Key questions in the CHL minimum-wage lawsuit

Rick Westhead

TSN Senior Correspondent

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TSN senior correspondent Rick Westhead reviews the issues surrounding the case launched by former major junior players arguing that teams should pay their players at least minimum wage:

How many lawsuits are currently underway and how long will this last?

Originally, one proposed national class action lawsuit was filed in Toronto in late 2014 against the Canadian Hockey League and the three leagues it oversees – the Ontario Hockey League, the Western Hockey League and the Quebec Major Junior Hockey League.

Then, the case was split into three different lawsuits at the agreement of the plaintiffs and defendants – one in Calgary against the WHL, another in Toronto against the OHL, and a third against the QMJHL in Montreal.

Ontario Superior Court Justice Paul Perell is hearing arguments at Osgoode Hall in Toronto this week about whether the OHL case should be a class action. If it is certified as a class action, all former OHL players who played for Ontario-based teams going back to Oct. 17, 2011, would become class members. Players who were with teams in Pennsylvania since Oct. 17, 2010, and players who were with Michigan-based clubs since Oct. 17, 2008, would also be class members.

A judge in Calgary is currently deciding whether to grant class certification to players in that case. A hearing date in the QMJHL litigation has not yet been established.

However the judge rules on the class-certification hearing, the losing side is likely to appeal. The trials in each of these cases probably wouldn’t be held until 2018. And then there are the likely appeals in those trials.

How many players are involved in the case?

There are two representative, or named, class plaintiffs in the Ontario case: Sam Berg, who played for the Niagara IceDogs; and Daniel Pachis, who played with the Saginaw Spirit from 2007-08 to 2008-09 and with the Oshawa Generals during the 2009-10 season.

In Calgary, the representative plaintiffs are Lukas Walter, who played with the Tri-City Americans from 2011-12 to 2012-13; Kyle O’Connor, who played with the Kootenay Ice from 2012-13 to 2014-15; and Travis McAvoy, who played with the Saskatoon Blades, Vancouver Giants and Portland Winterhawks from the 2011-12 to  2014-15.

Walter is also the plaintiff listed in Quebec. He played with the Saint John Sea Dogs during the 2013-14 season.

Lawyers for the plaintiffs say 546 current and former CHL players, who may become members of the class action if it is certified, have registered with their law firm after it established a social media campaign to build awareness.

What is the CHL’s argument against certifying these cases as class actions?

Justice Perell has already said in court that the strongest argument the league has against certifying the case as a class action is a conflict in the class.

The OHL argues that the representative plaintiffs, Sam Berg and Dan Pachis, do not represent the interest of all of the members of the plaintiffs’ proposed class. The league also argues the former players are interested solely in obtaining retroactive wage payments.

“Current and future players have an interest in safeguarding their hockey opportunities and the range of benefits they receive while playing in the OHL, benefits that are entirely dependent on the financial viability of the teams and that would be jeopardized by certification of this action,” the defendants wrote in a factum served March 14 to the plaintiffs. “Former players, [like Berg and Pachis], have a fundamentally different and conflicting interest. They have nothing to lose by seeking retroactive wages… Current players would get the short end of the outcome while former players would only stand to benefit.”

The plaintiffs disagree with the CHL’s position.

“The defendants characterize [Berg and Pachis] as opportunists who seek to cash in to benefit themselves, but who are indifferent to, and cannot fairly represent, the interests of current players… Sam Berg and Dan Pachis have both given evidence only that they are not seeking benefits related to education, billeting, etc., as relief in this lawsuit, which is perfectly reasonable given that OHL players already receive those benefits to an extent. At no point have either Sam or Dan given evidence that they are not interested in preserving player benefits if the defendants threaten to take them away.”

How much would paying players the current minimum wage cost each CHL team?

Expert witnesses for both the plaintiffs and defendants say paying players minimum wage would cost teams about $285,000 annually.

The OHL says in court documents that it already spends $46,000 per player per year on their development.

The plaintiffs say the OHL’s $46,000 per-player expense includes salaries, payroll taxes and employee benefits the clubs pay to their salaried staff, including general managers, coaches and scouts.

“These expenses can hardly be characterized as player benefits,” the plaintiffs wrote in a court filing. “The costs of general managers, coaches and scouts are incurred to generate competitive teams that can win games and generate higher revenue for the clubs. Similarly, ‘housing and support’ is not a ‘player benefit’. To the extent that teams pay billet families – typically in the range of $300 to $400 a month to house players and provide them with meals – that is simply the cost of doing business.” 

Niagara IceDogs co-owner Denise Burke says if her team is forced to pay players minimum wage it would be financially “catastrophic.” Scott Abbott, the owner of the North Bay Battalion, said if his team had to pay players minimum wage, it would likely result in the team shutting down.

What is the potential for damages if the CHL loses this case?

The original claim against the CHL, when the case was filed in late 2014, was for $180 million. But even if a plaintiff wins a case, a judge does not have to award that plaintiff the entire damages they are seeking, meaning the judge in this case could award far less even if the players are successful in court.

Lawyers for the CHL say the league has insurance coverage for about $30 million, although they say it’s unclear whether its coverage could be applied to a case like this. Lawyers for the plaintiffs say the CHL has insurance of close to $41 million.

Lawyers for the plaintiffs also point to a development contract between the CHL and National Hockey League that shows the NHL pays millions of dollars to the CHL each year to help it develop young players.

In 2016, the NHL paid the CHL about $11.4 million (U.S.).

Lawyers for the plaintiffs say if they win the case and the teams are forced to pay players minimum wage, the NHL would probably be willing to amend its agreement and pay more money to the CHL, to ensure its pipeline of young talent is maintained.

Lawyers for the plaintiffs also say that teams might survive by adopting a revenue-sharing model like one that’s used in the NHL, Major League Baseball and the National Football League that allows small-market teams to better compete against their larger-market rivals.