Legal Look: NHLPA has authority to dissolve - What's next?

Eric Macramalla
12/23/2012 11:02:11 AM
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The players have voted overwhelmingly - 706-22 - to give the NHLPA the power of dissolution by way of a disclaimer of interest.

We've come to a bit of a crossroads. The NHLPA must now decide what it wants to do next. There are options, but with each option comes risk.

What's the NHLPA's first option?

Dissolve and sue. The NHLPA could file a disclaimer of interest and dissolve the union. Once dissolved, the players could file an antitrust lawsuit requesting a court to declare the lockout unlawful, while also seeking compensation for lost wages. Since antitrust law provides for something called 'treble damages', which means triple damages, the players could get billions of dollars in compensation if this ever went to trial. Here's the math – the combined salaries of about 700 players (which is about a billion dollars) multiplied by 3.

That's a lot of money - and it's precisely that threat of antitrust litigation together with potentially catastrophic monetary damages that gains the players leverage in CBA talks.

Would the players ask a court to immediately lift the lockout?

First things first. There is an important distinction that needs to be made. The players can ask the court right off the bat to have the lockout lifted pending resolution of the matter at trial years from now. So the players would be arguing that it's an emergency that the lockout should be lifted right away, and given that it's an emergency they can't wait for a court to rule on the legality of the lockout at trial in a few years. So getting the lockout lifted temporarily within a month after filing the lawsuit is emergency relief.

That should be distinguished from a court ultimately finding that the lockout is unlawful at trial years from now – whether the lockout is or isn't still in place.

So there's emergency relief in the form of getting the lockout lifted right away, and there is ultimate relief years from now at trial. Two different things.

Now to answer your question in typical lawyer fashion – the players may or may not ask for the lockout to be lifted ASAP. We've seen both scenarios play out recently.

During the NFL lockout in 2011, the NFLPA asked the court for that emergency request to lift the lockout. In response, the lower court lifted the lockout, thereby re-opening the NFL for business. However, the NFL appealed the case, and the Appeals Court put the lockout back in place ruling that a judge in these circumstances didn't have the power to lift a lockout. That same court, though, was not saying that the lockout was legal. They were just saying at this really early stage of the court action they didn't have the authority to lift the lockout on an emergency basis. So that means it was still possible the court at trial could rule the lockout was ultimately unlawful, in which case the NFL could have owed the players billions of dollars in lost wages.

The NBA players took a different position in their own lawsuit during the 2011 lockout. Sensitive to the NFL Appeals Court decision keeping the lockout in place, the players decided not to ask the court to temporarily lift the lockout on an emergency basis. Instead, they asked the court to declare the lockout illegal much later at trial, while also seeking billions of dollars in lost wages.

So why didn't the NBA players ask to have the lockout lifted on an emergency basis?

Given the NFL decision, there was a risk that the court would have said that it couldn't lift the lockout on an emergency basis, thereby leaving it in place indefinitely. For the NBA players, that would have meant losing leverage.

So what are you saying?

The NHL players may not ask a court to temporarily lift the lockout on an emergency basis, and instead just ask for billions of dollars should the lockout be found illegal at trial. However, it's still possible they could make the request for emergency relief.

Wait. You keep talking about 'trial'. Would this ever get to trial?

No with a sprinkle of unlikely. To get this case to trial would take years. That just doesn't make a whole lot of sense for the NHL or its players. The league wants to get this settled in the short term and doesn't want to be embroiled in a court battle for years.

How does the NHL lawsuit in New York factor in?

The NHL has already filed a lawsuit in the state of New York, which historically is more sympathetic to owners than players. By being the first to file a lawsuit, it now becomes more difficult for the players to file a lawsuit about the same stuff in another state. Seeing this second lawsuit, a judge may say something like this: "Hey there's already a lawsuit about this somewhere else, and it was filed there first, so get out of my court". So that's why the NHL filed first – to secure home ice advantage and make it tougher for the players to file their own lawsuit in a more player friendly court – like one in California.

