Nevada Supreme Court in Gruden v. NFL: Lessons on Arbitration, Institutional Power, and Unconscionability for California Lawyers

Introduction

Gruden v. National Football League, No. 85527 (Nev. Aug. 11, 2025) presents a comprehensive appellate decision on arbitration, one-sided contracting, and the limits of institutional power. The Nevada Supreme Court’s reasoning—applying California law due to a choice-of-law clause—is especially relevant to California practitioners and clients negotiating or litigating in analogous settings: sports, media, and any context where large-scale, non-negotiable rules are incorporated into individual employment agreements.

The Contractual Language at Issue

NFL Constitution

The NFL’s core arbitration language is found at Article VIII §8.3(E):

“The Commissioner shall have full, complete, and final jurisdiction and authority to arbitrate: …

(E) Any dispute involving a member or members in the League or any players or employees of the members of the League or any combination thereof that in the opinion of the Commissioner constitutes conduct detrimental to the best interests of the League or professional football.” Slip op. at 3.

This clause was incorporated by reference into every employment agreement, as required by league-wide policy:

“Teams ‘shall include in every contract between any member club and its employees, including coaches, ... a clause wherein the parties to such contract agree to be bound by the Constitution and Bylaws of the League.’” Id. at 4.

Raiders Employment Agreement

The separate Gruden/Raiders contract independently required arbitration of “any dispute arising out of his employment contract.” Id. at 3.

Who Is Bound? “Current” versus "Former" Employees

A central issue was scope: does the NFL Constitution’s clause bind former employees? The Supreme Court majority concluded it does not:

“This language unambiguously restricts the Commissioner’s power to arbitrate to current members of the league and their employees or players. ... Gruden commenced this suit after resigning from the Raiders and was no longer associated with any NFL team. By its own unambiguous language, the NFL Constitution no longer applies to Gruden.” Id. at 3.

The majority further underscored that a broader construction would invite the Commissioner “to pick and choose which disputes to arbitrate,” undermining fairness and predictability of the system. Id. at 4.

The dissent, however, cited general federal policy and Litton Fin. Printing Div. v. NLRB, 501 U.S. 190 (1991) for the proposition that, absent an express exception, arbitration agreements typically survive employment for disputes arising out of the employment relationship. Id. at 13–14 (Pickering, J., dissenting).

Unconscionability and Adhesion: Applying California Law

Applying California law, the court addressed both procedural and substantive unconscionability (Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83 (2000)).

Procedural Unconscionability

The contract structure was a textbook case:

"Gruden had a seven-page employment contract... The contract incorporates the 447-page NFL Constitution by reference. In essence, Gruden had a 454-page contract, only seven pages of which he could actually negotiate. ... He still had no opportunity to negotiate away the provisions of the NFL Constitution or its incorporation into his employment contract, and we conclude at least some procedural unconscionability was present.” Slip op. at 5.

Sophistication of the employee was not a sufficient cure—see Stirlen v. Supercuts, Inc., 60 Cal. Rptr. 2d 138, 146 (Ct. App. 1997).

Substantive Unconscionability

The majority identified two principal flaws:

• Structural bias: Goodell, as Commissioner, could arbitrate claims regarding his own conduct:

"The ability of the stronger party to select a biased arbitrator is unconscionable, even if the stronger party may ultimately choose a neutral arbitrator." Id. at 6 (citing Beltran v. AuPairCare, Inc., 907 F.3d 1240, 1257–58 (10th Cir. 2018)).

• Unilateral amendment: The NFL could revise the Constitution, including the arbitration clause, at any time:

"The NFL Parties’ control over the NFL Constitution also renders the NFL Constitution’s arbitration clause substantively unconscionable." Id. at 7 (citing Al-Safin v. Cir. City Stores, Inc., 394 F.3d 1254, 1261 (9th Cir. 2005)).

Severability: Can Defects Be Fixed by Removing Biased Provisions?

