Philadelphia World Hockey Club, Inc. v. Philadelphia Hockey Club, Inc., Civ. A. No. 72-1661

• Decision Date: 08 November 1972
• Docket Number: 72-1906 and 72-1995.,Civ. A. No. 72-1661,72-1807,72-1902
• Parties: PHILADELPHIA WORLD HOCKEY CLUB, INC. v. PHILADELPHIA HOCKEY CLUB, INC., et al. PHILADELPHIA HOCKEY CLUB, INC. v. John McKENZIE et al. John McKENZIE v. PHILADELPHIA HOCKEY CLUB, INC., et al. SPORTS CENTREPOINT ENTERPRISES, LTD., et al. v. NATIONAL HOCKEY LEAGUE et al. WORLD HOCKEY ASSOCIATION et al. v. NATIONAL HOCKEY LEAGUE et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

351 F. Supp. 462

PHILADELPHIA WORLD HOCKEY CLUB, INC. v. PHILADELPHIA HOCKEY CLUB, INC., et al.

PHILADELPHIA HOCKEY CLUB, INC. v. John McKENZIE et al.

John McKENZIE v. PHILADELPHIA HOCKEY CLUB, INC., et al.

SPORTS CENTREPOINT ENTERPRISES, LTD., et al. v. NATIONAL HOCKEY LEAGUE et al.

WORLD HOCKEY ASSOCIATION et al. v. NATIONAL HOCKEY LEAGUE et al.

Civ. A. Nos. 72-1661, 72-1807, 72-1902, 72-1906 and 72-1995.

United States District Court, E. D. Pennsylvania.

November 8, 1972.

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Pepper, Hamilton & Scheetz by Edward W. Madeira, Jr., Barbara W. Mather, Jeffrey C. Hayes, Charles J. Bloom, Philadelphia, Pa., for plaintiff.

Blank, Rome, Klaus & Comisky by Edwin P. Rome, and Richard P. McElroy, Philadelphia, Pa., and Covington & Burling by Herbert Dym, Harry L. Shniderman, James H. McGlothlin, Charles Lister and Alan K. Palmer, Washington, D. C., for Philadelphia Hockey Club, Inc., Boston Professional Hockey Association, Inc., Charles O. Finley and Company, Inc., Chicago Blackhawk Hockey Team, Inc., Detroit Hockey Club, Inc., California Sports, Inc., North Star Financial Corp., Le Club de Hockey Canadien, Inc., Madison Square Center, Inc., Pittsburgh Penguin Partners, limited partnership, St. Louis Blues Hockey Club, Inc., Maple Leaf Gardens, Limited, Vancouver Hockey Club, Limited, Niagara Frontier Hockey Corp., and National Hockey League, defendants.

Arthur Morse, Chicago, Ill., for Chicago Blackhawk Hockey Team, Inc.

Harold E. Kohn, P. A. by Harold E. Kohn, Steven E. Haberfeld, Aaron M. Fine, Arthur Kaplan, Philadelphia, Pa., for John McKenzie.

Jerome H. Torshen, Chicago, Ill., for Sports Centrepoint, and others.

Sommer, Tinkham, Barnard & Freiberger by William C. Barnard, Indianapolis, Ind., for Chicago Blackhawk Hockey Team, Inc.

HIGGINBOTHAM, District Judge.

I. INTRODUCTION

In 1917, the National Hockey League was born with Montreal and Toronto as its only members. In 1924, Boston was added, followed in 1926 with Chicago, Detroit and New York. In 1967, Los Angeles, Philadelphia, Pittsburgh, California, Minnesota, St. Louis entered the League and in 1970 Buffalo and Vancouver. In 1972, Nassau (New York) and Atlanta joined this now famous League. Since 1966, the National Hockey League has received in excess of $36,000,000 for the sale of the rights to play major league professional hockey in their league. When in 1970 the National Hockey League admitted Vancouver and Buffalo, each of these two new clubs paid in excess of $8,000,000 for the acquisition of the minor professional league clubs in their locality and for distribution to National Hockey League clubs.¹

Thus, from what in 1917 was a relatively minor sports attraction, the National Hockey League has skated into the 1970's to a position of substantial wealth, power, broad spectator interest, international recognition and many superstars, all crescendoing into huge profits for both its owners and players.

One writer observes:²

"What has happened is this: the intrinsic speed and excitement of hockey has made it the game of the second half of this century."

Maybe in 1922 when the Supreme Court decided the baseball case, hockey was also, as Mr. Justice Holmes then described baseball, primarily an effort to give exhibitions with profits and interstate commerce contacts as mere incidentals. But today, as I review the instant record, hockey is primarily a multi-state, bi-national business, where the fundamental motive is the making of money. From its multiple interstate contacts it is a business in commerce subject to the federal anti-trust laws.³

Despite the thousands of words uttered on this record by all parties about the glory of the sport of hockey and the grandeur of its superstars, the basic factors here are not the sheer exhilaration from observing the speeding puck, but rather the desire to maximize the available buck.

Since 1971, the World Hockey Association (hereinafter referred to as WHA)⁴ has attempted to enter major league professional hockey to become a real competitor in this field where the National Hockey League⁵ (hereinafter referred to as NHL) has for so long held a total monopolistic position as the sole supplier of major league hockey competition. The basic issue is whether through their reserve clause, affiliation agreements, and market power dominance, the National Hockey League has violated the federal antitrust laws and if such a violation is found, whether the WHA is entitled to relief at this preliminary injunction stage.

