NHL Accused of Colluding in Junior Hockey Antitrust Suit
In the latest antitrust case arguing sports associations have illegally deprived young athletes of their market value, a group of hockey players and players’ unions sued the NHL and four other hockey leagues Wednesday for allegedly conspiring to deprive junior hockey players of the difference between the compensation they were paid and the compensation they would have been paid in a more competitive market.
Hockey players Tanner Gould and Isaiah DiLaura—along along with the World Association of Icehockey Players Unions North America Division and World Association of Icehockey Players Unions USA Corporation—argue the NHL, CHL, WHL, OHL and QMJHL comprise a cartel that conspires to price fix what major junior players earn while generating of hundreds of millions of dollars a year in revenue for themselves.
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The plaintiffs seek for their case to be certified as a class action on behalf of players who play or played major junior hockey at any time between February 14, 2020, and a yet-to-be determined future date when the case reaches a judgment. Whether the presiding judge, who as of this writing has not yet been named, certifies the case as a class action will be decided during the litigation.
The 106-page federal complaint, filed in the Southern District of New York, accuses the defendants of anticompetitive conduct by allocating markets. The WHL (Western Hockey League), OHL (Ontario Hockey League) and QMJHL (Quebec Maritimes Junior Hockey League) are competitors. But as the plaintiffs tell it, they have joined hands through the CHL (Canadian Hockey League) to limit how they and their clubs compete for players and other commercial endeavors. For example, the three leagues agree that OHL clubs have the exclusive right to recruit and sign players from two dozen U.S. states and Ontario. If the leagues competed for these players, each player would earn more (or so the argument goes).
Player compensation is also highlighted. According to the plaintiffs, “all major junior players” are paid less than market value through the defendants’ price fixing schemes. The complaint says WHL players are paid $250 a month, while OHL pay is $470 a month. By comparison, AHL (American Hockey League) players reportedly earn, on average, more than $5,000 a month, and players in the ECHL (formerly the East Coast Hockey League) earn on average more than $2,800 a month.
A further theme in the complaint is the alleged absence of player or union involvement in establishing economic rules. The major junior leagues are depicted as conspiring to create “involuntary drafts,” with exclusive geographic territories, for North American players who will turn 16 during their first major junior hockey season. Players drafted at age 14 or 15 have effectively no choice but to accept the arrangement, especially since players under 18 aren’t eligible to play in the AHL or ECHL.
The drafts also aren’t reflected in a collective bargaining agreement with the major junior players. The plaintiffs contrast that arrangement to ones for AHL and ECHL players, whose labor union—the Professional Hockey Players’ Association—negotiates hours, wages and other working conditions. The lack of collective bargaining is legally important since rules bargained between leagues and unions are generally exempt from antitrust scrutiny under the non-statutory labor exemption. Rules that haven’t been bargained are subject to antitrust scrutiny.
Further, the complaint offers details on how the defendants earn sizable revenues under the existing framework. It notes NHL TV broadcasts major junior games and major junior leagues have received “multi-million-dollar annual ‘funding’ payments from the NHL,” which is depicted in the complaint as a beneficiary of a cost-controlled developmental system.
Although the NCAA isn’t a defendant, its rules nonetheless emerge as a topic. The plaintiffs write that major junior players “are barred from ever playing in the NCAA” because they are professional athletes. The complaint adds that “with the NCAA beginning to compensate players like professionals”—an apparent nod to NIL and prospective changes with college athletes as employees—the eligibility of major junior players could change.
The defendants are accused of violating Section 1 of the Sherman Antitrust Act. Section 1 claims involve competing businesses that have joined hands to illegally suppress how they compete. The hockey leagues are accused of restraining competition by agreeing to exclusive geographic markets, conducting “involuntary drafts” and imposing a “de facto reserve system” bounding teenage hockey players to play for price-fixed wages and other benefits. The complaint also contends the players’ NIL rights are exploited through a “forced and uncompensated” assignment of those rights.
The plaintiffs demand monetary compensation for those alleged harms. It’s worth noting successful antitrust cases can lead to automatic trebling of damages, meaning damages of $100 million become a damages award of $300 million. The plaintiffs also seek injunctive relief, meaning court orders that would compel the hockey leagues to change economic rules.
As repeatedly evidenced in sports, antitrust litigations can last many years. Ed O’Bannon’s and Shawne Alston’s antitrust lawsuits against the NCAA both took more than seven years from start to finish.
Like the hockey league defendants, the NCAA is currently facing claims the association and its members have unlawfully conspired to restrain what college athletes and recruits can earn (see Johnson v. NCAA, In Re College Athlete NIL Litigation, Ohio v. NCAA, Tennessee & Virginia v. NCAA, Carter v. NCAA, and Hubbard v. NCAA) while two of its members, Dartmouth and USC, face NLRB charges stating players are employees within the meaning of the National Labor Relations Act.
It’s important to stress that a complaint only sets out one version of events and legal contentions. The plaintiffs’ legal team, which includes attorneys Jeffrey Shinder and Ethan Litwin of Constantine Cannon LLP, are advocates, not neutral narrators.
The hockey league defendants will answer the complaint, deny the allegations and seek its dismissal. The leagues will maintain their system is legally efficient, and that absent coordination, it’s possible some of the leagues might struggle and the number of hockey player positions could be reduced. Although the NCAA has lost high-profile antitrust cases, most antitrust defendants usually win.
World Association of Icehockey Players Unions North American Division, et al. v. National Hockey League, et al. could also eventually lead to a settlement where the defendants agree to pay the players more and increase ways the leagues compete.
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