National Hockey League v. Intermart, Inc., s. 84-1595

• Decision Date: 31 August 1984
• Docket Number: Nos. 84-1595,s. 84-1595
• Citation: 127 Ill.App.3d 1072,83 Ill.Dec. 246,470 N.E.2d 1
• Parties: , 83 Ill.Dec. 246 NATIONAL HOCKEY LEAGUE, a voluntary unincorporated association, Plaintiff- Appellee, v. INTERMART, INC., an Ontario corporation, carrying on business as Canadian Sports Network, sometimes known as Canadian Sports Network, Ltd., Defendant- Appellant. /84-1899.
• Court: United States Appellate Court of Illinois

Page 1

470 N.E.2d 1

127 Ill.App.3d 1072, 83 Ill.Dec. 246

NATIONAL HOCKEY LEAGUE, a voluntary unincorporated association, Plaintiff- Appellee, v. INTERMART, INC., an Ontario corporation, carrying on business as Canadian Sports Network, sometimes known as Canadian Sports Network, Ltd. Defendant- Appellant.

Nos. 84-1595/84-1899.

Appellate Court of Illinois First District, Third Division.

Aug. 31, 1984.

Rehearing Denied Nov. 2, 1984.

Jenner & Block, Chicago (Jerold S. Solovy, Howard R. Barron, Chicago, of counsel), Shearman & Sterling, New York City, (Robert F. Dobbin, Robert J. Hausen, New York City, of counsel), for defendant-appellant.

Schiff, Hardin & Waite, Chicago (W. Donald McSweeney, Barry S. Alberts, William M. Hannay, Chicago, of counsel), for plaintiff-appellee.

McGILLICUDDY, Justice:

On April 13, 1984, the plaintiff, the National Hockey League (NHL) filed a Complaint for Declaratory Judgment in the circuit court of Cook County against the defendant, Intermart, Inc. (Intermart), an Ontario corporation carrying on business as Canadian Sports Network (CSN), concerning the rights of the parties under an agreement. According to the complaint, the NHL is a voluntary unincorporated association which promotes professional hockey for the mutual benefit of its member hockey clubs, consisting of 14 clubs in the United States and seven clubs in Canada. CSN is a division of Intermart. On June 25, 1984, six of the seven NHL Canadian member clubs and CSN filed a statement of claim based on the alleged breach of the agreement in the supreme court of Ontario, Canada, against Carling O'Keefe Breweries of Canada, Ltd. (Carling O'Keefe), the principal officers of the NHL, the 14 NHL United States member clubs and Le Club de Hockey Les Nordiques 1979 (Quebec Nordiques), one of the Canadian member clubs. The action sought injunctive, declaratory and monetary relief. In the trial court and in its brief on this appeal, CSN stated that the NHL was not made a party to the Ontario lawsuit because a voluntary association may not sue or be sued under Canada law.

On June 26, 1984, the NHL filed in the circuit court of Cook County a motion for a temporary restraining order (TRO) and preliminary injunction prohibiting CSN from maintaining the prosecution of the Ontario action and from filing or prosecuting any other action arising out of the agreement. No evidentiary hearing on the motion was held. Following oral argument, on June 27, 1984, the trial court granted the motion and entered a TRO for a period of 10 days enjoining CSN from maintaining the prosecution of the Ontario action and from filing or prosecuting any other action arising out of the agreement in any court other than the circuit court of Cook County. The trial court has extended the TRO several times, and it has now been extended to September 17, 1984, the date currently set for trial on this matter. CSN's motion to vacate or dissolve the TRO was denied on July 6, 1984. CSN filed these interlocutory appeals pursuant to Supreme Court Rule 307(a) (91 Ill.2d R. 307(a)). The issues presented for review are: (1) whether the trial court abused its discretion in entering the temporary restraining order; (2) whether the trial court abused its discretion in extending the temporary restraining order for more than 82 days without an evidentiary hearing; and (3) whether the trial court abused its discretion in refusing to require the NHL to give bond.

