Monday, December 3, 2012

Mediation, Arbitration, Decertification & the NHL Player/Owner Meeting

I had the over under on mediation at 3 days. Lasted just 2.

Now we hear that Donald Fehr has agreed to a player/owner meeting with conditions.

Will it work? What’s next? Should I consider starting a cricket pool?

Mediation Fails

It was unfortunately not a surprise to see mediation between the NHL and NHLPA fail. Sport league disputes that involve billions of dollars very simply do not have a profile for settlement at mediation.

We need only look to the recent past for evidence. In 2011, both the NFL and NBA were locked out, both turned to mediation and both to the very skilled and respected George Cohen and his federal agency, the Federal Mediation and Conciliation Service. However, in both cases, Cohen was unable to bridge the divide.

Since those mediations failed, and others as well (the NHL in 2005), it was not reasonable to expect that the NHL mediation was going to meet with success.

Both Gary Bettman and Donald Fehr are bright and intimately familiar with the key issues at play. It was unlikely that mediation was going offer up an epiphany or give the sides an Oprah-Aha moment that would lead to a deal in principle. It was more likely to give rise to moments punctuated with statement like “I don’t agree”, “I don’t think so” and “Hey, that was my muffin”.

Why Don’t the Sides Go To Arbitration?

Unlike mediation, where mediators just try to facilitate settlement, an arbitrator (of which I am one) renders a binding decision. Absent an appeal, the sides must follow the ruling of the arbitrator.

Wrestling over billions of dollars and complex contract issues, leagues are simply uncomfortable with arbitration. The last thing they want – and that goes for the players as well – is having to live with a deal they hate.

We often see arbitration in labor disputes, where someone feels like they were fired without a good reason. We even see it within the sports arena, where players and teams go to arbitration over things like salary. However, to have a third party decide the fate of a league’s business model for the foreseeable future is a no-go and would never happen.

So forget about arbitration. Zero chance.

Bettman’s Proposal: Players and Owners Meet

An admission that the Fehr/Bettman dynamic is not working, the Commissioner proposed that the leaders on both sides recuse themselves for the time being and let the players and owners negotiate directly.

Yesterday, we learned that Fehr agreed to the player/owner meeting – but with conditions. His brother Stephen Fehr will be present. On the NHL’s side, Bettman has countered with Daly.

The meeting was not going to happen without conditions. At law, inequality of bargaining power between employer and employee is an important legal concept and one that courts take very seriously. It refers to one side having more power than the other side by virtue of their position and knowledge. Under those circumstances, the more powerful side can secure more favourable terms of settlement simply by virtue of the power imbalance. 

That’s why you will often see contracts include a clause that provides that the sides have sought independent legal advice. And that’s why contracts with minors are generally unenforceable.

And that’s why players have agents and a Union leader.

In the case of NHL owners and its players, there is unequal bargaining power. The owners operate in the complex and sophisticated world of business on a daily basis. They are comfortable and experienced with that setting. Most players, however, don’t have that comfort or experience. And why should they? They are hockey players that have not had the chance to gain the requisite level of expertise in the field of business.

As well, the owners are the bosses, and there is an inherent imbalance as a result of the employer/employee relationship.

It would be unreasonable to ask an owner to jump onto the ice. It is equally unjust to ask a player to jump into the boardroom. The players may well be very capable to grasp the issues. However, they lack the experience and confidence required to bargain effectively.

So Fehr agreeing to the proposed player/owner meeting with conditions is no surprise.

What If The Meeting Doesn’t Work?

If Fehr and company conclude that there is no room for compromise, the NHLPA could elect to dissolve itself by way of a disclaimer of interest with a view initiating antitrust litigation. The first goal in that case would be to ask a court to declare the lockout unlawful and lift it. If that happened, the NHL would have to resume operations (unless it appealed – which it would). The NHLPA would probably bring the lawsuit in a jurisdiction favourable to players, like California.

However, if the NHL believes that the threat of the NHLPA dissolving itself is very real, the NHL could sue first. They would do this in an attempt to secure a court in a jurisdiction (like New York as the NBA did) that favours the owners. Filing lawsuits first is a good way to try and get a favourable court. With two lawsuits about the same thing in different courts, we would likely see a fight over which court should hear the case. Messy.

Ultimately, the NHL need only to look to Marvin Miller’s legacy, the history of the MLBPA and Fehr’s 24 years as head of the MLBPA to understand why the NHL’s current proposal has not gained traction.

Little will change with a player/owner meeting unless something is given up. It’s less about who is talking and what is being said.

In fact, it's possible that the players may be more emotional than Fehr (actually, bet on it), and a meeting that is not handled with skill and care may set things back, rather than advance them.

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