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Insanity Clause?

The NHL’s CBA has boundary issues.  It has not defined some important limits.  It does not specifically limit contract length, it does not limit the NHL’s time frame for approving a contract, and it does not, apparently, limit the NHL’s ability to change their mind even after approving a contract:

Under Section 26.10(b) of the CBA, the NHL can investigate a possible circumvention even if the player’s contract has been “approved and registered”. On top of that, Section 26.10(d) provides that there is no time limitation  barring an investigation (“There shall be no limitation of time barring the investigation of a Circumvention by the Commissioner). (Offside: A Sports Law Blog)

Tim Panaccio points out that another section of the CBA does define a time frame for NHL approval or rejection of contracts (5 days unless the season starts in less than 7 days, in which case it is one day).  I imagine the reference to “investigation” might negate that time frame requirement.  The NHL sounds a bit like Elizabeth Swann: “Hang the code, and hang the rules. They’re more like guidelines anyway.”

The following contracts are being mentioned as targets for investigation since the Kovalchuk contract was rejected and that rejection was upheld: Chris Pronger’s 7 year deal with the Flyers, Marc Savard’s 7 year deal with the Bruins, Roberto Luongo’s 12 year deal with the Canucks.  Honorable mention to Marian Hossa’s contract with the Blackhawks. These investigations have been under way for some time, apparently, but it was not being openly discussed until now.

One of those is not like the others: the Hossa contract is already under way, in force, being acted upon.  Money has been paid out.  Presumably that should make it untouchable, but presumption is not fact.

The other deals all represent new contracts or extensions only coming into effect in the near future.  Nonetheless, the parties agreed to the terms and the NHL has either approved them or has said nothing for up to a year.

Silence.  It doesn’t usually indicate consent.  One exception is when a reasonable person would have said something if they did not consent.  For example, if someone asks you “can I shoot your dog?” and you say nothing.  The person shoots your dog.  You then go to court and sue the shooter for killing your dog.  The first question the defense will ask you is “why didn’t you say anything when the defendant asked if he could shoot your dog?”  You better have a darn good reason or else the jury will assume you wanted your dog shot.  A really good reason, like you are deaf and blind and could not understand the question.

So how is the dog shooting the same as the Pronger contract?  The NHL has had the contract in their hands for about a year now.  They have it because they asked for it.  They have written authority to approve or reject the contract.  It is, in fact, part of their job to do so.  Ergo, if they have said nothing, if the Flyers have advertised their nice long contract with Chris Pronger far and wide, if Pronger has been playing for the Flyers and his family has moved to accommodate that, why hasn’t the NHL said anything before now?

Regarding the Pronger contract, they still haven’t.  The NHL has recently asked for more information from the Bruins and the Canucks about the Savard and Luongo contracts.  The Savard contract and the Luongo contract have a lot in common with the Pronger deal.  They are all on that Kovalchuk arbitration opinion hit list.  They are all just about to kick in.  They were all clearly intended to sew up an elite player for the rest of his career.   They have all been mentioned in discussions of “loopholes” in the NHL’s Salary Cap system.  They were all approved, or not rejected, some time ago.

The CBA gives the NHL the right to do this- review a contract at any time, for whatever reason, without question.  It allows take-backs.

The law does not.  Why would the law care, one might ask, what the NHL does?  The NHL isn’t putting anyone in prison, they aren’t taking anyone’s house, they are not maiming offenders.  They should be allowed to decide who plays where and when in their league.  They make the rules.

But the law does care, especially when you make the gaffe of using the word “contract” in your employment negotiations.  A contract is a legally binding document.  It requires performance for compensation.  Within reason, parties can agree to any terms they want to agree to.

The concept of a legally binding contract is deeply rooted in US legal and cultural tradition.  Next to criminal laws, contracts are probably the most revered documents in the Anglo-American legal system.  Along with this reverence, we have a general aversion to the idea of retroactive punishment, or ex post facto laws.  It is just wrong to penalize someone for breaking a rule that didn’t exist when they broke it.  This includes messing with existing contracts.

…there is a constitutional prohibition against laws impairing contracts… If two individuals have a binding contract, and a legislature then passes a law abrogating the contract, an ex post facto law has been applied to the contract…

… the Constitution does not explicitly prohibit Congress from passing laws impairing the obligation of contracts. Regarding Congress, the Constitution merely states that “Congress shall pass no bills of attainder or ex post facto laws.” It is in the subsequent section… that the more specific clauses referencing the prohibition on laws impairing the obligation of contracts and legal tender are found. (The Case Against Civil Ex Post Facto Laws, Steve Selinger)

Within reason, a contract can be altered by laws or decisions that come up after the contract was formed.  But it has to be reasonable.  Payment method, for example, is not going to significantly alter the nature of the contract, as long as the same value is given for the same service.  You cannot pass a law that prohibits the sale of cherries across state lines without getting into trouble with cherry growers and buyers.  Under the Constitution, those prohibited cherries better be some dangerous cherries to justify interfering with all those contracts.

The NHL isn’t Congress.  The NHL doesn’t pass laws.  Congress doesn’t care about professional sports.  Oh, wait, except for baseball. Could these NHL contracts draw their attention?  Probably not.  Probably this would never escalate to that level.  But some court would care.  Lower courts care about NFL head injuries, even after the contact sports exception came into play.

Some court would care if the NHL started going back and changing their minds about done deals that have been relied on by players, their families, team owners and even season ticket buyers.  Some eager lawyer will certainly try to bring it to light.

Why should your average Joe care?  What’s in it for me, as someone who doesn’t, never will, cannot even dream of being paid this kind of money to do anything?   The sanctity of a contract is not class-biased.  Maybe the ability to see your contract honored is, if you can’t afford to sue.  But contract law is contract law.  There may not be criminal penalties at stake, but there is a special place in the social order for those who do not abide by contracts.  They are called cheats, liars, crooks, and a slew of racist and otherwise offensive names.  They are not well-liked.

The CBA is a contract in itself, older than any of the contracts being disputed.  The NHL could argue that not allowing them to do what the CBA says they can do is like going back and changing the contract after it has already been relied upon.  Then you have to choose between the lesser of two evils.  Which does the most harm, following the letter of the CBA or abiding by contract law?

Maybe the CBA allows arbitrary take-backs.  Common sense, fair play and contract law do not.

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