How Brady, Goodell could reach a settlement in Deflategate case

Tom Brady and Roger Goodell have been ordered to meet in court on Mon., Aug 31, unless the two sides reach a settlement this week. Michael McCann explains how this is possible, and what a workable settlement would look like.

On Monday, Aug. 31, attorneys for the NFL and NFLPA are scheduled to meet with U.S. District Judge Richard Berman to continue discussions on the legality of NFL commissioner Roger Goodell upholding Tom Brady’s four-game suspension. Judge Berman has also ordered Goodell and Brady to attend this meeting. It will likely be the last time they meet before Judge Berman renders a decision, which is expected by Sept. 4. The Aug. 31 meeting, however, doesn’t have to happen. The NFL and NFLPA could instead strike a settlement sometime this week.

This is the best week yet for settlement talks

The week of Aug. 23 should serve as a constructive period for both sides to engage in honest talks. There are no contentious court hearings to attend and media interest in the case will likely take a much-needed breather. Both sides also know that if they go to court next Monday, Judge Berman will again ask them very difficult questions. Those questions, and their accompanying answers, will surely generate another round of unflattering news stories for the NFL and the NFLPA.

Also, while a settlement would be possible any time before Judge Berman renders a decision, by next Monday, both sides might conclude—if they haven’t already—that they have gone too far and should wait for a decision. Although Judge Berman hasn’t expressly committed to ruling by Sept. 4, which is one day before Brady’s suspension is scheduled to go into effect, it is highly likely that he would do so.

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Why a settlement doesn’t make sense for either side

While this may be a good week for settlement talks, that doesn’t mean a settlement would make sense. In fact, there’s a good argument that there are no existing settlement terms that Brady, the NFLPA and the NFL would all accept.

First consider the perspective of Brady on a settlement. He will not admit to participating in an alleged ball deflation scheme that he swore, under oath, he did not partake in. Such an admission would risk potential perjury charges, and even if not criminally charged, Brady would be ridiculed as a liar and cheater. He might be willing to admit to not being fully cooperative, but an admission about ball deflation is a non-starter.

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Brady might also be less inclined to settle because he's under the impression that Judge Berman will rule in favor of him. Judge Berman has raised numerous criticisms of the NFL’s case during testimony and most legal experts who have publicly commented on the litigation, myself included, believe that Brady is likely to prevail. At this point, Brady might figure that his best play is to defeat the NFL by Judge Berman vacating the suspension. If Brady has come to that conclusion, then he won’t accept a settlement. The NFLPA, hoping to create judicial precedent that could effectively limit the disciplinary powers of the commissioner, might feel the same way.

The NFL is looking at the Brady litigation from a very different lens and yet is similarly adverse to a settlement. The league knows that despite Judge Berman’s harsh criticisms, he is ultimately obligated to accord high deference to the arbitrator—NFL commissioner Roger Goodell. However, Goodell acted in the capacity of the hearing officer for Brady’s appeal under Article 46 of the collective bargaining agreement. As I wrote last week, it is possible that Judge Berman has created a misleading impression that he will actually rule for Brady.

The NFL also knows that if Judge Berman strays too far from the appropriate standard of review, the league would have a compelling argument in an appeal to the U.S. Court of Appeals for the Second Circuit. The league would be just as happy with Brady serving a four-game suspension in November or December, or even at the start of the 2016 regular season, as it would with Brady serving his four-game suspension at the start of the 2015 regular season. The league has the luxury of waiting out an appeal.

Lastly, the NFL recognizes that if it cuts a deal with Brady in which his punishment is reduced, the league would create incentives for future suspended players to go to court. The league obviously does not want to unwittingly encourage more legal battles with players.

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Why a settlement makes a great deal of sense for both sides

I will now argue against what I just wrote. Why? Because a settlement would offer both sides something of incalculable value: closure. If a settlement is reached, there would be no waiting for a decision by Judge Berman that could go either way, and thus no waiting for an appeal to the U.S. Court of Appeals for the Second Circuit that could drag out into 2016. Keep in mind, to “win,” the NFL or NFLPA would have to win twice: once before Judge Berman and once before the federal appeals court. A settlement reached this week would end the timeline before the regular season begins. In contrast, without a settlement, the media will pepper Brady and Goodell—along with Brady’s teammates and coaches, and various NFL owners etc.—with questions about the litigation throughout the 2015 season. Deflategate would be a cloud that hangs above Brady and Goodell until 2016 and possibly beyond`.

