Tom Brady, Under-Inflated Footballs, and the Federal Arbitration Act
By: Robert C. Sentner, Partner, Sentner Safran LLP
European arbitration lawyers are forgiven for asking why they should be interested in a case that involves American football star Tom Brady, quarterback of the Super Bowl Champion New England Patriots football team, the substantive issue of which was whether he used under-inflated footballs to achieve competitive advantage in a major game. The reason is that besides posing important questions about the proper inflation of balls, the case illuminates a significant issue regarding enforcement of arbitral awards in the U.S.
For those interested in arbitration but not Mr. Brady or American football, the case in a nutshell is this: Quarterbacks throw balls to receivers. Some like their balls soft because it makes them easier to throw. There are thus rules governing how hard the balls must be. Hardness is to be measured by pounds per square inch of air. It is alleged that Tom Brady broke those rules in an important game and secretly caused his to be deflated. (In addition to the interesting legal and sporting issues involved, the case set a record for inappropriate double entendres.) A major investigation led to Brady’s suspension for four games.
The collective bargaining agreement between the football player union and the owners contains an arbitration clause allowing a disciplined player to appeal disciplinary measures in an arbitration. Brady, through the players’ union, appealed. The arbitrator, who was also the commissioner of the league, upheld the discipline imposed on several grounds.
The league moved to confirm the arbitration award, and Brady, though the players’ union, moved to vacate under the Federal Arbitration Act. The case was heard in the United States District Court in New York. Last week, Judge Berman of that court vacated the arbitration award, and directed that Brady be permitted to play. The primary ground for the opinion was that Brady lacked notice that the wrongdoing of which he stood accused could result in a suspension of four games. While that conclusion is highly debatable, it is an employment law issue, and not the issue that concerns us here. What concerns us is the Judge’s imposition of his views regarding pre-hearing discovery.
The league’s case against Brady was substantially based on an investigative report conducted by the Paul Weiss law firm. That report was produced to Brady, and the principal investigator was made available for cross-examination at the arbitration hearing. However, Brady’s counsel sought further discovery. Specifically, he asked that the arbitrator require production of the investigator’s unedited notes of witness interviews. The arbitrator refused to make that order.
The arbitration agreement has a specific provision entitled “Discovery.” It states: "Discovery. In appeals under Section 1(a), the parties shall exchange copies of any exhibits upon which they intend to rely no later than three (3) calendar days prior to the hearing. Failure to timely provide any intended exhibit shall preclude its introduction at the hearing."
Hence, when Brady’s counsel sought production of the investigator’s notes, which were not to be used as exhibits, the arbitrator stated that the agreement “provides for tightly circumscribed discovery and does not contemplate the production of any other documents in an Article 46 proceeding other than under these terms.” He also found the notes irrelevant because they played no part in the arbitration proceeding, the detailed report was produced, and the chief investigator was produced for cross-examination.
Thus, on the motion to vacate, Judge Berman was faced with (1) arbitration rules to which the parties had agreed that did not provide for discovery (other than a pre-hearing exchange of exhibits), (2) an arbitrator’s ruling on a procedural discovery matter that complied with those rules, and (3) the terms of the Federal Arbitration Act that make no mention of discovery.
Against this background, Judge Berman substituted his own view for that of the arbitrator, and vacated the award on the ground (among others) that the arbitrator did not order the discovery sought.
Judge Berman held that arbitrators have an affirmative duty “to insure that relevant documentary evidence in the hands of one party is fully and timely made available to the other party,” and that failure of the arbitrator to require this is grounds for vacating the award, if it can be shown to have prejudiced the other side. He cited several lower level courts that had so ruled in similar cases. Since the league’s counsel had access to the investigator’s notes, Judge Berman held it was mandatory that Brady also have access to those notes, even though they formed no part of the evidence in the case. Judge Berman held that the arbitrator’s denial of Brady’s motion to produce the notes “was fundamentally unfair and in violation of 9 U.S.C. § 10(a)(3).”
FAA § 10(a)(3) provides that an arbitration award may be vacated “where the arbitrators were guilty of misconduct . . . in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.” Judge Berman did not specify which clause he believed was violated. However, there was no showing here that the arbitrator refused to hear evidence as to the notes (there was no showing that they would have helped Brady’s case.) Thus, the only applicable provision is the catch-all phrase that the arbitrator was guilty of “other misbehavior by which the rights of any party have been prejudiced.”
Whichever clause Judge Berman relied on, this substitution of judicial views -- seemingly biased toward United States federal court rules on discovery --over that of an arbitrator agreed upon by the parties, intrudes substantially on arbitrators’ autonomy to decide procedural matters, and on parties’ freedom to agree on arbitration terms. Discovery decisions determined early on in an arbitral proceeding may loom large in later efforts to resist enforcement of awards.
The Brady case involved a purely domestic arbitration, so the international enforcement provisions of the New York Convention do not apply. However, it is not a far leap from a Federal Arbitration Act finding that an arbitrator was “guilty of misconduct . . . in refusing to hear evidence pertinent and material to the controversy,” or “other misbehavior by which the rights of any party have been prejudiced,” to a New York Convention finding that a party “was unable to present his case.”
This author, a lifetime New Yorker, fully discloses his bias here against Brady and his team. They keep winning, and winning, and we hate them. On that we can all agree. The ruling allows Brady to play when he otherwise would not. Yet, there are even more significant negative implications to this ruling. It infringes significantly on the sanctity of arbitration proceedings, the independence and authority of arbitrators to interpret the procedural aspects of the parties’ agreement, and to conduct the proceedings accordingly. That should concern all of us who practice in that field.
In any event, stay tuned for the appeal.