France v. Bernstein

43 F.4th 367

Todd FRANCE

v.Jason BERNSTEIN, Appellant

No. 20-3425

United States Court of Appeals, Third Circuit.

Argued March 14, 2022

Filed: August 9, 2022

John D. Comerford [ARGUED], James B. Martin, Dowd Bennett, 7733 Forsyth Boulevard – Suite 1900, St. Louis, MO 63105, Counsel for Appellant

William J. Clements, Michael A. Iaconelli, Glenn A. Weiner [ARGUED], Klehr Harrison Harvey Branzburg, 1835 Market Street – Suite 1400, Philadelphia, PA 19103, Counsel for Appellee

Before: JORDAN, KRAUSE and PORTER, Circuit Judges

OPINION OF THE COURT

JORDAN, Circuit Judge.

Courts will disturb an arbitration award only in limited circumstances, but those circumstances do occasionally arise. Under the Federal Arbitration Act ("FAA"), a court may, for example, vacate an award that was procured by fraud, and fraud is exactly what Jason Bernstein says was perpetrated by Todd France in the arbitration underlying this suit. Like something out of the film Jerry Maguire , these two sports agents fought over Bernstein's claim that France improperly organized a money-making event for a football player who was then one of Bernstein's clients, all in an effort to induce that player to fire Bernstein and hire France. The matter went to arbitration, and, in pre-hearing discovery, France denied possessing any documents pertaining to the event. He flatly denied having any involvement in the event at all. The end of this tale hasn't been told yet, but this much is now clear: France lied to Bernstein and the arbitrator, though his lies were not uncovered until after the arbitration was decided in his favor. Because the arbitration award was procured by France's fraud, we will reverse the District Court's order confirming the award and will remand with the instruction to vacate it.

I. BACKGROUND

A. The Parties and the Signing Event

Bernstein and France are certified contract advisors (more commonly referred to as agents) registered with the National Football League Players Association ("NFLPA"). They each represent NFL players in contract negotiations with NFL teams and in related matters. Bernstein is also the majority owner of Clarity Sports International LLC ("Clarity Sports"), which advises and represents professional athletes in matters other than their playing contracts, such as marketing and endorsement contracts. France, meanwhile, worked for the agency CAA Sports LLC ("CAA Sports") during the period relevant to this case. As agents for NFL players, Bernstein and France must comply with the NFLPA Regulations Governing Contract Advisors ("the NFLPA Regulations"), which are a product of the collective bargaining agreement the players have with the NFL and its constituent teams.

Bernstein's roster of clients used to include Kenny Golladay, a wide receiver who signed a standard representation agreement with Bernstein in late 2016, before Golladay's rookie season with the Detroit Lions in 2017. Golladay simultaneously signed a separate agreement with Bernstein's Clarity Sports for representation in endorsement and marketing deals. Under those contracts, Bernstein and Clarity Sports were Golladay's exclusive representatives. As required by the NFLPA Regulations, the contracts were filed with the NFLPA.

That agency relationship ended on January 29, 2019, when Golladay terminated both agreements. Break-ups are seldom happy affairs, but Golladay's goodbye was particularly troubling to Bernstein because, three days earlier, Golladay had participated in an autograph-signing event in Chicago that Bernstein had played no role in arranging – even though setting up such publicity and money-making opportunities for Golladay was precisely what Bernstein and Clarity Sports were hired to do. Bernstein became aware of the event, but only because he saw a Facebook post from one of the three sports memorabilia dealers promoting it. Once Golladay's agreements with Bernstein and Clarity Sports were terminated,¹ Golladay immediately signed with France. Bernstein soon came to believe that France and his colleagues from CAA Sports were behind the signing event the whole time.

