IN RE PROFESSIONAL HOCKEY ANTITRUST LIT.(MULTIDIST. LIT.)

• Decision Date: 26 February 1974
• Docket Number: 72-1995,Civ. A. No. 72-1661,72-1902,72-1906,72-1807,73-215,73-2484,74-127 and 74-161 to 74-163. M.D.L. No. 119.,73-74,73-19,73-218,73-358
• Citation: 371 F. Supp. 742
• Parties: In re PROFESSIONAL HOCKEY ANTITRUST LITIGATION (MULTIDISTRICT LITIGATION).
• Court: U.S. District Court — Eastern District of Pennsylvania

371 F. Supp. 742

In re PROFESSIONAL HOCKEY ANTITRUST LITIGATION (MULTIDISTRICT LITIGATION).

Civ. A. Nos. 72-1661, 72-1807, 72-1902, 72-1906, 72-1995, 73-19, 73-74, 73-215, 73-218, 73-358, 73-2484, 74-127 and 74-161 to 74-163. M.D.L. No. 119.

United States District Court, E. D. Pennsylvania.

February 26, 1974.

Leonard W. Wagman and Michael C. Silberberg of Golenbock & Barell, New York City, Perry S. Bechtle, Alan M. Lerner, Barry F. Greenberg of Cohen, Shapiro, Polisher, Shiekman & Cohen, Philadelphia, Pa., for Metropolitan Hockey Club, Inc. and Golden Blades Hockey, Inc.

Harold E. Kohn, Allen D. Black, David H. Weinstein, Arthur B. Makadon, of Harold E. Kohn, P.A., Philadelphia, Pa., for Harold E. Kohn, Harold E. Kohn, P.A., and World Hockey Assn.

HIGGINBOTHAM, District Judge.

OPINION

I. INTRODUCTION

This opinion constitutes the most recent chapter to an increasing number of directives and rulings issued by the Court — some sua sponte — over the past couple of weeks. These declarations heretofore were not prescribed to indulge any whims of the Court but unfortunately were necessitated by the numerous motions filed with the Court on a regular basis by the remaining parties to this antitrust litigation.

The instant matter pertains to the motion of Metropolitan Hockey Club, Inc. ("Metropolitan") and Golden Blades Hockey, Inc. ("Golden Blades") of the World Hockey Association ("WHA") to compel Harold E. Kohn, Esquire, and his firm, Harold E. Kohn, P.A., to produce for inspection and copying by Metropolitan and Golden Blades all legal papers and documents served by or upon Kohn and his firm prior to the settlement of portions of this litigation. Exclusive of Metropolitan and Golden Blades, the other member clubs of the WHA have executed a Consent Decree with the member clubs of the National Hockey League ("NHL"), said Consent Decree being approved by the Court on February 19, 1974.

Incident to the resolution of the aforementioned motion is the determination of the validity of an attorney's lien asserted by Kohn and his firm on all the papers falling within that category and now in their possession. Metropolitan and Golden Blades contend, inter alia, that Kohn had been retained by WHA as lead counsel to prosecute this litigation and consequently the status of Metropolitan and Golden Blades as members of WHA entitles them to copies of all legal documents in Kohn's possession. Consistent with that position, Metropolitan and Golden Blades insist that they are not required to pay Kohn any monies for inspection and receipt of said materials, except the nominal costs for reproduction and duplication.

For reasons which are hereinafter set forth, the Court concludes that Harold E. Kohn and his firm do have a legitimate general or retaining attorney's lien which attaches to all papers relating to and arising out of this litigation and now under their control. Before such documents are to be released, Metropolitan and Golden Blades must satisfy the full amount of the lien established by the Court as due and owing to Kohn or otherwise post adequate security to ensure adequate surety indemnification in the event of their subsequent noncompliance.

II. FINDINGS OF FACT

On the basis of the facts which are not in dispute, taking into consideration the WHA Requests for Admissions and the answers thereto, the memoranda of Golden Blades and Metropolitan in support of their motion, documents filed in opposition to said motion, and the various responses submitted in compliance with Pretrial Orders Nos. 14, 15 and 17, the Court makes the following findings of fact:

A. METROPOLITAN HOCKEY CLUB, INC.

1. In the early part of 1972, Metropolitan acquired a franchise to operate a team of the new WHA within 100 miles of New York City Hall.

2. Metropolitan was one of the original twelve clubs assigned franchises in the newly created WHA.

3. After paying only two player payrolls in the fall of 1972, Metropolitan failed to pay its financial obligations, including players' payroll.

4. The WHA then stepped in and paid that payroll and the other expenses of the team until some time prior to May 11, 1973.

5. An agreement between Metropolitan and WHA was entered into on November 16, 1972, wherein Metropolitan agreed to pass a corporate resolution empowering the WHA's designee to be named operating manager of Metropolitan.

6. (a) Metropolitan and WHA intended jointly to seek a new owner for the team.

(b) Under the agreement between WHA and Metropolitan dated November 16, 1972, it was agreed that any and all sums to continue day-to-day operations of Metropolitan were to be reimbursed out of the proceeds of the sale of the assets and franchise of Metropolitan.

