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Collective Bargaining Agreements and the NBA: What Crosses the Line

Published:  February 6, 2019

Analogizing to sports always creates a risk of alienating individuals who are not fans. Unfortunately, analogizing to sports is often extremely useful because conflict and controversy in professional and collegiate sports are highly publicized. In terms of labor and employment law, professional sports can often provide demonstrative examples of legal concerns that are relevant to many employers in other fields. For example, lay persons often develop most of their understanding of labor law from professional sports news. Virtually no average person would know the legal standard for overturning an arbitrator’s determination if not for New England Patriots Quarterback Tom Brady’s appeal of the 2015 arbitration decision related to the “Deflategate” controversy.

Recently, another professional sports story has provided an opportunity to illustrate a common concern in labor and employment law.  For the past few years, the basketball community has openly speculated, and frankly expected, New Orleans Pelicans to trade star player Anthony Davis. The writing is on the wall, and has been for several years. Davis is entering the prime of his career, and he is slated for unrestricted free agency in the summer of 2020. Anthony Davis is widely regarded as one of the five best basketball players in the world. The New Orleans Pelicans doesn’t enjoy the same reputation. The Pelicans have made the play-offs twice in Davis’ seven seasons with the team, and they aren’t expected to seriously compete for a championship in the next few years. It was widely expected (and recently confirmed) that Davis did not intend to return to the Pelicans when his contract expired. Instead of letting Davis walk away during free agency, the Pelicans were expected to trade him for substantial assets prior to the expiration of his contract. Earlier this week, Davis’ agent publicly announced that Davis would not resign after his contract expired and that Davis desired to be traded. In response, the NBA fined Anthony Davis $50,000 for publicly requesting the trade.

It should be noted that $50,000 is an extremely small percentage of Davis’ $25.4M annual NBA salary (which does not include Davis’ income from endorsements with Nike, Red Bull, Foot Locker, Exxon Mobil, Saks, Inc., or other business ventures). By comparison, it is the proportional equivalent of a $98 fine for an individual making $50,000 per year. When viewed as a percentage of his annual income, it seems odd that the NBA would levy a fine so low that it would barely register for the player. However, if we look a little bit deeper, there are provisions of the NBA’s Collective Bargaining Agreement, Constitution and By-laws that provide some insight.

The NBA didn’t cite a specific provision of the CBA or Constitution when fining Davis. The NBA’s public statement merely cited violation of “collectively bargained for rules prohibiting players or their representatives from making public trade demands.” It is odd that the NBA did not cite a specific rule violation. The specific rule violation probably falls somewhere under Article 35 of the NBA Constitution, which is incorporated into the Collective Bargaining Agreement.

Article 35, Section (d) of the NBA Constitution states: “The Commissioner [of the NBA] shall have the power to suspend for a definite or indefinite period, or to impose a fine not exceeding $50,000, or inflict both such suspension and fine upon any Player who, in his opinion, […] shall have made or caused to be made any statement having, or that was designed to have, an effect prejudicial or detrimental to the best interests of basketball or the [NBA] or of [an NBA team].” Article 35, Section (e) further states: “Any Player who, directly or indirectly, entices, induces, persuades or attempts to entice, induce, or persuade any Player […] who is under contract to any other [NBA team] to enter into negotiations for or relating to his services or negotiates or contracts for such services shall, on being charged with such tampering, be given an opportunity  to answer such charges after due notice and the Commission shall have the power to decide whether or not the charges have been sustained; in the event his decisions is that the charges have been sustained, then the Commissioner shall have the power to suspend such Player for a definite or indefinite period, or to impose a fine not exceeding $50,000, or inflict both such suspension and fine upon any such Player.”

It is unclear which of these provisions was violated by Davis’ comments (or more accurately, his agent’s comments). Functionally, they are most akin to a violation of section (e), which prohibits “tampering” with a player under contract with another team. However, there is really no precedent for this scenario, which is most akin to “self-tampering.” Therefore, the NBA Commissioner may invoke section (d), which provides almost unfettered discretion to levy a fine.

This illustrates the first relevant lesson. With at-will employees, employers enjoy unfettered discretion to make any employment decision, so long as it is not motivated by an unlawful motive, such as discrimination or retaliation. With contract employees or in a unionized setting, employers enjoy only as much discretion as has been authorized by the contract or collective bargaining agreement. It is exceedingly rare that employers will be entitled to unfettered discretion under a contract or collective bargaining agreement. If you are negotiating a contract or collective bargaining agreement, you should push for as much discretionary authority as possible.

The second lesson of this situation involves the NBA’s grievance procedures. As previously mentioned, it is curious that the NBA would issue a fine that is so paltry in comparison to player salary. Nonetheless, the number $50,000 comes up quite often. There is likely a good reason for that.

Under Article XXXI, Section 9 of the NBA’s current collective bargaining agreement, a fine of $50,000 or less imposed on a player by the Commissioner related to action taken by the Commissioner “concerning the preservation of the integrity of, or the maintenance of public confidence in, the game of basketball […] shall not give rise to a Grievance, shall not be subject to a hearing before, or resolution by, the Grievance Arbitrator, and shall not be determined by arbitration.” Instead, it will be resolved in a less formal process involving a Player Discipline Arbitrator. Although the phrasing doesn’t make this appear to be a major distinction, it has a great deal of importance.

Under Article XXXI of the current NBA's CBA, there are complicated procedures for Grievances and Arbitration. However, exempting minor fines (i.e., $50,000 or less) streamlines the process. This prevents that NBA from being tied up in more formal and exhaustive litigation over comparatively minor offenses.

This provides an important lesson for employers negotiating contracts or collective bargaining agreements. Employment settings present a wide variety of different conflicts and controversies, from minor disputes to major conflicts. Employees and/or union representatives will always attempt to ensure that employees have avenues for resolving grievances. However, it is not efficient to afford the same procedural processes to all disputes. While some issue may warrant exhaustive litigation, minor disputes do not warrant the same extensive and costly litigation. When negotiating a contract or collective bargaining agreement, it is wise to insist on separate procedures for conflicts depending on the comparative seriousness of the issue. 

If you have any questions regarding this topic, or any aspect of labor and employment law, please contact the attorneys at Royal, P.C.