National Football League Players Association v. National Football League Management Council

In 1978, Dante Pastorini (plaintiff) signed six one-year contracts (Houston contracts) covering the 1978 through 1983 seasons to play quarterback for the Houston Oilers (Houston) of the National Football League (NFL) for a salary of $150,000 per year. Each of the Houston contracts provided that (1) Pastorini would receive his salary even if his skill or performance was unsatisfactory (guarantee clause) and (2) the guarantee clause would not affect the operation of the NFL’s waiver system. In March 1980, Houston traded Pastorini to the Oakland Raiders (Oakland) (defendant), which assumed Houston’s obligations under the Houston contracts. However, Oakland waived Pastorini in September 1981, and Pastorini signed with other teams for the 1981–1983 seasons, earning $505,000 for those years. Nevertheless, Pastorini demanded that Oakland pay him his guaranteed annual salary for the 1981 through 1983 seasons ($450,000 in total) under the Houston contracts. Oakland refused, claiming it was entitled to offset the compensation Pastorini received from the other teams against its obligation to Pastorini. The NFL Players Association (union) (plaintiff) filed a grievance against Oakland pursuant to the collective-bargaining agreement (CBA) between the union and the NFL Management Council (council) (defendant). The council and Oakland responded that Oakland was entitled to an offset based on (1) a wrongfully discharged employee’s duty to mitigate damages and (2) a purported NFL custom and policy that a released player’s guaranteed salary would be offset by any compensation the player subsequently received from another NFL team. The union and Pastorini countered that Pastorini did not have a duty to mitigate because Oakland did not wrongfully discharge him but rather waived him, as authorized by the Houston contracts, and that the NFL’s purported custom and policy was inapplicable because it concededly was not part of the CBA. The arbitrator rejected the council and Oakland’s offset arguments, ruling that NFL guaranteed salaries were subject to offset only if they expressly so provided and that the claimed NFL custom and policy was not part of the CBA and thus was inapplicable to Pastorini. When Oakland refused to pay, the union and Pastorini filed a petition against the council and Oakland (which now played in Los Angeles) for an order confirming the award, which the trial court granted. The council appealed.