The Discretionary Opt-out Provision and Other Grounds to Terminate the NBA CBA

Article XXXIX (39) of the NBA Collective Bargaining Agreement governs the term, or period of time, the contract is legally enforceable. It was signed on December 8, 2011 and remains in effect through June 30, 2021. Although Article 39 determines a significant issue, that being the beginning and possible end dates of the Agreement, it is a mere 3 pages long (pp. 377-380). In those 3 pages there are 6 separate provisions that allow one or both parties to terminate the agreement before its stated expiration date. As short as it is, it is longer than similar provisions governing termination of CBA’s in Major League Baseball, the National Football League or the National Hockey League. Article 39 is sub-divided into the following sections:

ARTICLE XXXIX TERM OF AGREEMENT ……………………………. 377

Section 1. Expiration Date ……………………………………………… 377

Section 2. Mutual Options to Terminate Following Sixth Season ……………..377

Section 3. Termination by Players Association/Anti-Collusion ………………….377

Section 4. Termination by NBA/National TV Revenues ……………………….377

Section 5. Termination by NBA/Force Majeure …………….. 378

Section 6. Mutual Right of Termination ………………………….. 380

Section 7. No Obligation to Terminate; No Waiver ……….. 380

Section 1: Expiration Date

Article 39, Section 1 provides that the 10-year agreement is effective from December 8, 2011 through June 30, 2021 unless terminated under another section of this Article:

Section 1 (Expiration Date)

This Agreement shall be effective from December 8, 2011 and, unless terminated pursuant to the provisions of this Article XXXIX, shall continue in full force and effect through June 30, 2021.

By comparison, the 2005 CBA was a 6 year deal with an owners’ option to extend it for an additional 7th year. Considering the opt-out provision in the current CBA, it is guaranteed to be in effect for just under 6 years.

Opting Out at the Discretion of the Parties

 

Section 2: Mutual Options to Terminate Following 6th Season

The intent of the parties was to allow either side to unilaterally terminate the agreement after the 6th season, 2016-17. That is why the opt out is keyed to June 30, 2017 instead of 6 years from December 8, 2011 (December 8, 2017).

Section 2 (Mutual Options to Terminate Following Sixth Season)

The NBA and the Players Association shall each have the option to terminate this Agreement on June 30, 2017 by serving written notice of its exercise of such option on the other party on or before December 15, 2016.

This mutual termination clause is what most reports about collective bargaining in the NBA are referring to without being specific, even though there are other termination provisions contained in the Agreement.

The title, “Section 2”, is a bit of a misnomer; rather than a “section” of the article, it is merely one sentence. It is open-ended in that there are no pre-conditions which have to be met in order to give rise to the parties’ right to exercise the option. No penalties are attached to the early termination of the Agreement or the service of notice of intent to opt-out. There is no provision for liquidated damages if the termination results in the cancellation of games or other negative economic consequences to the non-terminating party.

One effect of the totally discretionary early termination provision, one that doesn’t hinge on any pre-conditions, has been to engender speculation now, two seasons ahead of the effective date. Teams and players are betting on whether one side or the other will exercise the option. Agents and owners are left to consider whether a deal made now for a period of years ending prior to June 2017, or extending past that date, will pay/cost more or less under the current salary cap when compared with the anticipated increases in the salary cap. Can players lock in a longer term deal now for higher money under the current cap? Or would a shorter contract that allows them to demand money over the current cap at its expiration be better?

Of course, the uncertainty is one of the downsides of structuring the Agreement this way. One upside would be the chance to make early adjustments to the Agreement for issues that arise which were not anticipated by the parties at the effective date or for which the parties lacked sufficient information.

By comparison, Major League Baseball removes any uncertainty about the timeframe of its CBA. It is effective from dates certain 2012 through 2016.

Article 69 of the NFL CBA governs the duration of agreement which is effective from August 4, 2011 until the last day of the 2020 league year. The only permissible ground for early termination would be due to collusion under Articles 16 and 17 and only after a System Arbitrator’s decision finding the requisite conditions have been met. (comparable to Article 39, section 3 of the NBA CBA).

The NHL CBA most closely resembles the NBA CBA. In Article 3, the NHL Agreement is stated to be effective September 16, 2012 through September 15, 2022. The parties may serve notice of termination of the Agreement at least 120 days (May 15, 2022) prior to September 15, 2022 or not less than a like period in any year thereafter otherwise it will remain in effect. There is an early termination provision which allows each side to terminate the Agreement two years prior to the expiration date of September 15, 2022. To exercise this option, the NHL must deliver written notice to the NHLPA of its election to do so on or before September 1, 2019. If the NHL has not already done so, the NHLPA may exercise its option for early termination by delivery of written notification to the NHL of its election to do so on or before September 15, 2019.

The NHL CBA is in effect for at least 8 years with notice of early termination a full year ahead in contract year 7. The NBA CBA is in effect for 6 seasons before the early termination option kicks in. The NHL CBA also provides for a longer run-up, double the time the NBA requires, for notice prior to the actual termination date. The NHL requires 1 year notice and the NBA just 6 months notice. Under the NBA CBA in order to trigger the early termination effective June 30, 2017, the terminating party has to give written notice of their intent to do so by December 15, 2016.

Neither the NHL nor NBA CBA demands specific compliance with any preconditions to severe the agreement. Whether to opt out of the agreement is at the discretion of either party.

Further, the NBA CBA does not require the parties to engage in negotiations to reach a new CBA within a specified time. There is no requirement that a (federal) mediator meet with the parties to facilitate negotiations. Unlike other sections of the CBA that require disputes to be submitted to arbitration, when negotiating a new Agreement, the parties are not required to submit their disagreements to binding arbitration. The parties must simply negotiate in good faith.

Terminating the Agreement Under Certain Specified Conditions

Other provisions of Article XXXIX address the termination of the CBA by one party or the other only if certain events occur or under defined conditions. Sections 3, 4, 5, 6 and 7, respectively, allow termination if:

  • Article XIV, Section 15 is satisfied the players may terminate;
  • “national television revenues” and “other media income” fall below a certain threshold according to a mathematical formula spelled out in the CBA then the owners may terminate;
  • an act of war, terrorism, natural disaster or similar event makes it impossible to carry out obligations under the agreement the owners may terminate;
  • Articles VII, X, XI and XIV are vacated, enjoined or declared unenforceable, either party may terminate; and lastly,
  • the right to exercise an option to terminate the Agreement with respect to any season does not waive either party’s right, if any, to terminate the Agreement in any succeeding season.

Section 3: Termination by players in event of anti-collusion.

The prohibition on collusion, in its simplest terms, means that NBA Teams won’t act collectively with the league or any other NBA Team by agreeing: (a) to negotiate or not to negotiate with any Veteran or Rookie;(b) to submit or not to submit an Offer Sheet to any Restricted Free Agent;(c) to offer or not to offer a Player Contract to any Free Agent; (d) to exercise or not to exercise a Right of First Refusal; or (e) concerning the terms or conditions of employment offered to any Veteran or Rookie.

Section 3 (Termination by Players Association/Anti-Collusion)

(a)In the event the conditions of Article XIV, Section 15 are satisfied, the Players Association shall have the right to terminate this Agreement by serving written notice of its exercise of such right within thirty (30) days after the System Arbitrator’s report finding the requisite conditions (pursuant to Article XIV, Section 15) becomes final and any appeals therefrom have been exhausted or, in the absence of a System Arbitrator, by serving such written notice upon the NBA within thirty (30) days after any decision by a court finding the requisite conditions (pursuant to Article XIV, Section 15). In the latter situation, if the finding of the court is reversed on appeal, the Agreement shall be immediately reinstated and both parties reserve their rights with respect to any conduct by the other party during the period from the date of service of the termination notice to the date upon which the Agreement was reinstated.

(b)If the Players Association exercises the right accorded it by Section 3(a) above, this Agreement shall terminate as of the June 30 immediately following the service of the termination notice.

Section 4: Termination by NBA/National TV Revenues

There are two parts to Section 4: subdivision (a) defines the term “National TV Revenues” as the net income received by the NBA from television and other media broadcast agreements. Subdivision (b) gives the NBA the right to terminate the agreement if television revenue ($897 million was the annual revenue under the 2007 ABC and TBS contracts) plus 104.5% of other media income in the 2010-11 salary cap year becomes reduced by at least 35%.   “Successor agreement” refers to an agreement that comes after the term of the 2007 ABC and TBS television contracts. The NBA can terminate effective June 30th before the first season which would be covered by a “successor agreement” by providing notice by at least April 30th. Upon providing such notice of termination, both the NBA and NBPA are obligated to negotiate in good faith to enter into a Successor Agreement (See CBA Article VII(1)(c)(2)).

Section 4 (Termination by NBA/National TV Revenues)

(a)For the purposes of this provision: (i) “National TV Revenues” shall mean the rights fees or other non-contingent payments stated in the NBA’s third-party national broadcast network ( e.g.ABC) and cable network ( e.g.TNT or ESPN) television agreements (each, a “National TV  Agreement”); and (ii) “Other Media Income” shall mean the aggregate net income earned by any League-related entity (as defined in Article VII, Section 1(a)(1)) (but excluding net income attributable to ownership interests in any such League-related entity that is not owned by the NBA, NBA Properties, Inc., NBA Media Ventures, LLC and/or a group of NBA Teams) or by the NBA on behalf of the Teams from agreements that provide for the transmission of live (or delayed) NBA games, on a domestic or international basis, by means of television, radio, internet andany other mode of delivery referenced in Article VII, Section 1(a)(1)(ii), net of reasonable and customary expenses related thereto.

(b) If, during the term of this Agreement, (i) the sum of the average annual National TV Revenues provided for under the Successor Agreements (as defined in Article VII, Section 1(c)(2)), plus 104.5% of Other Media Income for the most recent Salary Cap Year, will be at least 35% less than (ii) the sum of the average annual National TV Revenues provided for under the NBA/ABC and NBA/TBS Agreements (which,for purposes of this provision only, the parties agree is $897 million), plus Other Media Income for the 2010-11 Salary Cap Year, the NBA shall have the right to terminate this Agreement effective as of the June 30 immediately preceding the first Season covered by the Successor Agreements, by providing written notice of such termination to the PlayersAssociation at least sixty (60) days prior to such June 30. During the period following delivery of such written notice of termination, the NBA and the Players Association shall engage in good faith negotiations for the purpose of entering into a successor agreement and the provisions of Article XXX shall remain in full force and effect.

In other words, if “national television revenues” and “other media income” fall below a certain threshold according to this mathematical formula spelled out in the 2011 CBA then the owners may terminate. In fact, since the 2011 CBA the overall league basketball-related income was much higher than the parties had modeled. The owners have signed a 9-year, $24 billion television deal which goes into effect in the 2016-2017 season. [1] That this type of increase was not predicted explains why there is no counterpart to Section 4 in which the NBPA is given an option for early termination in the event television and other media revenues increase by a certain percentage over the 2011 calculation.