So option 1 is to dissolve then sue. What's option 2?

The NHLPA could elect not to dissolve itself. Fehr & Company could hope that the mere threat of dissolving the union with a view to initiating antitrust litigation is enough to extract leverage in these negotiations.

Which option is best?

Nothing applies pressure like a lawsuit. So from the standpoint of the players, Option 1 will be looked at very carefully. The bottom line, though, is the NHLPA needs to figure out what is best to get a deal done – and much of that will depend on how close the sides are to cutting a deal.

Eric, in your last article I told you I hated lawyers. Just to let you know, nothing has changed on that front.

I understand. My mom hasn't talked to me since I was called to the Bar. Something about majoring in 'Snakeism'.

Is there a drop dead deadline for the NHLPA to dissolve itself?

No. You've been hearing a lot that the NHLPA must dissolve by January 2. That's true – well sort of. The player vote that just passed authorizes the NHLPA to dissolve by January 2. However, if the NHLPA doesn't dissolve by then, it isn't barred from doing so at a later date. As well, the players could also vote to decertify the NHLPA, which is the players voting to no longer have the Union represent them (a disclaimer is the opposite – the union walking away from the players).

NHL players, like all employees, have a protected right to choose whether to have a union represent them. Employees not only have a basic right to bargain collectively through a union, they also have a corresponding right not to. The right to choose not to have a union and not to engage in collective bargaining exists before as well as after a collective bargaining relationship forms. This is fundamental to labor law.

The NHL is arguing that a disclaimer is just a sham designed to gain the players leverage. Does that hold water?

A disclaimer of interest must be in good faith. A union's mere statement that it's no longer representing the players may not be enough to discharge that good faith obligation. You need to look at the surrounding circumstances, including the conduct of the parties after dissolution, to determine if the union has really stopped representing the players. As was said in a case back in 1958 (which incidentally is when Elvis Presley was inducted into the U.S. Army), a disclaimer of interest is conducted in bad faith when it's "obviously employed only as a measure of momentary expedience, or strategy in bargaining."

That's what the NHL is arguing – the only reason the NHLPA would dissolve itself would be to gain leverage, and once they get what they want, they will just re-assemble the union. There is no real intention on the part of the NHLPA to abandon its players. On top of that, the NHL will argue that NHLPA executives will still be directing things behind the scenes.

This is a reasonable argument, and expect it to get some traction. Of late, we have seen the NFLPA and NBPA employ this disclaimer strategy, only to re-assemble later. A judge may not be happy with what is emerging as a new industry tactic in sport labor disputes and rule accordingly.

Eric, you have ended a few of your sentences with prepositions – are you embarrassed?

No, not really. I may, however, feel bad after.

If the NHLPA is dissolved, can Donald Fehr still negotiate on behalf of the players?

The idea behind the disclaimer is that the NHLPA is saying it's no longer representing the players. So Fehr can't on the one hand say the NHLPA is out of the picture, and on the other hand lead negotiations. If he did, the NHL's sham argument would be that much easier to make. So if the players sue, expect outside lawyers to take over negotiations. That's what happened in the NBA lawsuit.

How does this settle and get hockey back on the ice?

While CBA talks have spilled from the boardroom into the courtroom, lawsuits and judges won't get this settled. A deal will get done with the sides continuing to negotiate with a view to finding common areas of compromise. There is of course one thing that will drive settlement – a deadline. Pressure will mount on both sides as we near the NHL's deadline to cancel the season. The hope for hockey fans is that the sides don't collapse under the pressure and the season is lost like it was in 2005.

Given that there remain areas of compromise, this case has a profile for settlement. So it would be a surprise if we don't see NHL hockey this season. However, and as I'm sure you would agree, these talks have been filled with surprises.

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

Donald Fehr (Photo: The Canadian Press)


(Photo: The Canadian Press)
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