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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

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