Section 5: “Force Majeure”

Force Majeure termination clauses are not unique to sports. Such provisions are commonly found, for example, in leases, contracts or other agreements. The are intended to address each party’s legal rights and obligations in the event performance is impossible because of a crisis (natural disaster, war, act of terrorism, etc.). One example of a circumstance that this section anticipates is how to handle the issue of payment to players if one or more games cannot be played.

Section 5 (Termination by NBA/Force Majeure)

(a)“Force Majeure Event” shall mean the occurrence of any of the following events or conditions, provided that such event or condition either (i) makes it impossible for the NBA to perform its obligations under this Agreement, or (ii) frustrates the underlying purpose of this Agreement, or (iii) makes it economically impracticable for the NBA to perform its obligations under this Agreement: wars or war-like action (whether actual or threatened and whether conventional or other, including, but not limited to, chemical or biological wars or war-like action); sabotage terrorism or threats of sabotage or terrorism; explosions; epidemics; weather or natural disasters, including, but not limited to, fires, floods, droughts, hurricanes, tornados, storms or earthquakes; and any governmental order or action (civil or military); provided, however, that none of the foregoing enumerated events or conditions is within the reasonable control of the NBA or an NBA Team.

(b) In addition to any other rights a Team or the NBA may have by contract or by law, if a Force Majeure Event occurs and, as a result, one or more Teams are unable to play one or more games (whether Exhibition, Regular Season, or Playoff games), then, for each missed Exhibition, Regular Season, or Playoff game during such period (the “Force Majeure Period”) that was not rescheduled and replayed, the Compensation payable to each player who was on the roster of a Team that was unable to play one or more games during the Force Majeure Period shall be reduced by 1/94.6th of the player’s Compensation for the Season(s) covering theForce Majeure Period. For purposes of the foregoing calculation, and notwithstanding the actual number of games that any Team played, was scheduled to play, or could have played during the Seasons(s) affected by the Force Majeure Event, each Team shall be deemed to play seven (7) Exhibition games, eighty-two (82) Regular Season games, and 5.6 Playoff games during each such Season.

(c)In the event that Section 5(b) above applies, the applicable Compensation reduction from each player shall be withheld by the player’s Team from the first Compensation payment (or payments, if the first such payment is insufficient to satisfy the reduction) that is (or are) due or to become due to such player following the commencement of the Force Majeure Period (whether under the Player Contract that was in existence at the commencement of the Force Majeure Period or any subsequent Player Contract between the player and the Team). If such Compensation payment (or payments) is (or are) insufficient to cover the Compensation reduction required by Section 5(b) above, then either (i) the player shall promptly pay the difference directly to the Team (“old Team”), or (ii) if he subsequently enters into a Player Contract with, or is traded to, another NBA Team (“new Team”), such difference shall be withheld from the first available Compensation payment (or payments, if the first such payment is insufficient to satisfy the remaining reduction) that is (or are) due to the player from the new Team and shall be remitted by the new Team to the old Team.

(d)Upon the occurrence of a Force Majeure Event satisfying the terms of Section 5(a) above, the NBA shall have the right to terminate this Agreement as of the sixtieth (60th) day following delivery to the Players Association of a written notice of termination, which must be delivered to the Players Association within sixty (60) days of the Force Majeure Event. During the sixty-day period following delivery of such written notice of termination, the NBA and the Players Association shall engage in good faith negotiations for the purpose of entering into a successor agreement, and during such period the provisions of Article XXX shall remain in full force and effect.

Section 6: Mutual Right of Termination

Ironically, the shortest section in Article 39 is the mutual discretionary opt out in Section 2 which is the most likely ground the parties will cite for early termination. The other mutual right of termination exists in Section 6 but the exercise of the option is not wholly discretionary like Section 2; rather, Section 6 provides that if certain key provisions (“BRI”, salary cap, free agency, draft, anti-collusion) are held to be unenforceable or void either party may terminate the entire CBA.

Section 6 (Mutual Right of Termination)

If at any time during the term of this Agreement any provision contained in Article VII, X, XI and XIV of this Agreement is enjoined, vacated, declared null and void or is rendered unenforceable by any court of competent jurisdiction, then either the NBA or the Players Association shall have the right to terminate this Agreement by serving upon the other party written notice of termination at least sixty (60) days prior to the effective date of such termination.

Section 7: No obligation to terminate

Section 7 holds that there is no obligation to terminate and the parties do not waive their right to terminate in successive years if they forgo doing so initially.

Section 7 (No Obligation to Terminate; No Waiver)

The grant to either party of a right or option to terminate pursuant to the provisions of this Article XXXIX shall not carry with it the obligation to exercise that right or option; and the failure of the NBA or the Players Association to exercise any right or option to terminate this Agreement with respect to any playing Season in accordance with this Article XXXIX shall not be deemed a waiver of or in any way impair or prejudice the NBA or the Players Association’s right or option, if any, to terminate this Agreement in accordance with this Article with respect to any succeeding Season.

CONCLUSION

The two provisions of Article XXXIX (39) that have the greatest potential for modification in the next round of CBA negotiations are Section 2 and Section 4. The formula contained in Section 4 is outdated. Financial projections will dictate a more appropriate calculation. The NBPA may consider whether to advocate for an option to terminate the CBA early if the revenue projections increase along the lines of what occurred after 2011. This will depend on the term of the new CBA and how that term coincides with the term of the new television deal starting in the 2016-17 season.

Section 2 of the NBA CBA was contrasted above with the MLB, NFL and NHL Agreements.  Professional Baseball and Football do not have comparable discretionary early termination provisions; the NHL CBA does have a clause similar to that in the NBA CBA.

A middle ground between the different approaches could involve, as suggested above, mandatory mediation within a stated timeframe to try to resolve developing issues between the parties to give more clarity to the process than exists under the current agreement. The party with the disadvantaged position might also elect to receive liquidated damages under a formula analogous to the television and media revenue calculation in the current CBA Article VII(1)(c)(2) and Article XXXIX section 4. Such a formula could take effect after a defined period and thereby function to ensure timely and good faith bargaining if the party wished to avoid a monetary penalty.

Ultimately, negotiations pertaining to Article XXXIX will take place within the context of macro-level concerns about ensuring a financially stable business model; in addition to micro-level issues of revenue sharing and maximizing individual player and team profitability.

ENDNOTES

[1] See “Summer League Buzz: Owners the ones to watch in CBA negotiations”, Ken Berger, July 14, 2015 (www.cbssports.com/nba/writer/ken-berger/25242544/summer-league-buzz-owners-may-opt-out-of-collective-bargaining )

14 Months and Counting…Negotiating a Deal Before the CBA Opt-Out Notice Deadline

The NBA has faced interruptions in its playing schedule due to labor disagreements four times in its history. The upcoming 2015-2016 season is safe. The current NBA Collective Bargaining Agreement became effective on December 8, 2011. It is effective through June 30, 2021 if the parties do nothing. However, there is an “opt out” provision contained in Article XXXIX, Section 2. The opt-out allows either side to terminate the agreement after the 2016-2017 season.[1]

The earliest either party may terminate the agreement is June 30, 2017. So why discuss the CBA now? Because in order to opt out, written notice must be served on the other party by December 15, 2016. If notice is served, contractual relationships and future investments become uncertain and uncertainty is bad for business.

Part One of this article will look at the timeframe relevant to CBA negotiations; Part Two will examine the specific CBA language governing the termination of the current agreement.

The players’ union (NBPA) Executive Director Michele Roberts has publicly said she would like to avoid a work stoppage by completing CBA negotiations by the end of this season (by Spring 2016). See www.RealGM.comMichele Roberts Describes New CBA Deal Timeline As ‘Aspiration’” (September 5, 2015). Two of the main issues are expected to be the split of “basketball related income” (BRI) and making up for the 6 years between 2008-2014 that the salary cap hovered around $58 million.

Likewise, team owners were concerned in the 2011 CBA with achieving a sustainable business model and competitive balance. Owners have already tried to deal with the salary cap that will increase to approximately $89 million in 2016-17 and $108 million in 2017-18. This past March owners made an offer to the NBPA to “smooth over” the salary cap issue. The union rejected the proposal to breakup the cap increase over several seasons choosing instead to allow the increase to come in all at once after the upcoming season. This was an early attempt by owners to anticipate the effect of the league’s new 9-year, $24 billion dollar television/media deal that takes effect in the 2016-17 season. See Jeffrey Zillgitt, “NBA, union have too much to lose to op out of CBA” USA Today (August 5, 2015) (www.usatoday.com/story/sports/nba/2015/08/05/nba-nbpa-collective-bargaining-cba-lucrative-tv-deal-big-player-contracts/31125779); Will Green “NBA and NBPA to start 2017 CBA negotiations in August” SI Wire (June 10, 2015) (www.si.com/nba/2015/06/10/nba-nbpa-collective-bargaining-agreement-negotiations-august).

The parties will have 7 more months after this season ends before the written notice of termination must be served. In other words, to resolve issues arising under the CBA and to avoid the possibility of a work stoppage, the parties have a window presently of 14 months. In my experience over the last 20 years negotiating contracts (albeit not NBA CBA’s), and as a review of the history of CBA negotiations in the NBA demonstrates, 14 months is not a long time to resolve issues as complicated as those that will be presented in this round of talks. Roberts would like to see it done in half that time, in the next 7 months. How ambitious is that timeline?

Let’s compare the chronology of events that occurred under the 2005 CBA. That Agreement was a 6-year deal with an option that the owners could exercise to extend it through the 2011-12 season. The owners announced in 2009 they would not exercise their right under the contract option to extend the CBA into the 2011-12 season. This meant the CBA would expire at the end of June 2011. Since the parties had not agreed on a new CBA by then there was a delay in starting the 2011-12 season while the parties tried to agree on a new deal. Current NBA Commissioner Adam Silver was Deputy Commissioner and Chief Operating Officer under then-Commissioner David Stern. Silver was one of the main negotiators on behalf of the League and team owners the last time around and the actual signatory on the CBA.

Team owners imposed a “lock-out”[2] beginning on July 1, 2011 which lasted until December 8, 2011. A succinct summary of those events can be found at NBA.com Labor Central “NBA lockout timeline” (September 9, 2011). Prior to that time the NBA had not had a protracted labor dispute since the summer of 1998, when a lockout extended into February of 1999 and forced the league to play a 50-game season. See “Players union files claim against owners” http//sports.espn.go.com/nba/news/story?id=6584220 (May 24, 2011).

The time from the beginning of CBA negotiations until the lockout was August 2009-June 2011. The time for the current negotiations between the NBA and NBPA would be August 2015-June 2017. To understand how the 2011 CBA was reached, and the relevance that process might have to the upcoming CBA discussions, it is useful to look at the history of those negotiations.

 The following quotes are selected from excerpts of “NBA lockout timeline” cited above:

 June 21, 2005: The NBA and players union agree on a new six-year collective bargaining agreement. Some of the elements of the deal include:

  • An age minimum of 19, with the stipulation that American players be one year removed from high school. International players are eligible for the draft if they are at least 19 in the calendar year of the draft. Contracts for first-round draft picks are also revamped, shifting from three years guaranteed with a team option for a fourth year to two years guaranteed with a team option on the third and fourth years.
  • The luxury tax in effect every season. Previously, the luxury tax was in effect only in seasons where league-wide salaries exceed 61.1 percent of basketball-related income (“BRI”).
  • Maximum contracts are reduced — from seven years for free agents re-signing with their current team and six years for signing with a new team — to six and five years, respectively.
  • Formation of the NBA D-League

February 27, 2009: The AP reports the NBA lines up $200 million to be distributed in loans to 12 teams that have expressed interest in the funds as they face financial hardship during tough economic times.

