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September 5, 2008

Future Shock

The Process and the Grievance

by Kevin Goldstein

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Recent chats and my e-mail inbox have shown that our readers find the current draft soap opera a compelling story. Opinions are wide ranging, but beyond the issues themselves, numerous readers have asked about how the process actually works. Beyond the decision and who it may favor, how will a resolution come about? Here's a quick primer on what the grievance contains, and the steps to be taken on the way to a final ruling.

The Process

Next Wednesday, arbitrator Shyam Das will hear Grievance No. 2008-11, submitted by the Major League Baseball Player's Association and subtitled "August 15 deadline." While this is the case that involves Pedro Alvarez, Eric Hosmer, Scott Boras, the Pittsburgh Pirates, and the Kansas City Royals, none of the parties are specifically mentioned by name. As is common practice when a labor union and a business are involved, both sides agree to have their disputes handled by an independent arbitrator (or arbitration panel) whose decisions are legally binding. The advantages of this process over the regular legal system are numerous.

  • Speed: Grievances can be filed and acted upon quickly. This grievance will be heard just two weeks after its filing, and a ruling will come no more than 30 days (and likely much sooner) after the hearing. In the standard court system, such a case could be drawn out for months or even years.
  • Privacy: A grievance hearing is held in a private room. There are no reporters, there is no court stenographer, and there is no public record. This provides much desired confidentiality for all parties.
  • Judge Selection: Any attorney will tell you that the judge in a trial can often prove to be the difference in winning or losing a case. In the arbitration process, both parties agree to the arbitrator (or "neutral"). In this case, it's Das, a former attorney and now full-time arbitrator in multiple industries who has served in this role for baseball and the union since the late 1990s, and has settled over 100 disputes between the two sides. The concept of a neutral in the arbitration process is an important one, and expertise is an important factor as well. "One of the principals of this process is that the arbitrator is familiar with the industry," said Frank Zotto, a Vice President with the American Arbitration Association (AAA), who administers the process for many organizations, including Major League Baseball. "Both sides want a knowledgeable party, and by having one it saves time, and therefore money."

The hearing will take place in a room with both parties and the arbitrator present. It is not a court room, and AAA often supplies a venue in their offices for these hearings. It is not exactly like a standard legal procedure, but there are many similarities. "In many ways, the process is a creature of the agreement between the two parties," explained Zotto, "part of any agreement for arbitration between the two parties includes the rules for those arbitrations." At the same time, on a basic level, it is like a standard trial. "It's similar in that it is an adversarial process," continued Zotto. "Each party is permitted to be represented by counsel, but they don't have to be, and each side presents their case and can enter exhibits or evidence to the proceeding." Once the proceedings have ended, it's up to the arbitrator to rule, but at this point, the process diverges from that of a standard trial. As part of his determination, the arbitrator can re-open the hearing at a later date in order to hear additional evidence, and at any point, he can conduct separate meetings or conversations with either party.

Following the hearing and any discovery process by the arbitrator, a binding ruling and relief (or "award") are provided.

The Grievance

From an outsider's perspective, the "Notice of Grievance" is surprisingly brief. It's only five paragraphs long and would fit on just one page if not for the sizeable masthead on the MLBPA's stationary. The document is signed by Michael Weiner, general counsel to the MLBPA, who has been with the union for 20 years, and is addressed to Robert Manfred at MLB's office, who holds the title of Executive Vice President, Labor Relations and Human Resources. Dan Halem, another labor attorney with MLB, is cc'd on the document.

The first two paragraphs basically state that the two sides had agreed to rules on a signing deadline, and that those rules were not followed, with the key statement coming in paragraph two: "The Commissioner's Office, without notice to the MLBPA, unilaterally determined to permit Clubs to negotiate with drafted players after the August 15, 2008 deadline, and unilaterally determined to accept agreements reports by Clubs after the August 15, 2008 deadline." Again, there is no mention of any specific name or player; the allegation is simply that Major League Baseball went against a rule that was collectively bargained.

