838 F.3d 826
7th Cir.2016Background
- US Soccer Federation (Federation) and the U.S. National Soccer Team Players Association (Players Association) are parties to a CBA incorporating a Uniform Player Agreement (UPA) that governs use of player likenesses.
- UPA §6(f)(i) distinguishes non-Spot (including print creatives) and Spot (video commercials): for non-Spot uses of six or more players the Federation "will request, but not require" a sponsor contribution to a player pool; for Spots the Federation must provide the spot to the Players Association for its approval.
- From ~2001–2013 the Federation voluntarily submitted print creatives to the Players Association for review; in 2013 the Players Association disapproved a tequila poster and the Federation declared it had no contractual obligation to continue submitting print/digital creatives for approval.
- The Players Association filed a grievance; an arbitrator found the contract ambiguous and incorporated the parties’ past practice, holding that submission/approval of print creatives was an implied contractual term and awarding relief to the Players Association.
- The district court confirmed the award; the Federation appealed, arguing the UPA language is clear and the arbitrator exceeded his authority by adding an approval requirement.
- The Seventh Circuit reversed: it held the CBA/UPA unambiguously provides only a discretionary "request" for non-Spot sponsor contributions and that the arbitrator impermissibly added terms beyond his authority.
Issues
| Issue | Plaintiff's Argument (US Soccer) | Defendant's Argument (Players Ass'n) | Held |
|---|---|---|---|
| Whether the CBA/UPA requires Players Association approval of print/digital creatives (six or more players) | CBA/UPA is clear: non-Spot print creatives require only that Federation "request, but not require" sponsor contributions; no approval requirement | The agreement is ambiguous or silent on print-creative approval; arbitrator may consider past practice to fill gap and determine parties' intent | The provision is unambiguous; no approval required. Arbitrator exceeded authority by imposing approval requirement |
| Whether an arbitrator may rely on past practice to add terms when the contract contains integration/no-modification clauses | Past practice cannot alter clear, unambiguous contract terms; zipper/integration clauses bar implied modification | Past practice can create an implied term where the contract is silent or ambiguous; arbitrator properly applied past practice | Past practice cannot be used to modify unambiguous contract language; arbitrator impermissibly added terms |
| Proper standard for judicial review of arbitration awards | Award should be vacated if arbitrator ignores/contradicts clear contractual language | Courts should defer; arbitrator determines ambiguity and his interpretation should normally stand | Courts defer broadly, but may vacate awards that ignore or supersede clear contract terms; here vacatur required |
| Whether the arbitrator’s characterization of the contract as "silent/ambiguous" insulated his use of extrinsic evidence | No—an arbitrator cannot ignore express contractual language and then rely on past practice to rewrite the contract | Yes—arbitrator may find ambiguity and consider extrinsic evidence including past practice | Arbitrator mischaracterized the text as silent; that mischaracterization does not insulate an award that contradicts clear contract language |
Key Cases Cited
- United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29 (Sup. Ct.) (award valid if it "draws its essence" from the collective-bargaining agreement)
- United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593 (Sup. Ct.) (arbitrator cannot add to or alter agreement; must interpret and apply it)
- Tootsie Roll Indus., Inc. v. Local Union No. 1, 832 F.2d 81 (7th Cir.) (past practice cannot modify clear, specific contract terms)
- Anheuser-Busch, Inc. v. Beer Workers Local Union 744, 280 F.3d 1133 (7th Cir.) (arbitrator exceeded authority by importing earlier terms despite an unambiguous zipper clause)
- International Union of Operating Engineers v. J.H. Findorff & Son, 393 F.3d 742 (7th Cir.) (courts may not vacate awards for mere misinterpretation; distinction between misunderstanding and ignoring language)
- United Food & Commercial Workers v. Illinois Am. Water Co., 569 F.3d 750 (7th Cir.) (arbitrator may fill unanticipated gaps when contract does not contemplate the situation)
- Northern Indiana Public Service Co. v. United Steelworkers, 243 F.3d 345 (7th Cir.) (arbitrator may fill gaps where contract is literally silent on an outcome)
- Chicago Typographical Union No. 16 v. Chicago Sun-Times, Inc., 935 F.2d 1501 (7th Cir.) (vacatur warranted if there is no possible interpretive route to the award)
- Ethyl Corp. v. United Steelworkers of America, 768 F.2d 180 (7th Cir.) (arbitrator exceeded powers when award cannot be traced to agreement)
- Hill v. Norfolk & W. Ry. Co., 814 F.2d 1192 (7th Cir.) (standard emphasizing that courts ask whether arbitrator interpreted the contract)