In Hollywood Arbitration, the Problem is the Process

What’s wrong with the arbitration process?

arbitration processU.S. District Judge Richard Berman recently vacated NFL Commissioner Roger Goodell’s decision, as an arbitrator, to uphold the four-game suspension of the New England Patriot’s Tom Brady due to what he considered a faulty arbitration process. This decision won’t only affect the way the league and its players interact, it could also change the way arbitration processes work in entertainment.

Some talent-side litigators in Hollywood consider arbitration processes between their clients – directors, writers and actors among others – to be biased toward studios, the Hollywood Reporter explained. This is because the arbitration outfit that often oversees legal disputes in the entertainment business, JAMS, is generally assumed to prefer the studios over the individuals they employ. The for-profit organization is mysterious in that many of the details on cases it helps to work out aren’t exactly public, and there are many of these disputes.

Is JAMS biased toward studios?

The issue is, like Berman’s ruling that Goodell’s arbitration process was faulty, so too do many believe that JAMS’ own efforts to resolve cases may have problems, due to the fact that the organization may be anxious about losing business from Hollywood studios. Additionally, talent, the media outlet reported, generally has little influence in negotiating arbitration provisions. These factors combine to cost the actors, directors, writers and others millions of dollars annually.

“Every studio requires arbitration,” Neville Johnson, an anti-JAMS attorney, explained to the Hollywood Reporter. “It’s a stacked deck. You can’t win … Generally, there are only three ways to overturn an arbitration ruling. [The arbitrator] has to be drunk, bribed or he won’t let in relevant evidence.”

Johnson went on to call Berman’s decision and its potential subsequent effect on all sorts of future arbitration processes “one of the big issues in the coming century.”

Could the Berman decision change future arbitrations?

Going back to Deflategate for a moment, Berman didn’t decide that Tom Brady was not “generally aware” of the fact the footballs he was using were underinflated against league regulations, simply that Goodell’s decision to uphold his suspension was flawed. Leading up to the case between Brady and the league over the arbitration decision, there was the contention that Brady may lose due to the fact that judges often defer to arbitrators’ decisions. This, however, could not have been more wrong as evidenced by Berman’s thorough undressing of Goodell’s arbitration process. It indicated that just as much as the arbitrator’s final decision matters, so does the process.

Berman’s decision is likely to give talent-side litigators a confidence boost in future arbitration processes, The Hollywood Reporter noted. If the way JAMS approaches cases is faulty in ways similar to the way that Goodell handled the arbitration between the league and Brady, then the precedent set by Berman could begin to tilt the odds away from studios and back toward neutrality. Then actors, directors, writers, talent-side litigators and everyone else who may have disputes with studios have Brady and Berman to thank.

If you believe you may be involved in a flawed arbitration process, contact a lawyer with knowledge of entertainment law to determine how to shift the scale back in your favor

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Anthony R. Caruso is a business transactional attorney in New York and New Jersey with experience in structuring, negotiation and completion of legal deals involving business, entrepreneurs, athletes and performers.

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