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PHILADELPHIA WORLD HOCKEY CLUB, INC. v. PHILADELPH

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


November 8, 1972

Philadelphia World Hockey Club, Inc.
v.
Philadelphia Hockey Club, Inc., et al. Philadelphia Hockey Club, Inc. v. John McKenzie, et al. John McKenzie v. Philadelphia Hockey Club, Inc., et al. Sports Centrepoint Enterprises, Ltd., et al. v. National Hockey League, et al. World Hockey Assn., et al. v. National Hockey League, et al.

Higginbotham, D. J.

The opinion of the court was delivered by: HIGGINBOTHAM

HIGGINBOTHAM, D. J.:

I.

 INTRODUCTION

 In 1917, the National Hockey League was born with Montreal and Toronto as its only members. In 1924, Boston was added, followed in 1926 with Chicago, Detroit and New York. In 1967, Los Angeles, Philadelphia, Pittsburgh, California, Minnesota, and St. Louis entered the League and in 1970 Buffalo and Vancouver. In 1972, Nassau (New York) and Atlanta joined this now famous League. Since 1966, the National Hockey League has received in excess of $36,000,000 for the sale of the rights to play major league professional hockey in their league. When in 1970 the National Hockey League admitted Vancouver and Buffalo, each of these two new clubs paid in excess of $8,000,000 for the acquisition of the minor professional league clubs in their locality and for distribution to National Hockey League clubs. *fn1"

 Thus, from what in 1917 was a relatively minor sports attraction, the National Hockey League has skated into the 1970s to a position of substantial wealth, power, broad spectator interest, international recognition and many superstars, all crescendoing into huge profits for both its owners and players.

 One writer observes: *fn2"

 

"What has happened is this: the intrinsic speed and excitement of hockey has made it the game of the second half of this century."

 Maybe in 1922 when the Supreme Court decided the baseball case, hockey was also, as Mr. Justice Holmes then described baseball, primarily an effort to give exhibitions with profits and interstate commerce contacts as mere incidentals. But today, as I review the instant record, hockey is primarily a multi-state, bi-national business, where the fundamental motive is the making of money. From its multiple interstate contacts it is a business in commerce subject to the federal anti-trust laws. *fn3"

 Despite the thousands of words uttered on this record by all parties about the glory of the sport of hockey and the grandeur of its superstars, the basic factors here are not the sheer exhilaration from observing the speeding puck, but rather the desire to maximize the available buck.

 Since 1971, the World Hockey Association (hereinafter referred to as WHA) *fn4" has attempted to enter major league professional hockey to become a real competitor in this field where the National Hockey League *fn5" (hereinafter referred to as NHL) has for so long held a total monopolistic position as the sole supplier of major league hockey competition. The basic issue is whether through their reserve clause, affiliation agreements, and market power dominance, the National Hockey League has violated the federal antitrust laws and if such a violation is found, whether the WHA is entitled to relief at this preliminary injunction stage.

 After a careful review of this most detailed record *fn6" and the extensive briefs and proposed findings of fact, I find, for the reasons noted below, that for the National Hockey League players whose current contracts expired in September, 1972, *fn7" the National Hockey League violates the Sherman Act, Section 2, *fn8" in its efforts to preclude those players from joining WHA teams; accordingly the WHA is entitled to preliminary injunctive relief.

 I would like to note my appreciation to all counsel for the most diligent manner in which they have pursued their discovery and litigation in this case. In fact, their performance has been a model for the entire legal profession as to the rational way in which able counsel can meet difficult problems in litigating with obvious vigor a preliminary injunction case where time, if not of the essence, is at least critical because any unnecessary delay by counsel or the court could create a substantial injury to some of the parties. If this case could be decided solely on the basis of the talent and diligence of counsel, the parties would be in perfect equipoise.

 The original complaint was filed in Philadelphia on August 18, 1972. Since then, the parties have had extensive discovery, meeting with extraordinary dispatch difficult deadlines. They have filed detailed pre-trial memoranda and proposed pre-trial orders and amendments in support of numerous motions to remand, to dismiss, and for partial summary judgment. For one phase of this litigation pertaining to whether one case should be remanded to a Chicago state judge, we had extensive detailed arguments on the afternoon of September 27, 1972 and at 9:21 that evening, I dictated my opinion from the bench -- from which no appeal was filed.