March 20, 2009: 
After rumblings that the players and owners will reopen talks on reaching a new CBA, [NBA Commissioner] David Stern reveals that he and [NBPA Executive Director] G. William “Billy” Hunter have agreed to begin “substantive discussions.”

August 5, 2009: In New York, the NBA officially notifies the players union during a 3 ½-hour meeting between a group of 10 owners and reps from the players union that it will not exercise an option to extend the CBA into the 2011-12 season. It is categorized as an introductory meeting. No proposals for a new CBA are made.

January 29, 2010: 
The union receives a proposal from the NBA and its owners that calls for drastic financial change, including a “hard” salary cap which would eliminate some exceptions that teams over the cap can use to sign players if they are willing to pay a luxury tax. The proposal suggests cutting player contracts to a maximum of four years and decreasing the players’ share of basketball-related income from 57 percent to under 50 percent.

February 12-14, 2010: The NBA’s proposal is rejected by the union.Stern asserts that the NBA is projecting league-wide losses of about $400 million for the season and that a new financial model is needed.

July 2, 2010: The players union submits its first counter-proposal to the owners. The proposal includes leaving the current soft cap with exceptions and the luxury tax in place in addition to pushing for a better revenue-sharing model among the teams.

August 12, 2010: Big name players like Carmelo Anthony, LeBron James and Dwyane Wade are in attendance when the players’ union meets with owners in New York.

October 21, 2010: Stern reveals that the NBA wants to drastically slash players’ salaries as the league anticipates roughly $350 million in losses for the season with the league looking for a swing of $750 to $800 million in its favor. Commissioner also says that eliminating teams could be up for discussion as the league tries to stabilize its financial situation.

May 24, 2011: 
The players union files a lawsuit with the National Labor Relations Board to try to prevent a lockout. The union claimed the league was engaging in unfair practices including not bargaining in good faith, demanding huge financial takeaways from prior contracts without offering concessions in return, bypassing the Union to deal directly with players and threatening an unlawful lockout.

June 30, 2011 (midnight):

The league announces that it will lock out the players when the CBA expires at midnight. Lockout begins at 12:01 a.m. on July 1st.

July 12, 2011: 
NBA.com reports that, because the players were paid less than 57 percent of basketball-related income that was called for in the CBA, $160 million from escrow funds will be returned to the players.[3]

July 13, 2011: The players union sends a memo to the players supporting their plans to play basketball overseas.

July 29, 2011: With the NBA’s foreseeable future in jeopardy, FIBA grants players the option to play overseas.

August 1, 2011: The NBA also files unfair labor charges against the players union.

 August 31, 2011: 
Sides meet for six hours in New York in the second joint meeting since the lockout began.

September 7, 2011: Meetings continue with another six-hour session.

September 8, 2011: Sides meet for a second consecutive day

September 12, 2011: 
Charlotte Bobcats owner Michael Jordan is fined $100,000 for public comments made about the labor dispute.

September 13, 2011: 
Talks resume for the third time in two weeks with the additional attendance of the owners’ labor relations committee and the union’s executive committee. Both sides continue to disagree on changes to the salary cap structure.

September 21, 2011: 
Small groups from both sides meet in New York for a few hours and plan to continue talks the next day.

September 22, 2011: 
After another unsuccessful meeting between the heads of the NBA and players union, the threat of training camps and some exhibition games being cancelled becomes more of a reality.

September 23, 2011:
The league announces that training camps are being postponed indefinitely and all preseason games scheduled for Oct. 9-15 will be cancelled.

September 27, 2011: 
Sides take part in another small-groups meeting

 September 28, 2011: The NBA and players union hold another meeting and the calendar is again a looming counterpart in the labor negotiations. According to a report, if little to no progress is made during talks planned for the weekend, Stern says the 2011-12 season is in serious jeopardy. On the players’ side, the union is requesting a collective of star players including LeBron James, Kobe Bryant and Kevin Durant to attend the Friday meeting.

 September 30, 2011: With star players such as Dwyane Wade, LeBron James, Carmelo Anthony and Paul Pierce on hand, the union and owners resume labor discussions.  According to reports, a tense exchange occurred between Wade and Stern after Wade, frustrated with the proceedings, felt he was disrespected by the Commissioner. In one bit of progress, the league says it is committed to quadruple revenue sharing that would go to smaller-market teams in the third year of a new revenue sharing plan the league is working on.

October 1, 2011: The longest meeting between both sides since the lockout began July 1 takes place as the NBA and union talk for seven hours. The majority of the session is devoted to the salary cap structure, which the players insist on keeping the same while owners push for a number of changes. The players voiced their wishes for the next cap, including the midlevel and Larry Bird exceptions remaining in the deal.

October 3, 2011: On the day training camps were to have officially opened, Silver stressed that compromise would be needed on both sides to get a deal done.

October 4, 2011:
 The sides meet for about four hours and fail to reach agreement on the split of basketball-related revenue. The NBA announces the cancellation of the entire 114-game preseason schedule. Stern says that if a deal on a new collective bargaining agreement, at least in principle, is not reached by Oct. 10 (Monday), then the first two weeks of the season will be lost. The regular season is scheduled to begin Nov. 1.  Stern and Silver said owners offered players a 50-50 split of basketball-related income. That’s below the 57 percent that players were guaranteed under the previous collective bargaining agreement, but more than the 47 percent union officials said the owners previously proposed to them.

October 10, 2011: 
Both sides reconvened for a little over seven hours but were unable to come to terms, resulting in the first two weeks of the NBA season being canceled. Stern said . . .the longer it takes to come to an agreement, the more owners will try to recoup monetary losses incurred through canceled games.

October 12, 2011:
 The players union and NBA agree to meet early next week with a federal mediator as the sides continue to try to hammer out a new collective bargaining agreement. Similar mediations were successful in helping both the NFL and Major League Soccer reach deals on their own CBA’s.

October 17, 2011: Federal mediator George Cohen meets individually with both sides in preparation for a joint session scheduled for the following day.

October 18, 2011:
 NBA players and owners spend 16 hours meeting with Cohen and plan to return the next day at 10 a.m. to continue the talks. They didn’t emerge with the deal Stern wanted, but things went well enough that the owners decide to alter their plans of proceeding with their Board of Governors meeting the following day after previously saying they weren’t available. Following recommendation from Cohen, both sides left the meeting without commenting.

October 19, 2011:
 After a 16-hour marathon meeting, the sides meet for more than eight hours and agreed to continue talks on the next day.

October 20, 2011:
 NBA labor talks turned nasty and broke off when three days of meetings failed to yield a deal to end a 112-day lockout, raising the likelihood that even more games will be canceled. After 30 hours of negotiations before a federal mediator, the sides remained divided over two main issues — the division of revenues and the structure of the salary cap system. (emphasis added)

October 26-27, 2011:
 Sides negotiate for more than 15 hours making incremental progress on the “system” issues.

October 27, 2011:
 After negotiating for more than seven hours, sides agree to reconvene the next day.

October 28, 2011:
 After seemingly making progress the day before, talks crashed, with BRI the main culprit. With talks stalled, Stern canceled all games through Nov. 30th.

November 5, 2011:
 After meeting separately during the morning, the two sides met for 8-1/2 hours, with federal mediator George Cohen returning to help find a compromise. The NBA proposed a new offer to the players, and set a deadline of Nov. 9 at the close of business for the players to accept.

November 8, 2011:
 43 players, including Carmelo Anthony and Blake Griffin and representatives from 29 teams and, met for about three hours Tuesday afternoon to discuss the owners’ latest proposal. In a post-meeting news conference, they rejected the proposal and said the union wanted more negotiations before the 5 p.m. Wednesday (Nov. 9) deadline imposed by Stern. The union indicated there were system issues that needed to be modified if players were going to accept a split in a so-called “band” of from 49 to 51 percent of basketball-related revenue (BRI), which is the “50-50” deal offered by owners. At this point, the union and NBA have spent 22 sessions and 148 hours trying to agree on a new collective bargaining agreement.

November 10, 2011:
 A 72-game season starting Dec. 15 is proposed for NBA players.

November 14, 2011:
 After spending the weekend mulling the NBA’s offer, players arrived in New York City and delivered a [response] to one more ultimatum from NBA Commissioner David Stern: See you in court. The players’ association rejected the league’s latest proposal for a new labor deal and began disbanding, paving the way for a lawsuit that throws the season in jeopardy. By filing a disclaimer of interest, the union ended its role as a collective-bargaining agent and the NBPA executive director became the executive director of a “trade association”. Outside counsel Jeffrey Kessler and David Boies[4] — who, ironically, represented NFL owners when they thwarted the football players’ de-certification push last spring — will become the key figures from the players’ side, taking over for Hunter and NBPA president Derek Fisher. (emphasis added)

November 15, 2011:
 The locked-out players, including Carmelo Anthony and Kevin Durant, file class-action antitrust lawsuits against the league in northern California and in Minneapolis. Boies said the NBA lockout violates antitrust laws by refusing to allow players to work. NBA.com’s Labor Central Players file pair of antitrust lawsuits against NBA” (November 15, 2011)

November 17, 2011:
 Stern and the team owners conduct a conference call to discuss and update each other on the failed negotiations and resulting upcoming litigation being pursued now by the players.

November 21, 2011: 
Boies and the players withdraw the California lawsuit to focus on the complaint filed in Minnesota[5] [where things probably would move faster because the docket is less congested].

November 23, 2011:
 Talks aimed at ending the NBA lockout resumed.

November 25-26, 2011:
 NBA owners and players reached a tentative agreement early Saturday to end the 149-day lockout. After a secret meeting earlier this week, the sides met for more than 15 hours Friday, working to try to save the season. This handshake deal, however, still must be ratified by both owners and players. Thirty more days are needed from the handshake agreement to tipoff, and before players can vote to approve a deal, they must drop their lawsuit against the league and recertify as a union. A simple majority vote of the 430-plus union membership is needed to approve — or disapprove — the settlement. At least 15 of 29 owners are needed to ratify. The league plans a 66-game season and aims to open camps Dec. 9.

December 8, 2011:
 Both the owners and players ratified a new 10-year collective bargaining agreement, enabling training camps and the free agency period for the 2011-12 season to begin on Fri., Dec. 9 at 2 p.m. ET. The agreement includes a 50-50 split of basketball-related income, a higher luxury tax with progressive tax rates and the retention of a soft salary cap system. The maximum length of player contracts will be five years (previously six) and maximum annual increases in salaries will be 7.5% for teams re-signing their own players and 4.5% for teams signing other teams’ free agents. Eligibility for the NBA draft remains at age 19 as it was under previous CBA.

