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Friday, July 01, 2016
The New Deflategate Math at the Second Circuit
And then there were eleven. Buried in a little-noticed "State of the Circuit Report" released on May 26th, Second Circuit Chief Judge Robert Katzmann announced that two of the "active" judges on the court--Gerald E. Lynch and Richard C. Wesley--would be assuming "senior status" sometime "this summer." The Report does not state exactly when. But I later learned that Judge Wesley would be taking senior status on August 1st, and no information is yet available as to when Judge Lynch will assume senior status.
This is a potentially significant development in the NFL vs. Brady case, otherwise known as "Deflategate." The success of Tom Brady's and the NFLPA's petition for rehearing en banc depends on a majority of the "active" members of the court--currently 13--voting to rehear the case. In late April, a three-judge panel of the court (consisting of Judges Denny Chin, Barrington Parker and Katzmann) reversed the decision of U.S. District Judge Richard Berman vacating the arbitrating ruling of NFL Commissioner Roger Goodell which had upheld the four-game suspension of Brady. Under the current composition of the court, Brady would need at least 7 of the 13 judges to vote in favor of rehearing the case. The Court has not yet acted on the petition, ether by denying it outright (one possibility) or ordering the NFL to file a response brief (a more likely possibility).
August 1st is more than four weeks away, and the Second Circuit will likely weigh in before either Judges Lynch or Wesley assume senior status. But what if no decision has been reached by then (either because the Court has not yet decided whether to entertain rehearing en banc or, alternatively, has issued a briefing order to the NFL, which would likely push the decision past August 1st since the NFL would be given a minimum of 15 days to file a response)? Under that scenario, Brady and the NFLPA would need the votes of at least six judges, constituting a majority of the reduced 11-judge active court to secure rehearing en banc. And, by the way, a rehearing grant would automatically "vacate" the April 25th decision of the original three-judge panel.
Another possibility is that Judges Lynch and Wesley may voluntarily remove (or "recuse") themselves from the initial determination of whether to rehear the case, knowing that they will soon become senior judges and, therefore, would not sit on the eventual en banc panel if rehearing is granted. They are under no compulsion to do that, but it is a possibility with so little time (e.g., a matter of weeks) remaining on their active tenure.
How Will the Impending Senior Status of Judges Lynch and Wesley Impact Rehearing?
Looking further ahead, if rehearing en banc is granted (a rare occurrence, but the Court did rehear a case recently, as I wrote earlier this week), how would the removal of Judges Lynch and Wesley from "active" status affect Brady's chances? First, the en banc panel would not consist of the same group of judges that entertained the rehearing request. Judge Barrington Parker (a senior judge who sided with the NFL in the April 25th ruling) would be part of the en banc panel since he participated in the original panel decision). The addition of Judge Parker (who cannot participate in the initial decision whether to rehear the case since he is a senior judge) would add a twelfth judge to the en banc panel, creating an even number of judges. But, interestingly, if 12 judges rehear the case en banc, Brady would not need to carry a majority (seven or more) because in the event of a tie vote, the decision of the district court would be AFFIRMED. And since Judge Berman ruled in favor of Brady and the NFLPA, his decision would stand and the four-game suspension would be wiped out. Of course, the NFL would then ask the Supreme Court to review the case, but, in the unlikely event that review were granted (less than 1% of all petitions are granted), the earliest that the Supreme Court would hear the case is in 2017, long after the 2016 NFL season has ended. In that scenario, Brady would not miss any games during the 2016 season (and, potentially, the 2017 season as well).
But, as a practical matter, Brady would need to carry at least a majority (seven judges) of the 12-judge en banc panel in order to prevail on rehearing. This is because it is highly likely that the three judges who participated in the original panel decision (Parker, Chin and Katzmann) would vote the same way they did in the April 25th ruling. Both Parker and Chin ruled in favor of the NFL, 'and Katzmann sided with Brady and the NFLPA in a dissenting opinion. Assuming that the judges do not change their votes on rehearing (a highly likely scenario), the NFL would be staked to a 2-1 lead going into the en banc rehearing, meaning that Brady and the NFLPA would need to persuade at least five out of the remaining nine judges in order to prevail on rehearing. Thus, as a practical matter, the removal of Judges Lynch and Wesley from the en banc process would not lessen Brady's need to convince a majority of the judges on the panel. It would only mean that instead of persuading 7 out of 13 judges, he would need to persuade 6 out of 11 (or, assuming the votes of Parker, Chin and Katzmann remain the same), 6 out of 11. An equally daunting, but not an impossible, task.
Judge Lynch's Recent Opinion REVERSING Judge Berman's Vacatur Of An Arbitration Award and Citing the Second Circuit's Deflategate Decision Approvingly
It is difficult to predict how Judges Lynch and Wesley would vote if they participated in the en banc panel in Brady (and we now know it is a virtual certainty that neither will be participating due to their impending senior status). Since Judge Lynch was appointed to the Second Circuit by a Democrat (President Obama), and before that, to the district court by President Clinton (also a Democrat), and Judge Wesley was nominated by a Republican President (George W. Bush), they probably cancel each other out in terms of political ideology. However, federal judges do not always vote along party lines, and there are many prior examples bearing that out (Justice John Roberts as the deciding vote saving Obamacare immediately comes to mind).
