January 14, 2014

Analyzing A-Rod's Arbitration Case

Breaking Down A-Rod's Arbitration Award

by Eugene Freedman

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On Monday, January 13, Alex Rodriguez filed suit against Major League Baseball, the Office of the Commissioner of Baseball, and the Major League Baseball Players Association. After a short oral argument in the United States District Court for the Southern District of New York, Judge William H. Pauley III ordered that A-Rod’s attorneys were required to submit an unredacted and complete version of the previously confidential arbitration award with their filing.

While I was excited to read the award when the suspension was announced over the weekend, reading it was pretty anti-climactic. The award itself is quite uninspiring and doesn’t bring to light anything that had previously been missing from the discussion, perhaps because so much was leaked during the investigation and hearing.

The award contains a restatement of much of the evidence presented by MLB in its case against A-Rod. I had previously explained how the arbitration process would work. In this case, Arbitrator Horowitz decided to apply the higher standard of clear and convincing evidence rather than preponderance of the evidence. In applying the higher standard, he found A-Rod to have violated the JDA by taking three separate banned substances: testosterone, Insulin Growth Factor-1 (IGF-1), and human Growth Hormone (hGH). While he relied upon the testimony of Tony Bosch, he did not do so in a vacuum. Bosch’s testimony was unrebutted, and it was supported by the documentary and electronic evidence. A-Rod’s legal team attacked the validity of that evidence, but they did not appear to present any rebuttal testimony. While the burden was on MLB to prove its case, unrebutted testimony is generally accepted, and it was in this case.

The penalty is perhaps the only interesting section of the award. It’s also an area in which I was wrong in my prior column. I wrote, “Considering that the first offense is a 50-game suspension, the second is 100 games, and the third is a permanent ban (with caveats for return), it would be improper to wait until three violations for MLB to bring the first charge and seek a permanent ban. I can’t imagine that seeking 100 games for multiple violations in this first discipline will succeed.” That is in fact what MLB argued for—that this was three violations that required a permanent ban.

In the instant case, Arbitrator Horowitz applied Section 7.G.2. of the JDA rather than the 50-100-permanent schedule contained in Section 7.A. All of the parties—MLB, the MLBPA, and A-Rod—agreed that 7.G.2. applied. That section requires only that the suspension be supported by just cause, meaning that the penalty should be proportional with seriousness of the offense, the discipline should be progressive in nature, and that it should be in compliance with the CBA. The Arbitrator did consider the 50-100-permanent framework as a benchmark in his imposed penalty, finding that each independent drug violation should result in a 50-game suspension. Horowitz cited the Neifi Perez decision issued by his predecessor Shyam Das in 2008 for the notion that there was “a general understanding that separate uses are subject to separate discipline.” He went on to find that Section 7.L., the provision providing that a second discipline could not be issued prior to notice of the first discipline, applied only to disciplines for the use of the same substance. So, MLB couldn’t have charged A-Rod with multiple uses of testosterone to get up to the permanent ban level. It could, however, stack multiple 50-game suspensions for multiple first-time violations.

Arbitrator Horowitz tacked on an additional 12 games and the postseason for A-Rod’s impeding the investigation—specifically, making public statements he knew to be false, playing an active role in inducing Bosch to make similar false statements, and attempting to induce Bosch to submit a false affidavit.

A-Rod’s lawsuit to reverse the award will not succeed. I wrote about the standard to overturn a grievance arbitration award last Friday. A-Rod’s case boils down to an argument that the Arbitrator acted with manifest disregard for well-settled principles of law and demonstrated evident partiality towards MLB, and that the decision did not draw its essence from the CBA and JDA. On the last point, A-Rod’s team argued that the “162 game suspension amounted to (the Arbitrator’s) own brand of industrial justice as the suspension contravenes the progressive, disciplinary framework set forth in the JDA.” What’s interesting is that they cite Section 7.A., something that the Arbitrator states all parties agreed was not applicable. Moreover, disagreeing with how he applied the CBA is not the same as not applying the CBA.

On the question of manifest disregard for the law, A-Rod’s suit alleges that Commissioner Selig’s failure to testify and Bosch’s being allowed not to answer self-incriminating questions on cross-examination violated existing law. This allegation is weaker than the first. There is no law that required Selig to testify. It’s a private arbitration process, not a criminal case. Moreover, all of the questions cited by A-Rod’s filing were meant to undermine Bosch’s credibility, and would have been incriminating if answered. They related to distribution to minors, unlicensed practice of medicine, and where he received the medicines and prescription slips. None of those things was material to the underlying question of A-Rod’s behavior.

There are some other minor procedural deficiencies argued, but none is guaranteed by the CBA. Again, they presuppose that this is a criminal case, not a labor arbitration hearing.

Finally, there are allegations of bias, mostly riding on the belief that Horowitz is incentivized to rule in favor of MLB because Arbitrator Das was terminated after the Ryan Braun decision. I addressed this in comments to my October column when I wrote, “My experience is that arbitrators consider their integrity more important than almost anything else—it’s their reputation that gets them their future appointments. A fair, impartial arbitrator who issues a well-reasoned decision and is terminated by the losing party is far more likely to be hired by others than someone who issues poorly reasoned decisions attempting to balance wins and losses.” I’ve also found that Arbitrators love to tell stories about their firings. They are almost like badges of honor.

I believe A-Rod’s attorneys are aware of how unlikely that case is to succeed, so they’ve backed it up with a Duty of Fair Representation case against the Union. Those claims, if successful, would find the Union liable for the damages to A-Rod based upon the suspension, even though that’s not listed in the prayer for relief. I will address those claims in a subsequent column.

Eugene Freedman is Deputy General Counsel for a national labor union.

Eugene Freedman is an author of Baseball Prospectus. Follow @EugeneFreedman
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