ARBITRATION IN THE CBA OF THE NATIONAL HOCKEy LEAGUE
3. Grievance arbitration
Grievance arbitration, also known as “rights arbitration” in US and Canadian labor law, is mostly the judicial procedure to resolve disputes between an employer and a certified union over the interpretation and application of a collective agreement during the term of that agreement.131415 In addition, the CBA defines grievance as a mechanism to “any dispute involving the interpretation or application of, or compliance with, any provision of this Agreement, including any SPC16 In the NHL, all grievances are resolved exclusively in accordance with this procedure, including any disputes that arise from the individual employment contracts of the players, except wherever another method of dispute resolution is set forth elsewhere in the CBA. 17 In conclusion, grievance is the general procedure of dispute resolution at “the industrial level,” but also at the individual level.
The grievance arbitration can be initiated only by the NHL or the NHLPA, with a written notice. Notices have to be filed as within 60 days from the event causing the grievance, or from when the circumstances which created the grievance came to light, and must be sent to the opposing party. It shall contain the reasoning why the grievance was filed, a written explanation concerning the CBA and/or SPC provisions that had been violated, and details of the suggested solution or the remedy sought. After the notice is received, the opposing party has 10 days to respond, to acknowledge or to deny the facts presented.18
As it is written above, the CBA declares strict rules regarding delays. For example, if the grievance is not processed or resolved in accordance with the prescribed time limits, after notifying the other party of its intent in writing, the grieving party may advance the procedure to the next step. The party harmed by
13 see also e.g. Article 1 paragraph f) of the Quebec Labor Code, CQLR c C-27 (hereinafter referred to as QLC) says: „“grievance”: any disagreement respecting the interpretation or application of a collective agreement;” accessed on 15 May, 2015 at: http://www2.publicationsduquebec.gouv.
qc.ca/dynamicSearch/telecharge.php?type=2&file=/C_27/C27_A.html
14 Fournier-roux p. 172
15 Ontario Ministry of Labor FAQs define grievance arbitration as a mechanism to resolve disputes about the interpretation and application of a collective agreement during the term of that agreement, Ontario Ministry of Labor, Arbitration: FAQ, accessed on 15 May, 2015 at: http://
www.labour.gov.on.ca/english/lr/faqs/lr_faq4.php
16 Section 17.1 of the CBA
17 e.g. System Grievance in Article 49, Salary Arbitration in Article 12 of the CBA
a delay in the filing of the grievance that raises the issue of player status, or other time-sensitive issues, may argue to the arbitrator that the delay should affect the remedy.19
Grievance arbitration includes a permanent preventive mechanism to avoid the grieving parties from choosing to proceed to arbitration in all the disputes that emerge. Before proceeding to the hearing, the parties must first try to settle their differences in front of the Grievance Committee, which is a regular mee-ting between the NHL and the NHLPA held in every two months. The aim of these meetings is to discuss all the filed grievance notices with the effort to settle the disputes instead of electing arbitration. The two parties shall provide each other written outlines of the filed grievances seven days prior each meeting. Any discussion and offer made during these negotiations cannot be admitted to the arbitrator.20
If the discussion fails to end with a settlement (dispute has not been resolved) in front of the Committee, the process continues in front of a jointly appointed impartial arbitrator, elected by the parties from among the members of the Nati-onal Academy of Arbitration. Parties shall come to an agreement within 90 days, or the American Arbitration Association is assigned as an ad hoc arbitrator.21 Within thirty days before the scheduled date of the hearing, the party bearing the burden of presenting its case shall first submit a “Disclosure Statement” to the other party; the responding party will provide to the other party a responsive statement at least twenty days before the hearing. Both shall contain the statement of issues, factual background, theory of the case, witnesses and documents the party intends to present or submit. Parties are bound to these statements, and they have to be filed with the purpose and intent of fully apprising the other party of the disclosing party’s case. Although it does not preclude either party from raising additional arguments or additional, later-discovered facts in any subsequent pre-hearing, pre-hearing submissions can be provided to the arbitrator with mutual consent, demonstrating the intention to avoid surprise.22
Hearings are held in New york City or Toronto, Ontario, unless otherwise stipulated by the parties. Witnesses need to show up to the hearings, unless both sides agree they can give testimony by phone. Record shall be closed at the end of the hearing, unless the impartial arbitrator orders to the contrary, and renders another hearing in the case.
