Boston Celtics Limited Partnership v. Brian Shaw

Citations: 908 F.2d 1041; 17 Fed. R. Serv. 3d 192; 1990 U.S. App. LEXIS 12117; 1990 WL 99498Docket: 90-1621

Court: Court of Appeals for the First Circuit; July 16, 1990; Federal Appellate Court

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Brian Shaw signed a contract with the Boston Celtics on January 23, 1990, committing to cancel his prior agreement with the Italian basketball team, Il Messaggero Roma, to play for the Celtics. When Shaw threatened to break this commitment, the Celtics sought arbitration, which ruled in their favor, ordering Shaw to uphold his promise. The Players Association representing Shaw accepted the arbitrator's decision. The Celtics then petitioned a federal district court to enforce the arbitration ruling, which the court did. Shaw appealed the enforcement order.

The case presents undisputed facts: Shaw initially signed a one-year contract with the Celtics in 1988, followed by a two-year contract with Il Messaggero in 1989, which included a clause allowing him to cancel the second year by notifying the team between June 20 and July 20, 1990. In January 1990, Shaw entered a five-year "Uniform Player Contract" with the Celtics, which included a $450,000 signing bonus and annual compensation exceeding $1 million, and reiterated his obligation to rescind the Il Messaggero contract. On June 6, 1990, Shaw informed the Celtics of his decision to remain with Il Messaggero for the 1990-91 season, thus not exercising his right of rescission. The court ultimately upheld the arbitrator's decision, affirming the Celtics' position.

On June 11, 1990, the Celtics initiated an expedited arbitration process under the Collective Bargaining Agreement regarding Shaw's refusal to rescind his contract with Il Messaggero. Following a two-day hearing on June 13 and 14, the arbitrator ruled against Shaw, determining his actions violated his contract with the Celtics, and ordered him to rescind the Il Messaggero contract and refrain from playing for any other team during the term of his Celtics contract. Despite this, Shaw indicated on June 15 that he would not comply. Subsequently, the Celtics sought enforcement of the arbitration award in federal court under Section 301 of the Labor Management Relations Act. The court granted the Celtics' request for expedited enforcement on June 26, ordering Shaw to cancel the Il Messaggero agreement immediately.

Shaw appealed the district court's decision, challenging both the preliminary injunction and the enforcement of the arbitration award. He presented two main arguments: first, that the arbitration award was unlawful for five specific reasons, and second, that the district court employed improper procedures. Regarding the lawfulness of the award, Shaw claimed that the arbitrator had incorrectly determined he breached a contractual obligation because a prior agreement between the Celtics and the Players Association prohibited including termination promises in individual player contracts. He cited Article I, section 2 of the Collective Bargaining Agreement, asserting that his obligation to terminate the Il Messaggero contract was an amendment that did not fall within the permitted exceptions under the Agreement, rendering it null and void.

Shaw's argument does not demonstrate that the arbitrator's decision is unlawful. The key reasons include: (1) the case involves the interpretation of a contract under a collective bargaining agreement, which federal labor law assigns to arbitrators rather than judges; (2) a labor arbitration award is valid if it "draws its essence" from the labor contract, meaning the arbitrator must be arguably interpreting or applying the contract within his authority; (3) the standard for overturning an arbitrator's interpretation is narrow and requires only a "plausible argument" supporting the arbitrator's view.

Shaw's claim regarding the "rescission" promise suggests it defines the compensation relationship, impacting whether his compensation starts at $1.1 million for three years or $1.2 million for two years. The NBA Commissioner and the arbitrator both found the term related to compensation, and their conclusions have a plausible basis.

Regarding the arbitrator's order for Shaw to send a rescission letter on June 20, Shaw argues it was unlawful since the Messaggero contract allows him to send it anytime between June 20 and July 20. However, this argument is barred because Shaw did not raise it in the district court. Moreover, he had agreed in his Celtics contract that the Celtics could seek equitable relief if he threatened to play for another team. Thus, the arbitrator's choice of June 20 as the termination date appears to be an appropriate relief in light of the Celtics' need for timely information regarding Shaw's intentions.

