Current Month (June 2026)
Supreme Court Declines to Review Decision Finding the NFL’s Arbitration Process Was Unenforceable
By Leslie A. Berkoff, Partner and Chair of Dispute Resolution Practice Group, Moritt Hock & Hamroff LLP
The Supreme Court has declined to review a petition for certiorari from the National Football League (“NFL”) and the New York Giants, Denver Broncos, and the Miami Dolphins (collectively, the “Appellants”) (although the docket notes that Justice Brett Kavanaugh would have voted to grant the petition). New York Football Giants, Inc. v. Flores, No. 25-790.
The litigation commenced with discrimination claims advanced by Minnesota Vikings coordinator Brian Flores accusing the league and its teams of systemic discrimination in hiring and promoting Black coaches and front-office officials. The claims included allegations that the Giants conducted a sham interview with Flores for a head coach job in 2022 that already had been decided in favor of another candidate, conducted to satisfy what is known as the League’s Rooney Rule, which requires teams to interview minority candidates for open positions. The Giants denied the allegations. The NFL moved to compel arbitration in the case, as the NFL has an employment arbitration provision as part of its constitution and the process appoints the NFL’s top official as the arbitrator. The NFL has argued that the contracts signed by Flores and other coaches are governed by the league’s constitution and the arbitration clause contained therein.
In 2023, U.S. District Judge Valerie Caproni ruled that the portion of the suit involving the NFL, Giants, Texans, and Broncos would stay in federal court, while the portion involving three other teams would go to NFL arbitration—which, according to league bylaws, granted Commissioner Roger Goodell full authority over the process.
The NFL appealed the decision to the Second Circuit, which held that “Flores’s agreement under the NFL constitution to submit his statutory claims against the Broncos and the NFL to the unilateral substantive and procedural discretion of the NFL Commissioner—the principal executive of one of Flores’s adverse parties—provides for arbitration in name only and accordingly lacks the protection of the Federal Arbitration Act.” Flores v. N.Y. Football Giants Inc., 150 F.4th 172 (2d Cir. 2025).
The Second Circuit went on to conclude that the NFL’s arbitration process was unenforceable, as the NFL’s arbitration program lacked the “requisite independence between parties and arbitrator that is fundamental to the [Federal Arbitration Act]’s conception of arbitration.”
The appellants contended that the Second Circuit’s “unprecedented decision is irreconcilable with the text and history” of the FAA. The NFL and the teams argued in their petition that the arbitration clause nevertheless fits within the scope of the FAA, and the courts should allow organizations like theirs to enforce their own arbitration procedures.
In October 2025, the Second Circuit denied the NFL’s request for an en banc hearing.
The ruling has ramifications beyond the NFL, since several pro leagues entrust their commissioner with authority to oversee disputes involving teams and their employees and to arbitrate related employment and contractual claims.
Delaware Court of Chancery Applies Statutory “Heightened” Presumption of Director Independence, Dismisses Derivative Claim Challenging CEO Compensation
By K. Tyler O’Connell, Morris James LLP
In Ayers v. Foley, 2025-0650-LWW, 2026 WL 1723538 (Del. Ch. Jun. 15, 2026), the Delaware Court of Chancery for the first time applied the statutory “heightened” presumption of independence set forth in 8 Del. C. § 144(d)(2). As amended in 2025, new Section 144(d)(2) of the Delaware General Corporation Law provides that, if the board of directors of a public corporation have determined that a director satisfies the criteria for director independence under national securities exchange listing standards, the presumption of independence “shall be heightened and may only be rebutted by substantial and particularized facts that such director has a material interest in such act or transaction or has a material relationship with a person with a material interest in such act or transaction.” Here, a stockholder-plaintiff challenged a CEO’s roughly $50 million equity grant that was approved by outside, disinterested directors. Vice Chancellor Lori W. Will reasoned that, “[i]n conjunction with Rule 23.1” requirements for pleading demand futility in a derivative action, new Section 144(d)(2) “elevates” the pleading burden to rebut the presumption of independence by requiring “specific, non-conclusory facts of sufficient qualitative significance to support a reasonable inference of a material interest or relationship that would impair the director’s objective judgment.” Here, the plaintiff pointed to a history of outside business dealings between certain nonemployee directors and the CEO. The plaintiff argued such relationships showed the outside directors were not independent. The Court reasoned, inter alia, that the plaintiff failed to plead facts supporting that the supposed benefits the director received via such relationships were material in the particular director’s personal circumstances. Among other things, the Court rejected the plaintiff’s argument that relationships as minority co-owners of professional sports teams should be considered sufficiently “rare and prestigious” to be presumed disqualifying. Accordingly, because the plaintiff failed to plead that a demand upon the board would be futile, the Court of Chancery dismissed the challenge to the CEO’s compensation.
Tyler O’Connell is a Partner at Morris James LLP in Wilmington, Delaware. Any views expressed herein are not necessarily those of the firm or any of its clients.
