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Tom Brady’s “Deflategate” Win Part of a Bad Month for Sports Arbitration

If you follow sports at all, you have undoubtedly heard about the “Deflategate” scandal that has embroiled the NFL throughout the offseason, in which New England Patriots quarterback Tom Brady was suspended by the NFL for four games after being found complicit in a scheme to deflate game balls to suit Brady’s preference before the AFC Championship Game against the Indianapolis Colts. You probably have also heard about last week’s ruling by a federal judge overturning the suspension and ordering Brady reinstated.

Brady, like many employees, has an arbitration agreement with the NFL-this one contained within the collective bargaining agreement between the NFL and the player’s union, the NFLPA. When Brady appealed his suspension, he was required to submit the issue to arbitration before arbitrator appointed by NFL Commissioner Roger Goodell. Goodell appointed himself, and after a hearing, upheld the suspension.

Brady filed suit asking a federal court to set aside the award. Many legal analysts predicted that the NFL would win this suit. This was because, under the Federal Arbitration Act, which governs most arbitration in the United States, the arbitrators’ decisions (called “awards”) are subject only to very limited judicial review. A judge cannot set aside an arbitration award just because the judge would have ruled differently, or even if the arbitrator was clearly wrong in applying the law, but only in cases of fraud, corruption, “evident partiality,” or arbitrator misconduct. Courts confirm arbitration awards far more often than they vacate them-80% of the time, in fact, according to a 2005 study published by the ABA.

In vacating the award, Judge Richard Berman of the U.S. District Court for the Southern District of New York cited procedural deficiencies, such as Goodell’s denial of Brady’s request for discovery of certain investigation records, as well as substantive problems such as a lack of notice to Brady that he could receive a four-game suspension for his conduct. This reasoning was surprising because courts generally defer to the arbitrator’s discretion in managing the arbitration procedure and because courts rarely review the substantive merits of the arbitrator’s decision.

In his decision, however, Judge Berman heavily relied on the “industrial common law of the shop” concept, which holds that an arbitrator must interpret and apply a collective bargaining agreement in accordance with practices of the industry and the shop and with prior arbitral precedent. Again, this is a rare grounds for vacating an arbitration decision, because courts generally treat the “law of the shop” as a piece of evidence for the arbitrator to consider, and not a body of formal law for courts to review. Courts have vacated arbitration awards citing the “law of the shop” in the past, but generally only where the arbitrator failed to consider the “law of the shop” at all, not where the court believes the arbitrator applied it erroneously.

This case is not over yet. The NFL appealed Judge Berman’s ruling to the Second Circuit, which granted the NFL’s motion to expedite the appeal in late September. Oral arguments may be heard as early as February 1, or one week before the Super Bowl, though it seems unlikely that the appellate court will rule in time to affect Brady’s eligibility to play if the Patriots make it that far. Even so, the Second Circuit’s decision could have far-reaching implications in sports law, labor law, and arbitration law in general.

If you or someone you know is involved in a contractual dispute, contact an attorney at Abraham, Watkins, Nichols, Agosto, Aziz & Stogner by calling 713-396-3964 or toll free at 800-594-4884.

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