Shaw claims the arbitration award is invalid due to insufficient notice of the proceedings, as outlined in Article XXVIII of the Collective Bargaining Agreement. This provision dictates that when a player threatens to not play, the club can demand expedited arbitration, requiring the arbitrator to convene a hearing within 24 hours of the demand and issue an award within 24 hours post-hearing. Notably, any party's failure to attend does not delay the process.

Shaw contends he did not receive the required written notice, return receipt requested. However, the record shows that Shaw's attorney, W. Jerome Stanley, was served with written notice by a Celtics representative, and the hearing commenced the following day. Stanley left a message for Shaw regarding the arbitration, which Shaw received but chose not to return.

The arbitrator had the authority to determine that the Celtics met the notice requirements. He could interpret the contract as allowing for substantial compliance, equating written notice to Shaw's lawyer and oral notice to Shaw himself as sufficient due to the expedited nature of the proceedings. The absence of substantial prejudice to Shaw led to the conclusion that the notice provided was not fundamentally unfair. The standards of fundamental fairness only require adequate notice, and the arbitrator could reasonably find that the notice given met this criterion.

Shaw contends that the arbitration proceedings were unfair due to the arbitrator's refusal to grant a one-week continuance, which he claims would have allowed him to attend and present evidence. However, the contract mandates that the arbitrator proceed with a hearing after 24 hours' notice and allows for issuing an award regardless of a party's attendance. The context reveals that Shaw was represented by three lawyers at the hearing and was likely aware that his actions regarding Il Messaggero would prompt expedited arbitration. The arbitrator's decision not to grant a continuance was deemed not "fundamentally unfair," as fundamental fairness only requires each party to have a fair opportunity to present their case.

Regarding representation, Shaw argues the arbitration was invalid due to lack of representation. The record indicates that Shaw directed his agent, Stanley, to communicate with the Celtics and arrange for legal representation. Shaw met with the Celtics and Il Messaggero representatives, retained two attorneys for the arbitration, and made arguments through them. Stanley's claim of not being formally retained as Shaw's attorney did not constitute a breach of fundamental fairness.

Ultimately, the arbitration award was upheld as lawful, negating the need to address the Celtics' argument regarding Shaw's burden in this matter due to lack of union support. 

In the district court proceedings, a preliminary injunction was issued requiring Shaw to rescind his contract with Il Messaggero and prohibiting him from playing for any team other than the Celtics. Shaw challenges the legality of both the injunction and the enforcement order, asserting that the district court lacked discretion in granting the preliminary relief and mismanaged the proceedings.

The preliminary injunction in this case arises from an arbitration award related to a collective bargaining agreement between the Players Association and the NBA. Shaw, through his contract with the Celtics, is bound by this agreement. Established public policy supports judicial enforcement of arbitration awards, as seen in various Supreme Court cases and lower court opinions. A preliminary injunction may enforce such an award, even if it grants the plaintiff complete relief. 

The sole legal issue is whether the district court exceeded its equitable powers in issuing the injunction, which hinges on four criteria: likelihood of success on the merits, irreparable harm to the Celtics, balance of harms between Shaw and the Celtics, and the public interest. The court found that the Celtics demonstrated a clear likelihood of success since the arbitration award was lawful and enforceable, and they would suffer irreparable harm if the injunction were not granted, potentially losing a star player and facing challenges in planning for the next season. Shaw’s contract specifically acknowledges his unique skills, reinforcing the potential for irreparable injury to the Celtics if breached. The review of preliminary injunctions is limited to assessing abuse of discretion, and the court acted within its lawful powers in this instance.

The court determined that the "balance of harms" favors the Celtics in the case regarding Shaw's contractual obligations. While a preliminary injunction against Shaw could harm him by limiting his opportunity to play for his preferred team, the potential for success on the merits suggests he could ultimately still sign with Il Messaggero or rely on a lucrative Celtics contract exceeding $5 million. Conversely, failing to issue the injunction could severely hinder the Celtics' ability to plan for the upcoming season if the court later rules in their favor. The court assessed the likelihood of Shaw prevailing as very low, justifying the decision in favor of the Celtics.

