## Facts

- Pitcher Tommy John became a free agent after the 1978 MLB season.
- In November 1978, John (through agent Robert Cohen) reached an agreement in principle with the New York Yankees on a multi-year Uniform Player’s Contract described by the parties as “fully guaranteed.”
- Cohen explained to Yankees general manager Al Rosen that “fully guaranteed” meant John would be paid unless he arbitrarily decided not to play baseball.
- The parties also agreed the Yankees would obtain a $500,000 insurance policy for John.
- By January 2, 1979, John and Yankees owner George Steinbrenner signed the contract.
- Shortly after signing, Rosen told Cohen the Yankees were having difficulty securing a $500,000 policy and asked to start with $250,000 and later increase it; John agreed, but the parties had not yet documented that change.
- In three later conversations, Rosen and another Yankees representative told Cohen that Steinbrenner was upset the contract did not state John would not be paid if MLB players went on strike.
- Cohen responded that he intended the salary guarantee to cover a strike and did not agree there was a reason to change the deal.
- Cohen offered a trade: John would give up strike protection if the Yankees (1) agreed to pay him during an owners’ lockout and (2) provided the $500,000 policy; the parties signed a revised contract reflecting that arrangement.
- The American League president refused to approve the lockout-protection clause.
- Steinbrenner then proposed eliminating the lockout clause but keeping the strike exclusion and the $500,000 policy; Cohen rejected that proposal.
- Steinbrenner suggested canceling the deal; Cohen agreed and noted another team remained interested in signing John.
- Steinbrenner relented (“you win”), and the parties signed a third contract that provided a $500,000 policy and contained no exception for a strike or lockout.
- On June 12, 1981, MLB players went on strike; the Yankees did not pay John during the strike period, asserting the guarantee did not require payment during a strike.
- John and the MLB Players Association filed a grievance seeking payment, with the dispute presented to the MLB Arbitration Panel as a salary guarantee grievance.

## Issues

1. Whether a “fully guaranteed” MLB player contract that contains no express strike-pay exclusion requires the club to pay the player during a players’ strike.
2. Whether, in interpreting the parties’ final written agreement, the arbitration panel may consider negotiation history and prior draft agreements addressing strike and lockout risk.
3. Whether a club may rely on generalized practice or assumptions about work stoppages to defeat a negotiated salary guarantee reflected in the executed contract.

## Decision

- The MLB Arbitration Panel ruled for John and the MLBPA.
- The panel determined the Yankees were obligated to pay John’s salary during the 1981 strike under the final, executed “fully guaranteed” contract.
- The panel treated the parties’ negotiations and successive contract versions as confirming that the absence of a strike exclusion in the final agreement was deliberate.
- The panel rejected the Yankees’ attempt to read a strike limitation into the guarantee when the final contract did not contain one.

## Legal Principles

- A “fully guaranteed” player contract obligates the club to pay salary absent a valid, express contractual basis to withhold it; a strike exclusion will not be implied when it is not in the executed agreement.
- When the parties negotiate specific work-stoppage language, and the final signed contract omits that language, the omission is strong evidence the parties chose not to limit the guarantee for that contingency.
- Negotiation history and the sequence of draft revisions may be used to interpret the meaning of a disputed contract term, especially where the record shows a specific point was discussed, proposed, rejected, and then omitted from the final writing.
- General claims about customary nonpayment during work stoppages cannot override a specific, individually negotiated salary guarantee stated in the parties’ final agreement.

## Conclusion

Panel Decision No. 50D enforced Tommy John’s fully guaranteed Yankees contract according to its final terms and the bargaining record that produced it, holding the club responsible for paying his salary during the 1981 players’ strike because the parties’ executed agreement contained no strike-pay exclusion.


In the Matter of the Arbitration Between Major League Baseball Player Relations Committee and Major League Baseball Players Association, Panel Decision No. 50D, Salary Guarantee Grievances (1983)