By Jon Heshka, Associate Professor at Thompson Rivers University
The Canadian Hockey League (CHL) agreed in February 2020 to pay $30 million to settle three class action lawsuits which claimed its underage players are employees and entitled to statutory minimum wages plus back pay, overtime pay and vacation pay. The settlement and its terms were conditional upon final approval by the Courts of Ontario, Alberta and Quebec.
The CHL is made up of the Western Hockey League (WHL), the Ontario Hockey League (OHL) and the Quebec Major Junior Hockey League (QMJHL) and is comprised of 1400 players competing on 52 Canadian teams and 8 US-based teams.
The three certified class actions — one in relation to each of the three leagues comprising the CHL — Walter v. Western Hockey League, Berg et al. v. Canadian Hockey League et al. and Walter c. Quebec Major Junior Hockey League Inc. were fundamentally similar insofar as the players argued they are employees for the purposes of provincial employment standards legislation while the league argued they are student-athletes.
There is case law supportive of the players’ position that they are indeed employees. The Ontario Court of Appeal in Toronto Marlboro Major Junior A Hockey Club et al. v. Tonelli[22] characterized the relationship between the player and the club as a contract of service, which is an employer/employee relationship.
Similarly, the Tax Court of Canada in McCrimmon Holdings Ltd. v. M.N.R.,[23] ruled that major junior hockey players were employees for purposes of federal employment insurance and pension legislation. The court observed: “… the business of the Wheat Kings [a WHL franchise] is simply the business of hockey. It is a commercial organization … carrying on business for profit. The players are employees who receive remuneration — defined as cash — pursuant to the appropriate regulations governing insurable earnings.”
There are potentially 4200 former CHL players eligible for the settlement. How much each player would receive depends on how many file claims and their how long they played in the CHL.
It was reported that each of the teams would pay about $250,000 apiece and that the league and its insurer would pay for the balance.
Despite the courts approving of the fairness of the settlement and its distribution, they refused to sign off on it in October 2020. It is now in jeopardy due to 11th hour objections raised by class members Kobe Mohr and Anthony Poulin. They objected because it appeared to them that the Release would discharge the CHL from liability for one or more class actions that had already been commenced against the league.
As a result of the objections, the courts learned that on January 9, 2019, James McEwan filed a class action lawsuit against the WHL, CHL and Hockey Canada in connection with fiduciary duty breaches for all players who played hockey and suffered concussions or chronic traumatic encephalopathy.[24] The courts also learned that on June 18, 2020, Daniel Carcillo and Garrett Taylor filed a statement of claim in Ontario against the CHL, WHL, OHL, QMJHL and their respective clubs.[25] The claim is on behalf of players for alleged sexual abuse suffered by them under the age of eighteen. The Carcillo and Taylor action is based on systemic abuse by the defendants and breach(es) of contract. The objection was that the Release contained in the Settlement Agreement would, or could, discharge the CHL from liability for these class actions.
Justice Perell of the Ontario Superior Court of Justice held that it was not plain and obvious that the Release might not bar some class members from advancing claims in the other actions.[26]
Justice Hall of the Court of Queen’s Bench of Alberta was similarly unable to approve the proposed settlement because the “Released Matters” definition in the agreement is overly broad and were he to approve of the Release, the league could argue that the release terms have released them from liability for some or all of the other class action lawsuits now in existence, or for further class actions not commenced. “The class members cannot be unwittingly releasing the defendants from other claims beyond the one being settled,” Hall J. wrote.[27]
Quebec Superior Court Justice Chantal Corriveau expressed similar views.
Each of the three judges strongly indicated that they would have approved the Settlement Agreement but for the wording of the Release. They even advised that if agreement could be reached on a revised Release which was more narrowly worded so as to clearly apply only to claims like those raised in the actions, the motion for approval of the Settlement Agreement with the revised Release could be made in writing, with no need for another approval hearing.
As a result of the courts’ decisions, and unless the parties can reach an agreement on a properly worded Release, the Settlement Agreement can be terminated within 30 days of the courts’ decisions by either the plaintiffs or defendants. If the Settlement Agreement is terminated, the three class actions will resume at the stage they were at before the mediation, moving eventually to a trial or motion for summary judgment.
[22] [1979] 23 O.R. (2d) 193, 96 D.L.R. (3d) 135
[23] 2000 CanLII 460 (TCC)
[24] James McEwan v. CHL et al., Supreme Court of British Columbia, No: S-190264
[25] Daniel Carcillo v. CHL, Ontario Superior Court of Justice, CV-20-00642705-00CP
[26] Berg v. Canadian Hockey League, 2020 ONSC 6389
[27] Walter v. WHL, 2020 ABQB 631
