On Wednesday, August 19, attorneys for the NFL and NFLPA were back in a New York courtroom before Judge Richard Berman for oral arguments. Judge Berman’s task is to review NFL Commissioner Roger Goodell’s arbitration decision which confirmed Tom Brady’s four-game suspension. Now that the transcript of the hearing is out we have a better sense of how the arguments went and what Judge Berman is thinking.
First, a caveat. As Michael McCann has pointed out, judging Berman by his words in court is risky. Berman has spoken privately with both lawyers and has been present in private settlement talks, in which he may have expressed himself very differently from how he did in open court. He may also be playing devil’s advocate to force the attorneys to make better versions of their arguments, or even to help push toward the settlement he has made clear he prefers. However, I do think there are some things we can glean from the oral arguments and Berman’s demeanor and statements at oral argument, particularly some insight into how he may rule.
The Oral Arguments and Fundamental Fairness
Based on the transcript of the hearing, Berman very clearly favors the arguments put forward by Jeffrey Kessler, attorney for the NFLPA and Brady. In my opinion, Berman was not merely playing devil’s advocate and was not just playing up one side’s arguments in order to force a settlement, though that may be the effect of his comments. The difference in tone was a sharp contrast. Berman was helpful, clarifying, and patient with Kessler. He was critical, dismissive, and impatient with Dan Nash, attorney for the NFL. As a judge, Berman is well aware of the high deference to arbitrators, and the NFL has spent most of this case reminding him of that. However, after reading the transcript of the hearing, it is very difficult to see Berman ruling in favor of the NFL. In general, it was surprising how little time Nash spent attempting to respond to Kessler’s arguments.
The argument that Berman seemed to favor the most was Kessler’s point about fundamental fairness and the exclusion of Jeff Pash’s testimony. If there is an argument that it seems Brady is most likely to win, this appears to be it, not necessarily because it was his strongest argument or because fairness was the biggest issue with Goodell’s decision, but because Berman seemed most supportive of it.
Let’s back up a bit and understand this argument better. When appealing Brady’s suspension, the NFLPA requested that NFL Executive Vice President and General Counsel Jeff Pash testify at the hearing due to his involvement with the Wells Report. Essentially, the NFLPA wanted the opportunity to examine Pash and Wells on how their investigation was conducted, why they reached their conclusions, and more, to assist their arguments on appeal. As you can see below, Goodell ruled that Pash’s testimony was unnecessary for the purposes of the hearing:
So Goodell left open the possibility that Pash’s testimony could be included. The problem is that Kessler did not have the opportunity to examine Pash at the actual hearing. At the actual appeal hearing before Goodell, Kessler was able to question Wells about Pash’s involvement in the investigation and report. Here’s what Wells had to say about Pash’s involvement:
After getting Wells to admit that Pash did comment on and have a role in the editing process of the investigation’s report, Kessler pressed Wells on the nature of his comments:
So Wells felt that Pash was not substantively involved in the conclusions of the report, only with “wordsmithing” and superficially editing the text. In Brady’s post-hearing brief, Kessler conveyed his opposition to the exclusion of Pash’s testimony:
Perhaps Pash’s testimony would have shed light on lead investigator Ted Wells’s decisions while investigating or writing his report, enabling Pash to better cross-examine Wells himself. Maybe Pash would have contributed nothing to the hearing at all. Kessler’s point was that a fair hearing would have enabled him to examine a co-author and co-investigator of the report.
In his final decision on Brady’s suspension, Goodell doubled down on his decision to exclude Pash’s testimony, citing Wells’s explanation of Pash’s limited role:
While the exclusion of Pash’s testimony due to his limited role may make sense, Goodell oddly claimed the NFLPA waived the Pash argument by not seeking reconsideration of his decision at the hearing itself despite the NFLPA’s clear opposition in its post-hearing brief.
So why did Kessler want Pash and what does this have to do with Brady’s punishment? Kessler’s argument is that the appeal hearing to Goodell must be fundamentally fair. For the hearing to be fundamentally fair, Brady must have access to relevant evidence in order to present his case to the arbitrator. Because he was appealing the findings of the Wells Report, which was the basis for Brady’s discipline, Kessler needed access to evidence that would be relevant to how the investigation was conducted and how the Wells Report was written.
The NFL refused to provide several things in that regard – interview notes, Jeff Pash’s testimony on the Wells Report and investigation, and Goodell’s and Troy Vincent’s testimony on the slightly different issue of delegation. Kessler argued to Judge Berman that Pash was the co-lead investigator based on the NFL’s own announcement and the actual text of the Wells Report itself. Kessler also referred Berman to Wells’s own testimony which stated that Pash made comments on the report and pointed out that Wells had no idea how much Pash’s comments actually influenced the report. Despite the NFL’s arguments about Pash’s irrelevance, Kessler argued, “I’m entitled to probe that factually in a fundamentally fair hearing.”