Paragraph three outlines the six items that the Commissioner's Office violated:

  • Article II of the Basic Agreement.
    This states that baseball recognizes the MLBPA as the "sole and exclusive collective bargaining agent for all Major League Players," and in a phrase that allows for some application to non-union members Alvarez and Hosmer, "and individuals who may become Major League Players." This says that MLB has to work out all rules for negotiation with the union, and they can't just decide to do something (like extend an agreed-upon deadline) without discussing it with MLBPA.
  • Article XVIII of the Basic Agreement.
    Entitled "Rule Changes," this article is similar to Article II, stating that, "If... any Major League Rule, or other rule or regulation is proposed to be changed, the Clubs agree that they shall give the Association notice thereof, and shall negotiate the proposed change with the Association." Once again, the accusation is that Major League Baseball changed the rules on the negotiating deadline, and did so without the union's permission.
  • Article XX of the Basic Agreement.
    Article XX is the Reserve Clause, which covers both the draft and the rules for the restricted list, which the Pirates placed Alvarez on when he refused to sign. Without more specificity, it's hard to say exactly which end of this the MLBPA is accusing the Commissioner's office of violating, but it's most likely both.
  • Section II.E.5 of the Memorandum of Understanding dated October 23, 2006.
    Some quick background: We have the Basic Agreement, or the CBA, but in between each full CBA negotiation there come times where rule changes to the existing CBA are hammered out between the two sides. These agreements get filed as these Memorandums of Understanding (or MOUs). The October 23, 2006 MOU clarified the new draft rules that began in 2007, with Section II.E.5 reading, in its entirety, "August 15 signing deadline for all drafted players, except those eligible players who have utilized all of their NCAA eligibility." So, to put it simply, this is the rule for the new deadline. If MLB extended the deadline (which they undoubtedly did), this is the rule that they broke.
  • Section 8(a)(1) of the National Labor Relations Act.
    Section eight covers "Unfair Labor Practices," with (a)(1) stating that "it shall be an unfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7 [section 157 of this title]." Section 7-157 gives union members the right to collectively bargain, and this is just adding to the list of rules that say the extensions where outside of collective bargaining.
  • Section 8(a)(5) of the National Labor Relations Act.
    More "Unfair Labor Practices," with (a)(5) stating that "it shall be an unfair labor practice for an employer to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 9(a) [section 159(a) of this title]." Now, 9-159 says that the bargaining representatives for the union are the exclusive representatives for the union, and you can't bargain with anyone else. Again, this is legalese for, "Hey! You didn't call us."

Paragraph four asked for an award (once more without specificity) by stating, "Accordingly, the Panel should declare that this conduct by the Commissioner's Office was in violation of our agreements and was otherwise unlawful, and should award all such relief as is necessary and appropriate to remedy these violations."

Which brings us to the most complicated aspect of this case-the potential award itself. Tomorrow, I'll take a look at all of the possible measures of relief, and how if you're looking for the one that is fair to all parties, the answer is none of them, because in this case, no one is innocent.

Kevin Goldstein is an author of Baseball Prospectus. 
Click here to see Kevin's other articles. You can contact Kevin by clicking here

29 comments have been left for this article. (Click to hide comments)

BP Comment Quick Links

doncoffin
(422)

This is a very nice summary of the process, and I'm glad to see it. If you have no objections, I will use it the next time I teach collective bargaining, as it does a better job than any textbook I've seen.

The downside of aribtratiion for those of us outside the room is that we generaly have no access to the arguments presented by the two sides.

Sep 05, 2008 09:58 AM
rating: 0
 
BP staff member Kevin Goldstein
BP staff

I appreciate that, and allow me to use this space to send a huge note of thanks to the people at the American Arbitration Association for walking me through the process and answering all of my questions.

There is absolutely no access to the proceedings, it's actually a specific rule that states there is no stenographer and no record. The arbitrator just takes notes.

Sep 05, 2008 10:32 AM
 
Evan
(47)

I'm very intereted to read tomorrow's piece, because I find the suggestion that no one is innocent surprising. I would think the MLBPA would have to be innocent, in that the rules being broken were broken as part of a process to which the MLBPA was not party.

I await tomorrow's article with baited breath.

Sep 05, 2008 10:20 AM
rating: 0
 
BP staff member Kevin Goldstein
BP staff

I'm gonna let you down early here. I don't even see the MLBPA is a party to this -- they're just the ones filing the grievance. What I was saying in that sentence is that the Pirates, Frank Coonelly, Pedro Alvarez, Scott Boras and even the Royals and Eric Hosmer all need to take some of the blame for this mess.

Sep 05, 2008 10:33 AM
 
billm21

As for Hosmer's involvement in this, I've heard from a somewhat reliable source that both Hosmer and the Royals were ready to confirm his signing before midnight, but that MLB did not have the appropriate parties on their end available to monitor the conference call because they were busy dealing with the Alvarez signing. Is this true, in which case Hosmer and the Royals did nothing wrong?

Sep 05, 2008 10:41 AM
rating: 0
 
BP staff member Kevin Goldstein
BP staff

I will simply say that this does not agree in any way with my understanding of the facts.

