Sunday, 16 December 2012

The NHL Files a Preemptive Lawsuit Against the NHLPA

Friday was a busy day in the on-going NHL lockout (for Sports Law Blog's prior coverage of the dispute, click here).  In the early afternoon, news broke that the NHLPA's executive committee voted on Thursday night to seek the full union membership's authorization to file a disclaimer of interest, thereby permitting the committee to dissolve the union in order to file an antitrust lawsuit against the league challenging the legality of the lockout. 

Then a few hours later, the NHL announced that it had filed a lawsuit against the NHLPA in federal district court in New York, preemptively seeking a declaratory judgment that its lockout does not violate the law, and that any dissolution of the union would be ineffective.  The NHL's complaint is available here (courtesy of Canada's Globe and Mail).  The case has been assigned to Judge Paul Engelmayer, a 2011 Obama appointee. Due to his short tenure on the bench, Judge Engelmayer doesn't have much of a track record in either labor or antitrust suits, making him a bit of a wild card for this case.

At the same time, the league also filed an unfair labor practice charge against the union with the National Labor Relations Board, asserting “that by threatening to ‘disclaim interest,’ the NHLPA has engaged in an unlawful subversion of the collective bargaining process and conduct that constitutes bad faith bargaining.” 

The NHL's court complaint is strikingly similar to the one filed in August 2011 by the NBA against the NBPA, and at times copies much of the NBA's earlier language (this fact is not particularly surprising given that both leagues are represented by the Proskauer Rose and Skadden Arps law firms).  As with the NBA, the NHL argues that any decertification or disclaimer of interest by the NHLPA would be an impermissible bargaining tactic and little more than a sham.  The league also argues that such a maneuver would be ineffective under federal labor law, and therefore would not give players the right to pursue antitrust litigation against ownership under federal law. 

The NHL's complaint also copies the NBA's most unique claim, asserting that if the union does in fact dissolve then any existing player contracts would become null and void.  Basically, the league's argument is that because the CBA specifies most of the provisions in the NHL's standard player contract, any repudiation of the CBA by the players (e.g., by dissolving their union) would terminate all existing contracts governed by the CBA.  This is a completely novel legal theory -- no court has ever endorsed the argument -- but one that could nevertheless cause players with long-term contracts some hesitancy before agreeing to dissolve the union.  On the other hand, talented young players who are otherwise years away from free agency may not mind having their contracts voided, as it could theoretically give them the ability to sign new agreements on the open market.

Despite the many similarities, there are some differences between the two complaints.  First, the NHL makes use of an argument that Marc Edelman anticipated a couple weeks ago, asserting that the league operates in a "worldwide relevant geographic market" (see paragraphs 13 and 99-101).  In other words, the league is basically arguing that it competes with other foreign leagues for talent and that professional hockey players thus have employment opportunities all across the globe.  That is potentially significant because in order for the NHL players to get an injunction blocking the lockout they must be able to show "irreparable harm."  The fact that hockey players can potentially go to Europe and play professionally for a significant salary reduces the injury inflicted by the NHL's lockout, perhaps making it less likely that the court would agree to enjoin the lockout.  That was true in the case of the NBA to some extent as well, but probably provides the NHL with a stronger argument given the more comparative salary levels abroad in professional hockey. 

Another difference between the NHL's complaint and the one filed by the NBA in 2011 is the NHL's extensive use of recent quotes from professional hockey players to support the league's argument.  Specifically, the NHL cites various news reports in which players admit they are actively considering dissolving the NHLPA (pages 20-21) and which suggest that the maneuver would be part of the union's negotiating strategy (pages 24-26).  The complaint also cites recent statements from players expressing strong support for the union's leadership (pages 26-27), lending further credence to the NHL's argument that a disclaimer of interest would not reflect any dissatisfaction with the union, but instead simply be an improper bargaining ploy.

Finally, the NHL and NBA complaints differ in one other significant respect.  Whereas the NBA was able to point to specific instances in the past in which the NBA players had threatened to dissolve their union during collective bargaining, the NHL was unable to point to any such history by the NHLPA.  As a result, the league had to argue that the hockey players were likely to reform a union quickly after reaching a satisfactory agreement based on the prior behavior of NFL and NBA players.  Along these lines, the NHL notes that the NHLPA is represented by James Quinn, the same attorney who has represented the NFLPA and NBPA in the past.  While the NHL is likely correct that players would opt to reform the NHLPA should they reach a satisfactory settlement with the league, I suspect the court will nevertheless be a little hesitant to hold the recent experiences in the NFL and NBA against the NHLPA since it is a wholly separate union with a different membership and management.

Ultimately, the NHL's decision to file suit was not particularly surprising.  It appears that the league had had this complaint prepared for some time, and was simply waiting for the NHLPA to take the first formal step towards dissolving the union before filing suit.  By striking first, the NHL was able to pick the forum it believed was the most favorable to its case.  As Michael McCann has previously noted, precedent in the Second Circuit appears to be favorable to the league on these matters.  It will be interesting to see if this move further antagonizes players, or if it just proves to be a minor bump on the road towards a new agreement.

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