A recent Second Circuit decision may provide a hint as to how Judges Lynch and Wesley might view Brady's request for a rehearing. In New York City & Vicinity District Council of the United Broth. of Carpenters & Joiners of Amer. v. Association of Wall-Ceiling & Carpentry Indus. of New York, Inc., Case No. 15-574, 2016 WL 3383737 (2nd Cir. June 20, 2016), the Second Circuit, in an opinion authored by Judge Lynch (and joined in by Judge Wesley), concluded that a labor arbitration award "was properly grounded" in the arbitrator's application of the parties' collective bargaining agreement, and, consequently, reversed an earlier order entered by Judge Richard Berman (yes, the same judge who sided with Brady at the trial court level!) which had vacated the arbitration award on the basis that it did not "draw its essence" from the CBA.
In so holding, Judge Lynch quoted extensively from the Second Circuit's Deflategate decision, reiterating that "'[a] federal court's review of labor arbitration awards is narrowly circumscribed and highly deferential--indeed, among the most deferential in the law.'" Opinion, p. 17 (quoting Nat'l Football League Mgmt. Council v. Nat'l Football League Players Ass'n, 2016 WL 1619883, at *1 (2d Cir. 2016)). Judge Lynch, quoting from Deflategate, described the limited role of the judiciary in reviewing labor arbitration awards as follows:
A court is "not authorized to review the arbitrator's decision on the merits"; its role is simply to determine "whether the arbitrator acted within the scope of his authority as defined by the collective bargaining agreement." Id at *6. Thus, as long as "the arbitrator was even arguably construing or applying the contract and acting within the scope of his authority and did not ignore the plain language of the contract," the award should ordinarily be confirmed. Id.(Opinion, at pp. 17-18). Potentially troubling for Brady and the NFLPA is Judge Lynch's statement that "for our [the Court's] purposes, the CBA means what the arbitrator said it means" and that a court "may not" replace the arbitrator's interpretation of the CBA "with its own." (Opinion, at p. 22) (emphasis added)
But Judge Lynch Acknowledges Several Critical Exceptions to Judicial Deference
Despite reaffirming the legal principles underlying the Court's Deflategate decision AND reversing Judge Berman's vacatur of a labor arbitration award (the second time that's happened in less than two months), Judge Lynch's opinion in New York City & Vicinity District Council offers some potential silver linings for Brady and the NFLPA. This is because Judge Lynch identified several circumstances (none of which are identified in the Deflategate ruling) where a federal court "should" vacate a labor arbitration award. He wrote:
Conversely, a court should vacate an award if it "contradicts an express and unambiguous term of the contract or . . . so far departs from the terms of the agreement that it is not even arguably derived from the contract," United Bhd. of Carpenters v. Tappan Zee Constructors, LLC, 804 F.3d 270, 275 (2d Cir. 2015)--in other words, if the award does not "draw its essence from the collective bargaining agreement" but reflects instead "the arbitrator's own brand of industrial justice." NFL, 2016 WL 1619883, at *6 (internal quotation ,arks omitted)(Id., at p. 18)
Judge Lynch also acknowledged that the United States Supreme Court recognizes a "public policy" exception to the traditional judicial deference to labor arbitration awards, stating:
The Supreme Court has also recognized a second circumstance warranting vacatur of a labor arbitration award: "[i]f the contract as interpreted [by the arbitrator] violates some explicit public policy," such as obedience to judicial orders." W.R. Grace & Co. v. Local Union 759, Int'l Union of the United Rubber, Cork, Linoleum & Plastic Workers, 461 U.S. 757, 766 (1983).(Id.)
But Judge Lynch cautioned that the "public policy" ground for vacatur is "extremely limited," characterizing the reviewing court's task in applying that principle as "limited to determining 'whether the award itself, as contrasted with the reasoning that underlies the award, creates an explicit conflict with other laws and legal precedents and thus clearly violates an identifiable public policy.'" Id. (citing Local 97, Int'l Bhd. of Elec. Workers, A.F.L.-C.I.O. v. Niagra Mohawk Power Corp., 196 F.3d 117 (2d Cir. 1999)). [In the Niagra Mohawk Power case, the Second Circuit explained that "[p]ublic policy . . . is to be ascertained ‘by reference to the laws and legal precedents and not from general considerations of supposed public interests." Id. at 125]
What Judge Lynch's Recent Opinion Could Mean for Brady and the NFLPA
While Judge Lynch's opinion in New York City & Vicinity District Council may be viewed in some quarters as implicitly agreeing with the Court's Deflategate ruling (a perception no doubt bolstered by the favorable citation to Deflategate and the involvement of Judge Berman), it is important to remember that Judge Lynch's reiteration of the general legal principles invoked in Deflategate is not quite the same thing as applying those principles to a specific fact-pattern. The similarities between Deflategate and New York City & Vicinity District Council really do begin and end with the utilization of the same standard of judicial review and the coincidental involvement of Judge Berman (who may not be inviting any Second Circuit judges out to the Hamptons anytime soon!). But apart from that, the two cases could not be any more different. In contrast to Deflategate, the New York City & Vicinity District Council case did not involve workplace discipline. Rather, it concerned the more esoteric issue of whether a particular collective bargaining agreement between a regional council of a local unions and an employers' association was "superseded" by a separate agreement between the union and the employers' association's parent company. Given the dramatically different factual setting in New York City & Vicinity District Council, there were quite understandably no issues raised in that case concerning the scope of a labor arbitrator's appellate authority (as in Deflategate), whether principles of "fundamental fairness" were violated by virtue of an arbitrator's evidentiary rulings (as asserted in Deflategate), and whether a labor arbitrator was "evidently partial" (as asserted in Deflategate). Therefore, the precedential effect of New York City & Vicinity District Council (at least factually) may be limited at best.