  *   *   *   *   *

It was almost 23 months from the owners’ formal announcement on August 5, 2009 that they would not exercise the contract option to extend the CBA until the lock-out at midnight on June 30, 2011. Another 161 days (or just over 5 months) passed after the lock-out until the start of games in a shortened season. Therefore, from the formal announcement and start of CBA negotiations, through the work stoppage, and to the start of play, over 28 months passed. Considering that timeframe, August 2015 was not too early for the NBA and NBPA to begin the current CBA negotiations.

The timeline from the initiation of meetings in August 2015 to the deadline to serve notice that one party or the other will opt-out (December 15, 2016) is, as of this writing, a little over 14 months. From service of notice to the actual termination of the Agreement (June 30, 2017) is another 6-1/2 months. The total timeframe until a potential work stoppage is 20+ months with the clock ticking; This is 3 months less than the negotiation period that preceded the 2011 lock-out.

The NBA and NBPA are entering negotiations better positioned to strike a deal since the League is financially much stronger than it was in 2009. [6] It is unlikely the owners are going to want to see the stability attained as a result of the last CBA eroded. Dividing the monetary rights of the parties given the influx of new money is extremely complex. The audit provisions of the CBA will ensure that both sides are working with the same numbers. There will agreement about assuring the overall future profitability and financial security of the NBA business model. The disagreement will be over the details and the best way to achieve that goal.

ENDNOTES:

[1] Other grounds for terminating the CBA will be reviewed in Part Two of this article

[2] Technically, since the owners did not exercise the option to extend the 2005 CBA, there was a “lock-out” since no valid CBA was in place at the end of June 2011 . The posture of the parties under the 2011 agreement is different in that rather than allowing the parties to extend the CBA, it does not terminate until 2021 unless one party or the other opts out effective June 2017. If the players opt out, there could be a “walk-out” in June 2017; if the owners opt out, there could be another “lock-out”.

[3] July 12, 2011:  “Escrow money withheld from all NBA players’ paychecks each season will be returned to them this offseason for the first time, providing a $160 million infusion of cash in the midst of the league’s labor lockout. The escrow funds — representing eight percent of each NBA player’s salary — are held back each season to ensure that the players’ share of basketball-related income does not exceed the contractually agreed-upon percentage, currently 57 percent. This year, for the first time since the system was introduced in the collective bargaining agreement that came out of the 1998-99 lockout, the cut to players will fall short, sources with the NBA and the National Basketball Players Association confirmed. When a final audit is completed later this month, the players will have been paid less than 57 percent of BRI and will be due the entire $160 million. It’s the first time the players will have the full escrow returned, a union spokesman said. That cash could ease or delay the point at which some players begin to feel financial hardship from the lockout. Based on the “average” NBA salary of $5.7 million, the escrow rebate would be worth $456,000. A minimum-salaried player ($473,604) would be due $37,888 while a $16 million superstar could expect $1.28 million coming back. A majority of NBA players are paid from November through April, while those on a 12-month payment plan receive checks through the summer for the just-completed season. A check for 8 percent of their annual salary could put off any money pinch they eventually feel. Traditionally, the annual July audit is the time when BRI is defined, along with the salary-cap and minimum payroll figures. The NBA imposed the fourth lockout in its history on July 1 after negotiations of a new collective bargaining agreement failed and the old deal expired June 30. Only one of the previous three — in 1998-99 — caused the league to cancel games; that 204-day lockout resulted in a shortened 50-game season. This time, the league’s owners — estimating losses by 22 of its 30 teams in 2010-11 for a combined $300 million — have been seeking a reduction in the 57(players)/43 (owners) split of BRI, along with changes in the definition of BRI. Also, the owners have proposed a hard salary cap — or, in a recent revision, “flex” salary cap — as opposed to the “soft” salary cap previously in use. The soft cap led to a disparity in payrolls from the Los Angeles Lakers’ $110 million in salary and luxury-tax obligations to the Sacramento Kings’ $45 million. The owners cite competitive balance, along with profitability across all 30 teams, as reasons for their targeted changes. The players have shifted the onus for profitability onto the owners, urging more aggressive sharing of revenues among the teams. They rejected a proposal from the owners that would have guaranteed them at least $2 billion in annual compensation over a 10-year deal — the 2010-11 figure is $2.17 billion — because it would have represented both a pay cut and an exclusion from much of the league’s anticipated growth over that time. Instead the players have offered a reduction in their cut of BRI to 54.3 percent, which they contend would reduce salaries by a total of $500 million over a five-year CBA. . .In the last lockout, the owners and players went 45 days — from June 22 to Aug. 6 — between negotiating sessions. That time frame is believed to have led to the eventual cancellation of 464 regular-season games, the 50-game schedule and the loss of the 1999 All-Star Game.” www.nba.com “$160 Million in Escrow Money to be Returned to Players” Steve Aschburner (July 12, 2011).

[4] Kessler recently represented Tom Brady/NFLPA in the “Deflate”gate case. Boies is probably best-known to the general public for representing democratic presidential candidate Al Gore in the “hanging chad” re-count case in 2000 Bush v. Gore. Both Kessler and Boies had represented professional athletes/unions and team owners in the past.

[5] The NFLPA had also filed a lawsuit in federal court in Minnesota to vacate Commissioner Goodell’s arbitration award in “Deflate”gate. State and Federal Courts in Minnesota (8th Circuit) have been forums friendly to professional athletic unions in past disputes along with courts in the 9th Circuit (California).

[6] But compare comments of Commissioner Silver that “a significant number of teams are continuing to lose money despite fairly robust revenue sharing when some teams are receiving $20 million checks from their partners”. Ken Berger “Summer League Buzz: Owners the ones to watch in CBA negotiations”, CBSSports.com (July 14, 2015) (www.cbssports.com/nba/writer/ken-berger/25241544/summer-league-buzz-owners-may-opt-out-of-collective-bargaining-agreement)

COMPARING THE PLAYER DISCIPLINE PROVISIONS OF THE NFL AND NBA COLLECTIVE BARGAINING AGREEMENTS: Should there be a move toward uniform standards across Professional Sports?

In media remarks following Judge Berman’s decision rescinding Tom Brady’s 4-game suspension in the “Deflate”gate case, Brady’s attorney, Jeffrey Kessler advocated for the adoption of a new NFL personal conduct model. He compared what he viewed as the NFL’s fundamentally unfair process with the procedure adopted by Major League Baseball.

Although there are obvious differences between the major professional sports leagues, they have a commonality of interests in the need for fundamental fairness in all aspects of player-team contractual relationships. A review of the provisions governing arbitration in the player discipline context supports the argument that uniform language and procedures would have benefits for all parties. Concerns about due process and procedural guarantees exist whether the subject is the NFL, NBA, NHL or MLB.

Judge Berman’s decision was rooted in non-sports cases governing procedural due process in the arbitration context in addition to relying on the Ray Rice case as football-specific precedent. If the law applicable to ensuring due process is the same regardless of subject matter, should the language of the CBA’s arbitration provisions be uniform?

Mr. Kessler has pointed out that for over 80 years in the NFL the Commissioner has had the right to sit as an arbitrator. There was never a major controversy about this until 2012 when Commissioner Goodell began to press the bounds of his authority. There have been half a dozen disciplinary decisions overturned by courts since then; do we view these as the isolated results of one man’s overreaching that don’t signal the process itself is broken? Or the advent of a new antagonistic attitude toward player relations that warrants negotiating a change to the CBA?

Below are excerpts from the NFL and NBA Collective Bargaining Agreements. “Deflate”gate from start to finish took about 9 months. It may be surprising to some people that the rules governing the disciplinary response from the NFL Commissioner’s Office are found in only 3 pages of the 255-page CBA (excluding Appendices). The cases decided by the federal courts in the past 3 years now provide additional interpretative guidance.

NFL COLLECTIVE BARGAINING AGREEMENT

ARTICLE 46 COMMISSIONER DISCIPLINE (pp. 204-206)

Section 1. League Discipline: Notwithstanding anything stated in Article 43[1]:

(a) All disputes involving a fine or suspension imposed upon a player for conduct on the playing field (other than as described in Subsection (b) below) or involving action taken against a player by the Commissioner for conduct detrimental to the integrity of, or public confidence in, the game of professional football, will be processed exclusively as follows: the Commissioner will promptly send written notice of his action to the player, with a copy to the NFLPA. Within three (3) business days following such written notification, the player affected thereby, or the NFLPA with the player’s approval, may appeal in writing to the Commissioner.

(b) Fines or suspensions imposed upon players for unnecessary roughness or unsportsmanlike conduct on the playing field with respect to an opposing player or players shall be determined initially by a person appointed by the Commissioner after consultation concerning the person being appointed with the Executive Director of the NFLPA, as promptly as possible after the event(s) in question. Such person will send written notice of his action to the player, with a copy to the NFLPA. Within three (3) business days following such notification, the player, or the NFLPA with his approval, may appeal in writing to the Commissioner.

(c) The Commissioner (under Subsection (a)), or the person appointed by the Commissioner under Subsection (b), shall consult with the Executive Director of the NFLPA prior to issuing, for on-field conduct, any suspension or fine in excess of $50,000

(d) The schedule of fines for on-field conduct will be provided to the NFLPA prior to the start of training camp in each season covered under this Agreement. The 2011 schedule of fines, which has been provided to and accepted by the NFLPA, shall serve as the basis of discipline for the infractions identified on that schedule. The designated minimum fine amounts will increase by 5% for the 2012 League Year, and each League Year thereafter during the term of this Agreement. Where circumstances warrant, including, but not limited to, infractions that were flagrant and gratuitous, larger fines, suspension or other discipline may be imposed. On appeal, a player may assert, among other defenses, that any fine should be reduced because it is excessive when compared to the player’s expected earnings for the season in question. However, a fine may be reduced on this basis only if it exceeds 25 percent of one week of a player’s salary for a first offense, and 50 percent of one week of a player’s salary for a second offense. A player may also argue on appeal that the circumstances do not warrant his receiving a fine above the amount stated in the schedule of fines.

Section 2. Hearings:


(a) Hearing Officers. For appeals under Section 1(a) above, the Commissioner shall, after consultation with the Executive Director of the NFLPA, appoint one or more designees to serve as hearing officers. For appeals under Section 1(b) above, the parties shall, on an annual basis, jointly select two (2) or more designees to serve as hearing officers. The salary and reasonable expenses for the designees’ services shall be shared equally by the NFL and the NFLPA. Notwithstanding the foregoing, the Commissioner may serve as hearing officer in any appeal under Section 1(a) of this Article at his discretion. (emphasis added to original text)

(b) Representation. In any hearing provided for in this Article, a player may be accompanied by counsel of his choice. The NFLPA and NFL have the right to attend all hearings provided for in this Article and to present, by testimony or otherwise, any evidence relevant to the hearing.

(c) Telephone Hearings. Upon agreement of the parties, hearings under this Article may be conducted by telephone conference call or videoconference.

(d) Decision. As soon as practicable following the conclusion of the hearing, the hearing officer will render a written decision which will constitute full, final and complete disposition of the dispute and will be binding upon the player(s), Club(s) and the parties to this Agreement with respect to that dispute. Any discipline imposed pursuant to Section 1(b) may only be affirmed, reduced, or vacated by the hearing officer, and may not be increased.

