In Lou We Trust v. the CBA 2: The Reckoning

The second part of ILWT's CBA analysis is up. My comments on the first part are to be found in the previous post. I also posted a response to them in the comments on their site, but the comment was deleted because, apparently, I swore with asterisks. Moving on:

The gist of part two of the article is that there will be no penalties because Article 26 contains all the penalties and the CBA says we have to follow Article 11. It is true that the CBA requires Article 11 procedures be followed, as I have described many times on this blog. But it is not true that this precludes anything in Article 26. But let's get to the quotes.

In Lou We Trust -- "Article 11.6, Not Article 26.13 is Happening After Ilya Kovalchuk Contract Rejection"
Now, suppose the PA does file a grievance within 5 days, the sticking point becomes getting an arbitrator. The PA and NHL must agree on who it is and there's no time limit called out in Article 11 on how long it can take to get someone. It could be days. It could be weeks. Once someone is decided upon, then the 48 hour window of argument-and-decision by the arbitrator kicks in. So there is a way this could be dragged out.

This is false. Here is 11.6(i)(x) of the CBA:

(x) if the NHLPA does not timely dispute and refer to the Arbitrator such rejection in the manner set forth in Section 11.5(g) above, then immediately upon the expiration of the time period within which the NHLPA may dispute and refer to the Arbitrator such rejection, the SPC [...] will be deemed null and void.

And 11.5(g) of the CBA:

If the NHLPA sends such a notice [to the league, indicating its decision to dispute], then the NHLPA may also refer such dispute to the Arbitrator within twenty-four (24) hours of sending such notice.

I personally find the use of the word "may" here unnecessarily confusing. It almost looks like the NHLPA has the option of contacting the arbiter within 24 hours. But go back to 11.6(i)(x). It says, if they don't "timely dispute and refer to the Arbitrator...the SPC...will be deemed null and void." Notwithstanding the use of the word "may" in 11.5(g) (which for all I know has some legal meaning other than -- well -- "may"), the clause in 11.6(i)(x) is unambiguous. If the NHLPA doesn't refer to the arbiter per 11.5g, which says they "may" do it within 24 hours, then the SPC is void. Not contacting the arbiter within 24 hours of contacting the league constitutes "not timely disputing."

Does the CBA mean to say that the NHLPA "may" contact the arbiter within 24 hours, but may not contact them after that? Lawyers please weigh in, in the comments. Unless someone proposes a reasonable alternative interpretation, I have to go with: (x) says if they don't timely dispute and refer to arbitrator then the SPC is void.

Can't blame anyone for thinking otherwise, though. It's word salad.

If my interpretation is correct, then the NHLPA has five days to dispute, an additional day to contact the arbitrator, and after that it's 48 hours to a decision. ILWT's interpretation is that the NHLPA has five days to dispute, an infinite amount of time to find an arbitrator, and then 48 hours after that there's a decision. That doesn't make a whole lot of sense to me.

Especially since the CBA goes out of its way to allow the NHLPA five days to dispute in the summer, as opposed to one day during the season. This is because, obviously, during the season, people are missing games over this stuff. Why would they require one day for the NHLPA to dispute (during the season) and then allow an infinite period of arbitrator-finding? They wouldn't. I have re-convinced myself.

The time-line is, five days to dispute, one day to refer to arb., and two days to rule. Next Thursday at the latest.

Now, I got a fun discussion question.  Article 11.6.(b) goes over the NHL being allowed to challenge and de-register approved SPCs.  Could the NHL follow Article 11.6.(b).(iii), which will de-register the contract for circumvention; leading to this similar process with the same possible outcomes (de-registration is sustained, it's overruled, or it's not challenged and just accepted) for a SPC that has already been through this process after initial rejection?  I'd like to say no, but I'm not seeing anything in Article 11 that's clear.

No, because de-registration refers to what happens when a contract that has already been approved is discovered to be in circumvention of the CBA. Such a contract can't get rejected, as the Kovalchuk contract was, because it was already approved. Subsection (b) deals with circumstances that don't apply here.