Sep 05, 2008 13:21 PM
 
Faust

Kevin, why do you put it like that? Did you get your information on confidential background such that you can't tell us in detail about your "understanding of the facts"?

You're doing a heck of a job - wait, post-Katrina that just sounds sarcastic - a really outstanding job clearly laying out the historical and legal situation. But what I'm still short of is much understanding of the particular facts of the negotiations - who said and did what, and when, and with what rationale. (I've been too busy lately to follow the situation anywhere else than here on BP, so maybe that info is already out there somewhere.)

Sep 05, 2008 16:34 PM
rating: 0
 
frampton
(870)

Very cool that you got access to the notice of grievance. Any chance you'll also get MLB's response (if there is a formal "answer" to the grievance)?

Sep 05, 2008 10:39 AM
rating: 0
 
Bob Shore

Are you certain that the Arbitrator is allowed to meet with the sides separately? That's common in a mediation, but in my experience almost unheard-of in an arbitration, for precisely the same reasons it's not done in a regular trial.

Sep 05, 2008 10:51 AM
rating: 0
 
BP staff member Kevin Goldstein
BP staff

According to the rules of "Grievance Mediation" -- "the mediator is authorized to conduct separate or ex parte meetings and other communications with the parties and/or their representatives, before, during, and after any scheduled mediation conference."

Sep 05, 2008 11:02 AM
 
Bob Shore

But unless this is that odd hybrid known as a mediation-arbitration (in which first the parties attempt to mediate their dispute, but if it fails, the mediator becomes an arbitrator with the power to impose a solution), this dispute is going to arbitration, not mediation, so the Grievance Mediation rules won't apply.

Sep 05, 2008 23:11 PM
rating: 0
 
BP staff member Derek Jacques
BP staff

Bob's right on this one. Appendix A of the CBA specifies that in terms of Grievance Arbitrations "There shall be no oral communication by a Party with the Panel Chair in connection with arbitration cases unless the other Party or his representative is present." So under the CBA rules (which trump the AAA's rules) the arbitrator can't accept ex parte communications.

In my experience, it's not that rare for arbitrators to try and switch hats and mediate, even in non-hybrid proceedings (I've never had any experience with hybrid proceedings). But labor grievances usually aren't a good forum for mediation, and are approached with greater formality than commercial arbitrations. Since someone is accusing the other party of breaking the rules, you're typically going to need an adjudication on the facts.

Sep 06, 2008 09:46 AM
 
tballgame

Past articles on this topic have suggested the deadline could not be extended under any circumstance. I don't read the grievance as stating this. It sounds to me like Boras and the Pirates needed to call both the MLBPA and MLB for permission to extend the deadline a couple of hours to complete a signing that was near a deal at midnight.

Alternatively, Boras can be described as an agent of the MLBPA (I am assuming they license the agents), in which case Boras may have had some authorization from the MLBPA to work beyond the deadline with Hosmer, but Alvarez made the deal against Boras's wishes and thus without MLBPA authorization (implicit or otherwise) to work past the deadline.

Sep 05, 2008 10:52 AM
rating: 0
 
BP staff member Kevin Goldstein
BP staff

Yes, MLPBA does certify agents, but you are wrong (from what I can tell) in assuming that Boras got authorization from MLBPA to work beyond the deadline, as MLBPA was never told about any extensions. Only teams were, which is pretty much why we are where we are.

An an aside, based on my email inbox, we have TONS of lawyers who subscribe.

Sep 05, 2008 11:04 AM
 
Lagniappe

I have been trying to understand why the MLBPA got involved in the first place since Alvarez is not a member of the union. Is it that Boros is actually the member? Who is eligible for membership in the Association?
jim pigg

Sep 05, 2008 13:57 PM
rating: 0
 
ostrowj1

Unions don't like it when the executives get in the habit of ignoring labor contracts, even if the actions may not seem to affect them much.

Sep 05, 2008 14:38 PM
rating: 0
 
BP staff member Kevin Goldstein
BP staff

ostrowJ1 makes a great point here, but to clarify your question, agents are NOT in the union. Players, managers, coaches, and believe it or not, trainers are in the union. That said, agents are certified by the union and much adhere to a set of rules to retain that certification. That's germane here because on such rule is that agents are to notify the union if they believe the CBA rules have been broken -- which takes us BACK to the extensions . . .

Sep 05, 2008 14:59 PM
 
Yankfan21

One thing is nagging at me from the article - a potential loophole as it happens:

"August 15 signing deadline for all drafted players, except those eligible players who have utilized all of their NCAA eligibility."

