ARBITRATION NFL STYLE

We have spent some time on this blog explaining how arbitration clauses are typically a bad idea in business-to-business contracts.  We have explained that they are by and large unappealable, no matter how egregious an error of law the arbitrator might have committed.  So how, you ask, was the arbitration decision overturned by the Court in the Tom Brady case?

Since Congress decided that, as a default, courts should presume that arbitration awards will be confirmed, there are a precious few grounds indeed to throw out an arbitration award.  And all of them come down to one thing – bias or misconduct by the arbitrator.  (One can see how that differs from mistakes of law.  An honest mistake of law will get a judgment reversed on appeal, but not an arbitration award.)

And misconduct is, when all is said and done, what a federal court said happened in Commissioner Goodell’s NFL.  In that, it was an unusual case.

• Goodell’s administration imposed the suspension on Brady – then he appointed himself as the arbitrator on whether his own sanction was valid. He was, in essence, judge and prosecutor all at once.
• As arbitrator, the Commissioner denied the defense team access to some of the evidence.
• He relied on a supposedly independent report prepared by the same law firm that represented the league in arbitration.

All those things, detailed in a roughly 40-page opinion, added up to sufficient misconduct, according to the Court.  That makes the Brady case remarkable.  Few situations give rise to such misconduct as to overturn an arbitration award.

Two Florida employees who brought claims against Marriott and lost in arbitration learned this at their expense.  They tried to make hay of the fact that the arbitrator’s law firm advertised with the hotel chain.  But that relationship was too tenuous to evidence bias or misconduct, the Court held.   As another example, an attack on an arbitral decision concerning a commercial bond on a V.A. project in Orlando went the same way: the Arbitrator’s professional relationships did not create evident bias.  Proof of actual bias, misconduct, fraud, etc… is very hard to obtain.

The Brady case must then be seen as more of an exception than a rule.   More to the point for future litigants in our state, it should not make one lose sight of the extraordinary difficulties in contesting the validity of an arbitration’s result.