The NFL's problematic arbitration agreement

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Did the NFL drop the ball with Jon Gruden?

Last week, I posted about the unsuccessful motion of the National Football League to compel Jon Gruden, former head coach of the Las Vegas Raiders, to arbitrate his claims in a lawsuit that he filed against the NFL. Although I generally disagreed with the court’s decision denying the motion, it does appear that the language in the arbitration agreement may have contributed to the NFL’s preliminary loss.

The NFL claimed that Mr. Gruden was bound by Section 8.3(E) of the NFL Constitution, which gives the Commissioner authority to arbitrate “[a]ny dispute . . . that in the opinion of the Commissioner constitutes conduct detrimental to the best interests of the League or professional football.” As Mr. Gruden pointed out, invoking this authority would arguably require the Commissioner to predetermine the outcome of the arbitration. The clause might have been more effective if it had provided the Commissioner with authority to arbitrate disputes “that in the opinion of the Commissioner raise questions as to whether a party has engaged in conduct detrimental to the best interests of the League or professional football.” This provision could be broadened further to cover any disputes in which the facts or outcome could, in the Commissioner’s opinion, negatively affect the League or professional football.

Moreover, Section 8.3(E) covers “[a]ny dispute involving a member or members in the League or any employees of the members of the League or any combination thereof . . ..” In other words, it appears to cover only disputes between Mr. Gruden and the Raiders, not disputes between Mr. Gruden and the NFL or Commissioner Goodell. The arbitration provision should instead have clearly applied to all disputes arising out of or relating to Mr. Gruden’s employment contract.

Finally, Mr. Gruden’s contract should have expressly said that the arbitration provisions survived the termination of his employment and contract.

Thus, although I disagree with Judge Nancy Allf’s decision to deny the NFL’s motion to compel arbitration and believe she missed an opportunity to provide judicial guidance on these types of agreements, I think it was reasonable for her to find fault with the NFL’s arbitration provisions. The NFL has said that it will appeal, but even if it does not, it should consider revising its existing arbitration clauses.

The NFL still has ample grounds to defend itself. But, subject to an appeal, it will have to do so in the court system rather than in private arbitration.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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