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NHL avoids fight over labor, antitrust law
TIMOTHY L. EPSTEIN
Chicago Daily Law Bulletin
Published: January 14, 2013
It took until the 11th hour, with a season on the brink, but there will be hockey this season. The NHL and the the National Hockey League Players' Association (NHLPA) reached a tentative agreement early Sunday morning. While the deal and schedule still need to be formalized, expect a 48 to 50 game season commencing within the next two weeks. Fortunately for fans, this agreement will take the sport from the bargaining table to the ice and not to a courtroom. Ultimately, the combination of the threat of litigation and the prospect of additional lost revenue was just enough to save the NHL from yet another lost season.
Before this resolution, the two sides were in the early stages of litigation centering on the constant tension between labor and antitrust law, which would have posed a serious threat to further negotiations. On Dec. 14, the NHL announced that it filed a lawsuit against the NHL Players Association seeking a declaratory judgment that its lockout was valid and that the lockout's legitimacy should be outside the scope of federal court scrutiny under the Norris-LaGuardia Act. 29 U.S.C. Section 101 et seq.; Brady v. NFL. 644 F.3d 661, 675 (8 Cir. 2011).
The NHL asserted that the NHLPA would actually remain a "labor organization" within the meaning of the National Labor Relations Act. 29 U.S.C. Section 152(5). Like the NFL and NBA argued, the NHL described the NHLPA's actions as a sham designed to misuse antitrust laws and secure more favorable terms and conditions of employment. The players steadfastly rejected these assertions.
To clarify, a disclaimer of interest occurs when a union terminates its right to represent players and, like decertification, wherein actions are undertaken by individual players, it effectively dissolves the union as a bargaining unit. The idea is to disqualify the NHL from the nonstatutory labor exemption under the Sherman Act and, if successful, to subject the league and its lockout to antitrust scrutiny. At least some precedent favors the players' arguments. See McNeil v. NFL. 790 F.Supp. 871 (D. Minn. 1992). The NHLPA self-imposed a Jan. 2 deadline for filing the disclaimer, and had already begun taking votes of its membership when this deal was struck. By all accounts, the disclaimer was a foregone conclusion before Sunday.
From a practitioner's standpoint, the legal arguments would have been intriguing, since the NHL had some advantages not possessed by the NFL in the Brady suit. First, The NHL's complaint contained countless quotes from players, often through social media, indicating that disbanding the union was merely a leveraging ploy. (i.e. @Logancouture "100 percent in agreement with our @NHLPA leader for all of you asking.") This added credence to the league's argument that the disclaimer of interest was a tactic enabling players to repudiate the collective bargaining agreement, thus eliminating any bar to antitrust claims.
The NHL also would have enjoyed the benefit of a more favorable venue compared to the similar NFL litigation. Although the court in Brady refused to grant an injunction on the NFL lockout on jurisdictional grounds pursuant to Norris-LaGuardia, the 8th U.S. Circuit Court of Appeals has historically issued rulings favorable to players. See McNeil, 790 F.Supp. 871; Powell v. NFL. 930 F.2d 1293 (8th Cir. 1989). The 2nd Circuit, on the other hand, is generally thought to be more anti-union and may have been more likely to yield a positive outcome for the NHL.
Finally, even if a declaration of interest had been validated and the lockout enjoined, the NHL's position in the global marketplace is an advantage not possessed by other major North American sports leagues. In the face of antitrust scrutiny, the NHL was certain to point out that the relevant market for the services of professional hockey players is global, and not limited to North America. Basically, the league's smaller size would be advantageous.
To illustrate, the KHL, Russia's top league, has a salary cap of about $36 million, whereas, the NHL's cap during the 2011-2012 season was about $65 million. The NHL still holds top billing, but some stars, including Alexander Ovechkin, threatened to remain overseas even after the lockout. The NBA's market share, on the other hand, is much greater and competition for the NFL is virtually nonexistent. Obviously the NHL would prefer that its players did not have the leverage to look elsewhere when it comes time to bargain, but if an antitrust suit had been filed, the league could have utilized its smaller market share to its benefit.
The NHL also had precedent on its side. As Brady suggests, these cases fall within the parameters of Norris-LaGuardia, thereby relieving federal courts of jurisdiction to enjoin the lockout. See Brady, 644 F.3d at 673 (where a collective bargaining agreement dictates a relationship between a league and players prior to decertification, the dispute involves or grows out of labor relations, thus relinquishing the jurisdiction of federal courts).
Ultimately we will never know how this legal clash between the league and the players would have turned out. Instead, the two sides struck a deal that seems to establish a more sustainable framework for the NHL going forward.
As lawyers, it would have been interesting to see this legal battle play out, but thankfully for fans, it did not come to this. With so many sports labor stoppages in the last two years, hopefully we have finally reached an extended period of labor peace.