MIAMI DOLPHINS, LTD. v. COWAN

Citation Codes

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Docket Number

No. 91-2420.

Attorney(S)

Weissman, Lichtman Dervishi, P.A., and Jeffrey M. Weissman and Brian S. Dervishi, Ft. Lauderdale, for appellant. Joe N. Unger, P.A., Miami, Von Zamft Lorenzo, P.A., Coral Gables, for appellee.

Judges

COPE, Judge.

Acts

Labor — Labor-Management Relations — Conciliation Of Labor Disputes; National Emergencies — Functions Of Service

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Smart Summary

Factual and Procedural Background

In 1983, the Miami Dolphins, Ltd. entered into three consecutive one-year NFL Player Contracts with David Overstreet for the 1983-84, 1984-85, and 1985-86 seasons. These contracts included a "Signing Bonus Rider" providing for an initial $150,000 payment upon execution and a further $100,000 payment due on May 1, 1986, contingent on Overstreet's adherence to the contract provisions. Overstreet played for the Dolphins as intended but died in an automobile accident in 1984. The Dolphins refused to pay the $100,000 due in 1986 to Overstreet's estate. Paul Cowan, as administrator ad litem of Overstreet's estate, sued the Dolphins for the unpaid bonus. The trial court granted summary judgment in favor of the estate, and the Dolphins appealed.

Legal Issues Presented

Whether the dispute over the unpaid signing bonus should be referred to arbitration pursuant to the arbitration clause in the NFL Player Contracts and the applicable Collective Bargaining Agreement.
Whether the Miami Dolphins waived their right to arbitration by failing to promptly request it and by participating in litigation.

Arguments of the Parties

Appellee's Arguments (Estate of Overstreet)

The estate concedes the existence of an arbitration mechanism under the contracts and Collective Bargaining Agreement.
However, the estate contends that the Dolphins waived their right to arbitration by not promptly invoking it.

Appellant's Arguments (Miami Dolphins)

The Dolphins argue that the dispute falls within the arbitration provision of the NFL Player Contracts and the 1982 Collective Bargaining Agreement.
They contend that any claim regarding timeliness or waiver should be resolved by the arbitrators, not the court.
The Dolphins also assert that the estate's claim is time barred under the Collective Bargaining Agreement, but this issue should be addressed by the arbitrators.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Dryer v. Los Angeles Rams, 709 P.2d 826, 828-29 (Cal. 1985)	Federal substantive labor law governs arbitration questions involving Collective Bargaining Agreements.	Established that federal labor law applies to the arbitration provision in NFL contracts, guiding the court's analysis.
Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)	National labor policy favors arbitration and doubts are resolved in favor of arbitrability.	Supported the court’s preference to resolve doubts in favor of arbitration.
Belke v. Merrill Lynch, Pierce, Fenner Smith, 693 F.2d 1023, 1025 (11th Cir. 1982)	Federal labor law supports arbitration where contract provisions exist.	Reinforced the application of federal labor law and arbitration preference.
Britton v. Co-op Banking Group, 916 F.2d 1405, 1412 (9th Cir. 1990)	Standards for proving waiver of arbitration: (1) knowledge of right, (2) acts inconsistent with right, (3) prejudice to opposing party.	Applied the three-pronged test for waiver and found no prejudice, thus no waiver.
Rush v. Oppenheimer Co., 779 F.2d 885, 887 (2d Cir. 1985)	Supports the heavy burden of proving waiver of arbitration rights.	Used to confirm the standard for waiver applied by the court.
S H Contractors, Inc. v. A.J. Taft Coal Co., Inc., 906 F.2d 1507, 1514 (11th Cir. 1990)	Prejudice must be shown to establish waiver of arbitration rights.	Supported the court’s conclusion that absence of prejudice meant no waiver.
Adams v. Merrill Lynch Pierce Fenner Smith, 888 F.2d 696, 701 (10th Cir. 1989)	Prejudice is essential to prove waiver of arbitration.	Reinforced the requirement of prejudice for waiver determination.

Court's Reasoning and Analysis

The court began by recognizing that the NFL Player Contracts incorporated a binding arbitration clause governed by the 1982 Collective Bargaining Agreement, which is subject to federal labor law. Federal labor policy strongly favors arbitration, and any doubts are resolved in favor of arbitrability. The court applied established federal standards for waiver of arbitration rights, requiring proof of (1) knowledge of the right to arbitrate, (2) acts inconsistent with that right, and (3) prejudice to the opposing party caused by those acts.

Although the Dolphins did not initially request arbitration and participated in litigation for approximately three months—answering and counterclaiming—the court found no evidence of prejudice to the estate resulting from this delay. The absence of prejudice outweighed any inconsistent acts, meaning the Dolphins did not waive their arbitration rights. Consequently, the court held that the dispute should have been referred to arbitration. Issues such as whether the estate’s claim was time barred under the Collective Bargaining Agreement were deemed matters for the arbitrators to decide, not the court.

Holding and Implications

The court REVERSED the summary final judgment in favor of the estate and REMANDED the case with directions to refer the dispute to arbitration in accordance with the contractual arbitration provision and applicable federal labor law.

