LABOR LAW LESSONS LEARNED FROM NFL’S “DEFLATEGATE”

The United States Court of Appeals for the Second Circuit recently issued a decision denying a petition for re-hearing filed by the National Football League Players Association and Tom Brady in the ongoing saga now known as “Deflategate.” What started as a dispute over whether footballs were deflated below league-standard air pressure levels in order to gain an advantage over an opponent, escalated into a debate over the right of unionized employees in general to due process in disciplinary hearings. The Second Circuit’s ruling resolves that debate by reinforcing a longstanding general principle of labor law: an arbitration award that “draws its essence from the collective bargaining agreement” (an agreement bargained for and agreed to by the parties themselves) and was entered by an arbitrator acting within the bounds of his bargained-for authority, will be upheld.

The Backstory

In their collective bargaining agreement (the “CBA”), the Players Association and the NFL bargained for and agreed to terms whereby the league Commissioner should investigate possible rule violations, impose appropriate sanctions, and may serve as arbitrator at arbitrations challenging the disciplinary actions he has taken. Article 46 of the CBA grants the Commissioner broad discretion to take disciplinary action against any player whom he reasonably believes has engaged in conduct “detrimental to the integrity of, or public confidence in, the game of professional football.” A disciplined player then has the right to appeal to the Commissioner to seek an arbitration hearing, and the Commissioner may either appoint himself or someone else to serve as the arbitrator over such hearing.

In January 2015, during the American Football Conference Championship game between the New England Patriots and the Indianapolis Colts, an allegation was raised in regard to under-inflation of Patriots game balls. The NFL retained an outside law firm to conduct an independent investigation of that allegation, and as a result thereof, a report was issued determining that it was “more probable than not” that Patriots equipment officials had participated in “a deliberate effort to release air from Patriots game balls after the balls were examined by the referee.” The report also concluded that it was “more probable than not” that Brady was aware of the equipment officials’ actions and that it was “unlikely” that such officials would deflate game balls without Brady’s knowledge, approval, awareness and consent. Following the investigation, the Commissioner authorized a four game suspension of Brady pursuant to Article 46 of the CBA, making such decision based on the investigation report, as well as Brady’s reported failure to cooperate fully and candidly with the investigation (including refusal to produce relevant emails and text messages).

Brady, through the Players Association, filed an appeal of the suspension, and pursuant to the terms of the CBA, the Commissioner exercised his authority to serve as the arbitrator over such appeal hearing. Shortly before the hearing, it was revealed that on the same day that he was to be interviewed by the outside law firm’s investigation team, and despite knowing that the investigators requested information from the cell phone he had been using during the time period in question, Brady instructed his assistant to destroy the phone. The hearing was then conducted and consisted of nearly ten hours of sworn testimony and argument, and review of approximately 300 exhibits. On July 28, 2015, the Commissioner issued a final decision affirming the four game suspension, finding that Brady not only failed to cooperate with the investigation but made a “deliberate effort to ensure that investigators would never have access to information that he had been asked to produce.”

Following the Commissioner’s decision, the Players Association filed a lawsuit in district court, requesting that the arbitration award be vacated. The district court granted the request, reasoning that Brady lacked sufficient notice in regard to the possibility of suspension rather than simply the imposition of fines. The NFL then appealed that decision to the Second Circuit, requesting that the initial arbitration award be upheld.

The Second Circuit’s Decision

After reviewing arguments raised by each side, the Second Circuit issued an Opinion finding that the Commissioner properly exercised his broad discretion under the CBA and that his arbitration award was properly based on the terms of the CBA and did not deprive Brady of fundamental fairness. Specifically, the Second Circuit noted that the court’s function in reviewing such an arbitration award is simply to ensure that the award draws its essence from the CBA and is not merely the arbitrator’s own “brand of industrial justice” – the court is not permitted to substitute its own interpretation of the facts and CBA terms for that of the arbitrator chosen by the parties. If the arbitrator has acted within the scope of his bargained-for authority, the remedy for a party dissatisfied with the arbitrator’s award is not judicial intervention – rather, the parties are free to re-negotiate the terms of their CBA to reflect the scope of power they agree to provide to the arbitrator.

The Second Circuit held that the Commissioner did not exceed his bargained-for authority as he simply decided the issue of whether the discipline imposed on Brady was warranted under Article 46 of the CBA. The Commissioner did not develop a new basis for the disciplinary action, and did not deprive Brady of an opportunity to appeal the decision and provide evidence in support of his position. Furthermore, the Second Circuit noted that Brady was put on notice through Article 46 of the CBA that any action deemed by the Commissioner to be detrimental conduct could be grounds for suspension. Finally, the Second Circuit stated that the Players Association and NFL had bargained for and agreed to the terms of the CBA which included granting the Commissioner broad discretion to investigate and discipline players, and then serve as arbitrator over any appeal of such discipline. Thus, if the Players Association believes that such procedures are deficient or prejudicial, the appropriate remedy is to address them during collective bargaining – not during litigation in the court system.

The Take-Away

The Second Circuit’s decision in this matter reinforces the basic principle that, where there is a CBA that has been bargained for and agreed to by the parties, any disciplinary action and related arbitration award based on the terms of the CBA will be upheld. Employers with unionized workforces should keep this in mind when negotiating the terms of any CBA, when taking disciplinary action based upon the terms of the CBA, and during any arbitration proceedings related to same.

