By Christopher Deubert, Senior Writer
On March 1, 2023, Judge Valerie Caproni of the United States District Court for the Southern District of New York issued a split decision in a class action lawsuit brought by three Black NFL coaches against the NFL and certain clubs alleging a pattern and practice of racial discrimination. At issue was the NFL’s motion to compel the claims to arbitration. The court determined that the arbitration provisions in the coaches’ contracts covered claims against the clubs that employed the coaches, but not the other clubs that were named as defendants. As a result, the lawsuit is being bifurcated between arbitration and federal court.
Let us begin by clarifying the parties. Brian Flores was recently hired as the defensive coordinator of the Minnesota Vikings, but he initiated this lawsuit based on his termination as the Miami Dolphins’ head coach in January 2022 and his unsuccessful candidacy for the head coach positions with the Denver Broncos, New York Giants and Houston Texans. Steve Wilks is now the San Francisco 49ers’ defensive coordinator, but his claims in the lawsuit stem from his termination in 2019 after one year as the Arizona Cardinals’ head coach. Finally, Ray Horton is currently a coach in the USFL, but he alleged that he was discriminated against when he interviewed for the Tennessee Titans’ head coach job in 2016. The Dolphins, Giants, Texans, Broncos, Cardinals, and Titans are named defendants along with the NFL.
Judge Caproni determined that the coaches’ claims related to their employment with the Dolphins, Cardinals, and Titans must be arbitrated pursuant to the arbitration provisions in the coaches’ contracts with those clubs. Further, the court held that the arbitration agreements cover the coaches’ claims against the NFL. The plaintiffs had alleged in their complaint that the NFL was a joint employer of the clubs for purposes of their racial discrimination claims. Thus, because “Plaintiffs treat the NFL and its member teams ‘as a single unit;’ they cannot now claim that the two entities are distinct in order to avoid arbitration.”
The court, however, ruled that the arbitration provisions do not cover the claims against the Broncos, Giants, and Texans because the coaches had no contracts with them. Here, the NFL seems to have made a significant and avoidable error. After filing the lawsuit, Flores was hired by the Pittsburgh Steelers as a senior defensive assistant and linebackers’ coach. The NFL alleged that the arbitration provision in Flores’ contract with the Steelers retroactively covered any claims against the Broncos, Giants, and Texans. The basis for this claim was Flores’ commitment in that agreement to abide by the NFL Constitution, which the NFL contends requires arbitration of any employment-related disputes. However, as noted by the court, “[t]he Flores-Steelers Agreement required the approval of the NFL Commissioner before it became effective.” Because the NFL Commissioner, Roger Goodell, never signed the contract, even after the court prodded this issue, it is not a binding agreement. As a result, Flores can pursue the claims against the Broncos, Giants, and Texans in federal court. Finally, the court said that the claims against the NFL related to the claims against the Broncos, Giants, and Texans so they should also be heard in federal court.
It seems likely there will be a future dispute about the extent to which certain issues concerning the NFL should be in the arbitration proceeding or in federal court. The facts will certainly overlap the proceedings, but bifurcating potential legal liability will be complex. This is particularly true given that these are class claims.
The court’s decision to compel the cases to arbitration is particularly meaningful given that the court rejected the coaches’ challenge to Goodell serving as arbitrator. On this issue, the court relied upon the Second Circuit’s rejection of the same claim made by Tom Brady and the NFLPA in the ‘Deflategate’ proceedings. Nat’l Football League Mgmt. Council v. Nat’l Football League Players’ Ass’n, 820 F.3d 527 (2d Cir. 2016). On this point, the courts generally agree that the parties are bound by the bargain they made. Relatedly, the court was unmoved by other cases that have declined to enforce arbitration agreements appointing the commissioner of a sports league as arbitrator due to concerns about bias, including notably in the ongoing lawsuit brought by former Las Vegas Raiders coach Jon Gruden against the NFL. That decision was pursuant to Nevada law and was thus “interesting, but not controlling.”
On the whole, the court’s decision is a win for the NFL. The bulk of the claims must be arbitrated in a proceeding presided over by Goodell. Assuming the plaintiffs file an arbitration, how Goodell serves as arbitrator will be fascinating. Because Goodell is not an attorney, he usually takes one of four routes when he is supposed to be arbitrator: (1) he serves as arbitrator accompanied by internal or external counsel to advise him; (2) he designates internal NFL counsel to preside over the matter (generally General Counsel Jeff Pash); (3) he designates an attorney who formerly worked for the NFL or one of its clubs as arbitrator (Harold Henderson and Bob Wallace, for example); or (4) in high profile matters where judicial scrutiny is likely, Goodell has designated respected arbitrators to serve, usually former federal judges.
In this case, it is hard to imagine Goodell letting the case get too far out of his grasp. While prior cases concerning discipline against players were controversial and important, they did not concern the type of systematically wrongful conduct alleged in this case. From a public relations and legal perspective, the allegations in the Flores case seem about as bad as it can get for the NFL. Goodell is believed to be nearing the end of his tenure as Commissioner and will certainly not want to leave with a finding of racial discrimination being the capstone to what has otherwise generally been a successful, but often controversial, 17-year run.
Nevertheless, it seems unlikely that Goodell or Pash will serve as the arbitrator in this case. Both are likely to be witnesses, which should preclude them from presiding over the matter. Moreover, the case clearly requires a hearing officer with experience or expertise in employment law. But it probably should not be an attorney who has advised the NFL on such matters to avoid charges of bias. Consequently, the hearing officer may very well be a labor and employment attorney from a prominent firm with NFL ties, but whose work on behalf of the NFL concerns other areas of law.
The coaches are likely to appeal given the uphill battle the coaches now face in arbitration. Nevertheless, the Second Circuit has been deferential to the NFL on these issues in the past. Either way, more interesting decisions and news in these cases are likely forthcoming.
Deubert is Senior Counsel, Constangy, Brooks, Smith & Prophete, LLP