The direct effect of this decision is to require the parties to resolve their dispute through arbitration rather than litigation. The court did not set new precedent beyond reaffirming the strong federal policy favoring arbitration and the high burden of proving waiver. The ruling leaves substantive issues, including any statute of limitations defense, to be determined by the arbitrators.

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THE MIAMI DOLPHINS, LTD., APPELLANT, v. PAUL COWAN, AS ADMINISTRATOR AD LITEM OF THE ESTATE OF DAVID ARTHUR OVERSTREET, APPELLEE.

COPE, Judge.

The Miami Dolphins, Ltd., appeal an adverse summary final judgment. The principal issue is whether the controversy should have been referred to arbitration. We conclude that it should have and reverse.

In 1983 the Miami Dolphins entered into three NFL Player Contracts with David Overstreet. These were three, one-year contracts covering the 1983-84, 1984-85, and 1985-86 football seasons. Executed simultaneously was a "Signing Bonus Rider," which provided for payment of $150,000 upon execution, and $100,000 on May 1, 1986. The bonus payment was described as additional consideration for Overstreet's signing of the NFL Player Contracts and "the Player's adherence to all provisions of said contracts. . . ."

Overstreet became a player for the Miami Dolphins as contemplated in the contract. However, in 1984 he died in an automobile accident. The Miami Dolphins took the position that they had no further obligations under the Signing Bonus Rider. Consequently, they did not make the May 1, 1986 payment of $100,000 to Overstreet's estate.

Paul Cowan, as administrator ad litem of the estate of Overstreet, brought suit in the circuit court for the $100,000. The trial court entered summary judgment in favor of the estate and the Miami Dolphins have appealed.

The Signing Bonus Rider was expressly made part of each of the three NFL Player Contracts executed by the parties. Each NFL player contract provided that "[a]ny dispute between Player and Club [the Miami Dolphins] involving the interpretation or application of any provision of this contract will be submitted to final and binding arbitration in accordance with the procedure called for in any collective bargaining agreement in existence at the time the event giving rise to any such dispute occurs." NFL Player Contract, para. 20. At all pertinent times the parties were governed by the 1982 Collective Bargaining Agreement between the National Football League Management Council and the National Football League Players Association, which sets forth the applicable procedure for resolving any dispute regarding, inter alia, the NFL Player Contract.

An alternative arbitration procedure is provided in the event that no collective bargaining agreement is in existence at the time of the event giving rise to the dispute.

The estate concedes the existence of the arbitration mechanism. The estate argues, however, that the Dolphins did not promptly request arbitration and that they have therefore waived any rights under the arbitration provision.

The Collective Bargaining Agreement is subject to federal labor law. Dryer v. Los Angeles Rams, 709 P.2d 826, 828-29 (Cal. 1985). Federal substantive law therefore governs the question now before us. Id. at 829.

"National labor policy favors arbitration," id., and "doubts are to be resolved in favor of arbitrability. . . ." Id. at 830 n. 5; See also Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983); Belke v. Merrill Lynch, Pierce, Fenner Smith, 693 F.2d 1023, 1025 (11th Cir. 1982); Labor Management Relations Act § 203(d), 29 U.S.C. § 173(d).

Under federal law:

A party seeking to prove waiver of a right to arbitrate must demonstrate (1) knowledge of an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party opposing arbitration resulting from such inconsistent acts. The party arguing waiver of arbitration bears a heavy burden of proof.

Britton v. Co-op Banking Group., 916 F.2d 1405, 1412 (9th Cir. 1990); accord Rush v. Oppenheimer Co., 779 F.2d 885, 887 (2d Cir. 1985).

In the present case the lawsuit had been in progress for just over three months when the Dolphins raised the arbitration issue in response to a motion for summary judgment. The Dolphins had by then answered and counterclaimed. No discovery of any consequence had occurred in the case.

Activity comparable to the foregoing has been found not to constitute waiver under federal law. Assuming for purposes of this discussion that the Dolphins' proceeding with the litigation without first requesting arbitration constituted acts inconsistent with the right to arbitration, there must be a showing of "prejudice to the party opposing arbitration resulting from such inconsistent acts." Britton v. Co-op Banking Group, 916 F.2d at 1412; accord S H Contractors, Inc. v. A.J. Taft Coal Co., Inc., 906 F.2d 1507, 1514 (11th Cir. 1990), cert. denied ___ U.S. ___, 111 S.Ct. 677, 112 L.Ed.2d 669 (1991); Adams v. Merrill Lynch Pierce Fenner Smith, 888 F.2d 696, 701 (10th Cir. 1989); Rush v. Oppenheimer Co., 779 F.2d at 887. Here, there is no showing of prejudice. That being so, the matter should have been referred to arbitration.

The Dolphins contend that the estate's claim is time barred under the terms of the Collective Bargaining Agreement. That contention is a matter to be presented to the arbitrators and is not for us to determine.

Reversed and remanded with directions to refer the dispute to arbitration.