(e) Costs. Unless the Commissioner determines otherwise, each party will bear the cost of its own witnesses, counsel and other expenses associated with the appeal.

(f) Additional Procedures for Appeals Under Section 1(a).

(i) Scheduling. Appeal hearings under Section 1(a) will be scheduled to commence within ten (10) days following receipt of the notice of appeal, except that hearings on suspensions issued during the playing season (defined for this Section as the first preseason game through the Super Bowl) will be scheduled for the second Tuesday following the receipt of the notice of appeal, with the intent that the appeal shall be heard no fewer than eight (8) days and no more than thirteen (13) days following the suspension, absent mutual agreement of the parties or a finding by the hearing officer of extenuating circumstances. If unavailability of counsel is the basis for a continuance, a new hearing shall be scheduled on or before the Tuesday following the original hearing date, without exception.

(ii) 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.

(iii) Record; Post-hearing Briefs. Unless the parties agree otherwise, all hearings conducted under Section 1(a) of this Article shall be transcribed. Post-hearing briefs will not be permitted absent agreement of the NFL and NFLPA or the request of the hearing officer. If permitted, such briefs shall be limited to five pages (single-spaced) and must be filed no later than three (3) business days following the conclusion of the hearing.

Section 3. Time Limits: Each of the time limits set forth in this Article may be ex- tended by mutual agreement of the parties or by the hearing officer upon appropriate motion.

Section 4. One Penalty: The Commissioner and a Club will not both discipline a player for the same act or conduct. The Commissioner’s disciplinary action will preclude or supersede disciplinary action by any Club for the same act or conduct.

Section 5. Fine Money:
(a) Fines will be deducted at the rate of no more than $2,500 from each pay period, if sufficient pay periods remain; or, if less than sufficient pay periods remain, the fine will be deducted in equal installments over the number of remaining pay periods. For the 2016–2020 League Years, the amount will increase from a rate of $2,500 to $3,500 from each pay period.

(b) For any fine imposed upon a player under Section 1(b), no amount of the fine will be withheld from the player’s pay pending the outcome of the appeal, except that if: (i) the fine is imposed on or after the thirteenth (13th) week of the regular season; (ii) the player or the NFLPA does not timely appeal; or (iii) the hearing on a fine imposed for conduct occurring through the thirteenth (13th) week of the regular season is delayed by the player or the NFLPA for any reason beyond the time provided for in Section 2(b) of this Article, the full amount of the fine shall be promptly collected.

(c) Unless otherwise agreed by the parties, fine money collected pursuant to this Article shall be allocated as follows: 50% to the Players Assistance Trust and 50% to charitable organizations jointly determined by the NFL and the NFLPA. In the absence of said joint determination, the NFL and the NFLPA shall each determine a charitable organization or organizations to which half of the second 50% shall be allocated.

NBA COLLECTIVE BARGAINING AGREEMENT

ARTICLE XXXI

Section 9– Special Procedures with Respect to Player Discipline (pp. 314-319)

(a) A dispute involving (i) a fine of $50,000 or less or a suspension of twelve (12) games or less (or both such fine and suspension) imposed upon a player by the Commissioner (or his designee) for (x) conduct on the playing court (as defined in Section 9(c)(i) below) or (y) for in-game conduct involving another player (as defined in Section 9(c)(ii) below), or (ii) action taken by the Commissioner (or his designee) (A) concerning the preservation of the integrity of, or the maintenance of public confidence in, the game of basketball and (B) resulting in a financial impact on the player of $50,000 or less, shall not give rise to a Grievance, shall not be subject to a hearing before, or resolution by, the Grievance Arbitrator, and shall not be determined by arbitration; but instead shall be processed exclusively as follows:

(1) Within twenty (20) days following written notification of the action taken by the Commissioner (or his designee), the Players Association (with the approval of the player involved) may appeal in writing to the Commissioner.

(2) Upon the written request of the Players Association, the Commissioner shall designate a time and place for hearing as soon as is reasonably practicable following his receipt of the notice of appeal.

(3) As soon as reasonably practicable, but not later than twenty (20) days, following the conclusion of such hearing, the Commissioner shall render a written decision, which decision shall, absent further proceedings pursuant to Section 9(a)(5) below, constitute full, final and complete disposition of the dispute, and shall be binding upon the player(s) and Team(s) involved and the parties to this Agreement.

(4) In the event such appeal involves a fine and/or suspension imposed by the Commissioner’s designee, the Commissioner, as a consequence of such appeal and hearing, shall have authority only to affirm or reduce such fine and/or suspension, and shall not have authority to increase such fine and/or suspension.

(5) If a dispute under Section 9(a)(i)(y) above is not resolved in a manner satisfactory to the player as a result of the procedures set forth in Section 9(a)(1)-(4) above, then the Players Association may (with the approval of such player) seek review of the financial impact of the Commissioner’s decision by filing a written request for such review with the Player Discipline Arbitrator (as provided for below) within ten (10) days following the issuance of such decision, and the following procedures shall apply:

(a) Following receipt of the written request for review, the Player Discipline Arbitrator shall schedule a meeting with the player, the Players Association, and the NBA (and such representatives as each may designate), shall review the relevant facts and circumstances, and shall issue a decision affirming or reducing the financial penalty imposed by the Commissioner. All such meetings shall be in person, shall be held in New York (alternating between the NBA and Players Association offices), and shall be conducted during the month of September following the conclusion of the Season in which the in-game conduct involving another player occurred.

(b) In reviewing the fine and/or suspension imposed upon the player by the Commissioner, the Player Discipline Arbitrator shall have authority only to affirm or reduce the financial penalty associated with such fine and/or suspension (including lost salary). The Player Discipline Arbitrator shall have no authority to review financial penalties automatically imposed as a result of technical fouls, ejections, or the violation of other similar NBA rules that result in the imposition of an automatic penalty (such as the “leaving the bench”rule). The review by the Player Discipline Arbitrator shall be de novo.[2]

(c) The decision of the Player Discipline Arbitrator shall constitute full, final and complete disposition of the dispute, and shall be binding upon the player(s) and

Team(s) involved and the parties to this Agreement. The Player Discipline Arbitrator shall make no public comment regarding the matter.

(d) The Player Discipline Arbitrator shall be selected by agreement between the NBA and the Players Association, shall be a person with experience in professional basketball (such as a former NBA coach, general manager, or player), and shall have expertise with respect to the rules applicable to and conduct of NBA games. In the event that the NBA and the Players Association cannot agree on the identity of the Player Discipline Arbitrator, each party shall simultaneously serve upon the other a list of the names of five (5) individuals meeting the criteria set forth in this Section 9(a)(5)(d) and shall alternate in striking names from such list until only one (1) such name remains; and the individual whose name remains on the list shall be selected as the Player Discipline Arbitrator. (A coin-flip or such other procedure as agreed upon by the NBA and the Players Association shall determine which of such parties shall exercise the first strike.)

(e) The Player Discipline Arbitrator shall serve for the duration of this Agreement; provided, however, that as of January 1, 2013, and as of each successive January 1, either of the parties to this Agreement may discharge the Player Discipline Arbitrator by serving written notice upon him and upon the other party to this Agreement during the period from November 1 through December 1 immediately preceding each such January 1.

(f) If the Player Discipline Arbitrator is discharged (or resigns), the parties shall select a successor Player Discipline Arbitrator in accordance with the procedures set forth in Section 9(a)(5)(d) above.

(b) A dispute involving (i) a fine of more than $50,000 and/or a suspension of more than twelve (12) games that is imposed upon a player by the Commissioner (or his designee) for conduct on the playing court, or

(ii) an action taken by the Commissioner (or his designee) that (A) concerns the preservation of the integrity of, or the maintenance of public confidence in, the game of basketball and (B) results in a financial impact on the player of more than $50,000, shall be processed and determined in the same manner as a Grievance under Sections 2-7 above; provided, however, that the Grievance Arbitrator shall apply an “arbitrary and capricious” standard of review.[3]

(c) (i) As used in this Agreement, “conduct on the playing court” shall mean conduct in any area within an arena (including, but not limited to, locker rooms, vomitories, loading docks, and other back-of-house and underground areas, including those used by television production and other vehicles), at, during or in connection with an NBA Exhibition, All-Star, Regular Season or Playoff game. (By way of example and not limitation, conduct “at” and/or “in connection with” an NBA game shall include conduct engaged in by a player within an arena from the time the player arrives at the arena for an NBA game until the time the player has left the premises of the arena following the conclusion of such game.) Conduct engaged in by a player outside an arena such as, for example, in a parking lot adjacent to an arena, shall not constitute “conduct on the playing court.”

(ii) As used in this Agreement, “in-game conduct involving another player” shall mean conduct occurring during the course of an NBA Exhibition, All-Star, Regular Season or Playoff Game that is exclusively between or among players (and not, for example, involving in any manner a referee, fan, or coach) and that takes place on or adjacent to the playing floor (including the area of the benches), and shall include, but not be limited to, fights, altercations, flagrant fouls, and other similar conduct.

(d)        In the event a matter filed as a Grievance in accordance with the provisions of this Article XXXI gives rise to issues involving the integrity of, or public confidence in, the game of basketball, and the financial impact on the player of the action being grieved is $50,000 or less, the Commissioner may, at any stage of its processing, order that the matter be withdrawn from such processing and thereafter be processed in accordance with the appeal procedure provided in Sections 9(a)(1)-(4) above.

The NFL and NBA CBA’s have certain similarities. Each sets $50,000 as the threshold under which the disciplined player is subject to the Commissioner’s imposition of a penalty without resort to arbitration.

Each carves out a special procedure for dealing with actions taken against other players. For example, in the NFL agreement in instances of unsportsmanlike conduct on the field toward another player, the Commissioner may impose a fine and/or suspension but the appeal is heard by two hearing officers, one selected by each party.

In the NBA, for “in-game conduct involving another player” where a fine of $50,000 or less and/or a suspension of 12 games or less is imposed, the Player’s Association can appeal the Commissioner’s punishment to the Player Discipline Arbitrator. The parties are required under the Agreement to meet with the Player Discipline Arbitrator in person in New York City in September following the season in which the discipline was imposed.

However, for discipline imposed by the NBA Commissioner for conduct “on the court” or necessary for the preservation of the integrity of, or the maintenance of public confidence in the game of basketball, the procedure varies and depends upon whether (1) the fine is over or under $50,000 and/or the suspension is less or more than 12 games[4]. If the penalty assessed is under $50,000 and/or a suspension of 12 games or less, it is not grievable. That is, the player is not entitled to arbitration with a Grievance Arbitrator. The Players’ Association can take an appeal in writing to the Commissioner who conducts a hearing and issues a decision.

If the penalty exceeds the $50,000 fine or a 12-game suspension, the process is different in that it calls for an appeal to a Grievance Arbitrator.  In the more serious category of cases, there is no ability for the NBA Commissioner to appoint himself in his discretion to review the reasonableness of the penalty that he or his designee imposed. This is in stark contrast to the NFL CBA which, while using a similar $50,000 threshold, only requires that where a financial penalty in excess of that amount is to be imposed, the NFL Commissioner first has to consult with the Executive Director of the NFL Players Association.

