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Canadian Federal Court of Appeal Slams the Door on Buy-Side Conspiracy Claims

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Introduction

In Mohr v National Hockey League, 2022 FCA 145, the Canadian Federal Court of Appeal (FCA) dismissed an appeal from a motion to strike a proposed class action claim. The proposed representative plaintiff alleged an anti-competitive conspiracy among professional and major junior hockey leagues.

This decision is significant because the FCA confirmed that prohibitions under section 45 of the Canadian Competition Act apply to “supply side” agreements only. They do not apply to “buy side” agreements. The FCA also confirmed that anti-competitive agreement prohibitions related to professional sports under section 48 of the Act only apply to teams within the same league, not between different leagues.

Background

The proposed representative plaintiff, Kobe Mohr, a former major junior hockey player, alleged that a conspiracy contrary to section 48(1)(a) and (b) of the Act was carried out between North American professional and major junior hockey leagues – the NHL, AHL, ECHL, the CHL and its members, the WHL, OHL, and QMJHL – and Hockey Canada. Section 48 of the Act governs conspiracies in professional sports.

Mohr claimed that the defendants conspired to impose unreasonable terms and conditions upon a putative class of hockey players, including “nominal wages” and loss of marketing, sponsorship, and endorsement opportunities. He also alleged that the defendants conspired to unreasonably constrain the putative class members’ ability to negotiate with teams in the NHL, AHL, and ECHL.

Mohr sought damages of approximately $825 million.

The defendants moved to strike the claim, arguing that it disclosed no reasonable cause of action.

Mohr responded by bringing a motion to amend the statement of claim to include a general conspiracy allegation under section 45 of the Act.

In a decision issued by Chief Justice Crampton, the Federal Court held against Mohr on both accounts.

Mohr appealed, arguing that it was not plain and obvious that section 45 of the Act only applied to sell-side conspiracies. He also argued that section 48 of the Act is not limited to conspiracies by teams within the same league.

Decision

The FCA dismissed the appeal, confirming Chief Justice Crampton’s decision.  

The FCA held that section 45 of the Act creates an offence for conspiracies about “production and supply”. The plain meaning of this section is “limited to the provision, sale and distribution of products or services.” By contrast, the alleged conspiracy is about teams purchasing or acquiring the services of players, which falls outside the ambit of section 45. The FCA held in obiter dictum that “there may be circumstances in which section 45 could capture purchasers” but that was not an issue before the court.

The FCA also held that the plain meaning of section 48 of the Act is limited to conspiracies within leagues. Section 48(3) states that it applies to agreements “between or among teams and clubs engaged in professional sport as members of the same league.” The conspiracy alleged by Mr. Mohr involves teams in multiple different leagues. Accordingly, section 48 was found not to apply to allegations of conspiracies between leagues.

Takeaways

  • Section 45 of the Act only applies to “supply-side” agreements, not “buy-side” agreements.
  • Prohibitions against anti-competitive agreements related to professional sports under section 48 of the Act only apply to clubs or teams within the same league.
  • The FCA also clarified the role of a judge hearing motions to strike. A judge shall not make definitive pronouncements on legislative interpretations in a motion to strike. Novel interpretations must be allowed to progress past a motion to strike. Yet, not every novel interpretation is reasonable and not every unprecedented interpretation will survive a motion to strike. The court reiterated the maxim that devoting scarce judicial resources to one case for no good reason deprives the others for no good reason.
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John Pirie leads Baker & McKenzie's Litigation and Government Enforcement Group in Canada. He is a Chambers listed trial lawyer who acts for clients in complex business disputes, with significant experience in cross-border litigation and arbitration. Widely recognized as a leading trial, arbitration and appellate lawyer, John has a long record of success acting for both foreign and domestic parties. John has acted for multinational corporations, banks, a securities regulator, a stock exchange, investors and a range of professionals. John has recently been engaged to act for an Ontario Superior Court Judge.

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David Gadsden represents global clients in complex commercial disputes. He is the Chair of Baker McKenzie's Canadian Class Actions Group and is known for his sound advice on commercial class actions, competition and antitrust matters, arbitration, fraud cases and product liability matters. Clients value David's pragmatic and determined approach to disputes and have described him as "absolutely terrific at bringing across the finish line the most complex and multidimensional issues". David has been recognized by Benchmark Litigation, Legal 500, Best Lawyers Canada, and Lexpert’s annual Guide to the Leading US/Canada Cross-border Litigation Lawyers. He has previously been recognized by Lexpert as a Rising Star. As Chair of Baker McKenzie's Canadian Class Actions Group, David draws on his extensive class action experience, having acted as counsel for defendants and plaintiffs in numerous national and global class action lawsuits involving allegations of anti-competitive conduct, professional service negligence, product liability and securities fraud. David's practice also comprises international and domestic business disputes of all manner, including competition and antitrust litigation, commercial arbitration, business tort and trade secrets claims and product liability matters. David also has deep experience in fraud and financial crime matters. He is trusted counsel on multijurisdictional fraud investigations, including related civil disputes and regulatory proceedings. David has appeared as counsel at all levels of court in Ontario and in international and domestic arbitrations. He has completed the Osgoode Intensive Trial Advocacy Program, as well as the Intensive Advocacy Training Program conducted by the National Institute of Trial Advocacy. David has also lectured in the Osgoode Hall Graduate (LL.M.) Programme.

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Brendan O'Grady is a senior associate with Baker McKenzie's North America Litigation & Government Enforcement Practice Group in Toronto. He advises on commercial litigation and arbitration proceedings.

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Anton Rizor is an associate in Baker McKenzie's Ligitation & Government Enforcement Practice Group in Toronto. Anton joined the Firm as a summer student in 2021 and completed his articles in 2023. Anton is fluent in English and German. Anton focuses his practice on a wide range of commercial litigation, class action, and arbitration matters, assisting clients in navigating complex commercial and contracts disputes.

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