Could this not be interpreted in such a way as to say the signing deadline does not apply to Hosmer or Alvarez?

I say this because once represented by "agents" as opposed to "advisers," under NCAA rules, players are no longer eligible to take part in NCAA sports.

Thus, it would seem that it could be argued that Alvarez and Hosmer do not fall under the Aug. 15 deadline as they "used up" their NCAA eligibility when they opted to hire Boras as an "agent."

Sep 05, 2008 11:47 AM
rating: 0
 
BP staff member Kevin Goldstein
BP staff

Unfortunately, that is NOT the interpretation you would have had I quoted the entire MOU -- that refers to college seniors, who still have until the week before the next draft to sign.

Sep 05, 2008 11:50 AM
 
Yankfan21

AH, that makes a lot more sense to me. I wondered how the lawyers would let something like that slip by - and apparently, they did not!

Would have made for an amusing story though, otherwise.

Sep 05, 2008 12:21 PM
rating: 0
 
leez34

I'm not a lawyer, but I am a second-year law student. I find this fascinating, and I am also waiting for tomorrow's article with bated breath.

The reason is that legally, there must be some concept of "harm" in order for an award to be made. Since MLBPA is bringing the action, we focus on them. The contract was broken, yes, but how do we measure the harm done to them because of it? What is equitable? And does the reward have more potential to help or harm Hosmer and Alvarez? I think it's pretty clear that whatever it is, it'll help Boras.

Sep 05, 2008 12:21 PM
rating: 0
 
Brian Cartwright

I believe that is was Kevin Goldstein himself, on XM Radio, who announced the Alvarez deal at 1 am, so the deadline was not extended for even "a couple hours", but perhaps for something like 30 or 40 minutes.

Sep 05, 2008 14:21 PM
rating: 0
 
BP staff member Kevin Goldstein
BP staff

The fact that extensions were granted is the issue, not the length. Any such issuance would be against the rules.

Sep 05, 2008 14:54 PM
 
ostrowj1

Were extensions allowed last year?

Sep 05, 2008 14:42 PM
rating: 0
 
BP staff member Kevin Goldstein
BP staff

Yes, one was for Julio Borbon and the Rangers. Borbon's advisor/agent? Scott Boras.

Sep 05, 2008 14:55 PM
 
ostrowj1

Would that have a bearing on the case? My knowledge of the law is solely the result of watching way too much People's Court, but I would think that if the MLBPA allowed it last year (assuming they knew about it- but of course Boras would have notified them?!?) it would set a precedent? Does the MLBPA have a duty to notify prior to the deadline that they will not allow the extensions that were allowed last year?

Sep 05, 2008 16:50 PM
rating: 0
 
gdhailey

So how did you get a copy of the grievance? (So much for "privacy" as one of the advantages of arbitration.)

Sep 05, 2008 21:53 PM
rating: 0
 
dnazarian

Yet another lawyer (albeit not a labor lawyer) weighing in here: can't the Pirates challenge the MLBPA's standing to make this argument? As I understand the Alvarez facts, the player knowingly agreed to the extension of the deadline, waiving the "protection" from the deadline so that he could complete a deal that presumably he wanted, and the other side(s) (the Pirates and MLB) agreed. People waive much more important constitutional rights -- e.g., the right to remain silent, the right to a jury trial -- and rights under contracts all the time. If the (putative) union member asks MLB to allow him extra time and does so on an informed and voluntary basis, and MLB agrees, and he then submits a contract that accurately memorializes the deal to which he agreed (in the standard contract form), where's the harm to the player, or the breach of the CBA? I also wonder if this is a risky move for the union from a remedy perspective -- doesn't the union seriously risk a ruling that Alvarez failed to sign and thus is out of luck until next year's draft? That doesn't seem like an outcome that's in the player's/union member's best interest.

Sep 06, 2008 09:13 AM
rating: 0
 
Bob Shore

The voluntary waiver argument can't be right because it would create an exception that swallows the rule. Why couldn't other union members voluntarily waive, say, the right to the minimum salary negotiated by the union?

For a fairly prominent example, recall a few years ago when Boston's attempt to acquire A-Rod was thwarted. The MLBPA concluded that the revised contract that A-Rod was willing to accept was not worth as much as his original contract, and on that basis torpedoed the deal -- under the Collective Bargaining Agreement, players can't agree to a less valuable contract. --Bob

Sep 06, 2008 13:33 PM
rating: 0
 
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