The contract in dispute, called the "Trans-Border Agreement" (TBA), was executed on July 1, 1982, by CSN, a division of Intermart, and by the NHL on behalf of its member clubs. It provided, in pertinent part, that the NHL Canadian member clubs granted to CSN the exclusive right to televise the NHL United States member clubs' home hockey games throughout Canada during the 1982-83 and 1983-84 seasons, subject to limited border protection and certain previously-granted local broadcast rights. In exchange, CSN would grant certain reciprocal broadcast rights on behalf of the Canadian clubs and pay to the NHL, as agent for, and for distribution to, the NHL United States member clubs, $2,178,000 for 1982-83 and an increase in accordance with the larger of two agreed-upon formulas for 1983-84. Regarding negotiation of a new TBA for the 1984-85 season, the contract provided as follows:

"5. (a) Commencing no later than April 1, 1984, CSN and NHL will negotiate diligently in good faith with respect to terms and conditions on which CSN and NHL may enter into a new Trans-Border Agreement. Provided that on or before April 1, 1984, CSN has made an irrevocable 'Minimum Offer' (as defined herein) to NHL for the 1984-85 season, NHL will not enter into an agreement with any third party in the 1984-85 season, for the same rights granted to CSN for the 1983-84 season, without giving CSN a right of first refusal to match the offer made by such third party whose offer shall be on the same terms and conditions as the 'Minimum Offer,' except for the monetary amount. Such right of first refusal shall be exercised or lost by CSN ten business days from the date CSN receives written notice thereof from NHL, which notice must be given no later than thirty days after CSN has made such 'Minimum Offer' to NHL. The 'Minimum Offer' to be made by CSN for the 1984-85 season, to qualify for the said right of first refusal, shall be ten percent (10%) higher than the amount CSN has agreed to pay herein, for all of the same rights as granted to CSN in the 1983-84 season (and on the same terms and conditions except as provided in 5(b) below), and will terminate by July 1, 1984.

(b) CSN will use its best efforts to continue in the future to acquire and control the rights referenced in paragraph 1(b) hereof. Should it fail to do so, however, and should all Canadian Member Clubs fail to agree to the Agreement as set forth in Exhibit A hereof, then, to the extent necessitated by such circumstances, CSN shall be relieved of the responsibility of providing broadcast rights to games played in certain Canadian cities, and CSN's exclusive broadcast rights shall be waived to the extent necessary for the NHL and/or any U.S. Member Club to grant broadcast rights in exchange for the acquiring of such rights to games played in such Canadian cities."

The complaint alleged that on December 19, 1983, CSN made a minimum offer to the NHL for exclusive 1984-85 broadcast rights, even though it knew that one of the Canadian clubs had not agreed to grant reciprocal broadcast rights for the 1984-85 season. That club was Le Club de Hockey Les Nordiques 1979 (Quebec Nordiques), owned by Carling O'Keefe Breweries of Canada, Ltd. (Carling O'Keefe). On or about January 23, 1984, the NHL United States member clubs decided to negotiate new agreements with CSN and others on a nonexclusive basis, since they were aware that CSN would be unable to provide United States broadcast rights to all Canadian member clubs' home games for the 1984-85 season. By telephone on the same date, the NHL so advised CSN, and invited CSN to submit a proposal for such a non-exclusive agreement. On or about January 30, 1984, a committee representing the NHL's United States member clubs entered into an agreement with Carling O'Keefe which granted Carling O'Keefe the non-exclusive right to broadcast United States home hockey games throughout Canada. On the same date, the NHL committee advised CSN and the principal sponsor of CSN's broadcasts, Molson Breweries of Canada, Ltd. (Molson), that the committee desired to negotiate a similar non-exclusive agreement with CSN. At CSN's request, the NHL committee agreed to extend the deadline for a CSN proposal as well as to refrain from negotiating with any party other than Molson or Carling O'Keefe regarding Canadian broadcast rights.

By letter dated March 20, 1984, counsel for CSN, Molson and the Canadian Broadcasting Corporation informed the NHL that they intended to enforce what they considered to be CSN's exclusive broadcast rights for 1984-85 under the TBA.

On April 13, 1984, the NHL filed this action for judgment declaring that the TBA did not require the NHL to grant to CSN exclusive Canadian broadcast rights or to enter into any agreement with CSN for the 1984-85 season; that the TBA did not prohibit the NHL from entering into non-exclusive broadcast agreements with other parties; that the TBA did not grant to CSN any broadcast rights for the 1984-85 season; that CSN did not make a valid minimum offer; that the NHL's non-exclusive agreement with Carling O'Keefe would be permissible if CSN were unable to grant to the NHL United States member clubs...