Nevada court fumbles NFL's effort to take Gruden dispute to arbitration

NFL says it will appeal.

In October 2021, Las Vegas Raiders head coach Jon Gruden was forced to resign after the revelation of emails in which he made racist, sexist, and other unprofessional comments. At the time, Mr. Gruden was in the fourth year of a 10-year-$100 million contract, the largest contract ever for an NFL coach. 

Mr. Gruden and the Raiders quickly reached a confidential settlement concerning Mr. Gruden’s departure. But in November 2021, Mr. Gruden sued the National Football League and NFL Commissioner Roger Goodell, alleging that they had intentionally and tortiously interfered with his contract with the Raiders by leaking the emails to the media.

The NFL filed separate motions to dismiss the lawsuit and to compel Mr. Gruden to arbitrate his claims. On May 26, Judge Nancy Allf denied both motions, ruling from the bench.

In Part One of this two-part post, I will discuss why the court was wrong to refuse to compel arbitration. In Part Two, I will discuss how the arbitration provisions at issue weakened the NFL’s case.

The contract 

NFL clubs are required to include certain provisions in their contracts with coaches and other non-player personnel. Among other things, employees under contract must agree to be bound by various league rules, including binding arbitration before the Commissioner in the event of a dispute. All sports leagues’ contracts have similar requirements.

In his contract with the Raiders, Mr. Gruden agreed to be bound by the NFL Constitution, which includes Section 8.3, titled “Jurisdiction to Resolve Disputes.” Section 8.3 provides the Commissioner with authority over

(A) Any dispute involving two or more members of the League or involving two or more holders of an ownership interest in a member club of the League, certified to him by any of the disputants;

(B) Any dispute between any player, coach, and/or other employee of any member of the League (or any combination thereof) and any member club or clubs;

(C) Any dispute between or among players, coaches, and/or other employees of any member club or clubs of the League, other than disputes unrelated to and outside the course and scope of the employment of such disputants within the League;

(D) Any dispute between a player and any official of the League;

(E) Any dispute involving a member or members in the League or any players or employees of the members of the League or any combination thereof that in the opinion of the Commissioner constitutes conduct detrimental to the best interests of the League or professional football.

In addition, the contract contained an arbitration provision requiring that “all matters in dispute between Gruden and Club, including without limitation any dispute arising from the terms of this Agreement, shall be referred to the NFL Commissioner for binding arbitration, and his decision shall be accepted as final, conclusive, and unappealable.”

The fumble

In their briefs, the parties spent about 85 pages making well-articulated and interesting arguments about the potential applicability and enforceability of the arbitration clauses at issue. (The NFL brief is here, Mr. Gruden's opposition brief is here, and the NFL reply is here. The transcript of the hearing is here.) Yet, as explained in the NFL’s briefing, courts have long recognized the authority of commissioners to regulate activities within their leagues and have historically deferred to commissioners’ rights to arbitrate any disputes within the league. I say this as an attorney who has been involved in numerous arbitrations and lawsuits where Commissioner Goodell’s authority was at issue.

Nonetheless, Judge Allf, speaking from the bench, in 159 words and without citing a single case or statute, denied the NFL’s motion to compel arbitration, saying that the “arbitration would be unconscionable both procedurally, as well as substantive[ly].” Mr. Gruden had argued that any arbitration would be unfair because the Commissioner would be the arbitrator, an argument that Judge Allf found persuasive. However, as several cases involving players have held, the parties are bound to the arbitrator they agreed upon in the contract. Although Mr. Gruden – unlike a player – was not represented by a union when he agreed to have Commissioner Goodell be the arbitrator, he was represented by one of the most powerful and experienced agents in the NFL.

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.

Robin Shea has 30 years' experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act). 
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