THE BURDEN OF PROOF IN THE NHLPA v. NHL CASE OF CIRCUMVENTION

Take any case in court, be in civil or criminal, and the first issue presented to a jury at its selection is the “burden of proof.” That burden is why close cases have a victor and loser, as well as why seemingly guilty individuals are presented with a “not guilty” verdict. In court, we find three burdens. Typically, a plaintiff or petitioner (the one suing or prosecuting) has a burden either (1) by a preponderance of the evidence, a 51% standard or tipping of the scales (common in civil cases), (2) a clear and convincing standard, one that is more than a tipping of the scales but less than, (3) the beyond a reasonable doubt standard, one that exists in criminal matters.

Arbitrations are generally no different. An arbitration is essentially an alternate form of dispute resolution. Rather than going to court, parties contract to litigate their disputes in arbitration and before an arbitrator.

Fast forward to the Ilya Kovalchuk cap circumvention case and the CBA.

Here is what we know: (1) The NHL has rejected the contract, (2) The NHLPA has filed a grievance (thus making them for practical purposes the plaintiff / petitioner), and (3) the matter has proceeded to arbitration, commencing today.

What don’t we know, or better stated, what have few asked? Who has the burden of proof and what is that burden?

I admit when I first read the CBA, I grew a gray hair. As someone deeply familiar with litigation and specifically trial work, I shuttered to think how a bunch of legal minds could get together and not establish within their own rules a clear burden of proof standard that would help an arbitrator decide contested cases. I then re-read the applicable provisions (with Surly on the phone with me) and realized that within its ambiguity lies the answer, one that gives the arbitrator much discretion and appears to favor (in this case) the NHL.

Let’s look at article 26.13 (emphasis added):

“26.13 Enforcement by the System Arbitrator.

…(b) The System Arbitrator may find a Circumvention has occurred based on direct or circumstantial evidence, including without limitation, evidence that an SPC or any provision of an SPC cannot reasonably be explained in the absence of conduct prohibited by this Article 26. The investigation and findings of the Investigator pursuant to Section 26.10 shall be fully admissible in any proceeding before the System Arbitrator under this Section 26.13.”

Let’s work from the bottom up. What does section 26.10 state and who is this investigator?

“26.10 Investigations.

(a) The Commissioner of the NHL or the Executive Director of the NHLPA (the “Investigator”) may, sua sponte or based upon reports or complaints received by either, commence an investigation regarding whether a Circumvention has occurred.”

So, the investigator is whomever did the investigation. In the Kovalchuk case, that would be the NHL Commissioner, i.e, Gary Bettman.

What are these “findings” to which 26.13 refers? For that, we read 26.10(e):

“(e) At the conclusion of his investigation, the Investigator shall issue a written determination regarding whether or not, in his opinion, a Circumvention has occurred. The Investigator’s determination shall not be binding, but it shall be fully admissible in any hearing commenced before the System Arbitrator pursuant to Section 26.13 below.”

The “findings” are the Commissioner’s written determination regarding circumvention. In this case, the NHL wrote an investigative report as to why there was a circumvention. Why that has not been published and public record is a tangent I will not go into now though when this matter has concluded, I do intend to make a demand to the NHL for same.

Going back to 26.13, we now know that the Commissioner’s actual written determination of why there was circumvention shall be admissible in the arbitration. That, my friends, is called stacking the deck. The Arbitrator doesn’t get to look at the circumvention issue with fresh eyes. He gets to consider why the league came to its decision and, more importantly, must consider it. Of course, what weight he gives to it is not explained in the CBA and therefore he may be able to give it tremendous weight or none at all.

Now comes the important part. Take a sip of your beer, I’ll wait…

Section 26.13 tells us that “direct evidence” is enough to find circumvention, but it’s not necessary. The same section explains that circumstantial (indirect) evidence is also enough but again, it’s not necessary. “Without limitation”, the arbitrator can find circumvention if “evidence that an SPC or any provision of an SPC cannot reasonably be explained in the absence of conduct prohibited by this Article 26.

There is your burden of proof. It’s intentionally vague. In the Kovalchuk Cap Circumvention case, if the NHLPA cannot reasonably explain why any aspect of Kovalchuk’s contract complies with the CBA, the arbitrator can then find that “lack” of “explanation” is enough to find circumvention. Let’s apply this to real life. Imagine if it was a crime to have carnal intentions toward Heidi Androl. Assume further that Surly is being accused of same. If Surly cannot reasonably explain why he does not have the hots for Heidi, then he is convicted. He is literally guilty unless he proves his innocence.

Can the NHLPA reasonably explain that 5 years at the tail end of a contract at the league minimum doesn’t violate the CBA? What do you think? I think with that daunting burden of proof, the player’s association may stand about the same chance as Surly. Time will tell…



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9 replies

  1. “Can the NHLPA reasonably explain that 5 years at the tail end of a contract at the league minimum doesn’t violate the CBA?”

