Deflategate Hearing Highlights Dangers of Arbitration Agreements

September 3, 2015 Alerts and Newsletters

Yes, there is a connection between the current wrangling over deflated footballs in Federal Court in New York and your next construction arbitration. At issue in NFL v. NFL Players Association is a narrow question – should Roger Goodell's arbitration decision imposing a four game suspension on Tom Brady and fining him $2 million be upheld or vacated? Generally, an arbitration award can only be vacated if a court finds that the arbitrator acted fraudulently, was obviously partial, or exceeded his or her power. If you have an agreement to arbitrate disputes, that standard applies whether you make your living throwing spirals to Rob Gronkowski in the end zone, or building your city's next big office tower.

Without inflaming the reader with the author's partisan feelings about the Brady case, the lesson is a simple one. When you agree to arbitrate disputes, you are effectively giving up the right to appeal a bad outcome to a higher court. In even simpler terms, you are almost always stuck with an arbitration award. In the vast majority of cases, no matter how irrational the arbitrator's decision, that decision will be upheld by a reviewing court. Judge Richard Berman's decision vacating Commissioner Goodell's arbitration order is the exception to the rule that, for better or worse, judges rarely vacate arbitration awards. The federal and state statutes which enable and promote arbitration expressly limit the scope of judicial review of arbitration awards.

None of this is to say that arbitration is a bad idea. For many (maybe most) construction disputes, arbitration remains the best and cheapest way to reach a resolution. The tradeoffs between efficiency, finality and process work well in most construction disputes. However, the agreement to arbitrate should not be taken for granted. Know what you are getting into and, when in doubt, check with your construction lawyer to make sure you don't get sacked.

___________________________________________________________________
This communication is intended for general information purposes and as a service to clients and friends of Verrill Dana, LLP. This publication, which may be considered advertising under the ethical rules of certain jurisdictions, should not be construed as legal advice or a legal opinion on any specific facts or circumstances, nor does it create attorney-client privilege.

Firm Highlights

Matter

Procurement

We have assisted many owners, and contractors in design and construction contracting including: Massachusetts Institute of Technology Investment Management Company on over a billion dollars in projects in Kendall Square area of Cambridge, Massachusetts...

Matter

Breach of AIA Construction Contract and Waiver of Consequential Damages By Owner

Our client, a general contractor, and the project owner signed an American Institute of Architect A101 contract with accompanying A201 general conditions. The project included construction of a new office/retail building, and associated site...

Matter

Engineering Malpractice

We asserted claims on behalf of a large private institution related to defective design and installation of a geothermal heating and cooling system in a high profile public building. The matter was settled favorably...

Matter

Defense of Breach of Contract, Negligent Construction and Breach of Duty of Workmanship Claims

We successfully defended a large mechanical contractor in connection with lawsuit stemming from the comprehensive failure of the hydronic piping system in a resort hotel's heating and cooling system. Through fact and expert witness...

Publication/Podcast

City of Portland Releases Guidelines and Procedures for All Construction Sites and Workers at all Public Works

On Monday, March 30, I participated in a video conference on construction activities and COVID-19 sponsored by the Portland Chamber of Commerce with various City of Portland officials and representatives of the developer/contractor community...

Publication/Podcast

Massachusetts COVID-19 Essential Services as they Relate to the Construction Industry

On March 23, 2020, Governor Baker issued “an emergency order requiring all businesses and organizations that do not provide ‘COVID-19 Essential Services’ to close their physical workplaces and facilities to workers, customers and the...

Matter

Defense of Contractor - Davis-Bacon Prevailing Wage Claims

This case concerned the construction of a marine boat dock on an island in Boston Harbor. The Plaintiff claimed entitlement to unpaid wages and enhanced wages under the federal prevailing wage statute known as...

Matter

Client Recovers on Claim On Differing Site Conditions Claim Involving Subsurface Contaminated Soils

We successfully resolved a substantial claim for our client, a large, Maine based site contractor, stemming from differing site conditions encountered on an aviation facility owned by project federal government. The case stemmed from...

Matter

Project Owner Breached Contract by Attempting to Terminate Contractor

Our client, large construction contractor, completed construction of a new entry at a public building. The scope of work included construction of new concrete sidewalks, stairs, accessibility ramp, canopy, lighting, railings and a non-load...

Publication/Podcast

Is the Coronavirus Pandemic a Force Majeure?