By: Carianne P. Torrissi
ctorrissi@klehr.com

WITH CERTAIN EXCEPTIONS, PHILADELPHIA EMPLOYERS MAY NOT LAWFULLY OBTAIN OR CONSIDER CREDIT HISTORY INFORMATION IN MAKING EMPLOYMENT DECISIONS

Earlier this year, Philadelphia City Council President Darrell L. Clarke proposed legislation that would prohibit most employers in most instances from obtaining and considering the credit histories of job applicants and employees. As of July 7, 2016, that legislation became a reality. Pursuant to an amendment to the City’s anti-discrimination law – the Fair Practices Ordinance - covered employers in Philadelphia, with certain exceptions, now may not lawfully obtain or use credit history when making decisions in connection with “hiring, discharge, tenure, promotion, discipline or consideration of any other term, condition or privilege of employment with respect to such employee or applicant.” The ordinance defines “credit history” broadly to include information regarding a person’s debt, credit worthiness, standing, capacity, score or history, bank account balances, and potential legal actions such as bankruptcy, liens or collection activities. This amendment adds to the already long list of protections provided by Philadelphia’s anti-discrimination law and, therefore, applies to any public or private employer doing business in Philadelphia that employs one or more people covered by the law.

The ordinance does contain certain exemptions and exceptions, however. First, the law exempts the following employers from its coverage:

• the City of Philadelphia (where credit-related information is sought to obtain information concerning taxes or other debts owed to the City);
• law enforcement agencies or financial institutions; and
• employers who must obtain credit-related information pursuant to state or federal law.

Second, the law includes several potentially significant exceptions. The ordinance provides that even covered employers may consider credit-related information for the following employees, whose duties make companies particularly vulnerable to risk but for considering this information:

• employees who are required to be bonded under City, state or federal law;
• employees who have supervisory or managerial responsibilities and are involved in setting the direction or policies of the business, or a division, unit or similar part of the business;
• employees with “significant financial responsibility to the employer,” such as determining whether to make payments, transfer money, collect debts or enter into contracts (with the exception of jobs that involve the handling of retail transactions);
• employees who, to perform their jobs, must access financial information concerning customers, employees, or the employer (except information customarily provided in a retail transaction); and
• employees who, to perform their jobs, must access “confidential and proprietary information that derives substantial value from secrecy.

If, because of credit history information, an employer takes an adverse employment action against an individual who falls within the above-listed exceptions, the employer must notify the individual in writing of the reason the employer considered the credit history information in the first place and the specific credit information on which the employer intends to rely to make the employment decision. Further, before an employer may implement the adverse employment decision, the employer must give the individual an opportunity to explain the circumstances surrounding the information.

Because the new ordinance is an amendment to the City’s Fair Practices Ordinance, individuals aggrieved under the law may file a complaint with the Philadelphia Commission on Human Relations and/or, after timely exhausting his/her administrative remedies, pursue a private lawsuit. Damages for violations include compensatory damages, punitive damages and attorneys’ fees.

In light of this new ordinance, employers in Philadelphia should consult legal counsel before obtaining or considering credit history information for any applicant or employee. In addition, because many other cities and states have enacted similar laws, multi-state employers should take steps to ensure that they are complying with those laws as well.

By: Lee D. Moylan
lmoylan@klehr.com

WHAT EMPLOYERS NEED TO KNOW ABOUT PENNSYLVANIA’S MEDICAL MARIJUANA LAW

Pennsylvania’s Medical Marijuana Act took effect On May 17, 2016, making Pennsylvania the 24th state to legalize medical marijuana. The Act allows patients suffering from a variety of ailments, including, among others, cancer, HIV/AIDS, autism, post-traumatic stress disorder, multiple sclerosis, and severe chronic or intractable pain, to use marijuana to treat their conditions. Medical marijuana will be dispensed only as pills, oils, topical gels, creams or ointments, vaporization, nebulization, or liquid.

Pursuant to the Act, the Pennsylvania Department of Health must promulgate rules and regulations pertaining to the establishment and operation of marijuana dispensaries, the registration of patients certified to use medical marijuana, and the issuance of identification cards to those patients or their caregivers.

Although these regulations likely will not be in place for 18 to 24 months, employers must be aware of the employer-specific provisions of the Act. First, the Act contains a broad anti-discrimination provision, which provides “[n]o employer may discharge, threaten, refuse to hire or otherwise discriminate or retaliate against an employee regarding an employee’s compensation, terms, conditions, location or privileges solely on the basis of such employee’s status as an individual who is certified to use medical marijuana.”

Despite its breadth, a number of exceptions exist to the Act’s anti-discrimination policy. First, employers need not comply with the requirements of the Act if following the Act “would put the employer or any person acting on its behalf in violation of Federal law.”

Second, the Act prohibits employees from being under the influence of marijuana when: (1) utilizing or controlling chemicals that require a permit issued by a federal or state government or agency; (2) working with high-voltage electricity or other public utilities; or (3) performing employment duties at heights or in confined spaces.

Additionally, the Act permits employers to prohibit employees from performing any task – while under the influence of medical marijuana – that the employer deems life threatening to the employee or any other employees, or that could result in a public health or safety hazard.

Moreover, under the Act, employers may discipline an employee for being under the influence of medical marijuana in the workplace or while performing work if “the employee’s conduct falls below the standard of care normally accepted for that position.”

Finally, the Act provides that employers are not required to accommodate the use of medical marijuana on “the property or premises of any place of employment.” As such, employers do not have to permit their employees to use medical marijuana while at work.

While the mandates of the Act appear straightforward, many unanswered questions exist regarding the implementation and interpretation of the Act, including the pending regulations. To ensure compliance with the Act, Pennsylvania employers should review their drug policies and consult legal counsel with any questions or concerns.

By: Zachary D. Sanders
zsanders@klehr.com