7. Messrs. Ralf Brent, Lawrence Stern and Lee Matison were willing to acquire a WHA franchise in the New York metropolitan area.

8. Messrs. Brent, Stern and Matison entered into an agreement with the WHA dated April 11, 1973 and Raiders Hockey, Inc., now Golden Blades, entered into an agreement with Metropolitan dated March 26, 1973 in respect of the acquisition of the assets and certain liabilities of Metropolitan.

9. The unpaid Metropolitan obligations included about $270,000 in unpaid withholding taxes.

10. The purchase price recited in the agreement of April 11, 1973 between Messrs. Brent, Stern and Matison and WHA is $1,500,000. In addition, Raiders Hockey, Inc. was required by WHA to acquire all of the assets of Metropolitan, which acquisition was consummated at a purchase price of 200,000 shares of Golden Blades Common Stock.

B. GOLDEN BLADES HOCKEY, INC.

11. By agreement dated March 26, 1973, Raiders Hockey, Inc., now Golden Blades, acquired all of the assets and certain liabilities of Metropolitan.

12. On May 11, 1973, Messrs. Brent, Stern and Matison fulfilled all of the terms of their agreement of April 11, 1973 with WHA except that they requested additional time to arrange for the issuance of a $500,000 promissory note. WHA agreed to this request and on May 14, 1973, the sum of $500,000 was paid WHA in cash in lieu of the issuance of said promissory note.

13. Raiders Hockey, Inc., a Delaware corporation, had been formed prior to the closing with WHA. Subsequently, that corporation's name was changed to Golden Blades Hockey, Inc. Messrs. Brent, Stern and Matison assigned all of their rights under the WHA agreement to Golden Blades and a franchise was subsequently issued by the WHA to Golden Blades.

14. Metropolitan owns 200,000 of the 1,040,000 outstanding shares of Golden Blades Common Stock.

15. On November 8, 1972, this Court in Phila. World Hockey Club v. Philadelphia Hockey Club, 351 F.Supp. 462 (E. D.Pa.1972) granted a preliminary injunction to the WHA effective upon posting a $2.5 million bond.

16. The WHA Litigation Report of October 11, 1973, states in part:

"PRELIMINARY INJUNCTION BOND

"The last, and perhaps most important part of this report, concerns the preliminary injunction bond posted in the Philadelphia action. As you will know, that bond is in the amount of $2,500,000. At present it is supported by nine (9) letters of credit, each for $250,000, delivered by each of the following nine (9) WHA Members:

"1. Chicago Cougars Hockey Club, Inc.

"2. Edmonton World Hockey Enterprises Ltd.

"3. Professional Hockey Corp. (Los Angeles)

"4. Midwest Saints, Inc. (Minnesota)

"5. New England Professional Hockey, Inc.

"6. Le Club De Hockey Les Nordiques, Inc.

"7. Sports Centrepoint Enterprises, Ltd. (Winnipeg)

"8. Ontario Nationals Hockey Teams, Inc. (Ottawa)

"9. Philadelphia World Hockey Club, Inc. (Blazers)

"Obviously, two of the entities posting bonds (Philadelphia and Ottawa), will no longer desire to participate. Although they are parties to the litigation and, in the best interests of all, have decided not to withdraw, it is appropriate that their letters of credit not be renewed, and new letters be posted by Vancouver and Toronto. It would also seem appropriate that the new WHA Member Franchises become parties in this litigation, as their interests are just as much at stake as those already involved as parties.

"During the first week of November, many of these letters of credit begin to expire and the bonding company has recently written us demanding that the full amount of collateral ($2,500,000) be posted with them, in the form of letters of credit no later than November 1, 1973. The form of letter of credit requested by the bonding company is that recently issued by the Los Angeles Sharks, a copy of which is enclosed for your reference.

"Twelve WHA clubs are now playing hockey and each of them is receiving the daily benefit of the existence of the preliminary injunction. Consequently, it appears that the appropriate method of supporting the new bond which will be issued in early November would be to divide twelve into $2,500,000 and have each club post a letter of credit for approximately $210,000. Obviously, this will require some readjustment. In addition, the bonding company will not accommodate us at all this year and, it is an absolute requirement that the collateral be posted on time, or the bond will be revoked. I am sure that all counsel will agree with me and the WHA Legal Committee that this would be a disastrous result, causing us to lose all credibility in the pending Philadelphia actions."

17. The Court makes no finding as to whether Golden Blades as a condition precedent to participation in this antitrust litigation was required to submit a letter of credit in the amount of $250,000 or $210,000.

18. Paragraph 4.4 of the April 11, 1973 Agreement provides:

"In the event that the Members Messrs. Brent, Stern and Matison fail to pay the Purchase Price at the Closing May 11, 1973 or to make other arrangements satisfactory to WHA in respect thereof, this Agreement shall terminate, in which event the Advance $100,000 shall be retained by WHA as liquidated damages and the rights of the parties hereto shall be governed by the

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