered into numerous arbitration agreements. Banks issuing credit cards, used car dealers, and all sorts of manufacturers and retailers slip “forced arbitration” agreements into their contracts with their customers that mean instead of getting the benefit of the courts and juries, you will be stuck with the decision of an arbitrator, “however good, bad, or ugly.” So if the used car you just bought the day before catches fire and burns down your house and it turns out the used car dealer knew it had a defect but didn’t tell you? Arbitration. If the people from the department store coming to install your new appliances decide to rob you instead? Arbitration! If your bank has been secretly charging you too much in fees? You get it.
Even if you believe in your heart of hearts, as a Ravens fan (or really any non-Patriots NFL fan), that Tom Brady deserves much worse than a four game suspension, don’t let your glee over this result cloud the alarm that you should feel when you realize that it would be equally impossible for you to overcome a flawed arbitration ruling should you find yourself in forced arbitration. But where Tom Brady is a multimillionaire who fully understood and bargained for a contract containing an arbitration agreement, you were never really given a choice at all.
For more about forced arbitration, see this blog entry
or read this article