Nonetheless, the New York City & Vicinity District Council decision could be helpful to Brady and the NFPLA on rehearing, and, ironically, could be interesting fodder for a Rule 28(j) notice of supplemental authority (by Brady and the NFLPA). At first blush, it would seem counterintuitive for Brady and NFLPA to rely on a case which overruled a district court's vacatur of an arbitration award, particularly where it is Judge Berman being reversed. But the real value (at least to Brady and the NFLPA) of New York City and Vicinity District Council lies in the "exceptions" to arbitrator deference recognized by Judge Lynch. As identified by Judge Lynch (and discussed briefly above), the two exceptions requiring a vacatur of a labor arbitration award are where the award: (1) contradicts an express and unambiguous term of the CBA or so far departs from the terms of the agreement that it is not even arguably derived from the contract; or (2) violates public policy.
The "public policy exception" may be the real key here. While the Second Circuit has previously addressed the parameters of that exception in a 1999 opinion (Local 97, Int'l Bhd. of Elec. Workers, A.F.L.-C.I.O. v. Niagara Mohawk Power Corp., 196 F.3d 117 (2d Cir. 1999)), and in several earlier opinions, it has not applied (or discussed) the exception in any post-2000 case. Judges Chin and Parker were not even on the Second Circuit bench the last time the "public policy exception" came into play. Thus, Judge Lynch's invocation of the "public policy exception" (while ultimately not applicable in the New York City & Vicinity District Council case) could serve as a revival of that doctrine in the Second Circuit. Might as well start with Deflategate.
One can easily envision a number of identifiable public policy considerations contravened by Commissioner Goodell's arbitration ruling; i.e., the right to cross-examine material witnesses; the right of access to material, non-privileged evidence in the possession of the other side; the right to a fundamentally fair arbitration proceeding; the right to present evidence to an unbiased tribunal; and the requirement that an arbitrator act impartially and in a manner consistent with the collective desires of both parties, to name just a few. While these policies are encapsulated in case-law or rules of procedure, they may still properly serve as a recognized "public policy" (for purposes of the "public policy exception") under Supreme Court and Second Circuit precedent. See Local 97, Int'l Bhd. of Elec. Workers, A.F.L.-C.I.O. v. Niagara Mohawk Power Corp., 196 F.3d 117, 125 (2d Cir. 1999) ("Public policy . . . is to be ascertained ‘by reference to the laws and legal precedents and not from general considerations of supposed public interests." (citing W.R. Grace, 461 U.S. at 766, 103 S.Ct. 2177 (quoting Muschany v. United States, 324 U.S. 49, 66, 65 S.Ct. 442 (1945)).
Despite the Recent Opinion, Judges Lynch and Wesley May Still Sit Out Deflategate
With their impending senior status, Judges Lynch and Wesley are unlikely to ever be part of an en banc panel in Deflategate. But Judge Lynch's recent opinion in New York City & Vicinity District Council (which was joined in by Judge Wesley) suggests that Brady and the NFLPA might not be overly upset if these two judges excused or recused themselves from voting on whether to even entertain rehearing en banc, given the favorable references to the Deflategate opinion and the fact that Judge Berman was reversed in that case. Despite being only a few weeks away from assuming senior status, Judges Lynch and Wesley still get to vote on whether or not to grant rehearing en banc provided it occurs before August 1st, since they would still be "active" judges before that date. Perhaps one reason for the delay in the rehearing decision, as suggested by one of my Twitter followers, is that Judge Katzmann may be waiting for Judges Lynch and Wesley to assume senior status before polling the Court, knowing that they may vote against rehearing and thereby reduce the already-slim possibility of a "majority" of the active judges voting to rehear the case. I doubt that's the reason.
Regardless, this game of judicial musical chairs at the Second Circuit is a fascinating development at a time when there has otherwise been "radio silence" on the court docket and we overanalyze every twist and turn while we wait for the Court's decision. Ultimately, it may turn out to be a non-factor, but it is a noteworthy development in a case where everything (including a letter from a World War II veteran) is closely scrutinized.