Schleppenbach: Second Circuit Refuses To Compel Arbitration Under NFL Constitution

Parties that desire arbitration should take steps to ensure their arbitration clauses provide basic procedural protections, according to Shook Partner Jay Schleppenbach. Schleppenbach has written an article for the Illinois State Bar Association’s In The Alternative newsletter discussing a U.S. Court of Appeals for the Second Circuit ruling in which the court refused to compel arbitration in a case invoking the NFL Constitution’s arbitration clause.  

 

In “Second Circuit Refuses to Compel Arbitration Under NFL Constitution, Which ‘Provides for Arbitration in Name Only,’” Schleppenbach discusses the Second Circuit’s ruling in Flores v. New York Football Giants, Inc. The case involves statutory racial discrimination claims against different organizations and subject to different arbitration clauses, Schleppenbach said. While the district court enforced arbitration clauses as to many of the claims, it denied enforcement as to claims where the arbitration clause was from Section 8.3 of the NFL Constitution. The Second Circuit agreed with the plaintiff that the arbitration agreement was not protected by the Federal Arbitration Act because it did not provide for an independent arbitral forum, but instead gave “unilateral substantive and procedural discretion” to the principal executive officer of the NFL, one of the plaintiff’s adverse parties.

 

Schleppenbach says that while parties have leeway to design arbitral procedures that work best for them, such leeway is not absolute.

 

“Parties desiring arbitration must make sure they provide basic procedural protections and, most importantly, a neutral decisionmaker so as to avoid having their arbitration clauses found unenforceable like the one in the NFL Constitution,” he advises.