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Legal Look: A primer on NHLPA decertification

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Eric Macramalla, TSN Legal Analyst
11/26/2012 12:10:01 PM
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With talks seemingly stalled, we are hearing the NHLPA and players are considering decertification as their next option. NBA commissioner David Stern characterized decertification as triggering a 'nuclear winter.' Decertification has also been called an AK-47. It's a pretty dramatic tool and can have serious repercussions.

What is Decertification?

It's unlawful for competitors to get together and fix the marketplace. If they do so, they open themselves up to antitrust lawsuits. This applies to the NHL, because the 30 team owners are competitors and they get together and place restrictions on the NHL marketplace. Things like a salary cap, free agency restrictions and rookie pay are all on their face antitrust violations. Another thing that is an antitrust violation: the owners (as competitors) getting together and agreeing to lockout the players.

However, since these restrictions are inside the protective bubble that is the collective bargaining agreement (CBA), the NHL is protected and the players can't sue for these antitrust violations. So the CBA insulates the NHL from antitrust lawsuits.

That's where decertification comes in. It refers to the NHL players revoking the NHLPA's authority to bargain on their behalf and effectively blows up the Union.

And that leads to the important part - by decertifying, the CBA rule protecting the NHL against antitrust lawsuits may no longer apply and players are now free to sue the NHL for antitrust violations. So decertification is like the pin that bursts the protective CBA bubble.

The first antitrust violation the players would tackle in court would be to have the illegal boycott that is the NHL lockout declared unlawful and lifted.

Are Decertification and Disclaimer of Interest The Same?

No. These terms are used interchangeably but are not the same thing. Decertification refers to the players voting to no longer have the NHLPA represent it. It requires the players to vote on decertification and then to subsequently have the National Labor Relations Board validate decertification.

Disclaiming interest occurs when the Union terminates its right to represent the players. It's a less formal process than decertification and only requires the Union to renounce representation of the players. It's easier to do and it takes less time to re-form the Union afterwards.

While they are different, the net effect is the same: the Union is dissolved and the players are free to sue for antitrust violations.

Why Would the Players Decertify?

NHL players hope that the threat of antitrust litigation will pressure the NHL to settle on more favourable terms. So Unions are dissolved in these types of negotiations with a view to extracting leverage in CBA negotiations. In the short term, the threat of a lockout being lifted by way of a court order may give the NHL the incentive to consider settlement. The players could also sue for antitrust violations like the salary cap and free agency restrictions. Antitrust litigation can be a powerful weapon as it can result in the award of treble damages, which refers to three times the actual damages. Simply put, antitrust litigation may result in catastrophic monetary damages awarded against the league. We are potentially looking at hundreds of millions of dollars.

What's After Decertification?

Once the NHLPA is decertified, the next step would be for the players to file a lawsuit asking a court to end the lockout on the basis that it's unlawful. If the players are successful, the NHL would appeal the court's decision.

Ultimately, if the players win and the lockout is deemed unlawful, the NHL would need to resume operations.

Would The NHL Have Any Defences?

Expect the NHL to argue that the NHLPA's decertification is a sham. They would say that it's nothing more than an opportunistic and transparent attempt to extract leverage in CBA negotiations. Decertification is a serious move, and it should not be akin to turning a light switch on and off when it's convenient. Decertification is a far more formal process than disclaiming interest, and as a result may not be as vulnerable to a sham argument.

The NHL could also maintain that federal labor law prevents courts from issuing orders that end lockouts. And there is a precedent for that. That's what the Eighth Circuit Appeals Court ruled in the Tom Brady case, where the players were looking to have the lockout lifted. In that case, the Appeals Court said that the NFL lockout should stay in place because a federal statute called the Norris-LaGuardia Act prevents federal courts from issuing injunctions during labor disputes to end work stoppages.