The NFL Commissioner can, without restriction to cases involving penalties under or over $50,000, serve as the arbitrator who hears the appeal where the incident involves on-the-field conduct or is detrimental to or undermines public confidence in the game. The NBA CBA ensures a more independent process where the alleged violation is severe; in less serious cases with caps on the penalty that the Commissioner can impose, his office is permitted to act as arbitrator for purposes of an appeal.

“On the playing court” discipline was the subject of a lawsuit filed by the NBA seeking declaratory judgment, or a court determination, interpreting the player discipline provision of the CBA ten years ago.

In National Basketball Association v. National Basketball Players Association, Ron Artest, Stephen Jackson, Anthony Johnson & Jermaine O’Neal, 2005 WL 22869 (SDNY 2005) (unreported), the main issue was the Commissioner’s authority to impose a suspension on players for misconduct during a game. On November 19, 2004, the Indiana Pacers and Detroit Pistons played in Detroit. With less than a minute to go in the game, Ron Artest of the Pacers committed a flagrant foul against Ben Wallace which resulted in a shoving match and other players had to separate them. While the referees were trying to sort out the penalties, a fan threw a beverage at Artest and he retaliated by going after the fan in the stands. Stephen Jackson followed behind him and also got involved in the fight. Anthony Johnson left his team bench and confronted a fan. Jermaine O’Neal was stopped by an usher as he tried to run into the seats. A fan got down onto the playing floor and O’Neal hit him.

The day after the game, then-Commissioner David Stern suspended all the players indefinitely until the incident could be investigated. The next day he announced that Artest would be suspended for the entire season; Jackson for 30 games; O’Neal for 25 games; and Johnson for 5 games.[5]

Ronald Klempner appeared for the NBPA and Richard Buchanan was General Counsel to the NBA. Klempner was Deputy General Counsel to the NBPA until Commissioner Michele Roberts replaced him last year with Gary Kohlman and made Klempner senior counsel for collective bargaining.

Each of the players received a letter from the Senior Vice President of NBA Operations, Stu Jackson, informing them of the suspensions. According to the letter from Jackson, the suspensions were based on Section 35(d) of the NBA Constitution. [6] The players’ union took an appeal under the CBA to the Grievance Arbitrator pursuant to Article XXXI. Under that section, the NBPA argued it was entitled to an arbitration hearing because the discipline imposed by the Commissioner was not authorized by the CBA. The NBA objected to having the Grievance Arbitrator hearing the dispute, argued that he had no jurisdiction and indicated it would refuse to participate in any proceedings. The NBA took the position that the Commissioner had the exclusive authority to hear the appeal.

On December 3, 2004, the Grievance Arbitrator, Roger P. Kaplan, Esq,[7] issued a decision In the matter of Arbitration Between the National Basketball Players Association and the National Basketball Association, holding that: “Notwithstanding the provisions of Article XXXI, Section 5(b), I find that the broad arbitration clauses contained in Article XXXI, Section 1 of the CBA and paragraph 17 of the Uniform Player Contract, warrant a finding that I have jurisdiction to determine whether the arbitrability issue raised by the NBA is meritorious.”

The NBA filed a lawsuit the same day in federal court for a legal declaration of the rights of the parties under the CBA. While that was pending, the Grievance Arbitrator conducted an arbitration hearing on December 9, 2004 and issued his arbitration award on December 21, 2004. He found that he had authority to determine whether the dispute could be arbitrated. Having that authority he decided, yes, the case was subject to arbitration; the reason the Commissioner did not have sole authority is because the incident did not take place “on the playing court” as that term was used in Article XXXI, Section 8 of the CBA; and that the Commissioner had just cause to suspend Artest, Jackson and Johnson but O’Neal’s suspension should be reduced to 15 games.

O’Neal had already sat out 15 games so the NBPA moved for emergency relief to force the NBA to comply with the Grievance Arbitrator’s ruling. The federal court ordered that the additional 10 game suspension imposed by the Commissioner should not be enforced at least until the Court could review the underlying issues.

The Court first examined the issue of whether the disciplinary decision by the League could be arbitrated. The NBA argued that the CBA contained both a broadly worded arbitration clause in which all disputes would be arbitrated and a conflicting specific clause assigning certain decisions to the exclusive purview of the Commissioner. Id citing Katz v. Feinberg, 290 F.3d 95 (2d Cir. 2002) (when the language regarding the parties’ intentions to arbitrate are ambiguous, the district court, not the arbitrator, must resolve the issue). The Court’s opinion was that there was no ambiguity and that the NBA Constitution[8] and CBA both reflected the parties’ intention to arbitrate disciplinary disputes.

Next, the Court looked at the NBA’s argument that the Grievance Arbitrator lacked jurisdiction over an issue of substantive, as opposed to procedural, arbitrability. Under the federal Labor Management Relations Act, Congress assigned the Courts the duty of determining whether one side or another broke its contractual promise to arbitrate. The Court found that the issue before the Grievance Arbitrator was not whether the parties intended to arbitrate (see discussion above) but through which process the appeal must be sought (to the Commissioner or to the Grievance Arbitrator) and, therefore, was procedural not substantive.

The Court reasoned as follows:

  • Section 35(h) of the NBA constitution (“Misconduct”) requires any appeal of decisions of the Commissioner must be resolved by the Grievance Arbitrator under the CBA.
  • Article XXXI of the CBA sets forth the general grievance and arbitration procedures that must be followed
  • Article XXXI, Section 8 (“Special Procedure With Respect to Player Discipline) requires any fine or suspension imposed by the Commissioner for a player’s “conduct on the playing court” OR to preserve public confidence in the game resulting in a financial impact to the player of $25,000 or less, is processed exclusively under the authority of the Commissioner to hear any appeal.

Since the financial impact to the players in this case was more than $25,000, the only question was whether the fight should be considered “conduct on the playing court”. If it was, then the Commissioner had exclusive authority. If not, then the Grievance Arbitrator should hear the appeal.

The NBA argued “conduct on the playing court” should mean broadly any “misconduct at or during a game”. The Players’ Union argued it should be narrowly interpreted to mean only “conduct which occurs as part of the playing of the game (such as flagrant fouls, fights between players, confronting referees, etc). The Court looked at the CBA, Player Conduct Memos[9] sent to the players and the history of past grievances. It determined that the meaning of “conduct on the playing court” fell somewhere between the competing definitions offered by the parties.

The Court launched into an extensive review of the use of the competing phrases “on the court” and “off the court” as they were used in the CBA, Uniform Player Contract, Annual Player Conduct Memos and past grievance decisions[10]. The Court reviewed all of the instances of past player discipline for misconduct which was deemed not subject to appeal. It found in every case, unlike the factual circumstance involving Jermaine O’Neal, that the conduct fell under the definition of “on the court” misconduct not subject to appeal by arbitration: “Fighting with or striking a fan has never been characterized as conduct on the playing court. This is understandable since it has absolutely no place in the play of the game of professional basketball…This dispute is not about the Commissioner’s authority to take strong and decisive action to discipline players who strike fans. That authority is unquestionable. However, the NBA’s Player Conduct Memo supports [the Grievance Arbitrator’s] finding that Jermaine O’Neal’s actions in shoving an arena employee and punching a spectator, falls in the category of violence off the court as defined by the NBA’s Player Conduct Memo.

The Court was not asked by the NBA to determine the merits of the Grievance Arbitrator’s decision to reduce Jermaine O’Neal’s suspension to 15 games so it simply denied the NBA’s motion to vacate the Grievance Arbitrator’s award and granted the Players’ Union motion to confirm it. As to the suspensions of the other players the Court, in footnote 10 to its decision wrote:

“Given the unique facts of this case, this decision is limited to the application by defendant O’Neal to confirm the arbitration award as to him. Defendants Johnson, Jackson, and Artest have not moved to confirm the arbitration award as to them. The record as to them, therefore, will not be confirmed and has no force and effect. The arbitration award relating to defendants Artest, Jackson and Johnson does not change the period of their suspensions…”

In other words, because the Grievance Arbitrator upheld the Commissioner’s suspensions of those players and neither the NBA (because it was arguing the Grievance Arbitrator lacked authority over the issue) nor the NBPA (because the Grievance Arbitrator’s award did not reduce the suspensions) moved to confirm the award, the issue was not before the Court to decide.

***********************************************

The NBA arbitration rules for player discipline are more detailed and multi-dimensional than the NFL counterpart. An argument can be made that a “serious” penalty in the NBA, one which can be appealed to a Grievance Arbitrator, constitutes 15.8% (at least 13/82 games) of the season. If a suspension of 13 games or more is imposed by the Commissioner, he does not have authority to hear the appeal.

The equivalent percentage of game suspensions in football is between 2 and 3 games (2/16th of the season or 12.5% or 3/16 games or 18.75%). Had the same procedure used in the NBA CBA been used in the case of the NFL “Deflate”gate case, Tom Brady would have been entitled to have a Grievance Arbitrator review the penalties imposed by the Commissioner’s Office. The parties still may have wound up in Court but at least there would have been procedural safeguards in place to ensure less conflict-ridden decision-making.

ENDNOTES:

[1] Article 43 governs non-injury grievance procedures

[2] Under this standard, appellate courts consider legal issues anew, and decide how to interpret and apply the law. Although a trial court’s reasoning on a legal issue may provide a point of comparison for an appellate court, the trial court is not given any deference. The appellate court can, and frequently does, decide the legal issue differently from the trial court.

[3] Arbitrary and capricious is a legal standard by which an appellate court determines whether a previous ruling is invalid because it was made on unreasonable grounds or without any proper consideration of circumstances.

[4] The NBA season is 82 games long. The threshold for determining the applicable arbitration procedure is a suspension lasting under or over approximately 15% of the season.

[5] Five other players were also suspended for their involvement in the incident

[6] NBA Constitution Section 35(d): “If in the opinion of the Commissioner any other act or conduct of a Player at or during an Exhibition, Regular Season, or Playoff game has been prejudicial to or against the best interests of the Association or the game of basketball, the Commissioner shall impose upon such Player a fine not exceeding $35,000 or may order for a time the suspension of any such Player from any connection or duties with Exhibition, Regular Season, or Playoff games, or he may order both such fine and suspension.”

[7] Kaplan graduated from George Washington University Law School in 1968. Kaplan, whose office is in Alexandria Virginia, has been a sports arbitrator since 1989. He has been the grievance arbitrator for the NBA and NBA Players Association and has decided many cases involving Major League Baseball and the NFL Players Association.

[8] NBA Constitution Section 35(h) (attached as an addendum to the Uniform Player Contract): “[e]xcept for a penalty imposed under Paragraph (g) of this Article 35 [relating to players gambling on the outcome of any game]…[a]ny such challenge by a player [to the decisions and acts of the Commissioner pursuant to Article 35] shall be resolved by the Grievance Arbitrator in accordance with the grievance and arbitration procedures of the collective bargaining agreement.”

