NHL seeks dismissal of ‘implausible’ junior hockey lawsuit

Blazing an antitrust lawsuit that accused the NHL of depriving junior hockey players of their market value as “implausible” and “factually unsupported,” the NHL last Friday asked a judge in the Southern District of New York to dismiss a case that could bring down the player development industry.

In February, two former junior hockey players (Tanner Gould It is Isaiah DiLaura) along with labor organizations representing North America’s top current and prospective junior hockey players processed the NHL and the Canadian Hockey League (which is made up of three leagues: OHL, QMJHL and WHL) for allegedly conspiring to limit what players can earn. Through an agreement with the CHL, the NHL is portrayed as supporting a system that protects league profits at the expense of young players’ earnings. Major junior leagues, for example, enjoy exclusive territorial rights to recruit and sign players, thus reducing how these leagues compete in the labor market.

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In many ways, the NHL’s motion to dismiss attempts to persuade U.S. District Judge Margaret Garnett that the process is deficient.

For starters, the NHL claims the plaintiffs are “manifestly incorrect” about key facts. Although the complaint alleges that the NHL makes “annual payments” conditional on junior leagues maintaining allegedly anti-competitive rules, the NHL asserts that it “does not require the CHL to maintain any of the specific rules at issue in this case.” Instead, the NHL financially supports player development, contributing, for example, to player tuition, education, concussion protocols and mental health training.

The NHL also opposes the plaintiffs, claiming that the NHL-CHL agreement obligates the NHL to pay major junior clubs for 18- or 19-year-old players drafted and signed to NHL contracts. The league says the NHL only pays if a drafted and signed player is actually signed by an NHL team on its roster.

The labor relationship between the NHL and the players is also invoked as a defense. The NHL-CHL agreement is embodied in the NHL-NHLPA collective bargaining agreement, which states that the NHLPA is the exclusive bargaining representative “of all present and future NHL players.” The NHL highlights the non-statutory labor exemption, which reflects a series of U.S. Supreme Court rulings that rule that when management and workers collectively negotiate wages, salaries and other conditions of employment, those conditions are exempt from antitrust scrutiny.

In the NHL’s opinion, the exemption applies to the rules at issue in this case. This is true even if junior hockey players are not members of the NHLPA. The NHL relies on case precedent to argue that the exemption nevertheless applies “to the claims of prospective players who have not been drafted and may never be drafted.”

League references NHLPA x Plymouth Whalersa case from 2005 involving a challenge to OHL eligibility rules that limit the number of “overage” or 20-year-old hockey players. Given that the underlying legal challenge in Plymouth Whalers It stemmed from when NCAA players who were drafted by NHL teams were able to become free agents, the non-statutory labor exemption was applied. The NHL argues that because the current plaintiffs are contesting annual payments related to the development of junior hockey players, some of whom are future NHL players, and are contesting other aspects of potential employment in the NHL, the exemption should apply up here too.

The league, represented by law firm Paul, Weiss, also insists that much of the plaintiffs’ case concerns issues unrelated to the NHL or its dealings with the CHL. For example, although the exclusive geographic areas for CHL leagues to recruit players are challenged, the NHL says nothing in its CHL agreement is pertinent to this topic. Likewise, although the plaintiffs assert that the CHL project is anti-competitive, the NHL maintains “no term of the NHL-CHL Agreement relates to the CHL Defendants’ preliminary proceedings.”

Furthermore, the NHL references a defense that the CHL emphasizes in its own motion to dismiss. The Foreign Trade Antitrust Improvements Act (FTAIA) limits the scope of U.S. antitrust law to protect American citizens and exporters. The NHL and CHL maintain the FTAIA bars the plaintiffs’ claims since “none of the allegedly anticompetitive effects of the NHL’s conduct in the United States” would have caused the plaintiffs’ injuries, “which were suffered in Canada.”

In this regard, the NHL emphasizes that DiLaura “played only for Canadian teams” during the relevant period. As for Gould, the NHL says he played “at most” one season in the U.S., and the complaint “does not contain factual allegations showing how the NHL’s conduct caused DiLaura any alleged injury in the United States.”

Plaintiffs will have the opportunity to rebut these arguments in upcoming memos to Garnett.

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