 Though originally some phases of the case were argued as motions for partial summary judgment and motions to dismiss, on October 10, 1972 the parties agreed that the record was closed and that I ". . . may consider all of the matters on the preliminary injunction aspects which have been also submitted on behalf of the motions for summary judgment." Transcript, October 10, 1972, 148-9. The last exhibit was filed on October 24, 1972 pursuant to the court's request for additional information.

 Since the record has been closed as to the preliminary injunction phase and the record might contain some material facts which are in dispute, I am declining to rule on the summary judgment motions. Instead I am deciding the case on the preliminary injunction phase with all of the facts (whether disputed or not) being resolved in the findings of fact, infra, and in the opinion. In accordance with Rule 52 of the Federal Rules of Civil Procedure, this entire opinion, including the discussion, constitutes my Findings of Fact and Conclusions of Law, and any proposed Findings of Fact and Conclusions of Law inconsistent with those not here found are hereby rejected. *fn9"

  II.

 FINDINGS OF FACT

 General Findings As to Jurisdiction and Parties

 1. Five separate actions are consolidated before this Court in this proceeding. They are:

 

a. Philadelphia World Hockey Club, Inc. v. Philadelphia Hockey Club, Inc., et al., C.A. 72-1661, complaint originally filed in this Court on August 18, 1972.

 

b. Philadelphia Hockey Club, Inc. v. John McKenzie, et al., C.A. 72-1807, removed from the Court of Common Pleas of Philadelphia County on September 13, 1972, pursuant to 28 U.S.C. § 1441.

 

c. John McKenzie v. Philadelphia Hockey Club, Inc., et al., C.A. 72-1902, complaint originally filed in this Court on September 26, 1972.

 

d. Sports Centrepoint Enterprises, Ltd., et al. v. National Hockey League, et al., C.A. 72-1906, transferred from the United States District Court for the Northern District of Illinois pursuant to 28 U.S.C. § 1404(a).

 

e. World Hockey Association, et al. v. National Hockey League, et al., C.A. 72-1995, transferred from the United States District Court for the Central District of California pursuant to 28 U.S.C. § 1404(a). *fn10"

 2. Philadelphia World Hockey Club, Inc. (hereinafter "Philadelphia Blazers"), plaintiff in C.A. 72-1661, is a corporation organized under the laws of the State of New Jersey with its principal place of business in Philadelphia, Pennsylvania. *fn11"

 3. Sports Centrepoint Enterprises, Ltd., (hereinafter "Winnipeg Jets"), plaintiff in C.A. 72-1906, is a corporation organized under the laws of the Province of Manitoba with its principal place of business in Winnipeg, Manitoba, Canada. (Complaint and Answer in C.A. 72-1906, para. 3a.)

 4. Chicago Cougars Hockey Club, Inc., (hereinafter "Chicago Cougars"), plaintiff in C.A. 72-1906, is a corporation organized under the laws of the Province of Manitoba with its principal place of business in Chicago, Illinois. (Complaint and Answer in C.A. 72-1906, para. 3b.)

 5. John McKenzie, (hereinafter "McKenzie"), plaintiff in C.A. 72-1902, is an individual and a citizen of Canada, residing at Boston, Massachusetts. (Complaint in C.A. 72-1902, para. 3; Complaint and Answer in C.A. 72-1807, para. 2.)

 6. World Hockey Association, (hereinafter "WHA"), a plaintiff in No. 72-1995, is a non-profit corporation organized and existing under the laws of the State of Delaware, with its main office located in Santa Ana, California. WHA was formed in 1971 to operate a league of professional hockey clubs and to promote the interests of its individual member clubs. WHA has member franchises in cities and states throughout the United States and Canada. (Complaint in C.A. 72-1995, para. 3.)

 7. The following plaintiffs in C.A. 72-1995 are all WHA franchise holders, and are corporations organized under the laws of the state or province indicated, with a place of business similarly indicated for each defendant:

 

a. Edmonton World Hockey Enterprises, Ltd., Alberta, McDonald Hotel, Edmonton, Alberta, Canada.

 

b. Cleveland World Hockey Association Club, Ohio, 3715 Euclid Avenue, Cleveland, Ohio.

 

c. Houston Hockey Club, Inc., Ohio, San Houston Coliseum, 810 Bagby, Houston, Texas.

 

d. Los Angeles Sharks, Inc., California, 3939 South Figueroa Street, Los Angeles, California.

 

e. Midwest Saints, Inc., Minnesota, Metro Square, St. Paul, Minnesota.

 

f. New England Professional Hockey Club, Inc., Massachusetts, 17 Lobby Street, Boston, Massachusetts.

 

g. Metropolitan Hockey Club, Inc., New Jersey, Statler Hilton Hotel, 7th Avenue and 33rd Street, New York, New York.

 

h. Ontario National Hockey Teams, Inc., Ontario, P.O. Box 1358, Station B, Ottawa, Ontario, Canada.

 

i. Le Club de Hockey Les Nordiques, Inc., Quebec, Colisee de Quebec, Quebec, Canada. (Complaint in C.A. 72-1995, para. 4.). *fn12"

 8. National Hockey League, (hereinafter "NHL"), defendant in C.A. 72-1661, 72-1902, 72-1906 and 72-1995, is an unincorporated nonprofit association with its principal place of business in Montreal, Canada. From the time of its organization, the membership of the NHL has consisted of member clubs engaged in the staging of professional hockey games throughout the United States and Canada through a league of professional hockey clubs based on franchises covering specific geographical territories. (Complaint and Answer in C.A. 72-1661, para. 4; Exhibit P-3, Arts. I & II.) *fn13"

 9. The following defendants in C.A. 72-1661, 72-1902, 72-1906 and 72-1995, are all corporations organized under the laws of the State or Province indicated immediately following each such defendant, with a place of business as indicated:

 

a. Boston Professional Hockey Association, (hereinafter "Boston Bruins"), Massachusetts. (Complaint and Answer in C.A. 72-1661, para. 5.)

 

b. Charles O. Finley and Company, Inc., (hereinafter "California Golden Seals"), holds the NHL franchise for Oakland, California. (Complaint and Answer in C.A. 72-1661, para. 6.)

 

c. Chicago Blackhawk Hockey Team, Inc., (hereinafter "Chicago Blackhawks"), Illinois, 1800 W. Madison Street, Chicago, Illinois. (Complaint and Answer in C.A. 72-1661, para. 7.)

 

d. Detroit Hockey Club, Inc., (hereinafter "Detroit Red Wings"), Michigan, 5920 Grand River, Detroit, Michigan. (Complaint and Answer in C.A. 72-1661, para. 8.)

 

e. California Sports, Inc., (hereinafter "Los Angeles Kings"), California, 3900 West Manchester Boulevard, P.O. Box 485, Inglewood, California. (Complaint and Answer in C.A. 72-1661, para. 9.)

 

f. The Hockey Club of Minnesota, Inc., (hereinafter "Minnesota North Stars") now known as Northstar Financial Corporation, holds an NHL franchise in Bloomington, Minnesota. (Complaint and Answer in C.A. 72-1661, para. 10.)

 

g. Le Club de Hockey Canadien, Inc., (hereinafter "Montreal Canadiens"), Quebec, 2312 St. Catherine Street West, Montreal, Quebec, Canada. (Complaint and Answer in C.A. 72-1661, para. 11.)

 

h. Madison Square Garden Center, Inc., (hereinafter "New York Rangers"), holds an NHL franchise for New York, New York. (Complaint and Answer in C.A. 72-1661, para. 12.)

 

i. Philadelphia Hockey, Inc., (hereinafter "Philadelphia Flyers"), Philadelphia, Pennsylvania, The Spectrum, Pattison Place, Philadelphia. (Complaint and Answer in C.A. 72-1661, para. 14.)

 

j. Pittsburgh Penguin Partners, a Limited Partnership, (hereinafter "Pittsburgh Penguins"), hold an NHL franchise for Pittsburgh, Pennsylvania. (Complaint and Answer in C.A. 72-1661, para. 14.)

 

k. St. Louis Blues Hockey Club, Inc., (hereinafter "St. Louis Blues"), Missouri, 5700 Oakland Avenue, St. Louis, Missouri. (Complaint and Answer in C.A. 72-1661, para. 15.)

 

l. Maple Leaf Gardens, Ltd., (hereinafter "Toronto Maple Leafs"), Ontario, 60 Carlton Street, Toronto, Ontario, Canada. (Complaint and Answer in C.A. 72-1661, para. 16.)

 

m. Niagara Frontier Hockey Corporation, (hereinafter "Buffalo Sabres"), New York, Buffalo, New York. (Complaint and Answer in C.A. 72-1661, para. 17.)

 

n. Vancouver Hockey Club, Ltd., (hereinafter "Vancouver Canucks"), holds an NHL franchise for a hockey club in Vancouver, British Columbia. (Complaint and Answer in C.A. 72-1661, para. 18.)

 

o. Atlanta Hockey, Inc., (hereinafter "Atlanta Flames"), Georgia, 2 Forsyth Street, N.W., Atlanta, Georgia. (Complaint and Answer in C.A. 72-1661, para. 19.)

 

p. Nassau Sports, a Limited Partnership, (hereinafter "New York Islanders"), New York, 1 Old Country Road, Carle Place, Nassau County, New York. (Complaint and Answer in C.A. 72-1661, para. 20.) *fn14"

 10. Clarence S. Campbell, (hereinafter "Campbell"), defendant in C.A. 72-1995 is an individual and President of the NHL and maintains a place of business in Montreal, Quebec, Canada. (Complaint in C.A. 72-1995, para. 8.)

 11. Jurisdiction of the subject matter duly appears pursuant to 15 U.S.C. §§ 15 and 26 and 28 U.S.C. § 1337 and has not been challenged. Jurisdiction and proper venue of the defendants, except Atlanta and Nassau in C.A. 72-1661, is not contested. (See Complaint and Answer in C.A. 72-1661, paras. 1 and 21.)

 12. C.A. 72-1807 was removed to this Court pursuant to 28 U.S.C. § 1441(a) and (b). (Removal Petition in C.A. 72-1807, para. 11.)

 13. This matter comes before the Court on motions for partial summary judgment and preliminary injunction submitted by Blazers in No. 72-1661, Centrepoint and Cougars in C.A. 72-1906 and McKenzie in C.A. 72-1807 and 72-1902.

 Interstate Trade and Commerce

 14. The various teams of the NHL transport players and equipment across state lines and the boundary between Canada and the United States in the course of playing their schedules of professional major league hockey games in the various cities in which NHL teams are located. (Defs.' Proposed Pretrial Order, para. 4(c), p. 22.)

 15. Each NHL club stages hockey events, contracts with players and other individuals for their services, purchases equipment, contracts with television and radio stations, transports players and equipment, purchases and sells or arranges for the purchase and sale of refreshments at hockey rinks and carries on other activities in various parts of the United States and Canada. (Defs.' Proposed Pretrial Order, para. 2, p. 21.)

 16. The NHL employs the instrumentalities of interstate commerce in the following respects:

 (a) The NHL contracts with national network television stations for the broadcast of certain of its games (Exhibit P-27, Campbell dep., p. 148; Exhibit P-38, Wirtz dep., p. 36; Defs.' Proposed Pretrial Order, para. 4(a), p. 22.)

 (b) Some of the NHL clubs sell tickets, employ agents and advertise in connection with the staging of some hockey events across state and national boundaries (Defs.' Proposed Pretrial Order, para. 4(b), p. 22.)

 (c) The staging of hockey events by NHL teams requires interstate travel by them as well as communication in interstate commerce and movement of equipment in interstate commerce. (Defs.' Proposed Pretrial Order, para. 4(c), p. 22.)

 The Relevant Market

 17. The relevant market is major league professional hockey. (Findings of Fact 20-37, infra.)

 18. The relevant geographic markets are the United States and Canada and the metropolitan areas in which the NHL teams are located. (Findings of Fact 20-37, infra.)

 19. There is a sufficient disparity between major league professional hockey on the one hand and minor professional league and amateur hockey on the other to distinguish the former from the latter. (Findings of Fact 20-37), infra.

 20. The average ticket price for NHL games is $5.22; for AHL games it is $3.07; for WHL games $2.47; and for CHL games $2.42. (Exhibit P-27, Campbell dep., p. 147; Exhibit P-71.) 21. Average paid attendance at NHL games is approximately 14,000; total paid attendance for the 1971-72 season was 7,906,000 for 536 games. The following is the total and average paid attendance for the 1971-72 season at minor league games: Total Paid Average Paid No. of Attendance Attendance Games AHL 1,934,504 4,437 436 WHL 1,032,233 4,779 216 CHL 849,333 3,932 216 Total Minor Leagues 3,816,070

19721108

© 1992-2004 VersusLaw Inc.



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