After a careful review of this most detailed record⁶ and the extensive briefs and proposed findings of fact, I find, for the reasons noted below, that for the National Hockey League players whose current contracts expired in September, 1972,⁷ the National Hockey League violates the Sherman Act, Section 2,⁸ in its efforts to preclude those players from joining WHA teams; accordingly the WHA is entitled to preliminary injunctive relief.

I would like to note my appreciation to all counsel for the most diligent manner in which they have pursued their discovery and litigation in this case. In fact, their performance has been a model for the entire legal profession as to the rational way in which able counsel can meet difficult problems in litigating with obvious vigor a preliminary injunction case where time, if not of the essence, is at least critical because any unnecessary delay by counsel or the court could create a substantial injury to some of the parties. If this case could be decided solely on the basis of the talent and diligence of counsel, the parties would be in perfect equipoise.

The original complaint was filed in Philadelphia on August 18, 1972. Since then, the parties have had extensive discovery, meeting with extraordinary dispatch difficult deadlines. They have filed detailed pre-trial memoranda and proposed pre-trial orders and amendments in support of numerous motions to remand, to dismiss, and for partial summary judgment. For one phase of this litigation pertaining to whether one case should be remanded to a Chicago state judge, we had extensive detailed arguments on the afternoon of September 27, 1972 and at 9:21 that evening, I dictated my opinion from the bench— from which no appeal was filed.

Though originally some phases of the case were argued as motions for partial summary judgment and motions to dismiss, on October 10, 1972 the parties agreed that the record was closed and that I ". . . may consider all of the matters on the preliminary injunction aspects which have been also submitted on behalf of the motions for summary judgment." Transcript, October 10, 1972, 148-9. The last exhibit was filed on, October 24, 1972 pursuant to the court's request for additional information.

Since the record has been closed as to the preliminary injunction phase and the record might contain some material facts which are in dispute, I am declining to rule on the summary judgment motions. Instead I am deciding the case on the preliminary injunction phase with all of the facts (whether disputed or not) being resolved in the findings of fact, infra, and in the opinion. In accordance with Rule 52 of the Federal Rules of Civil Procedure, this entire opinion, including the discussion, constitutes my Findings of Fact and Conclusions of Law, and any proposed Findings of Fact and Conclusions of Law inconsistent with those not here found are hereby rejected.⁹

II.

FINDINGS OF FACT

GENERAL FINDINGS AS TO JURISDICTION AND PARTIES

1. Five separate actions are consolidated before this Court in this proceeding. They are:

a. Philadelphia World Hockey Club, Inc. v. Philadelphia Hockey Club, Inc. et al., C.A. 72-1661, complaint originally filed in this Court on August 18, 1972.

b. Philadelphia Hockey Club, Inc. v. John McKenzie, et al., C.A. 72-1807, removed from the Court of Common Pleas of Philadelphia. County on September 13, 1972, pursuant to 28 U.S.C. § 1441.

c. John McKenzie v. Philadelphia Hockey Club, Inc., et al., C.A. 72-1902, complaint originally filed in this Court on September 26, 1972.

d. Sports Centrepoint Enterprises, Ltd., et al. v. National Hockey League, et al., C.A. 72-1906, transferred from the United States District Court for the Northern District of Illinois pursuant to 28 U.S.C. § 1404(a).

e. World Hockey Association, et al. v. National Hockey League, et al., C. A. 72-1995, transferred from the United States District Court for the Central District of California pursuant to 28 U.S.C. § 1404(a).¹⁰

2. Philadelphia World Hockey Club, Inc. (hereinafter "Philadelphia Blazers"), plaintiff in C.A. 72-1661, is a corporation organized under the laws of the State of New Jersey with its principal place of business in Philadelphia, Pennsylvania.¹¹

3. Sports Centrepoint Enterprises, Ltd., (hereinafter "Winnipeg Jets"), plaintiff in C.A. 72-1906, is a corporation organized under the laws of the Province of Manitoba with its principal place of business in Winnipeg, Manitoba, Canada. (Complaint and Answer in C.A. 72-1906, ¶ 3a.)

4. Chicago Cougars Hockey Club, Inc., (hereinafter "Chicago Cougars"), plaintiff in C.A. 72-1906, is a corporation organized under the laws of the Province of Manitoba with its principal place of business in Chicago, Illinois. (Complaint and Answer in C.A. 72-1906, ¶ 3b.)

5. John McKenzie, (hereinafter "McKenzie"), plaintiff in C.A. 72-1902, is an individual and a citizen of Canada, residing at Boston, Massachusetts (Complaint in C.A. 72-1902, ¶ 3; Complaint and Answer in C.A. 72-1807, ¶ 2.)

6. World Hockey Association, (hereinafter "WHA"), a plaintiff in No. 72-1995, is a non-profit corporation organized and existing under the laws of the State of Delaware, with its main office located in Santa Ana, California. WHA was formed in 1971 to operate a league of professional hockey clubs and to promote the interests of its individual member clubs. WHA has member franchises in cities and states throughout the United...