B. Arbitration

Five months later, Bernstein filed a written grievance against France pursuant to the dispute resolution provisions in the NFLPA Regulations. In his grievance, Bernstein alleged, "[o]n information and belief," that France initiated contact with Golladay, arranged and negotiated the autograph-signing event for him, and then used the event's proceeds to induce him to terminate his relationship with Bernstein and to sign with France. (J.A. at 90-91.) In doing so, Bernstein said, France violated two provisions of the NFLPA Regulations. First, he allegedly violated Section 3.B(2), which prohibits agents from "[p]roviding or offering money or any other thing of value to any player or prospective player to induce or encourage that player to utilize his/her services[.]" (J.A. at 50, 92.) Second, France allegedly violated Section 3.B(21)(a), which prohibits agents from

[i]nitiating any communication, directly or indirectly, with a player who has entered into a Standard Representation Agreement with another Contract Advisor and such Standard Representation Agreement is on file with the NFLPA if the communication concerns a matter relating to the:

(i) Player's current Contract Advisor;

(ii) Player's current Standard Representation Agreement;

(iii) Player's contract status with any NFL Club(s); or

(iv) Services to be provided by prospective Contract Advisor either through a Standard Representation Agreement or otherwise.

(J.A. at 52, 92.) Bernstein alleged that he had suffered $2.1 million in pecuniary losses, which he claimed is what his commissions on Golladay's next big playing contract and accompanying endorsement and marketing deals would have been. As required by the NFLPA Regulations, the dispute was referred to arbitration.

1. Pre-Hearing Discovery

The NFLPA appointed an arbitrator, and the parties were permitted to take discovery from each other before the hearing. That discovery included document production and depositions of Bernstein and France, although France resisted such discovery and forced Bernstein to pursue an order from the arbitrator. At France's deposition on November 7, 2019, he repeatedly denied having any involvement in Golladay's participation at the autograph-signing event.

Bernstein's efforts to obtain documents from France proved frustrating. Although France promised to produce documents in response to certain requests – and eventually did produce some, though only after Bernstein complained to the arbitrator – France denied having any documents responsive to key requests about Golladay's appearance at the signing event. Specifically, Bernstein asked for

• "Each and every document, or communication from you to any other person, that concerns, relates to, or mentions the January 21, 2019 appearance and autograph signing by Kenny Golladay that is referenced in the Grievance."

• "Each and every document, or communication from you to any other person, that concerns, relates to, or mentions the negotiations and/or discussions for, about, or concerning the January 21, 2019 appearance and autograph signing by Kenny Golladay that is referenced in the Grievance."

• "Any contracts or agreements that concern, relate to, or mention the January 21, 2019 appearance and autograph signing by Kenny Golladay that is referenced in the Grievance."

• "Any contracts, agreements, documents or communications that concern, relate to, or mention the sale of merchandise, items, and/or sports memorabilia signed, autographed, and/or inscribed by Golladay during the January 21, 2019 autograph signing that is referenced in the Grievance."

(J.A. at 2807-08.)

France's response to each of those requests was "none." (J.A. at 2807-08.) France also took the position that he would produce documents only if they were in his personal possession. He asserted that he would not collect and produce documents in the possession of non-parties, including "co-employees at CAA Sports, representatives, attorneys, accountants, affiliates and agents[,]" despite Bernstein's stated desire to reach those people with his document requests. (J.A. at 2804.) In other words, in France's world, it didn't matter whether documents were under his control; if they were not physically in his possession, he was not going to turn them over.

Bernstein took issue with France's cramped interpretation of his (France's) discovery obligations, and he brought the issue to the arbitrator's attention in an email requesting an order that France produce responsive documents in CAA Sports' possession. In response, France declared that only he – and not CAA Sports or any of his colleagues – was bound by the NFLPA Regulations and thus obligated to comply with discovery in arbitration. Nevertheless, he promised that, "for the avoidance of any doubt, [he was] in fact producing the responsive documents that [were] in [his] possession or control" (J.A. at 2816) – even though "control" seemed not to mean much, if anything, to him, because he maintained that he did not control documents in the possession of CAA Sports (or any other non-party).

Bernstein still wanted access to documents from individuals and entities other than France alone, and so, with just a few weeks until the first day of the arbitration hearing, he opted "to end the debate" over the scope of France's obligation to produce documents. (J.A. at 2814.) In order to do so, he asked the arbitrator to authorize a subpoena for documents from CAA Sports. Soon after, he requested authorization for six additional subpoenas directed to other non-parties: Golladay; the three sports memorabilia dealers that promoted the signing event; Golladay's mother; and a mentor of Golladay's named Kenneth Saffold, Jr.² The arbitrator authorized all seven subpoenas, but, he cautioned, he did not have authority to enforce those subpoenas.

Bernstein served the subpoenas on CAA Sports, two of the sports memorabilia dealers,...