Odd that Article 11.6.(a).(i) allows for circumvention to be a reason for rejection, yet it doesn't refer to either article for additional information or procedures.  Would it be fair to assume that they could be used in the arbitration hearing?  I don't know for certain.  Either way, I am taking that to mean that the procedures outlined in Article 11.6.(a) stands on its own.

"They" being other articles of the CBA? Yes, they can all be cited. 26 is the circumvention article. 50 is the salary cap article. Therefore, in order to discuss a circumvention of the salary cap, you necessarily have to invoke Articles 26 and 50.

Article 11.6 specifically addresses the procedures that "shall" (must) be followed in the event of a rejected SPC. And ILWT is correct, I believe, that Article 11 does not specify penalties or remedies, other than "contract good yay" or "contract bad boo." (Those are not the actual terms.)

However, as ILWT also points out, if the arbiter rules in favor of the league, they are ruling that the contract is void because it is a circumvention of the CBA, specifically Article 50. The arbiter's decision is binding. Which suggests that the determination of it being a circumvention is also binding.

Article 26 discusses the general procedures for investigating any kind of suspected circumvention at any old time. There are many kinds of circumventions, my favorite being undeclared mascot revenues. If it comes to Bettman's attention that team x may have bought a house for so-and-so's girlfriend... Article 26 is intended to cover all sorts of shady attempts to trick the league out of its revenue.

I have frequently said that it stands to reason that since the league has already declared that they believe the Kovalchuk contract is a circumvention of Article 50, it makes zero sense for the league to subsequently launch an investigation into whether or not they think the thing they already think, and which has already been ruled a circumvention by the arbiter.

And because 26 allows the league (or the NHLPA) to conduct an investigation for as long as they want, at any time, I assume they could also just say, "hey, we're done with our investigation obviously" and skip that whole step.

It does appear though that 26 requires a second arbitration process, which is a bit more open ended, but the net result of which is that 26 becomes essentially the "sentencing phase," where the second arbiter decides if there's anything else to be discussed that might also have been circumventions (e.g. did Kovalchuk know, did Grossman send an email saying "let's force them to reject it", etc. -- remember that suspensions of Grossman, Lamoriello, the owners of the Devils and Kovalchuk are all possible penalties here, so they would necessarily want to take more time to flesh out what exactly they think happened and who exactly did what). But, ultimately, the second arbiter simply rules on each alleged additional or secondary circumvention -- but not the original one, because that would make no sense at all -- after which Bettman gets to assess penalties at his sole discretion.

We pored over this much more entertainingly in these posts: Penalty for Circumvention is Your Sanity and Two Things Everyone Seems to Be Getting Wrong.

ILWT then asserts in some detail why Article 26 doesn't and won't apply.

There are 5 additional penalties ranging from a smaller fine, a loss of draft picks, voiding the contract, forfeiture of wins during the period of the circumventing contract, and suspension of parties involved. I've only quoted the first one because it actually calls out Article 50.

Well, I don't believe this contract violates Article 50. In fact, the contract and the team are compliant with it's regulations. Ergo, I think this penalty can't be enforced.

The problem with this is it's circular. "Because I don't believe the contract violates Article 50, this penalty -- which first requires that the arbiter rules that the contract violates article 50 -- can't be enforced."

We wouldn't even be to that point if the arbiter had already in a binding manner determined that the contract is in fact a circumvention of Article 50.

The bottom line is, there's a quick (11) process for determining if the contract is good, and a longer (26) process for pursuing penalties and remedies. It's possible, of course, that Bettman will simply not bother to pursue the Article 26 penalties. I can totally see that happening. But the way to get to those penalties is simple. The second arbiter rules on the league's laundry list of circumventions, if any, and if any of them stick, the penalties may be assessed. Simple. Badly written. But simple.

Some other quick points:

This [the process in 26] is quite different from Article 11.6.(a).  There's more flexibility in the allowed lengths of time for decisions.  The arbitrator doesn't need definitive evidence.  The goal isn't to uphold a decision, it's to determine whether circumvention has taken place.  I'll get to how that's defined a little later.  Still, there's no grievance to be filed by the PA that makes this arbitration happen, just a claim that there has been circumvention.

