By Karen Bunso
On February 26, 2016, the Unites States District Court Central District of California issued its opinion on the matter of Drew Rosenhaus v DeSean Jackson and concluded that Jackson is entitled to have the award previously ruled for Rosenhaus vacated the on the grounds of evident partiality.
This case stemmed from the 2009 Standard Representation Agreement (SRA) between sports agent Rosenhaus and professional football player Jackson. In a separate contractual agreement, Rosenhaus loaned Jackson $375,000 with the stipulation that only $200,000 needed to be repaid so long as Jackson retained Rosenhaus as his agent.
Jackson later terminated the agreement with Rosenhaus and did not pay money Rosenhaus claimed was owed. Rosenhaus filed a grievance with the National Football League Players Association (NFLPA), which applies arbitration to resolve disputes between players and agents. Jackson responded and argued that the loan agreement constituted an improper inducement under existing NFLPA regulations. In response to the filed grievances, per NFLPA regulations, an “outside impartial arbitrator” would be selected by the NFLPA for the arbitration procedure.
However, Jackson’s Cross-Petition argued that the NFLPA had been appointing the same person — Roger Kaplan — to serve as outside impartial arbitrator repeatedly. The NFLPA had assigned Kaplan as arbitrator for the Rosenhaus-Jackson dispute, which was heard on September 24, 2013. After the hearing, but before Kaplan issued an award, Jackson learned that Kaplan was serving as the arbitrator in another Rosenhaus dispute, between Rosenhaus and his former employee. Danny Martoe.
Since Martoe was a private employee of Rosenhaus, this dispute was not within the NFLPA’s jurisdiction and therefore not subject to mandatory NFLPA arbitration. However, Rosenhaus made arbitration before the NFLPA a stipulation in Martoe’s employment contract. The NFLPA Legal Department granted jurisdiction over this dispute “for the purpose of advancing the clearly stated agreement of the parties,” but would not cover costs.
Citing the appearance of bias, Jackson asked Kaplan to recuse himself from the arbitration with Rosenhaus due to Kaplan’s failure to disclose his retention by Rosenhaus in the Martoe arbitration dispute. Kaplan denied Jackson’s request citing an NFLPA memo, which explained that arbitrators hear cases involving other parties previously adjudicated, which is not unusual and not grounds for recusal. Additionally, Kaplan stated that Jackson had notice of the Martoe dispute through David Cornwell, Martoe’s lead attorney.
On April 10, 2014, Kaplan ruled that Rosenhaus’ compensation to Jackson was not “improper inducement” and for Jackson to pay $516,415 to Rosenhaus. On April 24, 2014, Rosenhaus filed a Petition to Confirm Arbitration Award and on June 5, 2014, Jackson filed a Cross-Petition to Vacate the Arbitration Award.
In August of 2014, the Court held a hearing and considered the dispute and determined that Kaplan’s interpretation of the NFLPA’s anti-inducement rule did not exceed his power and that Jackson did not meet the standard necessary to vacate the award based on actual bias or corruption. The Court also decided that more information was needed to address whether or not Rosenhaus’ choosing of Kaplan in another arbitration needed to be disclosed; and if it was disclosed.
Based on the evidence presented by both Rosenhaus and Jackson, Kaplan had indeed earned additional income in the amount of $140,000 as the arbitrator for Rosenhaus and Martoe. Rosenhaus argued that receipt of $140,000 did not equate to additional income of $140,000, to which the Court stated that this argument was beside the point. The point was that Kaplan was presented a lucrative business opportunity beyond his income from arbitrating disputes within the NFLPA’s jurisdiction. Kaplan received additional income from Rosenhaus in a manner that was “highly unusual” and Kaplan was on notice of—but failed to disclose or at least further investigate—facts reasonably giving the impression that Kaplan might be partial to Rosenhaus in the present and future arbitrations.
Consequently, the Court found that the majority of evidence supported Jackson’s argument. It was the Court’s opinion that Jackson was entitled to have the award ($516,415) previously ruled for Rosenhaus, vacated the on the grounds of evident partiality.
Karen Bunso is a PhD student in Sport Management at Florida State University.