The NFL and dissent argued that even if the arbitrator-selection clause was tainted, it could be severed, preserving meaningful arbitration:

“[B]ecause the provision in the NFL Constitution is not an independent employment arbitration clause, but rather one delegating powers to the Commissioner and giving the Commissioner the sole power to arbitrate intra-agency disputes, severance would render the provision meaningless.” Id. at 6.

The dissent, based on Beltran v. AuPairCare, Inc., emphasized California’s “strong preference” for severance where possible and practical. Id. at 12 (Pickering, J., dissenting), citing Cal. Civ. Code § 1670.5(a).

Equitable Estoppel and Non-Signatory Arbitration

Separately, the NFL invoked equitable estoppel to enforce the arbitration clause in the Raiders contract (to which it was not a signatory):

“Gruden’s claims here are not intertwined with his contract. ... The gravamen of Gruden’s complaint is the NFL Parties’ alleged actions external to the contract—namely, the unauthorized release of his emails.” Id. at 8 (citing Soltero v. Precise Distrib., Inc., 322 Cal. Rptr. 3d 133, 138 (Ct. App. 2024)).

Likelihood of Federal Review and NFL Appeal: Appellate Process and Theory

Given the decision’s impact, the NFL is likely to immediately seek U.S. Supreme Court review via certiorari under 28 U.S.C. § 1257(a). The legal grounds are robust:

• FAA Federal Policy: The NFL will invoke the Federal Arbitration Act’s “liberal federal policy favoring arbitration.” See AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 343 (2011).

• Preemption of State Law: The NFL will likely argue that the Nevada Supreme Court’s refusal to sever the biased clause—or its broad application of unconscionability—conflicts with FAA preemption doctrine. See Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 581 U.S. 246, 251–52 (2017); Epic Sys. Corp. v. Lewis, 584 U.S. 497, 504–05 (2018).

• Presumption of Surviving Arbitration: The League will likely argue that, under Litton and related SCOTUS precedent, arbitration agreements “survive contract expiration where the ‘dispute involves facts that arose before the contract expiration’” unless clearly excepted. See Litton, 501 U.S. at 205–06.

• Non-Signatory Enforcement: On equitable estoppel, the NFL will likely invoke Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009), to argue that non-signatories can enforce arbitration where claims are “intertwined” with the agreement.

If certiorari is granted, California counsel should watch closely for new limits—or expansions—on court review of institutional unconscionability and preemption.

Practical Implications for California Attorneys

This decision—and the legal turbulence following it—offers clear advice for California lawyers and clients:

• Be explicit as to whether post-employment arbitration is intended.

• Ensure institutional dispute systems have neutral, non-self-interested forums, and avoid or limit unilateral amendment powers.

• Remember that severe structural bias or non-negotiable, institution-drafted frameworks will be subject to rigorous unconscionability scrutiny under Armendariz.

• Even “sophisticated” parties may obtain judicial relief from one-sided arbitration schemes.

Conclusion

Gruden v. NFL may not be binding in California, but its reasoning is built almost wholly upon California contract and arbitration doctrines. It is a powerful reminder that enforceable arbitration requires both clear, mutual agreement and basic procedural fairness—a lesson as relevant in Silicon Valley and Hollywood as in the NFL.

References

• Gruden v. Nat’l Football League, No. 85527 (Nev. Aug. 11, 2025)

• Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83 (2000)

• Litton Fin. Printing Div. v. NLRB, 501 U.S. 190 (1991)

• Al-Safin v. Cir. City Stores, Inc., 394 F.3d 1254 (9th Cir. 2005)

• Beltran v. AuPairCare, Inc., 907 F.3d 1240 (10th Cir. 2018)

• Soltero v. Precise Distrib., 322 Cal. Rptr. 3d 133 (Ct. App. 2024)

• Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 581 U.S. 246 (2017)

• Epic Sys. Corp. v. Lewis, 584 U.S. 497 (2018)

• AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011)

• DIRECTV, Inc. v. Imburgia, 577 U.S. 47 (2015)

• Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009)

• Stirlen v. Supercuts, Inc., 60 Cal. Rptr. 2d 138 (Ct. App. 1997)