Alex Rodriguez’s attorneys have, at various times, suggested that he will challenge the outcome of his Biogenesis suspension-related grievance arbitration should he not be satisfied with the result—and that only a result of no suspension will be acceptable. (Update: Arbitrator Fredric Horowitz reduced Rodriguez's sentence, but only to 162 games. A-Rod does plan to appeal to federal court.) In a column in November, I wrote, “Courts grant great deference to labor arbitration and arbitrators under what’s referred to as the Steelworkers Trilogy, a series of cases issued by the Supreme Court in 1960.” That is true whether the case involves teamsters in Detroit or Chicago or baseball players in San Diego or New York.
Steve Garvey challenged the arbitrator’s decision in his collusion-related damages case all the way to the Supreme Court. (MLBPA v. Garvey, 532 U.S. 1015 (2001)). He lost. Similarly, any challenge to Arbitrator Frederic Horowitz’s pending award in the Rodriguez matter will be denied as well. Garvey’s case is interesting, however, because the Supreme Court laid out the standard courts must use in reviewing labor arbitration cases based upon prior case law, didn’t really add any new theory, and then applied that standard to a case involving the sport we all know and love.
After the Major League Players Association won its three collusion cases against the Clubs covering the 1985, 1986, and 1987 offseasons, the Union and the Clubs negotiated a global settlement agreement to deal with the question of damages. The league established a $280M fund to be distributed to affected players, and the MLBPA established a “Framework” to evaluate the individual players’ claims.
The Framework required that players who alleged that they had lost contract extensions would receive damages “only in those cases where evidence exists that a specific offer of an extension was made by a club prior to collusion only to thereafter be withdrawn when the collusion scheme was initiated.” There were several other allegations of lost income players could make in order to receive a remedy.
Once the claims were evaluated, the MLBPA recommended a distribution plan for the claims. The Framework also provided that players could ask an arbitrator to review the distribution plan to determine “whether the approved Framework and criteria set forth therein have been properly applied in the proposed Distribution Plan.”
Garvey claimed damages of $3M because he was not extended for the 1988 and 1989 seasons. He presented a 1996 letter from Ballard Smith, former Padres President and CEO (1979-1987), as evidence, stating that before the end of the 1985 season, he had offered Garvey an extension through the 1989 season, but the Padres refused to negotiate with Garvey after collusion began. Incidentally, Garvey retired after his age-38 season in 1987, one in which he played only 27 games and finished with a .211/.231/.276 line.
The arbitrator denied Garvey’s claim, writing, “there exists… substantial doubt as to the credibility of the statements in the Smith letter.” He went on:
The shadow cast over the credibility of the Smith testimony coupled with the absence of any other corroboration submitted by Garvey compels a finding that the Padres declined to extend his contract not because of the constraints of the collusion effort of the clubs but rather as a baseball judgment founded upon age and recent injury history.
Although the District Court rejected Garvey’s claim, the Court of Appeals for the 9th Circuit reversed that decision, finding that the arbitrator’s refusal to credit Smith’s letter was “inexplicable” and “border(ed) on irrational.” The same arbitrator had previously rejected the owners’ testimony in the underlying collusion case.
The Supreme Court reversed the Circuit’s decision and upheld the arbitrator’s award. Citing Paperworkers v. Misco, Inc., which built upon the Steelworkers Trilogy, the Court wrote, “Courts are not authorized to review the arbitrator’s decision on the merits despite allegations that the decision rests on factual errors or misinterprets the parties’ agreement. It went on, “when an arbitrator resolves disputes regarding the application of a contract, and no dishonesty is alleged, the arbitrator’s ‘improvident, even silly, factfinding’ does not provide a basis for a reviewing court to refuse to enforce the award.”
While the Circuit found the arbitrator’s refusal to credit Smith’s letter “irrational” and “bizarre,” the Supreme Court wrote, “established law ordinarily precludes a court from resolving the merits of the parties’ dispute on the basis of its own factual determinations, no matter how erroneous the arbitrator’s decision.”
In a footnote, the Supreme Court applied that standard to the Garvey case.
In any event, no serious error on the arbitrator’s part is apparent in this case…. The arbitrator’s explanation for his decision indicates that he simply found Smith an unreliable witness and that, in the absence of corroborating evidence, he could only conclude that Garvey failed to show that the Padres had offered to extend his contract. The arbitrator’s analysis may have been unpersuasive to the Court of Appeals, but his decision is hardly qualified as serious error, let alone irrational or inexplicable error.
The Garvey case came after decades of established law on this very subject. While the 9th Circuit disagreed with the arbitrator’s credibility findings and factual findings, and therefore the result, it was not appropriate for it to put itself in the place of the arbitrator. It was not appropriate to reverse his decision without some proof of misconduct as long as the decision draws its essence from the collective bargaining agreement.
If Alex Rodriguez challenges Arbitrator Horowitz’s decision, he will be subject to the same standard as Garvey. Courts are not permitted to stand in the place of the arbitrator and make credibility and factual findings from afar. As long as the arbitrator does not “dispense his own brand of industrial justice,” no appeal is going to be successful.
Eugene Freedman is Deputy General Counsel for a national labor union.
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