NFL’s business structure will make it much harder to remove Jon Gruden’ lawsuit to federal court

USA TODAY Sports

The early stages of a civil lawsuit can in many ways determine its outcome. For big-money interests sued in a different state by a citizen of that state, the first task is to find a way to remove the case from state court to federal court.

Congress has recognized the concept of home cooking when it comes to the court system. When the money at issue exceeds a specific statutory amount (it has climbed from $10,000 to $50,000 to $75,000 in recent decades), an out-of-state defendant can take the case out of the state-court system and into the federal system, where the judges aren’t elected by residents of the state but appointed for life.

In the lawsuit filed by former Raiders coach Jon Gruden, the NFL will want to take the case to federal court. As explained by Daniel Wallach, however, the league’s business status as an “unincorporated association” may keep that from happening. Or, more accurately, from succeeding. (The league can remove the case and the force Gruden to initiate an effort to send the case back through what’s called a motion to remand.)

If the league were a corporation, its residence would be the state in which it has officially been incorporated and (if different) the state in which its principal place of business is located. But, as Wallach explains it, the league isn’t a corporation.

This makes it vulnerable to being sued in state court in every state where the NFL does business, even if the local team (as in Gruden’s case) isn’t joined as a defendant.

While the fact that the NFL consists of its 32 members and thus can be sued wherever they are located will help Gruden for the purposes of keeping the case in state court, it makes the precise language of the waiver (if any) signed by Gruden when he settled his remaining contract claim with the Raiders even more critical. Unless the paperwork specifically exempted the rights that Gruden now asserts, the NFL could argue that a general release of claims against the Raiders benefits the other members of the unincorporated association.

It all comes down to the language of the agreement, along with the manner in which it would be interpreted by the appropriate court. Regardless, it apparently will be a state court and not a federal court that determines the issue, which is good news for Gruden.

It’s also possible that the NFL will try to force the entire dispute into arbitration, a far more favorable forum for big-money interests. Again, however, the threshold decision would be made by a state judge, not a federal judge.