The impartial arbitrator renders his final decision 30 days from the close of the record and receipt of the hearing transcript, which is binding, but must remain within the scope of the CBA. An arbitrator has authority to interpret, apply, and determine the provisions of the CBA or the SPC, but is not entitled to modify,
19 Section 17.2 paragraph (c) and Section 17.14. of the CBA
20 Section 17.4 of the CBA
21 Section 17.5. of the CBA
22 Section 17.6. of the CBA
subtract from their wording. Costs of arbitration are divided by the parties, except for the fee of the counsels and transportation costs. 23 If any monetary award is made by the arbitrator, payment has to be made within thirty days of the receipt of the award, unless the time limit is extended by mutual agreement. The decision of the arbitrator constitutes a full, final and complete disposition of the grievance, without a possible appeal.
In conclusion, grievance arbitration in the NHL is the standard arbitration procedure to resolve any disputes arose from the CBA or the SPCs quickly and efficiently, but also to avoid national legal jurisdiction. This process is the way to determine whether a player is fit enough to play (where the team physician makes the call on a player’s status, but the player is entitled to a second opinion by his own doctor to make a determination as to whether the player is able to perform his duties as a hockey player) and to decide the amount of reasonable remedies and the loss of income.24 Grievance can be filed if the issue of wrongful termination of the employment occurs,25 but also to determine procedural questions of the league. For example, a grievance arbitrator ruled for the League in August 2010, when the New Jersey Devils signed a contract valued at $102 million over seventeen years with Ilya Kovalchuk, which was the longest contract in the history of the league, but at the same time constituted a circumvention of the salary cap26. The League rejected the contract, and as a result, the National Hockey League Players’ Association filed a grievance on Kovalchuk’s behalf.2728 4. Salary arbitration
Salary arbitration is a process established for teams and players to solve their contract disputes concerning the reasonable salary for the player with the tool
23 Section 17.8 – 17.9 of the CBA
24 NHLPA won the grievance on behalf of Sean Bergenheim, where the Florida Panthers suspended the player after believing that he sustained his injury while playing in Finland during the NHL lockout in 2004-2005, see also Niagara Falls Review: NHL notes: Bergenheim wins grievance against Panthers, accessed on 15 May, 2015 at: http://www.niagarafallsreview.ca/2013/03/01/
nhl-notes-bergenheim-wins-grievance-against-panthers
25 NHLPA filed a grievance after the Tampa Bay Lightning terminated the contract of Riku Helenius in April 9, 2014, see also Mike Halford: NHLPA files grievance after Bolts terminate Helenius contract, NBC Sports Pro Hockey Talk, accessed on 15 May, 2015 at: http://prohockeytalk.
nbcsports.com/2014/04/09/nhlpa-files-grievance-after-bolts-terminate-helenius-contract/
26 Salary cap in the NHL limits the amount that each team may spend in a given year on players’
salaries see also BERNSTEIN, Simon (2011): “Salary Caps in Professional Sports: Closing the Kovalchuk Loophole in National Hockey League Player Contracts;” Cardozo Arts &
Entertainment Law Journal, p 375 – 402, accessed on 15 May, 2015 at: http://papers.ssrn.com/
sol3/papers.cfm?abstract_id=1955729
27 All SPCs must be filed with the Central Registry and approved by the League or the Arbitrator, see also Section 11.3. of the CBA
of arbitration. The NHL was the first professional league in North America to introduce this kind of dispute resolution in 1970. The dissatisfaction that led to the introduction was generated by the reserve clause, which had been included in the NHL’s SPC in 1958. This clause stipulated that when a player’s contract expired, the team could unilaterally extend it for the same duration as that of the previous contract, at the level of salary determined by the team.29 Since this clause was automatically integrated also into the new contract of all the players, it was possible for the team to continually renew them without any real negotiations.30
The rules of the procedure, the deadlines, and the eligibility are strictly regulated in the CBA, just as it has been described above in the grievance arbitration. To understand eligibility for salary arbitration, it has to be remarked that there are six “Groups” of players defined in the CBA for the purpose of deciding how much control the employing team has over a player with an expiring contract.
