Today, the 3rd Circuit Court of Appeals delivered a bombshell judgment on NFL agent Jason Bernstein's motion to vacate a March 2020 arbitration ruling denying Bernstein's grievance against NFL agent Todd France. The parties originally found themselves in court after Giants' wide receiver Kenny Golladay (then with Detroit) abruptly terminated both his exclusive endorsement/marketing and standard representation agreements with Bernstein (of Clarity Sports) in January of 2019. Bernstein grew suspicious of foul play when he learned (via a Facebook post) that Golladay had participated in an autograph signing three days prior, which he played no role in arranging.
As Golladay's separation from Clarity Sports became official, the receiver quickly signed with CAA Sports and veteran agent Todd France. This led Bernstein to believe that France was behind the autograph signing event, which would violate Bernstein's exclusive marketing and endorsement agreement, as well as NFLPA policy. Five months later, Bernstein filed a written grievance against France pursuant to the dispute resolution provisions in the NFLPA regulations.
Bernstein, claiming he had suffered $2.1 million in pecuniary losses (projected commissions on Golladay's NYG contract), alleged France violated Section 3.B(21)(a) of NFLPA regulations, which prohibits agents from "initiating any communication, directly or indirectly, with a player who has entered into a Standard Representation Agreement with another Contract Advisor and such Standard Representation Agreement is on file with the NFLPA if the communication concerns a matter relating to the: (i) Player's current Contract Advisor; (ii) Player's current Standard Representation Agreement; (iii) Player's contract status with any NFL Club(s); or (iv) Services to be provided by prospective Contract Advisor either through a Standard Representation Agreement or otherwise.
As required by the NFLPA Regulations, the dispute was referred to arbitration. The NFLPA appointed an arbitrator, and the parties were permitted to take discovery from each other before the hearing. On November 7, 2019, Bernstein had the opportunity to depose Todd France. France unequivocally and repeatedly denied having any involvement in the autograph signing. Further, Bernstein faced immense difficulty in discovery, as "France denied having any documents responsive to key requests about Golladay's appearance at the signing event."
The arbitration hearing was held in Alexandria, Virginia, on November 19 and December 12, 2019. There, the arbitrator ruled that "Bernstein did not meet his burden of proving that France had violated either provision of the NFLPA Regulations invoked in the grievance." "More specifically, because France had nothing to do with the signing event - and because Golladay had already made up his mind to switch to France by that point - France did not violate Section 3.B(2)'s prohibition on agents providing a thing of value to induce a player to sign with him." The arbitrator thus denied Bernstein's grievance in an award dated March 27, 2020.
Bernstein sought to vacate that award and made it all the way to the Third Circuit Court of Appeals, which brings us to today's ruling. "Newly revealed evidence showed that France was in fact involved with the autograph-signing event," said Circuit Judge Jordan.
As discovery continued in October 2020, CAA Sports produced an email from an employee to France attaching a contract for the autograph event for Golladay's signature, plus another email from France to Golladay attaching the same contract and asking him to sign and return it.
The court recognizes that there is an extremely steep hill to climb to vacate an arbitration award, as such rulings are intended to be final. However, there are grounds that may call for a vacated award, and fraud is one of them.
"Bernstein says that the arbitration award here was procured by fraud because of France's non-production of responsive documents, as well as his false testimony at the arbitration hearing and his pre-hearing deposition." The court agrees:
Perhaps the easiest conclusion in this case, even under a clear-and-convincing-evidence standard, is that France committed fraud.
The court also held today that France lied under oath and wrongfully withheld important discovery information that Bernstein requested. France continuously represented that there were no existing documents pertaining to the Golladay signing event. "He then doubled down by denying in his pre-hearing deposition and at the hearing that he had any knowledge of or involvement in the signing event." "His lawyer voiced the same position in his opening statement at the arbitration hearing.
"None of that was true, as revealed by the evidence uncovered in Bernstein's Parallel Action. Text messages and deposition testimony showed that 'Todd' was to ride with Golladay to the signing event, and emails to and from France attached the contract for the event."
The court held that "France's false representations that he did not possess those emails and that he had no involvement in the event amount to clear and convincing evidence that fraud occurred. Further, the court held that Bernstein could not have discovered this fraud and that it was material to the arbitrator's ruling:
Bernstein's central allegation in his grievance was that France was behind Golladay's signing event. The arbitrator concluded that Bernstein did not present any evidence in support of that theory. But Bernstein could have, and undoubtedly would have, presented such evidence if not for France's lie that he had no documents reflecting his involvement in the signing event and his further lies about being wholly uninvolved in the event.
With that, the United States Court of Appeals for the Third Circuit vacated the arbitration award, holding that it was procured by fraud. "An honest process is what those who agree to arbitration have a right to expect."
Jason Morrin is a recent graduate of Hofstra Law School. He was President of Hofstra’s Sports and Entertainment Law Society. He will be joining Zumpano, Patricios, & Popok as a law clerk, awaiting July, 2022 Bar Exam results. He can be found on Twitter @Jason_Morrin.