    I agree. To me that’s the smoking gun, those final years. The amount is the current league minimum which will undoubtedly be way below the league minimum in 2023. So they are BS numbers just tacked on the deal to lower the cap hit.

  2. Great post – I am a litigator as well (though not as experienced as yourself) and my first impression of 26.13 is that it gives the Arbitraitor extensive power to admit evidence but does not necessarily imply a burden of proof. The clause doesn’t state that the Arbitrator “must” find “Circumvention” (sidenote: would be interested to see the definition of that term in the CBA) on the basis of such evidence, it states that the Arbitrator “may” find Circumvention based on direct/indirect evidence or lack of reasonable explanation.

    However, just because the clause allows the Arbitrator to consider essentially anything and make their finding on Circumvention based on little or no direct/indirect evidence/explanation, doesn’t mean that the Arbitrator will apply the clause in that fashion. In my view, the NHL is the one asking the Arbitrator to find “Circumvention” and must provide adequate proof at first instance be it via direct/indirect evidence or simply the bare allegation (inviting the Arbitrator to assume Circumvention if the NHLPA fails to explain).

    Presumably, the Arbitraitor will prefer to have more than just an investigative report that attaches the impugned SPC (i.e. the bare allegation). In which case, Article 26.13 says that the Arbitrator can consider anything the parties put before the proceeding. Practically speaking, short of an email from Lou Lamoriello stating his intent to challenge or flout the anti-circumvention provisions of the CBA, any evidence the Commissioner puts forward in the report will necessarily be circumstantial. As far as we know, that circumstantial evidence appears to be the current state of the New Jersey payroll vis-a-vis the cap, the extraordinary schedule of compensation set for Mr. Kovalchuk, the term of the contract and the paucity of players that continue their careers into their forties. There may be more to this but not having their report, lets presume that’s all the NHL brings to the arbitration .

    What I view as problematic for the NHL is that all “guaranteed” contracts are essentially speculative as to their tenure. A player may suffer a career-ending injury at any time. Any player can be sent down to the AHL removing the salary from the books etc. Moreover, it is a fact that a player’s skills will generally deteriorate over time and merit less value in the marketplace for talent. So apart from the fact that most players don’t continue to play into their forties, what is it about Kovalchuk’s deal that makes it so outlandishly speculative? The fact that both the length and salary are extraordinary would appear to be reflective of the value of Mr. Kovalchuk’s services. In other words, I think the NHL needs something “more” than the bare allegation or it risks the Arbitrator making findings of abitrary application or unfairness.

    Not having read the CBA, I would be interested to see how the term “Circumvention” is defined and if there are any other global provisions in the CBA that require some duty of uniform enforcement of the CBA (outside of any general duty of fairness the NHL may owe to its players as the employer). I would expect Kovalchuk/NHLPA to argue he is being unfairly targeted where other players have been allowed to “skate” away from the scrutiny of the Commissioner.

    All of this is a long way of saying that I think Article 26.13 opens the door to evidence but doesn’t necessarily set the burden of proof an Arbitrator will apply.

  3. It also seems to make sense, in light of that excellent explanation (thank you Bobby), why the NHL didn’t go after the earlier contracts to DiPietro, Luongo and Hossa. If the numbers taper off more gradually you can explain it away as being a more reasonable assessment of the players worth as he plays through the contract. You can’t logically explain why a deal drops off the table like this one does without it being an intent to circumvent the agreement.

  4. So gents, what happens if the NHL wins the arbitration.

    What is that asshole Grossman going to do with his client?

  5. If the NHL wins, the contract is void and Kovalchuk is once again a free agent. I think that the bigger question is what does Kovalchuk do with that asshole Grossman? Does he fire him? This is going to get more fun to watch before it is over with.

  6. Are we sure this is an article 26 arbitration? It could be an article 11 arbitration hearing.

    • Well Article 26 is the one that deals with circumvention. I’m unclear on whether the arbiter is bound to stick to certain articles. One would think that is circumventing the CBA is the issue, then the entire CBA must be considered.

      • I think 26 deals with arbitration due to circumvention for the purpose of fines/penalties. Article 11 is for disputes over rejected contracts.

        The CBA is too vague to get a good feel though and I haven’t seen anything official from either side on what “step” they are on.

  7. Another big difference in the Kovalchuk contract versus the other contracts talked about is that Kovalchuk wanted $100 million in 10 years and there has to be a lot of negotiation notes taken during the 17 day UFA odyssey. NJ gave him $95 million/10 and added 7 years for $7 million. How can the Kovalchuk group explain the extra 7 years as anything more than cap circumvention?

    NJ gets a $9.5 million/year player for a $6 million cap hit.

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