National Football League Players' Ass'n v. National Football League Management Council
188 Cal.App.3d 192, 233 Cal. Rptr. 147, 1986 Cal. App. LEXIS 2371 (1986)
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Rule of Law:
When an employment contract includes a guaranteed salary provision but is silent on the issue of offset, an arbitrator's plausible interpretation that the common law duty to mitigate damages does not apply will be upheld, especially where evidence suggests that offset clauses are explicitly included in such contracts when intended.
Facts:
- In 1978, Dante Pastorini negotiated a series of NFL contracts with the Houston Oilers for the 1981, 1982, and 1983 seasons, each guaranteeing a salary of $150,000 per year.
- The contracts explicitly stated that Pastorini would be paid his salary even if his performance was deemed unsatisfactory, and did not contain any provision for offsetting his salary with earnings from other employment.
- In March 1980, Pastorini was traded to the Oakland Raiders, who assumed his guaranteed contracts.
- On September 1, 1981, the Raiders released Pastorini under the contract's waiver provision due to unsatisfactory performance.
- After his release, Pastorini signed with the Los Angeles Rams for the 1981 season and later with the Philadelphia Eagles for the 1982 and 1983 seasons, earning significant salaries from both teams.
- The Raiders refused to pay Pastorini's guaranteed salary, asserting they were entitled to deduct the money he earned from the Rams and Eagles.
Procedural Posture:
- The National Football League Players’ Association and Dante Pastorini filed a noninjury grievance against the Raiders pursuant to their collective bargaining agreement.
- The matter proceeded to arbitration, where Arbitrator Sam Kagel ruled in favor of Pastorini, finding that mitigation and offset were not applicable.
- When the Raiders failed to comply with the award, the Players’ Association and Pastorini petitioned the superior court (a trial court) to confirm the arbitration award.
- The Raiders filed a cross-petition in the same court to vacate the award.
- The superior court confirmed the arbitration award, entering judgment for Pastorini.
- The National Football League Management Council and the Raiders (appellants) appealed the superior court's judgment to this intermediate appellate court.
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Issue:
Does an arbitrator exceed their powers by finding that the doctrine of mitigation of damages does not apply to a guaranteed player contract that lacks an explicit offset clause, thereby requiring the releasing team to pay the full guaranteed salary regardless of the player's subsequent earnings with another team?
Opinions:
Majority - Barry-Deal, J.
No. An arbitrator does not exceed their powers when making a plausible interpretation of a contract that draws its essence from the agreement. The arbitrator correctly distinguished this case from a wrongful discharge action; Pastorini was not terminated in breach of contract but was released under a waiver provision explicitly authorized by the contract. Therefore, his claim was not for damages, which would be subject to mitigation, but rather an action on the contract itself for an agreed-upon debt. The arbitrator considered evidence showing that when an offset was intended in NFL contracts, a specific provision was included. Since Pastorini's contract lacked such a provision, the arbitrator's conclusion that the parties intended unconditional, guaranteed payment without offset was a plausible interpretation and not a manifest disregard of the law.
Analysis:
This decision solidifies the high degree of deference courts afford to labor arbitration awards, particularly in matters of contract interpretation. It establishes that default common law doctrines, such as the duty to mitigate damages, are not automatically incorporated into collectively bargained agreements. The ruling emphasizes the principle of freedom of contract, holding that sophisticated parties can contract around default rules, and the absence of specific language (like an offset clause) can be interpreted as an intentional choice. This places the burden on employers to explicitly draft offset provisions into guaranteed contracts if they wish to reduce their liability should the employee find subsequent employment.
