NHL v. NHL PLAYERS ASS'N

• Decision Date: 07 April 1992
• Docket Number: Civ. No. 4-91-636.
• Citation: 789 F. Supp. 288
• Parties: NATIONAL HOCKEY LEAGUE, et al. v. NATIONAL HOCKEY LEAGUE PLAYERS ASSOCIATION, et al.
• Court: U.S. District Court — District of Minnesota

789 F. Supp. 288

NATIONAL HOCKEY LEAGUE, et al. v. NATIONAL HOCKEY LEAGUE PLAYERS ASSOCIATION, et al.

Civ. No. 4-91-636.

United States District Court, D. Minnesota, Fourth Division.

April 7, 1992.

Gary J. Haugen, Maslon, Edelman, Borman & Brand, Minneapolis, Minn., and Herbert Dym, Covington & Burling, Washington, D.C., for plaintiffs.

Luke H. Terhaar, Lindquist & Vennum, Minneapolis, Minn., and James W. Quinn, Weil, Gotshal & Manges, New York City, for defendants.

ORDER

ROSENBAUM, District Judge.

The Anthems

The National Hockey League (NHL) seeks a declaratory judgment against the National Hockey League Players Association (NHLPA) and a putative defendant class of hockey players. The NHL and its twenty-two Member Clubs (the clubs) seek a declaration that their continued adherence to particular contract terms of the parties' 1988 Collective Bargaining Agreement¹ (the 1988 Agreement) is protected from antitrust challenge under the nonstatutory labor exemption, as defined by the Eighth Circuit in Powell v. National Football League, 930 F.2d 1293 (8th Cir. 1989), cert. denied, ___ U.S. ___, 111 S.Ct. 711, 112 L.Ed.2d 700 (1991). Prominent among plaintiffs' goals is the preservation of the NHL "equalization rules"—the "reserve clause" of professional hockey.

Plaintiffs assert that the proper defendants are arrayed before the Court, and move to certify a mandatory defendant class of both present and future players. Plaintiffs then seek summary judgment. Defendants, in reply, move to dismiss the action for lack of subject matter jurisdiction, pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure (Fed.R.Civ.P.). Defendants seek dismissal, claiming the NHLPA is not a proper party to this declaratory judgment action and, further, that no "actual controversy" exists between the NHL and the putative defendant class. Matters outside the pleadings have been presented to, and considered by, the Court. Therefore, the defendants' motion shall be treated as one for summary judgment. Gibb v. Scott, 958 F.2d 814, 816 (8th Cir. 1992); Fed.R.Civ.P. 12(b).

For the reasons set forth below, the Court finds that plaintiffs' suit against the NHLPA lacks an independent basis for subject matter jurisdiction. Further, the Court finds that no justiciable controversy exists to provide jurisdiction for plaintiffs' action against the named defendant players or the putative defendant class. Accordingly, the matter is dismissed for lack of subject matter jurisdiction.

The Players

The NHL is an unincorporated, not-for-profit association dedicated to the perpetuation of hockey as one of the national games of the United States and Canada. Compl. ¶ 5; 1988 Agreement at 1. There are currently twenty-two employer member clubs in the NHL which constitute the NHL teams presently in operation. Compl. ¶ 5.

The NHL and the clubs (the plaintiffs), bring this declaratory judgment action against the NHLPA and a putative defendant class of hockey players (the defendants). The NHLPA is a labor organization as defined by § 2(5) of the National Labor Relations Act (NLRA), 29 U.S.C. § 152(5). The NHLPA is recognized as the exclusive bargaining representative for all present and future hockey players employed by the clubs. 1988 Agreement at 1.

The putative class representatives, the named defendant players, include Robert S. Gavin, a professional hockey player, employed during the 1991-92 season by the Minnesota North Stars; David Maley, a professional hockey player, employed during the 1991-92 season by the New Jersey Devils; Shawn Chambers, a professional hockey player, employed during the 1991-92 season by the Washington Capitals; Tom Kurvers, a professional hockey player, employed during the 1991-92 season by the Vancouver Canucks; Don Beaupre, a professional hockey player, employed during the 1991-92 season by the Washington Capitals; Brad Willner, an amateur hockey player, drafted by the New Jersey Devils in June, 1991; and Steve Magnusson, an amateur hockey player, drafted by the Calgary Flames in June, 1991.²

In a dazzling cross-ice pass, plaintiffs seek certification of a mandatory, non-opt-out defendant class comprised of:

All hockey players who are presently on a Reserve, Inactive, or Free Agent List of an NHL club pursuant to NHL By-Laws, and all hockey players who are on a Reserve, Inactive, or Free Agent List or any NHL club pursuant to NHL By-Laws at any time prior to the date of final judgment in this action.

Compl. ¶ 50.