All of these group designations are determined by the professional experience of the player and the age of the player when his first SPC is concluded. Players under the term of entry-level deals (duration of the first SPC) are considered to be “Group 1” players, the remaining five groups determine whether a player is a restricted free agent (RFA) or an unrestricted free agent (UFA) at the expiration of his contract.31 Group 2 and group 4 players are related to the “restricted free agent” (RFA) status. Only Group 2 players can initiate salary arbitration, which is a status depending on the age at the signing of the first SPC and the minimum (and maximum) number of years of professional experience spent in the NHL.
A Group 2 player with the age of a) 18-21 needs to have 3 years b) 22-23 needs to have 2 years
c) 24 or older, needs to have at least 1 year
of professional experience in hockey.32 years of professional experience
de-29 Weiler, Joseph M (1992): “Legal Analysis of the NHL Player’s Contract,” Marquette Sports Law Review, Vol 3, Issue 1., p 70, accessed on 15 May 2015 at: http://scholarship.law.marquette.
edu/cgi/viewcontent.cgi?article=1069&context=sportslaw
30 Fournier-roux p 165
31 The difference between restricted and unrestricted free agency is that in the event a player is an RFA, the employing team has the right to give a qualifying offer to the player, binding the RFA to the team, to match an offer the player receives or to get draft pick compensation for the player leaving. Unrestricted free agents are players without a team as they contract expired without a renewal, or were not chosen in a league’s draft of amateur players.
UFAs are free to negotiate with any team and to decide with whom to sign a contract.
see also Section 10.1 - 10.2. of the CBA, Fournier-rouxp 166-167, and “Getting to Know the CBA - Episode 3: Getting to Know the CBA - Episode 3: “Free Agency” accessed on 15 May, 2015 at http://www.wingingitinmotown.com/2013/6/21/4436012/getting-to-know-the-cba-episode-3-free-agency
32 To be eligible to salary arbitration, a Group 2 player with the age of 18-20 needs to have 4, a 21 year old needs to have at least 3 years professional experience, see also par. 12.1. (a) of the CBA
pends on where and how many games the player has played, but also change based on the age. If the player is aged 18 or 19, professional experience is gained only if 10 or more games were played a year in the NHL. Older players gain a year by playing 10 or more games of hockey at any professional level (NHL, mi-nor league regular season and playoff games, and games played in any European professional league) while under an SPC.33
What really makes a Group 2 player “restricted” and bound to the team is if a qualifying offer has been made. Players become unrestricted free agents and of course will not remain Group 2 players if their SPC expires without the employ-ing team makemploy-ing a qualifyemploy-ing offer, so in case a team intends to maintain the employment of a player it has to make an offer. The amount of qualifying offer is set forth in the CBA and depends on the yearly salary of the (Group 2) player. If the yearly salary stipulated in the SPC prior the offer been made is
a) under $660,000, the qualifying offer has to contain at least 110%
b) from $660,000 to $1,000,000, the qualifying offer has to contain at least 105% (but in no event to exceed $1,000,000)
c) Over $1,000,000, the qualifying offer has to be at least 100%
of the yearly salary of the player.34
After the player has received a qualifying offer which he does not wish to ac-cept, once during his career, he can request salary arbitration to obtain a more ad-vantageous annual salary, or he can simply refuse the offer in question and not re-quest arbitration. In conclusion, contrary to the grievance arbitration, players are entitled to initiate salary arbitration. Teams may also initiate salary arbitration if the player refused the offer, but has not filed for salary arbitration, or if the qualifying offer the team shall make would be over $1,750,000 per annum. 35
As it can be inferred from the above, arbitration may be either player-elected or team-elected. To initiate arbitration, the player has to file his request by June 5, the team has to file its notice before June 15, or 48 hours after the conclusion of the Stanley Cup Finals in the League. 36
The hearing consists of the parties’ affirmative argument, followed by each party’s rebuttal and finally a surrebuttal. Arbitration hearings are scheduled between July 20 and August 4. The NHL and the NHLPA jointly appoint eight arbitrators to rule all grievances filed in a season. The disputing parties choose one arbitrator from the previously selected arbitrators.37 The player shall be represented by the NHLPA, unless the NHLPA chooses to delegate its authority to the player’s representative. At the hearing, the parties may present whatever documents, witnesses they choose to be necessary. The salary arbitrator may
33 Subparagraph 10.2. (a) (i) of the CBA
34 Subparagraph 10.2. (a) (ii) of the CBA
35 Section 12.1. and 12.3. of the CBA
36 Section 12.2. and 12.4. of the CBA
also call for any evidence, witness, documents, as he deems necessary to resolve the dispute. By no later than 48 hours before the hearing, the parties shall send their respective briefs to each other and the arbitrator; this document is 40 pages at most, and details the parties position, arguments and statistics put forward to back up the case. During the hearing, each party has a maximum of 90 minutes to present their case and to respond to the arguments of the other party. If the rebuttal of the respondent raises new substantive issues or introduces additional comparable players for the first time, the other party as an extra 10 minutes for surrebuttal solely to address the risen issues.