[9] Every year since 1997 the NBA had sent the players an annual player conduct memo summarizing their duties “on and off the playing court”

[10] The NBA cited the following examples: Patrick Ewing left the bench in connection with an altercation during a game; Clarence Weatherspoon fought with Kevin Willis during a game; Tim Hardaway engaged in improper conduct with a referee and refused to immediately leave the court when ejected; Reggie Miller fought with Kobe Bryant after a game; Ron Mercer fought with another player in the locker room; Gary Trent went into the visiting lockerroom and fought with a player; PJ Brown fought Charlie Ward; Vernon Maxwell entered the spectator area during a game; JoJo English fought with Derek Harper during a game; Shaquille O’Neal used an obscenity during a live tv interview.

“DEFLATE”GATE: Similarities and Differences in the arbitration clauses of the NFL vs. NBA Collective Bargaining Agreements

On Thursday September 3, 2015, Hon. Richard M. Berman, United States District Court Judge for the Southern District of New York, issued a decision in National Football League Management Council v. National Football League Players Association (15-cv-5916 & 15-cv-5982). “Deflategate”, as it is commonly referred to, pitted NFL Commissioner Roger Goodell against New England Patriots quarterback Tom Brady. Judge Berman’s decision provides a detailed analysis of the NFL CBA’s arbitration clause pertaining to the procedure for imposing discipline for on-field player conduct.[1] The NFL had imposed a 4-game suspension on Brady for his alleged complicity in using footballs that were underinflated during the AFC Championship game against the Indianapolis Colts on January 8, 2015. The Decision resolved the parties cross-motions to confirm or vacate the July 28, 2015 arbitration award imposed pursuant to Section 301 of the Labor Management Relations Act (29 USC 185) and the Federal Arbitration Act (9 USC 10).

This article compares player discipline under the CBA’s of the NFL and the NBA. The article will be divided into two parts: (1) background of “Deflate”gate and Judge Berman’s decision and (2) comparison of the NFL and NBA CBA’s provisions for arbitrating player disciplinary matters.

TIMELINE AT ISSUE IN THE “DEFLATE”GATE CASE

  • 1/8/15 — AFC Championship Game
  • 1/23/15 — NFL announces that NFL Executive Vice President and General Counsel Jeff Pash and Theodore V. Wells of Paul, Weiss, Rifkin, Wharton & Garrison will conduct an investigation into allegations that footballs used in the game were intentionally underinflated to give Tom Brady an advantage because he preferred to use “softer” footballs (“Pash/Wells investigation”)
  • 3/6/15— the day that that he was interviewed by Mr. Wells and his investigative team- Mr. Brady instructed his assistant to destroy the cellphone that he had been using since early November 2014, a period that included the AFC Championship Game and the initial weeks of the subsequent investigation
  • 5/6/15— 139-page “Pash/Wells” investigative report made public
  • 5/11/15— NFL Executive Vice President Troy Vincent sends separate disciplinary letters to Tom Brady and Robert Kraft, owner of the Patriots, notifying them that based on the findings of the report the NFL will impose a 4-game suspension on Brady and fine Kraft one million dollars; in addition, the Patriots will forfeit their first round pick in the 2016 draft and their fourth round pick in the 2017 draft.[2]
  • 5/14/15— Brady through the Players Association, appealed the four-game suspension. Commissioner Goodell designated himself as arbitrator to hear Brady’s appeal pursuant to CBA Art. 46 § 2(a), which provides that “the Commissioner may serve as hearing officer in any appeal under Section l(a) of this Article at his discretion.” [3]
  • 5/19/15– The Players Association filed a motion seeking Goodell’s recusal[4] from arbitrating Brady’s appeal, arguing that he could not lawfully arbitrate the dispute because Goodell was a central witness and that he had publicly prejudged the outcome apparently referring to remarks Goodell had made in the press.
  • 6/22/15-– Commissioner Goodell denied Brady’s document request citing to CBA Article 46: “[i]n appeals under Section I(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.” Goodell stated that “the collective bargaining 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.” Commissioner Goodell granted the motion to compel the testimony of Wells, but denied the motion to compel the testimony of designated co-lead investigator Pash. With regard to Pash, Commissioner Goodell contended “[b]ecause Article 46 of our Collective Bargaining Agreement does not address the permitted scope of witness testimony at appeals hearings, it is within the reasonable discretion of the hearing officer [Goodell] to determine the scope of the presentations and, where appropriate, to compel the testimony of any witnesses whose testimony is necessary for a hearing to be fair.” Goodell stated that “Jeff Pash, the NFL’s general counsel, does not have any first-hand knowledge of the events at issue here”.[5]
  • 6/23/15— Brady and the Patriots appealed from disciplinary decision letter and an arbitration hearing was conducted before NFL Commissioner Roger Goodell pursuant to Article 46 of the NFL CBA—transcripts of hearing made public this date
  • 7/28/15— Commissioner Goodell issues final decision in the Article 46 appeal. He vacates team penalties but affirms Brady’s 4-game suspension. The NFL League Management Council files a Civil Complaint in federal court in New York City requesting that it adopt the findings of the arbitrator giving the decision force of law[6]
  • 8/4/15— The NFL Players’ Association files an Answer to the League’s Complaint and a Counterclaim in US District Court for the SDNY. The Counterclaim requests that the Court vacate the arbitration decision.
  • 8/7/15— NFLPA files a memorandum of law with the Court
  • 8/7/15— the NFL Management Council files a memorandum of law
  • 8/12/15 & 8/19/15 — The Court hears oral argument from the attorneys on the competing motions to affirm or vacate the arbitration decision

The Federal Court’s Analysis

Judge Richard M. Berman is a federal district court judge in the Southern District of New York, which hears cases in Manhattan where league offices are located. Judge Berman has served on the Court since October 21, 1998 after having been nominated by President Bill Clinton. He has been on senior status since September 11, 2011. Others who have served as judges of the Court include Justice Sonia Sotomayor. The Southern District has heard many cases with historical significance including, for example, claims arising from the sinking of the Titanic and the New York Times’ Pentagon Papers.

The NFL was represented by a team led by Daniel L. Nash of Akin Gump. Mr. Nash is a well-known labor and employment lawyer in Washington DC. He has defended professional sports leagues and member teams in a number of cases ranging from the obligation of a team to pay player medical coverage during a lockout to claims of bad faith bargaining in a contract dispute.

The NFLPA and Brady were represented by Jeffrey Kessler of Winston Strawn. Mr. Kessler’s major clients include the National Football League Players Association and the National Basketball Players Association. His reputation is as an anti-trust and intellectual property lawyer for clients with international interests. He has represented professional sports unions, CAA (a U.S. based international sports and entertainment agency) and is perhaps best known for negotiating the current free agency/salary cap systems in the NFL and NBA. He represented Michael Vick in his roster bonus arbitration, Plaxico Burress in his Signing Bonus arbitration, and now Tom Brady.

After extensive settlement negotiations failed to resolve the case, Judge Berman issued a Decision reversing the NFL’s decision to suspend Brady for four games. The Court relied on the same factual findings in the Pash/Wells investigative report and the documents and testimony comprising the record of the arbitration proceedings:

“An arbitrator’s factual findings are generally not open to judicial challenge, and we accept the facts as the arbitrator found them”. (citing Westerbeke Com. v. Daihatsu Motor Co.. Ltd., 304 F.3d 200, 213 (2d Cir. 2002); see also Int’l Bhd. of Elec. Workers. Local 97 v. Niagara Mohawk Power Com., 143 F.3d 704, 726 (2d Cir. 1998).

The Court concluded that the facts required the arbitrator’s decision to be reversed. More frequently, arbitration decisions are upheld because of the deference given to those decisions except where there are serious doubts about the legality of the process:

“The Court is fully aware of the deference afforded to arbitral decisions, but, nevertheless, concludes that the Award should be vacated. The Award is premised upon several significant legal deficiencies, including (A) inadequate notice to Brady of both his potential discipline (four- game suspension) and his alleged misconduct; (B) denial of the opportunity for Brady to examine one of two lead investigators, namely NFL Executive Vice President and General Counsel Jeff Pash; and (C) denial of equal access to investigative files, including witness interview notes. “

The Court’s decision was anchored in three primary findings: (1)that the arbitrator failed to follow the applicable law governing the CBA; (2)the player was denied due process or law by not having notice of the reasonable consequences that would be imposed for his conduct; and (3) the player was denied reasonable access to documentation and witnesses undermined the fairness of the arbitration.

The first two of these grounds were summed up by Judge Berman as follows:

“When it is clear that the arbitrator ‘must have based his award on some body of thought, or feeling, or policy, or law that is outside the contract[] and not incorporated in it by reference … the arbitrator has failed to draw the award from the essence of the collective bargaining agreement.” In re Marine Pollution Serv.. Inc., 857 F.2d 91, 94 (2d Cir. 1988) (quoting Ethyl Corn. v. United Steelworkers, 768 F.2d 180, 184-85 (7th Cir. 1985), cert. denied I 06 S. Ct. 1184); see also Bounty-Gate, slip op. at 6 (“In other words, rightly or wrongly, a sharp change in sanctions or discipline can often be seen as arbitrary and as an impediment rather than an instrument of change.”). It is the “law of the shop” to provide professional football players with (advance) notice of prohibited conduct and of potential discipline. See. e.g., Langhorne, slip op. at 25 (“Any disciplinary program requires that individuals subject to that program understand, with reasonable certainty, what results will occur if they breach established rules.”). Because there was no notice of a four-game suspension in the circumstances presented here, Commissioner Goodell may be said to have “dispense[d] his own brand of industrial justice.” 187 Concourse Assocs., 399 F.3d at 527 (citation omitted). “When the arbitrator’s words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement ofthe award.” United Steelworkers of Am. v. Enter. Wheel & Car Com., 80S. Ct. 1358, 1361 (1960).”

Brady had been disciplined pursuant to the Competitive Integrity Policy which is provided to Chief Executives, Club Presidents, General Managers, and Head Coaches. As a player, Brady was not provided with the Competitive Integrity Policy. Brady was given a document called League Policies for Players [Player Policies]. In relation to these two policies, Judge Berman specifically noted:

“This is what the players are given. And it’s interesting. It said ‘for players.’ What is not here is the competitive integrity rule [Competitive Integrity Policy] that Mr. Wells used in his report or anything about it…and it’s clear Mr. Wells didn’t use this [Player Policies]; he used the other one [Competitive Integrity Policy] … And by the way, the fine is $5,512 for the first offense. That’s it. That’s the only notice that a player has ever had about anything regarding equipment is in the [P]layer’s [P]olic[ies]”

The Players Association argued that “[t]he basis for Brady’s punishment was the very narrow finding in the Wells Report [and reiterated in the Vincent Disciplinary Decision Letter] that [Brady] was … ‘generally aware’ of ball deflation by two members ofthe Patriots equipment staff.” The League argued that Brady’s intentional deletion of his cell phone content upon being notified of the investigation violated his obligation to cooperate with the investigation and constituted an act that went beyond “general awareness” and was a separate basis for discipline.

The Court agreed with the Players Association finding no NFL policy or precedent provided notice that a player could be disciplined, including suspended, within the meaning of the Wells Report/Vincent Disciplinary Decision Letter finding of “generally aware”.