Additionally, the court found that a preliminary injunction would not harm public interest, emphasizing the importance of expeditious and informal dispute resolution, particularly in professional sports. Although Shaw argued that the Celtics had "unclean hands" due to the circumstances under which he signed the contract, the court noted that evidence indicated Shaw was a college graduate with prior experience playing under contract with the Celtics, had negotiated a significant salary increase, and did not express concerns about the contract until months after signing it. This evidence undermined Shaw's claims of coercion or misunderstanding regarding the contract.

The district court determined that the Celtics did not have "unclean hands," rejecting Shaw's argument based on the case of Minnesota Muskies, Inc. v. Hudson. In Muskies, Team B improperly lured a player from Team A, which had a contractual right to renew the player's contract. In contrast, Il Messaggero has no contractual claim over Shaw, as the decision to renew or rescind the contract lies solely with him. Therefore, the Celtics' actions to persuade Shaw to exercise his rights were not improper or unfair. The court also issued a preliminary injunction and ordered the enforcement of an arbitration award simultaneously, treating the enforcement as a permanent injunction and a final judgment. This was deemed reasonable since both orders effectively led to the same outcome for Shaw. Shaw contends that the swift enforcement of the award, shortly after the complaint was filed, deprived him of procedural rights akin to a summary judgment motion, which typically requires a 20-day wait, while only 11 days passed in his case.

Shaw's argument regarding procedural time limits is deemed excessively formalistic. The critical issue is whether Shaw suffered any injury due to these limits, such as being unable to mount a defense or prove a vital fact. Shaw was aware that the district court could grant relief quickly and provided affidavits and arguments but did not offer any new significant evidence during the proceedings. At oral arguments, his counsel could not identify any additional evidence that might have influenced the district court's decision, which the court confirmed by stating there was no more information to affect its ruling.

It is established that a summary judgment will not be overturned if no genuine material factual disputes exist, even if procedural rules were not strictly followed. The district court properly consolidated the merits hearing with the preliminary injunction motion, as permitted by Federal Rule of Civil Procedure 65(a)(2). This rule allows for the advancement of trial when no genuine issues of material fact are present, thus supporting the appropriateness of summary judgment procedures. Courts have historically moved rapidly to resolve matters when expediency is necessary, citing examples where final judgments were issued within days of filing complaints.

The case involves a collective bargaining agreement in professional sports that allows for expedited arbitration. The Supreme Court has highlighted the significance of enabling unions and employers to establish informal dispute-resolution processes, granting courts substantial authority to ensure these mechanisms function effectively. The court referenced decisions such as Textile Workers Union v. Lincoln Mills, which affirmed a union's right to enforce arbitration agreements, and Boys Markets, Inc. v. Retail Clerks Union Local 170, which supported the federal courts' ability to issue injunctions to maintain industrial peace during disputes. The district court's decision to expedite the enforcement of the arbitration award was deemed appropriate, as it maintained fairness while aligning with the parties' agreement for swift resolution.

Shaw's argument regarding Massachusetts law, specifically Mass. Gen. Laws ch. 150C, Sec. 11, which requires any motion to vacate an arbitration award to occur within thirty days, was dismissed. The court clarified that this state law does not impede federal courts from enforcing arbitration awards. The court recognized that while federal courts may consider state statutes when applying Sec. 301, the specific provisions of Massachusetts law do not limit federal authority in this context. Consequently, the district court's order was affirmed, and the mandate was to be issued immediately. 

Additionally, the excerpt includes details of a uniform player contract for Brian Shaw with the Boston Celtics, outlining his compensation and payment schedule, including a signing bonus and acknowledgment of an existing contract with Il Messaggero Roma that Shaw intends to rescind, allowing him to play in the NBA.