Deflategate and the power of external investigations

May 12, 2015 - by: David Kim 0 COMMENTS

After more than three months of waiting, we finally got the investigative report regarding the New England Patriots’ “Deflategate” incident that occurred during the NFL’s AFC Championship Game earlier this year. Was it worth the wait? Was the NFL’s subsequent punishment just? It’s pretty clear it depends on whom you ask.16350680255_56244e827d_o

Authored by Ted Wells and his team from the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP, the investigative report (the “Wells Report”) comes in at a hefty 243 pages (with exhibits). Those who question the Wells Report point to inconsistencies and unsubstantiated conclusions that would undermine the report’s finding that “it is more probable than not” that two Patriots personnel were involved in deliberately deflating footballs and that “it is more probable than not” that quarterback Tom Brady was “at least generally aware” of these two individuals’ actions. Others find that enough circumstantial evidence exists (in the form of text messages, statements, and certain scientific data) to make such a determination.

The only thing that is absolutely clear is that the contents, findings, and conclusions reached in the Wells Report will continue to be debated for weeks and months to come. Which is why I’m not going to attempt here to delve into the specifics of the Wells Report, but rather let you soak in the report for yourself and any subsequent analysis. And frankly I don’t have close to enough space to cover all the issues.

What is more interesting to some was how the NFL was going to react. In essence, the Wells Report of “more probable than not” violations mirrors the NFL’s Policy on Integrity of the Game and Enforcement of Competitive Rules, which provides that the standard of proof to find a violation is a preponderance of the evidence. Therefore, the Wells Report essentially gives the NFL the basis to say a violation of its policy has occurred and therefore affords it the right to discipline the parties involved. While people can question the accuracy of the Wells Report all they want, there is no question that the NFL has the right to seek to enforce discipline based on the report’s findings. The only question was how much discipline the NFL would seek. Well, we found out just yesterday. How about a $1 million fine to the Patriots organization (the highest ever assessed by the NFL to a club), the loss of two draft picks (including a first rounder next year), and oh yeah, suspension of Brady for the first four games in the upcoming season.

And isn’t this the reason the NFL hired an outside law firm to conduct this investigation? The NFL has pretty much botched every internal investigation it has done in its turbulent past year (particularly with respect to domestic violence issues) and frankly needed the cover to claim it relied on an external and independent investigation. While one can debate whether this was an independent investigation (due to certain historical relationships), there is no doubt that this fairly large punishment would never have been levied by the NFL unless it could point to the Wells Report as support.

Employers often grapple with this same decision. While many employment-related disputes and complaints are internally investigated, and hopefully the company has provided training regarding how to properly conduct internal investigations, there are situations that may call for company leaders to hire an outside entity, particularly a law firm, to conduct an investigation for them. Perhaps an allegation involves a high-level employee, and an external investigation is needed to demonstrate and ensure impartiality. Perhaps a sensitive or complex situation needs an investigation that the company feels its current employees are not qualified to handle or that requires an investigation completely thorough enough to ensure no blow-back in the future. Of course, the cost of hiring an outside firm to conduct an investigation can be expensive. In addition, privilege issues can be extremely complex so the company may want to consider not hiring its normal litigation counsel to conduct certain investigations, or else risk the inability of using its normal counsel in any related litigation.

The positives, however, are that the company can demonstrate objectivity and show that they took a complaint or allegation seriously by hiring an independent third party to investigate. Reliance upon such an investigation will permit the employer to more effectively defend against discrimination and harassment claims, for example, and show that they appropriately responded once they were aware of any workplace misconduct. In certain cases, the existence of such a report and the employer’s reliance on the external report in making a reasonable business decision can result in dismissal of the case at the outset or make the plaintiff’s counsel’s views of settlement more aligned with yours.

While the Wells Report, and the subsequent NFL discipline, will continue to be hotly debated and analyzed, this is due in great part to the public nature of the individuals involved and the public realm and media frenzy in which the NFL operates. Despite this debate, tellingly, New England Patriots owner Robert Kraft had previously issued a statement noting his disagreement with the findings but ultimately stated that “knowing there is no real recourse available, fighting the league and extending this debate would prove to be futile . . . [we will] take the appropriate actions based on those findings as well as any discipline levied by the league.” Sure, after the discipline was handed down yesterday, Kraft issued another statement stating that the NFL’s punishment “far exceeded any reasonable expectation.” And sure, Brady will likely appeal his four-game suspension as is his right under the collective bargaining agreement between the NFL and the players’ union. It’s to be determined how successful Brady or the Patriots would be in challenging these penalties.

But ultimately, the Wells Report provides the NFL cover to issue some form of discipline in accordance with its company standards, policies, and agreements. Having such cover is beneficial to all employers, if it is something that can be feasibly done in the appropriate circumstances. Hopefully, however, the report of the third party you hire will be much shorter than 243 pages, or else you’re likely dealing with a whole host of other problems.

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