Question [Court]:

I am not sure I understand what in the world that means, that phrase. So, it says: at least generally aware of the inappropriate activities of Mr. McNally and Jastremski involving the release of air from Patriot game balls. So, I don’t know what that is. You know, did he [Brady] know that McNally took the balls unaccompanied into the bathroom? Did he know that in the bathroom, if in fact it happened, McNally deflated the balls? Did he know that McNally then went on to the field with the balls? See Decision at p. 25

Further, the player’s duty to cooperate with a league investigation was spelled out in an updated memorandum sent on February 11, 2014 to Team Coaches and Executives by Commissioner Goodell but not to players. So with regard to the deletion of cell phone content, Judge Berman did not find a substantive violation of a rule of which the player had been put on notice.[7]

The third ground that the Court anchored its determination on was the fact that Commissioner Goodell denied Brady’s request that certain investigative documents be turned over and that he be allowed to call NFL General Counsel Jeff Pash as a witness.

The Court cited the Ray Rice case, in which the judge held that the “key elements of a ‘fundamentally fair hearing”‘ include a grievant’s ability to “present evidence and cross-examine witnesses,” and that an arbitrator should “compel(] the witnesses necessary for the hearing to be fair.” Def.’s Countercl. Ex. 166E, Ray Rice Order on Discovery and Hearing Witnesses at 1-2 (quoting Kaplan, 1996 WL 640901, at *5). Commissioner Goodell was ordered to testify in the Ray Rice arbitration with the Court concluding that “[t]o limit the available witnesses knowledgeable about the content of that meeting to the individuals the NFL is willing to produce would prevent Mr. Rice from presenting his case and runs the risk of providing an incomplete picture of the content of a meeting that both parties have identified as critical.” Id.

There was precedent for the League’s argument that arbitrators are “endowed with discretion to admit or reject evidence and determine what materials may be cumulative or irrelevant.” Abu Dhabi Inv. Auth. v. Citigroup. Inc., No. 12 Civ. 283 (GBD), 2013 WL 789642, at *8 (S.D.N.Y. Mar. 4, 2013) aft’d. 557 F. App’x 66 (2d Cir. 2014) cert. denied, 135 S. Ct. 137, 190 L. Ed. 2d 45 (2014). Nevertheless, Judge Berman found that Commissioner Goodell improvidently limited Brady’s right to due process by limiting his access to specific documents and witnesses.

ENDNOTES:

[1] Both the NFL & NBA CBA’s are notable for the multiple provisions defining various types of arbitrators. This article is limited to discipline imposed by the Commissioner or his designee for game related player conduct.

[2] “On May II, 2015, Vincent sent a (separate) “disciplinary decision” letter to Brady, stating: “The Commissioner has authorized me to inform you of the discipline that, pursuant to his authority under Article 46 of the CBA [Collective Bargaining Agreement], has been imposed on you for your role in the use of under-inflated footballs by the Patriots in this year’s AFC Championship Game. This activity represents a violation of longstanding playing rules developed to promote fairness in the game.” Vincent Letter to Brady cited at page 9 of Judge Berman’s Decision.

[3] Paragraph 15 of the standard NFL Player Contract states as follows: Player recognizes the detriment to the League and professional football that would result from impairment of public confidence in the honest and orderly conduct of NFL games or the integrity and good character of NFL players. Player therefore acknowledges his awareness that if he accepts a bribe or agrees to throw or fix an NFL game; fails to promptly report a bribe offer or an attempt to throw or fix an NFL game; bets on an NFL game; knowingly associates with gamblers or gambling activity; uses or provides other players with stimulants or other drugs for the purpose of attempting to enhance on-field performance; or is guilty of any other form of conduct reasonably judged by the League Commissioner to be detrimental to the League or professional football, the Commissioner will have the right, but only after giving Player the opportunity for a hearing at which he may be represented by counsel of his choice, to fine Player in a reasonable amount; to suspend Player for a period certain or indefinitely; and/or to terminate this contract.

[4] During the New Orleans Saints Pay-for-Performance investigation (“Bounty-Gate”), Commissioner Goodell recused himself, and appointed, as independent arbitrators, former U.S. District Judge Barbara S. Jones and former NFL Commissioner Paul J. Tagliabue

[5] Judge Berman noted in his Decision that Goodell failed to address the fact that Pash had reviewed a draft of Well’s report of investigation before it was finalized and made public.

[6] On July 29, 2015, the National Football League Players Association (“Players Association” or “Defendant”) filed a Petition to Vacate the Arbitration Award in the United States District Court for the District of Minnesota. The Minnesota matter was immediately transferred to the Southern District of New York under docket number 15 Civ 5982 by U.S. District Judge Richard H. Kyle pursuant to the”first-to-file”rule. See National Football League Players Association v. National Football League Management Council, Civ. No. 15-3168 (RHK/IHB), slip op. at 2 (D. Minn. July 30, 2015). The Minnesota district court had been favorable to the NFLPA during litigation dating to the 1980s.

[7]“Actual or suspected violations will be thoroughly and promptly investigated. Any club identifying a violation is required promptly to report the violation and give its full support and cooperation in any investigation. Failure to cooperate in an investigation shall be considered conduct detrimental to the League and will subject the offending club and responsible individual(s) to appropriate discipline” (Sec. A2 of the Game Operations Manual for Member Clubs. (2014 ed. Game Operations Manual)

NBA Collective Bargaining Agreement Status- Introductory Post

 

The Collective Bargaining Agreement of the National Basketball Association is the contract between the 30 team owners (represented by the Commissioner) and the Players union (National Basketball Players Association/NBPA).  The CBA defines business relationships in the League by providing rules about player contracts, eligibility for the draft, trades, revenue sharing, and salaries, among other things.  The CBA is a document negotiated by the parties and given effect for a certain defined period.

History

In June 2005, the NBA’s 1999 CBA expired, meaning the League and the players union had to negotiate a new agreement; in light of the fiasco that was the 2004-05 NHL lockout, the two sides quickly come to an agreement and ratified a new CBA in July 2005.  This agreement expired following the 2010-11 season, leading to the 2011 NBA lockout.  A new CBA was ratified in December 2011 ending the lockout.  http://en.wikipedia.org/wiki/NBA_Collective_Bargaining_Agreement

In the 1999 and 2005 CBA’s the salary cap remained substantially unchanged.  In 2005, the NBPA agreed to what is now considered a controversial player age minimum for draft eligibility.  In return, the players received slightly increasing shares of League revenues.  However, under the 2011 CBA the percentage of revenue dropped from 57% to 50%.

The 2011 CBA contains an opt-out provision effective June 2017 whereby either party would have to give notice of their intent to terminate the agreement in December 2016. The Executive Director of the NBPA, Michele Roberts, and NBA Commissioner Adam Silver have both made public statements that their respective clients may exercise the option.   Michele Roberts has gone on record saying that she wanted to get the parties to the bargaining table well in advance of the CBA deadline. (http://www.si.com/nba/2015/06/10/nba-nbpa-collective-bargaining-agreement-negotiations-august).  Contract talks started last month.

The issues that are likely to top the agenda include:

  • Increases due to the salary cap
  • Division of Basketball-Related Income (BRI) between owners and players, including revenues from lucrative television deals
  • Minimum age restriction for entry into the Draft—either raising it from 19 to 20 years old (Commissioner David Silver’s position) or lowering it to 18 (NBPA position)
  • Rookie and Minimum pay scales

Roberts is the first woman in NBA history to be elected Executive Director of the players’ union. In turn, the NBPA is the only major professional sports union (NFL, NHL, MLB) to be led by a woman.

Roberts, does not come from a background in labor negotiations. She graduated from the University of California at Berkeley and spent the first eight years of her legal career as a public defender in Washington D.C. Her reputation as a top criminal defense lawyer was solidified with an acquittal in a high profile homicide case. After that Roberts took positions at white collar defense firms in D.C. including Skadden, Arps, Slate, Meager and Flom where she worked until she was elected to the position of NBPA Executive Director in 2014.

The players had been without a permanent Executive Director since they unanimously voted out Billy Hunter at the All-Star break in 2013.  Hunter had served as union chief since 1996 but was removed after an independent report cited questionable business practices, among other things, extending a contract without union approval. http://www.washingtonpost.com/sports/union-head-michele-roberts. Former Deputy General Counsel Ron Klempner served as “acting” Executive Director until Roberts beat out over 300 other candidates at a vote in Las Vegas last year.http://www.forbes.com/sites/darrenheitner/2014/10/20/national-basketball-players-association-picks-new-general-counsel.

Despite her criminal defense background, Roberts pitched herself as someone that had plenty of experience in high-pressure negotiations if not strictly in the labor-employment realm. Her track record of being able to convince juries to vote her way spoke to what the players wanted in an Executive Director – someone willing to go to battle for them who was a proven winner.

Prior to August 2014, Roberts took steps took steps to appoint experienced lawyers to her negotiating team. She kept Ron Klempner and named him Senior Counsel for Collective Bargaining.  Gary Kohlman, a reknowned Washington D.C. labor and employment lawyer was appointed General Counsel.  The remainder of the senior management team of is made up of former NBA players and the former president of the NFLPA.http://nbpa.com/nbpa-executive-director-michele-roberts-announces-initial-appointments-nbpas-senior-ma/.

Commissioner Silver, who was appointed to his position six months before Roberts was elected, will lead the negotiations on behalf of the owners.

CBA line by line

 The 2011 Collective Bargaining Agreement and Exhibits runs over five hundred pages. The NBPA has published a 38 page summary available on the union’s website. A more in-depth 93 page summary in question and answer format is available at Larry Coon’s NBA Salary Cap FAQ.http://www.cbafaq.com Larry Coon is a computer scientist who designed a way to pull information relevant to a particular subject area or question from discrete parts of the document. Professor Coon’s copyrighted summary is a valuable resource. In July 2015, Daniel Leroux began installments of the CBA Encyclopedia for RealGM.com (www.basketball.realgm.com/news/analysis/tags/CBA-Encyclopedia)

I have read the entire Collective Bargaining Agreement. The above-referenced summaries are useful to give sophisticated fans a context for the legal terminology used in the document. In the coming year we will be dealing with CBA issues, the resolution of which will determine whether NBA basketball is played in 2017-2018 and what it might look like. From a lawyer’s point of view, this negotiation is equivalent to a season of legal all-star games.

To appreciate the maneuvers, passes, scores and pace of what we’ll see happen at the bargaining table, we have to examine how the relevant provisions of the CBA impact both owners and players. Aside from the potential that one side or the other will opt out of the CBA next year placing the 2017-2018 season in jeopardy, fans will also be affected by a variety of other financial decisions made by each side.

In this blog, I will identify the specific provisions, pages or sections that are going to be in “play”, quoting the exact language of the agreement. I will also provide additional background and pedigree information on the lawyers representing both sides. Complex negotiations are difficult to report on because of the subject matter and time constraints inherent in most media formats.  I think fans would genuinely be interested in understanding the negotiation process if more complete information was available.  A blog may be an effective platform for that purpose.