Going head to head with Darelle Revis in his prime as the NFL’s premier shutdown cornerback was never a quarterback’s idea of a fun Sunday afternoon. And for years, Revis’s agents and attorneys, Neil Schwartz, Jonathan Feinsod, and Schwartz & Feinsod, LLC, profited handsomely from negotiating his NFL contracts and endorsement deals off the field. But when Revis discovered that Schwartz had unilaterally negotiated a provision in an endorsement deal that would have given Schwartz’s half of the money, rather than the 10% they had previously agreed upon, he fired Schwartz and sued him for fraud.
Revis’s only written agreement with Schwartz, however, was the NFLPA standard representation agreement, which is a preprinted form that contains a fairly broad arbitration clause sending all disputes arising under the agreement to arbitration.
At the time he signed the SRA, Revis also orally agreed that Schwartz would represent him in negotiating off the field endorsement deals in exchange for a 10% contingency fee. The SRA notes that Revis and Schwartz had entered that separate agreement for legal services at the same time as the SRA.
When Revis sued for fraud, Schwartz responded by moving to compel arbitration under the SRA, even though the dispute centered on the off the field endorsement deal and not the contract negotiations with NFL teams. Schwartz argued, the SRA was the parties only written contract and it incorporated the terms of the oral legal services agreement, so the arbitration clause should force Revis to arbitrate his claims, rather than pursue them in court.
When Supreme Court, Westchester County agreed, Revis appealed to the Second Department. In an order with two Justices dissenting, the Appellate Division majority held that the broad SRA arbitration clause left the question of arbitrability to the AAA arbitrators and, under those rules, “neither the Supreme Court, nor this Court, nor any court, has the authority to decide whether and to what extent these parties’ disputes are arbitrable” (Opn, at 13). Thus, the majority reasoned that it was powerless even to inquire whether Revis’s fraud claims fell within the scope of the parties’ arbitration clause in the SRA.
The dissenting Justices, however, didn’t feel as powerless. As they saw it,
it is a misreading of the contract documents to draw a line from the SRA to the NFLPA Regulations to the AAA Rules, and then, upon examining them collectively, to conclude that the separate Marketing and Endorsement contract (hereinafter the M&E) must initially go to an arbitrator in the event of a dispute between the parties over the M&E. Notably, Paragraph 8 of the SRA only incorporates the arbitration procedures of the NFLPA Regulations to the extent of resolving disputes over the meaning, interpretation, application, or enforcement “of this Agreement,” meaning the SRA only (emphasis added). By the plain language of the SRA, the NFLPA Regulations are not incorporated for the resolution of disputes that arise outside of the SRA. They could be incorporated for other agreements if the other agreements were to so provide, but here, the M&E was not in writing and, therefore, did not provide so. If the NFLPA Regulations do not extend to the M&E, then the terms of the AAA Rules are also not reached.(Dissenting Opn, at 17)
With the two Justice dissent on a question of law–the proper interpretation of the SRA’s arbitration clause and its applicability to the separate legal services agreement for endorsement deals–providing an appeal as of right to the Court of Appeals, Revis now asks the Court to reverse the Appellate Division majority’s opinion and limit the scope of the SRA’s arbitration clause to only an agent’s services in negotiating contracts with NFL teams. Separate agreements could incorporate the SRA’s arbitration clause by reference if the parties so choose. But unless they do expressly, the SRA’s arbitration clause should be limited to the services that the SRA covers.
Revis has a strong argument under the plain terms of the SRA, which, as the Appellate Division dissent notes, limited arbitration to when disputes arise in the meaning, interpretation, or enforcement of “this Agreement.” Indeed, New York’s general rule is that the question of arbitrability is first decided in the courts (see Matter of Smith Barney Shearson Inc. v Sacharow, 91 NY2d 39, 45  [“the question of arbitrability is an issue generally for judicial determination in the first instance”]). Only a narrow exception exists when the parties clearly and unmistakably agree “to arbitrate even [arbitrability]” (id.).
Although the AAA Rules incorporated in the SRA is an unmistakeable agreement to arbitrate the arbitrability of claims arising under the SRA, Revis’s claims don’t appear to arise under the SRA. Rather, Revis’s fraud claims relate only to the separate legal services agreement for the off the field endorsements. Because that agreement was an oral one, there is no unmistakeable agreement to arbitrate even the arbitrability of disputes arising under it.
What’s remarkable is that this case could have a significant impact on how broadly or narrowly the arbitration clause of the NFLPA’s standard representation agreement is construed, and yet, so far, there are no amicus filings supporting either side. But there’s still time. The Court of Appeals’ rules for amicus motions provide that amicus briefs can be filed up until about one month before the case is scheduled for oral argument. And this case hasn’t been scheduled for oral argument yet. The Court of Appeals would benefit from hearing the perspectives of the players or agents who could be impacted by the Court’s interpretation.
For more on Revis’s upcoming trip to the Court of Appeals, you can find the briefs here: