WHL must open books, judge rules

The league has to disclose its finances as a class action lawsuit begins.

by Ian Mulgrew/Special to the Langley Advance

Canadian and Western Hockey League teams have been ordered to reveal their finances in a player’s class-action lawsuit for failure to meet employment standards.

In a big win for the major junior players, Alberta Court of Queen’s Bench Justice R. J. Hall said the teams must produce evidence to back their claims that their financial straits are so dire they can’t afford to pay the talent.

The leagues argued the disclosure order was too broad and the money numbers should not be revealed until after the lawsuit was certified, but the judge disagreed.

He said the league must prove its assertions that the players’ demands would have such a bad financial effect on the clubs some would be forced to close.

“(The order) short circuits the necessity for a sham examination on affidavits before the application is brought, and conserves court time and litigation expense,” Hall ruled late Friday. “Having placed the clubs’ and leagues’ financial viability squarely into issue, the CHL, the WHL and the clubs must produce their financial documents as potentially proving their position, or placing their evidence into dispute.”

Neither league responded by deadline to a request for comment.

While some teams in the leagues that provide NHL apprenticeships may be teetering financially, big market teams appear to be earning large profits. Besides tickets and concession earnings, the teams make money on merchandise sales, television rights, NHL payments, video-game licences and other revenue streams. Some are businesses worth tens of millions.

Meanwhile, the 16- to 20-year-old players are billeted, work long hours on and off the ice, and are paid small stipends. They can earn scholarships that provide a year of post-secondary schooling for each year played, if they dress for enough games and meet other criteria.

“When the players told me they were getting $50 a week, I couldn’t believe it,” said Toronto lawyer Ted Charney, who is stickhandling the class-action suits.

The players have been referred to in league documents and contracts as “professional,” they have been issued T-4 slips, others obtained work permits, and the U.S. National Collegiate Athletic Association considers them to be professionals. The teams and players have been found by the federal Tax Court to be in an employee-employer relationship.

Yet, the leagues maintain they are “student athletes” and in February privately persuaded the B.C. government to exempt them from the minimum wage and employment standards laws without examining their finances. They were successful in persuading Saskatchewan, Nova Scotia and Washington state to do the same.

“I just wish that the three legislatures and the state of Washington had an opportunity to review all these financials statements before they legislated us out of our class action,” Charney complained.

“We’re pleased with the judge’s decision. It will give us an opportunity to weigh the statements that the commissioners have made with respect to the financial strength of the leagues against what the actual financial statements and leaguewide profit-sharing agreements reveal.”

Led by Langley’s Lukas Walter, the past and former players are seeking millions in lost wages, holiday pay and want the league, in future, to pay the minimum wage and respect job laws.

The Alberta suit, which has yet to be certified, is a mirror of litigation launched in Ontario, also still to be certified, against the major junior teams of Eastern Canada.

While this order applies to the WHL and Ontario teams, because they filed affidavits in the Alberta litigation, it does not apply to CHL teams in Quebec and the Maritimes.

The Ontario teams can also avoid disclosure by withdrawing their Alberta affidavits, though Charney said the players will seek a similar order in the eastern action.

Hall ordered the clubs to produce financial statements and tax returns from 2011 to the present. He ordered WHL commissioner Ron Robison to produce all revenue-sharing agreements showing how the umbrella organization for 60 teams from Victoria to Halifax earns revenue. He also ordered Robison and CHL president David Branch to provide the documentation for the financial claims they made.

“I would have thought the commissioners and the CHL and the WHL would have welcomed this ruling because it will give them an opportunity to reinforce what their previous statements have said,” Charney quipped.

“Presumably, they are of the opinion these documents will back them up, I’m surprised they haven’t voluntarily produced them and that it took us having to go to court and obtain a court order. You can put sarcasm emphasized. In my 30 years of practicing law and in all of my years conducting class actions, I’ve never come across a case where the defence was please don’t certify this class action because I’ll go broke if you do!”

There is a four-day certification hearing set for Calgary in February and a three-day hearing set for Toronto in March.

– Ian Mulgrew is a reporter with the Vancouver Sun.

For more from the Sun, click HERE.

 

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