Berman seemed well-prepared on this issue and supportive of Kessler. Unasked, he immediately brought up Pash’s important role with the NFL:
Note that Berman states that Pash was “instrumental in negotiating the collective bargaining agreement in 2011.” Kessler did not even bring this point up to the judge. The NFLPA did not argue in any of their memos or statements prior to the hearing that Pash was such an essential cog to the NFL legal process that he was involved in the 2011 CBA negotiations. Berman brings this up on his own, almost suggesting additional reasons to Kessler why Pash would be an important person to examine.
Later in the hearing, Nash (the NFL’s attorney) is discussing the precedent of the Ray Rice case relating to Goodell’s role as arbitrator deciding on his own prior decisions, when Berman interrupts the discussion to ask directly about Pash:
Keep in mind that Berman has read Goodell’s decision, he’s read the prior briefs of the parties, he’s probably read Wells’s testimony at the hearing, and he’s also heard Kessler’s explanation of the NFL’s reasons to exclude the testimony. Berman knows that Goodell already deemed Nash irrelevant to the proceedings, but he appears to have an issue with this and he’s trying to get to the bottom of it. Nash responded and Berman almost immediately responds incredulously:
So Berman says that Pash’s involvement was “a big deal,” even understanding Wells’s testimony that it was limited. He pushed Nash on this pretty hard:
Berman’s implicit point to Nash was that Goodell did not really know what might have been cumulative in Pash’s testimony. A fair hearing would have allowed Kessler the opportunity to probe that himself. Berman again re-emphasized the fact that Pash’s name was listed as co-lead on the investigation and report. Nash tried to downplay this by saying that it was only true if he relied on an old press release, at which point Berman retorted that “It’s not my press release…you all wrote it.”
At this point Nash tried to shift the discussion to the issue of whether the report was independent, but Berman kept him focused on the issue of Pash. Nash insisted that under the law, arbitrators have the discretion to make judgments about the nature of witnesses’ testimony and determine if the testimony will be cumulative or irrelevant. Berman then made it a point to correct Nash, informing him that the case law states that arbitrators must specify how a witness’s testimony would be cumulative, essentially justifying their decision to exclude the testimony. Here was an important point Berman raised:
Nash’s defense was that the NFLPA essentially waived this issue because Goodell said he would give them the opportunity to request Pash’s testimony again and they did not, but as seen above, this argument is odd considering the NFLPA’s post-hearing brief made clear they were not happy about the exclusion of Pash. Berman’s last statement to Nash on the issue was about as close as you may see to a preview of his decision:
Here, Berman has gone beyond asking questions or proposing hypotheticals. He opines from the bench that to merely dismiss Pash’s testimony by calling it cumulative without specifying is insufficient. Berman also questioned Nash extensively on the issue of the interview notes that were not provided to Kessler, which also goes directly to whether the appeal hearing was fundamentally fair. Berman’s questioning on this issue of fundamental fairness was probably more extensive than on any other issue. That could mean that he already has a good idea how he will rule on other issues and is still on the fence about this issue and wants clarification. But based on the tenor of his critical questioning of Nash, and his unasked for support toward Kessler, it seems more likely he was looking for Nash to persuade him away from his view that the hearing was fundamentally unfair.
What Does the Law Say about This Fairness Argument?
We know that Judge Berman said his understanding of the law was that arbitrators cannot exclude witnesses by merely calling their testimony cumulative or irrelevant, so let’s take a look at some of that law.
Under the Federal Arbitration Act, federal courts can vacate arbitration awards when “the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy[,] or of any other misbehavior by which the rights of the party have been prejudiced.”
In 1997, the Second Circuit reviewed a decision from the Southern District of New York (the same jurisdiction Brady’s case is in) which endorsed an arbitration award in the Tempo Shain case, which had a similar fact pattern to this issue in Brady’s case. As the Second Circuit explained, arbitration decisions are not opened up to evidentiary review “except where fundamental fairness is violated.” Arbitrators are not required to hear all evidence offered by a party, as Nash noted to Judge Berman.
In Tempo Shain, the court held that the testimony that was excluded was “pertinent and material to the controversy.” Although the fact situation is not quite comparable, the excluded witness could have provided evidence to contradict the arguments of the other party. Additionally, the excluded witness was identified as being involved in a disputed negotiation, despite the other party’s claim to the contrary, much as Pash was identified as being involved in the Wells investigation, despite the NFL’s claims. The excluded witness was the only who could have rebutted certain testimony, just as Pash was likely the only witness who could have provided contrary evidence to Wells’s testimony. The court found there was “no reasonable basis to exclude” the testimony.