This decision is important for the NHL. However, it doesn't mean that the NHL would win based on this decision. It's of limited value. While it lifted the lockout, the Appeals Court actually didn't rule on whether the lockout was legal. Had the NFL players pursued the case, it's possible that the lockout could have been declared illegal by the Court. As well, Eighth Circuit decisions are binding on courts within the Eighth Circuit – but not other courts. If the players took the lawsuit to a different circuit, they may stand a better chance.

As for this circuit talk, in the U.S., the Courts of Appeal cover their own individual circuits. For example, the Eighth Circuit Appeals Court handles cases from places like Minnesota and Nebraska.

Where Would The Players File A Lawsuit?

Well it's unlikely to be the Eighth Circuit. The first thing the players would ask for would be to have the lockout lifted and we know that the Eighth Circuit based on the Brady decision might well say no. So the key for the players would be to file the lawsuit in a circuit that is more player friendly. That means they could well file in the Ninth Circuit, which, in part, handles cases from California. This circuit is known to be more progressive and pro-player.

Could The NHL File A Lawsuit First?

The NHL could move pre-emptively - and they probably should if they feel the threat of litigation is real. By filing first and doing so in a jurisdiction that both sides are connected to, it makes it more difficult for the players to have their case heard in a sympathetic circuit like the Ninth Circuit. For the NHL, they could look to file in the Second Circuit, which handles cases, in part, out of New York. That circuit has more owner friendly decisions. In fact, that's precisely what the NBA did faced with the possibility of the NBPA dissolving itself. The NBA went to court first and did so in the Second Circuit.

So overall, the players might prefer the Ninth Circuit, while the NHL might want to head to the Second Circuit or maybe the Eighth Circuit. It will be interesting to see if a lawsuit is filed, and if so, who files first. If I'm the NHL, I'm filing that lawsuit yesterday.

What Would Be Considered A Good Win For The NHL?

If the NHL can get a Court to keep the lockout in place, that would be a big win for the league because the lockout would remain in place for an indefinite period of time. That would undoubtedly create more leverage for the league.

Imagine the opposite - the players win and the lockout is lifted. If that happens, the league would really have to look to get this settled in a hurry. The last thing it wants is to resume operations against its will.

Who Would Win In Court?

The only certainty here is uncertainty. Each side can improve the chances of success by employing a good strategy. However, the law here is sorted and complex and it's too tough to say which side is heavily favoured in court. Frankly, if this ends up in the courts no one will win. There will be losers, though, I suspect. The goodwill associated with the NHL brand will continue to erode. As a result, fans – even those in traditional hockey markets – may turn away from the game. Some may do so temporarily, while others may not ever come back. So everyone loses here – the owners, the players and the fans. Well there are potentially two winners here – lawyers and their billable hours.

If The Players Decertify Is The Season Over?

The season wouldn't be over, but it makes it more likely that there will be no hockey this season. The NHLPA and Donald Fehr are considering this option quite late, and decertification doesn't happen overnight. It can take up to 45 days. That could take us well into January. Then you have the lawsuits. That also takes time. Judges are just going to expedite things because they may be in a hockey pool. Ultimately, though, the players hope that the mere threat of decertification will be enough to get the NHL to settle on more favourable terms.

My Head Is Spinning - Is That Normal?

Totally and Completely.

So What's Next?

Let's see if the NHLPA is decertified and who files a lawsuit first.

Is There A Chance the Lockout Will End Soon?

The hope is that things do get settled in the short term. There are obvious areas of compromise, and the hope is that the sides can settle on them. This isn't 2004. Back then, the NHL business model was broken with up to 73% of league revenue going to players. Fans were more likely to indulge the league as it looked to fix its business. This time around, however, the business model is not broken and the sides are grappling over revenue share. With fans less likely to look favourably on either side, settling soon is in the best interest of all parties involved.

Eric Macramalla is TSN's Legal Analyst and can be heard each week on TSN Radio 1050. You can follow him on Twitter @EricOnSportslaw.

Steve and Donald Fehr (Photo: The Canadian Press)

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(Photo: The Canadian Press)
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