NFL v. Gruden: Nevada Supreme Court Sends Dispute to Arbitration

In 2018, Jon Gruden (“Gruden”) signed a ten-year contract with what is now the Las Vegas Raiders.  Gruden’s employment agreement incorporated the NFL Constitution.  The NFL Constitution contains an arbitration provision at Article VIII § 8.3, which states:

The Commissioner shall have full, complete, and final jurisdiction and authority to arbitrate:

. . .

(E) Any dispute involving a member or members in the League or any players or employees of the members of the League or any combination thereof that in the opinion of the Commissioner constitutes conduct detrimental to the best interests of the League or professional football.

In October 2021, the Wall Street Journal and the New York Times published articles referencing controversial emails attributed to Gruden.  Shortly thereafter, Gruden resigned from his position with the Raiders.  Gruden subsequently sued the NFL and the NFL Commissioner. The NFL moved to compel arbitration, but the district court denied the request.  Appeals followed.

First, the Nevada Supreme Court addressed whether the NFL Constitution was properly incorporated by reference into his Raiders employment agreement.  Applying California law, the Nevada Supreme Court indicated “an external document is incorporated into a contract where ‘the reference is clear and unequivocal,’ ‘the reference is called to the attention of the other party and he consents thereto,’ and ‘the terms of the incorporated document are known or easily available to the contracting parties.’”  In Gruden’s employment agreement, it stated that Gruden agreed to “abide by and be legally bound by the Constitution, Bylaws, and rules and regulations of the NFL in their present form and as amended from time to time hereafter…which are hereby made a part of this [a]greement.”  The Nevada Supreme Court concluded that Gruden “assented to the employment agreement…[and] cannot now disavow that assent.”

Second, the Nevada Supreme Court addressed whether the NFL Constitution contains a valid arbitration provision that addresses the disputes at issue.  The Nevada Supreme Court noted that federal law and the laws of California and Nevada favor enforcement of a valid arbitration provision.  In reviewing the arbitration provision and the scope thereof, the Nevada Supreme Court indicated the plain terms of Section 8.3(E) of the NFL Constitution “applies to any dispute ‘involving’ teams or team employees so long as the dispute ‘constitutes’ conduct detrimental to the NFL”  and the actions pertaining to leaking emails meets the conduct detrimental requirement of the arbitration provision.  The Nevada Supreme Court concluded that Section 8.3(E) of the NFL Constitution contains a valid agreement to arbitrate between the parties and the presumption in favor of arbitration puts this dispute within the scope of the clause.

Third, the Nevada Supreme Court addressed whether the arbitration provision in the NFL Constitution is unenforceable due to unconscionability.  Under California law, a party must show both procedural and substantive unconscionability.  The Nevada Supreme Court noted that “Gruden makes strong arguments as to substantive unconscionability” by arguing that the NFL Commissioner has the “jurisdiction” and “authority” to act as the arbitrator of such dispute while also being a defendant in this case.  However, Gruden did not establish procedural unconscionability so his unconscionability challenge fails. 

In conclusion, Gruden’s employment agreement with the Raiders incorporated the NFL Constitution by reference and he agreed to arbitrate claims under Article VIII § 8.3 of the NFL Constitution.  Accordingly, the Nevada Supreme Court reversed the district court’s order and remanded the case to the district court to grant the motion to compel arbitration.

For any questions, contact Christian Dennie at cdennie@denniefirm.com.