A settlement would have to be approved by Judge Berman, but approval would likely be a mere formality. Judge Berman clearly wants the litigation to end, if for no other reason than there would be no risk that his decision is reversed on appeal. Also, given that both the NFL and NFLPA have hired some of the most expensive and talented attorneys around, Judge Berman would need not worry about unequal bargaining power in the settlement talks. If he’s presented with a settlement, he will almost certainly accept it.

So what might a workable settlement look like? Here’s one possibility:

I. No statement about fault

One potentially viable framework for a settlement would be the NFL and NFLPA announcing that they are in agreement that Brady will be punished (whether that punishment is a fine or a shortened suspension) and they agree to offer no other substantive characterization about the settlement.

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In this scenario, Brady wouldn’t sign a statement of fault, but the NFL wouldn’t clear Brady of involvement. The subject of what Brady might have done or not done would be left unstated and would remain unstated—forever. The settlement would only be treated as an end to the litigation. Any additional statements by the NFL and NFLPA about the settlement would only be pleasantries, such as mutually expressing gratitude to Judge Berman for his time and efforts and offering appreciation that they resolved their dispute amicably.

For Brady, such a settlement would ensure that he will not be compelled to admit to participating in a ball-deflation scheme. This is the most important goal for Brady. Frankly, he would be better off losing to the NFL before Judge Berman and before the U.S. Court of Appeals for the Second Circuit than admitting to lying. While his critics would argue that Brady agreeing to a settlement along these lines would effectively constitute an admission to involvement in an alleged ball deflation scheme, Brady could simply ignore the “noise” of his critics knowing that it would gradually fade away.

For the NFL, a settlement would ensure that Brady is held accountable. In the settlement proposed here, the NFL would also avoid a scenario whereby Brady admits only to a lack of complete cooperation. Such a low-level, inconsequential admission might be construed as a repudiation of the Wells Report and its controversial theories of a ball deflation conspiracy. Instead, in this proposed settlement, Brady would accept punishment for “something” left unstated. The NFL would hope that the public views such an admission as connected to a ball deflation scheme.

II.  Permanent confidentiality and non-disparagement

Any settlement would likely require that all interested parties permanently refrain from speaking publicly about the litigation and the underlying controversy. This prohibition would forbid sharing or leaking information that has not yet been made public, such as communications between NFL officials or transcripts and notes related to interviews conducted by Ted Wells and his staff. Violation of a confidentiality clause would constitute a breach of a contractual provision and significant monetary damages could be assessed. Similarly, the parties might agree that none of them can publicly disparage each other, at least in regards to Deflategate and the surrounding controversy.

III. Waiver of possible defamation claims

The NFL would probably only agree to a settlement if Brady himself contracts away his right to sue the league and its officials for defamation. Brady has the right under Massachusetts law (and potentially other states’ laws) to sue for defamation. In such a lawsuit, he would argue that the NFL made untrue statements about him and those statements damaged his reputation. As a public figure bringing a defamation claim, Brady would have the added hurdle of proving “actual malice,” which means proving the NFL intentionally or knowingly lied about him. A successful defamation lawsuit would only offer Brady one type of remedy—monetary damages—and would have no bearing on Brady’s suspension.

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A defamation lawsuit could take months or even years to resolve and could eventually require both Brady and the NFL to share materials in pretrial discovery that they might prefer to keep confidential. The NFL could also argue, as it did in response to Jonathan Vilma’s defamation lawsuit, that a defamation suit brought by Brady is pre-empted by the collective bargaining agreement.

While it is unlikely that Brady, who is reportedly worth about $120 million, would sue the NFL for more money, the NFL probably would want to eliminate that possibility. The league could do so by all interested parties agreeing to waive away any potential defamation claims.

In short, while a settlement seems unlikely right now, if Brady, the NFLPA and the NFL are all willing to make concessions, they might just find a common ground that makes them all better off.

Michael McCann is a Massachusetts attorney and the founding director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law. In the fall 2015 semester, he will teach an undergraduate course at UNH titled “Deflategate.” McCann is also the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law and he teaches “Intellectual Property Law in Sports” in the Oregon Law Sports Law Institute.