The arbitrator has discretion over the relevancy and materiality of all evidences, but comparable statistical evidence in a party’s affirmative case (applicant) must be included in the parties brief. Moreover, the NHL and the NHLPA must jointly create and send each other an exhibit setting out the financial terms contained in the SPCs of all players alleged to be „comparable” players and eligible for any arbitration session by 5 June.38 The NHL and the NHLPA shall also negotiate to identify and eliminate differences between the two to create a joint exhibit, which shall not be disclosed by the arbitrator, but the parties shall use extracts in the ongoing case.
Admissible evidences are also bound by the regulations of the CBA. The set of admissible evidences are (1) the overall performance, including official statistics prepared by the NHL (both offensive and defensive), of the player in the current season or preceding seasons;(2) the number of games played by the player, his injuries or illnesses during the preceding seasons; (3) the player’s number of years of experience in the NHL or the team; (4) the overall contribution of the player to the success or failure of the team in the preceding season; (5) any special qualities of the player, such as leadership or personal commitment to the community; (6) the overall performance in the previous season or seasons of any player(s) who is alleged to be „comparable” to the player whose salary is in dispute; and (7) the annual salary of players alleged to be „comparable. 39
On the other hand, some evidences are explicitly inadmissible and shall not be considered by the arbitrator. For example, any prior offers or history of negotiations between the player and the team, the salary arbitration awards prior to 5 July 2005, videotapes, newspapers, press game reports, testimonials, SPC of any player who is not considered as a comparable player, shall not be taken into account. In the end, the arbitrator renders his or her decision not later than forty-eight hours after the hearing. The arbitrator decides on the salary of player, the duration/term of the contract, and also provides a reasoning for the decision.
The decision of the arbitrator is final, without any possible appeal. Although, if the award issued is for $3,500,000 or more per annum in a player-elected arbitration, the team can notify the Player after the award that it does not intend
38 Subparagraph 12.9. (g) (vi) of the CBA
39 Paragraph 12.9 (g) of the CBA
to tender to the Player an SPC based on the award determined in the arbitration decision (walk-away right).40 If the team exercises the walk away right, the player who has been awarded a one year extension will become a free agent, but if a two year extension has been awarded, the parties shall enter into a one-year SPC which expires only at the end of the (next) season after the arbitration. In both cases, the team must exercise its right within forty-eight hours following the decision. Lastly, the number of walk away rights the team is authorized to exercise per season is depending on and limited to half of the number of salary arbitrations initiated by the team players.41
Derek Marr published a comprehensive study in 2011 about the emergence of salary arbitration in the NHL. The study shows that the number of players filing for arbitration has declined, and the number of cases heard has declined at an even higher rate. Higher quality players sign long-term contracts, exceeding the Group 2 status required for the eligibility.42 As the caliber of player filing for arbi-tration and reaching the hearings decreases, the willingness of NHL teams to go to arbitration also decreases – it is likely that the team would have a greater risk
Derek Marr published a comprehensive study in 2011 about the emergence of salary arbitration in the NHL. The study shows that the number of players filing for arbitration has declined, and the number of cases heard has declined at an even higher rate. Higher quality players sign long-term contracts, exceeding the Group 2 status required for the eligibility.42 As the caliber of player filing for arbi-tration and reaching the hearings decreases, the willingness of NHL teams to go to arbitration also decreases – it is likely that the team would have a greater risk