But is there a whistle?

The Rules

The contract provisions which lie near the core of this declaratory judgment action are the NHL "equalization rules."³ Generally stated, these rules require that any NHL club contracting to acquire a free agent player provide an "equalization payment" to the free agent's former club. This equalization payment may be in the form of player contract assignments, draft pick assignments, or a cash payment. Notably, the equalization payment must be mutually agreed between the member clubs involved. The player is merely the triggering mechanism. If the clubs do not agree to the equalization terms within three days of the free agent's acquisition, the matter must be submitted to binding arbitration. 1988 Agreement, Ex. 15 at § 9A.8(b).

There is no serious question that these rules restrict the free agent's movement within the league and encumber the free agent's salary negotiations with a potential acquiring club. These effects may possibly implicate federal antitrust law. Plaintiffs contend that these rules, which they fervently wish to maintain, pose a risk of antitrust litigation. This risk, they assert, gives this Court jurisdiction to issue declaratory relief.

The Face Off

A procedural history of the parties' collective bargaining negotiations is necessary to an understanding of plaintiffs' self-described "consternation" at the prospect of antitrust litigation and their consequent filing of this action.

On May 14, 1991, the NHLPA sent the NHL a "Notice of Termination and Proposed Revision of Agreement." According to the NHLPA, this notice was designed to trigger the termination of the 1988 Agreement on September 15, 1991. Having sent this notice, the NHLPA contends that the 1988 Agreement has expired and that the players are currently without a contract. The contract, however, requires that a party seeking termination "shall furnish the other a written notice of termination and proposed revision of this agreement not less than 120 days prior to the 15th day of September, 1991...." 1988 Agreement at Art. II § 2.01.⁴ Consequently, the NHL contends that a full-text "proposed revision" should have accompanied the notice. Because the NHLPA's notice was unaccompanied by such revision, plaintiffs do not consider this notice to be an effective termination of the contract.⁵

In support of the NHL's view, the clubs delivered a memorandum to the NHLPA on June 13, 1991, along with management's contract proposals. This memorandum further set forth the club's position that the NHLPA's notice of termination was ineffective and failed to terminate the contract on September 15, 1991.

In response, the NHLPA distributed to the Clubs a memorandum entitled "Players' Position on Free Agency Issues." This memorandum, dated June 14, 1991, asserted that if the terms of the 1988 Agreement "are imposed without the players' approval after September 15, when the existing collective bargaining agreement terminates they, in our view, plainly would violate the antitrust laws and would subject the league and its tems sic to treble damages." Ziegler Decl. at ¶ 8.⁶

On July 5, 1991, in an apparent effort to resolve the standoff over termination of the agreement, the Clubs submitted the question of whether the NHLPA's failure to include a proposed contract revision rendered the termination ineffective to binding arbitration. The Clubs withdrew this arbitration submission on August 20, 1991, at the time of filing the complaint. Compl. ¶ 45. At the time of oral argument, and indeed to this date, the parties have continued to meet, and to bargain, with the intent of achieving a new collective bargaining agreement. Ziegler Decl. ¶ 6. No new contract has, thus far, been achieved, and on April 1, 1992, the NHL players went on strike. According to recent communications between counsel and this Court, however, the negotiating ice may yet melt.

The Power Play

Plaintiffs claim they have been checked into the boards between the defendants, the Sherman Antitrust Act, and the NLRA. Plaintiffs fear that their continued adherence to the equalization rules, which they argue is compelled by the NLRA, see Litton Financial Printing v. N.L.R.B., ___ U.S. ___, 111 S.Ct. 2215, 2217, 115 L.Ed.2d 177 (1991); N.L.R.B. v. Katz, 369 U.S. 736, 747, 82 S.Ct. 1107, 1113, 8 L.Ed.2d 230 (1962),⁷ may simultaneously subject them to treble damages under federal antitrust law. Plaintiffs, therefore, ask this Court to declare that their compliance with the equalization rules, or terms substantially similar thereto, is protected from antitrust challenge under the non-statutory labor exemption as defined by Powell v. National Football League, 930 F.2d 1293 (8th Cir.1989), cert. denied, ___ U.S. ___, 111 S.Ct. 711, 112 L.Ed.2d 700 (1991).

Plaintiffs seek to take advantage of Powell and remove, at least for the present, the threat of an antitrust action from the NHLPA's collective bargaining arsenal. Plaintiffs seek a definitive declaration of the instant at which they would face a ripened antitrust challenge or—at a minimum—a declaration that they have not yet passed into any danger zone which still exists after Powell.

Off Sides

Plaintiffs seek a declaratory judgment, pursuant to 28 U.S.C. § 2201. The relevant provision of the Declaratory Judgment Act (the Act) states:

In a case of actual controversy within its jurisdiction, ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights

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