Kessler recognized Berman’s concern over Pash’s testimony. After Nash finished his oral argument, Kessler came back in rebuttal and immediately honed in on this point. He cited to the Home Indemnity case, which was another 1997 case in the Southern District of New York, though not as similar of a situation. The district court in that case noted that the “touchstone” of arbitral misconduct is the concept of fundamental fairness. The issue in Home Indemnity was the preclusion of certain discovery. The court found that the aggrieved party was “obstructed from both defending itself against [the] allegations, as well as substantially asserting its counter-allegations.” The court cited case law noting that without “a full and fair hearing on the merits, a district court will not hesitate to vacate the award.”
As the court noted and Judge Berman stated at the hearing, there are no cases that “support the proposition that an arbitration panel can properly bar a party from defending itself by precluding discovery of [evidence] dispositive to the dispute before it. Such an award does not make ‘rational sense’ [and] precludes [a party] from a fundamentally fair hearing[.]”
These cases speak directly to Kessler’s point. Kessler argued, and Berman seemed to agree, that Pash’s testimony was directly relevant to the Brady’s ability to defend himself because he was the only other significant person involved in the process of the Wells Report. Whatever Goodell may have thought of Pash’s testimony, he needed to provide a reasonable justification for why he believed Pash’s testimony to be cumulative. Wells himself appeared to have no idea what Pash’s role was in crafting the report. Judge Berman appeared clearly concerned that Kessler’s inability to question Pash denied him pertinent and material evidence to Brady’s attempt to undermine the basis for his discipline.
Andrew Sensi already covered much of this in his solid article last week, so I am certainly borrowing heavily from him here. Starting with what I believe to be the least likely option, Judge Berman is unlikely to alter the substance of the arbitration award by reducing Brady’s suspension, for example to two games or some similar ruling. This would usurp the role of the arbitrator and virtually ensure that Berman’s ruling is overturned on appeal. Berman is well aware of the case law on this and would not likely make such a misstep.
Berman could also rule for the NFL. As the NFL has argued throughout this case, the legal system shows great deference to the arbitration system and the judgments of arbitrators, including their rulings on evidence, discovery, and the merits of the case. In the end, Judge Berman could decide that even though he finds Kessler’s arguments persuasive, he is bound to respect the decision of the arbitrator (Goodell). After last week’s oral arguments, this seems unlikely, though still a possibility.
The two sides could also settle. The NFL may see the writing on the wall and attempt to offer Brady a much better deal than they have previously, perhaps just a fine for admission of non-cooperation without any admission of guilt related to knowledge of deflation. Indeed, Berman tried to push this issue along a bit during oral arguments. This would avoid an adverse ruling from Judge Berman with potentially more indictments of the power of the commissioner and the NFL’s faulty process. Although it seems like Brady would want to avoid settlement at this point, feeling like he will win with Berman, he might still accept a settlement for several reasons.
First, just because he wins with Berman does not necessarily mean he avoids suspension. Berman could remand the case to either Goodell or a neutral arbitrator for what would amount to a do-over arbitration. A new arbitration, even by a neutral arbitrator, could still decide to suspend Brady, in which case a settlement he can control might be preferable. Second, even if Brady is not suspended by a future neutral arbitrator, or if Berman’s ruling makes another arbitration proceeding unnecessary, the NFL will still likely appeal the case to the Second Circuit, which could overturn Berman’s decision, either reinstating Goodell’s original decision, or sending the case back for a new arbitration ruling. Litigation always involves uncertainty and risk, and settlement is the best way parties have to avoid that risk.
But, it seems most likely after oral arguments that Judge Berman will rule in Brady’s favor. He could rule for Brady on fundamental fairness alone, at which point the case would likely be remanded to Goodell for a new hearing. Berman could rule for Brady on evident partiality, and the case would be remanded to be reheard by a neutral arbitrator. Berman could also rule for Brady on issue of fair and consistent policies, which was the least discussed argument at the hearing. He could also rule for Brady on the notice issue, which may have been Kessler’s strongest argument, though not the argument Berman seemed most interested in. Kessler argued that lack of notice cannot be cured in a new arbitration, so the case would essentially be over without any punishment for Brady.
The (deflated) ball is in the judge’s court. Judge Berman could also rule in favor of some combination of these arguments or in favor of all of them. They all appear to be possibilities because of Berman’s demeanor, questions, and statements during oral argument. There is no guarantee how he will rule, but after oral arguments, we have a pretty good indication because we got a look at a potentially winning argument that Berman seems to openly support.
 9 U.S.C. § 10(a)(3)
 Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16 (2d Cir. 1997).
 Id. at 20.
 Id. at 21.
 Home Indem. Co. v. Affiliated Food Distributors, Inc., No. 96 CIV. 9707 (RO), 1997 WL 773712 (S.D.N.Y. Dec. 12, 1997).
 Id. at *3.
 Id. at *4.
 Id. at *5.