However, Article 26 allows for either or both of the league or the NHLPA to conduct investigations and issue reports of alleged circumventions. Like he says, there's no "dispute" aspect. What there is, in place of that, is a clause where the parties have to sit down to try to "work it out" before proceeding to the arbiter. I previously weighed in (the "sanity" link above) on the hilarity of the prospect of that particular meeting, as it would have to happen in this case several months from now, the original contract having been rejected the year before.

As far as I can tell, if the NHL alleged circumvention and investigated the Kovalchuk contract, they have to sit down with the Devils and/or the PA and hammer out some sort of compromise that ends the issue.  Since that hasn't happened, there's no need to worry about 26.13.  It's not happening unless this is accomplished.

That doesn't follow. Article 26 obviously allows for the parties not to reach a compromise, otherwise there wouldn't be any point in having an arbitrator, since no one would ever get there. In the Kovalchuk case, that meeting would go something like this:

League: Remember how the arbiter ruled that the contract was a circumvention?

NHLPA: Vaguely.

League: Well, that's still true.

NHLPA: Okay.

Essentially, any player's contract that has been approved is eligible for investigation for circumvention. I would think that even if the contract is accepted via Article 11.6.(a).(v), that it still could be investigated later on.

So if the NHL rejects the contract and that rejection is sustained, does that mean they can't investigate it for circumvention on the basis that the contract would be voided? I would think so, but 26.10.(b).(i) isn't quite clear.

The original arbiter's ruling is binding. Article 26 is not an "appeal" process. Thank God.

You can complain about the lack of an investigation, but failing to investigation [sic] is not an illicit action by the league?  So how in the world does [sic] the joint discussions happen as described in 26.12 without an investigation?

It's badly written (shocking, I know), but what happens is, (1) there is an investigation, (2) when the investigation is done, the league and the NHLPA call each other, saying, "hi, we're done," (3) then there is a meeting, where they hammer on things, (4) then the report(s) is/are issued, (5) then there's arbitration. But it's written by a chimp, so it makes no sense.

Investigations are not secret events that no one talks about. Definitely not in today's era of the Internet delivering news at any time. [...]

Why is this relevant for Devils fans worrying about Ilya Kovalchuk? Essentially it means you all should rest a little easier. As far as I know, there aren't any outlets reporting that the NHL is investigating the Kovalchuk contract, only that the NHL has rejected the contract. [...]

[U]ntil there are reports of an investigation, there is no reason to believe that the NHL will hit the Devils with a cap penalty or take their picks according to the CBA. [...] If someone tries to tell you that the Devils will face minimum penalties, then you have the facts to tell him or her that's false.

Here's the problem. Investigations can take a lot of time, but they can also take no time at all. In this case, the reason you aren't hearing about an investigation may well be that, as you say, they have already determined there's a circumvention. Their "investigation" is over. They have decided. And now the arbiter will agree or not. And it's binding.

The post then moves to an interesting point, which is, essentially, that the league's case is that there is an undisclosed agreement between Kovalchuk and the Devils that he won't play the last years of his contract. I can see making that argument.

But it's not necessary because of the clause that says "intent to or effect of" circumventing the CBA. The NHL doesn't have to bother with the undisclosed agreement circumvention if they don't want to, because they can argue that the contract has "the effect" of circumventing the CBA, even without the intent.

If this is accurate, then one would think the NHL feels there is an undisclosed agreement; hence they rejected it based on the case of circumvention. The reasoning is weak according the agents quoted by Michael Traikos in the National Post; most notably by Ian Pulver, player-agent and CBA author. After all, Article 50 doesn't have a limit on contract length (I may be wrong in saying there was an explicit statement saying no limit, but there's no explicit limit either), there's nothing else in Article 50 that the contract violates, and short of psychics getting involved, definitively proving that Kovalchuk won't play until he's 44 is going to be a gargantuan challenge.

Perhaps that would help explain why the NHL decided to just outright reject the contract instead of going through all of Article 26?

I don't think so. They rejected the contract because that's what you do if you think a contract is in violation of the CBA. The choice is reject or approve. You don't approve it so you can then meander through the deep dark woods of Article 26. You reject it because you have decided it's a circumvention and the arbiter rules within a week. What could be simpler?