Former Astros GM Demands Trial Over his Sign-Stealing Termination, but Quiet Arbitration Settlement May be Unavoidable

Former Astros general manager Jeff Luhnow is not fading quietly into the footnotes of baseball’s hall of shame. Still unemployed after his termination by the Astros following Major League Baseball’s investigation of the dark arts employed during the team’s World Series-winning season, Luhnow is seeking to air out the circumstances of his termination in a lawsuit filed earlier this week.

The lawsuit charges that the Astros violated the terms of Luhnow’s employment contract and unfairly made him a scapegoat in an attempt to close the books on the sign-stealing scandal and limit lasting damage to the team. Among other things, Luhnow argues he was fired without cause following a “deeply flawed” MLB investigation. Luhnow claims he had no knowledge of the sign-stealing operation, and none of his actions amount to a firing offense as outlined in his contract. The lawsuit seeks the $22 million balance of $31 million in compensation described in the contract he signed in May 2018, along with performance bonuses, profit-sharing interests, legal fees and court costs.

If the facts as alleged are true, Luhnow makes a compelling argument, but his chances for success hinge on the wording of his contract and how the contract language defines firing offenses. So far, the contract has been referenced in the complaint but has not been included in its entirety in the court file.

We’re able to see Luhnow’s allegations thanks to the lawsuit filed in Harris County district court, but the dispute is not likely to stay in the public venue for long. Like most executive employment contracts – especially those involving athletes and entertainers – Luhnow’s contract includes an arbitration clause. In this case, the contract allows MLB Commissioner Rob Manfred to select an arbitrator of his choice to resolve any any dispute behind closed doors.

It’s very difficult to get out of such arbitration provisions, but his legal team has done a good job of alleging potential bias. The lawsuit charges that Luhnow’s unfair punishment and termination were worked out between the team and MLB, so allowing Manfred to select the arbitrator would not result in a fair proceeding. 

“The commissioner vetted potential penalties with [Astros owner Jim Crane], and the two exchanged a series of proposals,” the suit reads. “Those negotiations proved beneficial to Crane and the Astros.

“The commissioner allowed the Astros to keep their 2017 World Series championship, imposed a $5 million fine (a fraction of the revenues Crane had reaped as part of the team’s recent success), and took away four draft picks. He also issued a blanket vindication of Crane, absolving him of any responsibility for failing to supervise his club.

Perhaps Luhlow sees value in the opportunity to rehabilitate his reputation by stating his case in a public filing for all to see, even if those claims are destined for arbitration. At best, it seems that a neutral arbitrator will be chosen, and the case will proceed through arbitration out of the public eye. The likely outcome is a quiet settlement.

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