Wildfire Productions, L.P. v. Team Lemieux LLC and Lemiux Group, L.P. ( 2022 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
WILDFIRE PRODUCTIONS, )
L.P., )
)
Plaintiff, )
)
v. ) C.A. No. 2021-1072-PAF
)
TEAM LEMIEUX LLC and )
LEMIEUX GROUP, L.P., )
)
Defendants. )
MEMORANDUM OPINION
Date Submitted: March 23, 2022
Date Decided: June 29, 2022
Jon E. Abramczyk, Sabrina M. Hendershot, MORRIS, NICHOLS, ARSHT &
TUNNELL LLP, Wilmington, Delaware; Daniel H. Shapira, Robert M. Barnes,
Daniel J. Stuart, MARCUS & SHAPIRA LLP, Pittsburgh, Pennsylvania; Attorneys
for Plaintiff Wildfire Productions, L.P.
Kurt M. Heyman, Jamie L. Brown, HEYMAN ENERIO GATTUSO & HIRZEL
LLP, Wilmington, Delaware; Patricia L. Glaser, Craig H. Marcus, Nathaniel Wright,
GLASER WEIL HOWARD AVCHEN & SHAPIRO LLP, Los Angeles, California;
Attorneys for Defendants Team Lemieux LLC and Lemieux Group, L.P.
Ryan M. Lindsay, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP,
Wilmington, Delaware; Attorneys for Intervenor National Hockey League.
FIORAVANTI, Vice Chancellor
In December 2021, the controlling owners of the Pittsburgh Penguins (the
“Team”), a member of the National Hockey League (the “NHL”), agreed to transfer
a controlling ownership interest in the Team to another investor group. A minority
owner of the Team asserted a variety of claims in this court challenging the
transaction. The defendants—the transferors of the controlling interest—and the
NHL—which has intervened—contend that the plaintiff’s claims must be arbitrated
before the NHL Commissioner (the “Commissioner”). The court agrees with the
defendants and the NHL. Accordingly, the plaintiff’s claims are dismissed in favor
of arbitration.
I. BACKGROUND
The facts recited in this Memorandum Opinion are drawn from the Verified
Complaint (the “Complaint”), 1 documents integral thereto, and materials submitted
by the parties.
A. The NHL and the Governing Agreements
The NHL is a joint venture consisting of thirty-two member clubs (the
“Member Clubs”), including the Team. 2 All of the Member Clubs are signatories to
the NHL Constitution. 3 The NHL Constitution provides that each Member Club
1
See Dkt. 1, Verified Complaint (“Compl.”).
2
Dkt. 38, Unsworn Declaration of Kevin Acklin (“Acklin Decl.”) ¶ 2.
3
Acklin Decl. ¶ 3; id., Ex. A (“NHL Constitution”) at 26.
“accepts and agrees to abide by the foregoing Constitution and each and every
alteration, amendment and repeal thereof duly made.” 4 The Commissioner serves
as the Chief Executive Officer of the NHL and is “charged with protecting the
integrity of the game of professional hockey and preserving public confidence in the
League.” 5 The NHL Constitution grants the Commissioner all powers that may be
“necessary or appropriate” to fulfill his or her responsibilities.6 The Commissioner
has “the authority to interpret . . . the provisions of the Constitution . . . and League
rules and resolutions, and their application and enforcement.”7 Most important to
the pending motions, Article 6.3(b)(1) provides that the Commissioner “shall have
full and exclusive jurisdiction and authority to arbitrate and resolve . . . any dispute
that involves . . . two or more holders of an ownership interest in a Member Club of
the League.”8
The NHL requires all direct and indirect owners of Member Clubs to execute
a Consent Agreement with the NHL whereby they “agree to be bound by and adhere
to all of the terms and provisions of . . . the NHL Constitution,” including mandatory
4
NHL Constitution, art. XII.
5
Id., art. 6.1.
6
Id., art. 6.3(a).
7
Id., art. 6.3(d).
8
Id., art. 6.3(b)(1).
2
arbitration.9 Thus, all owners and partners of all Member Clubs hold their interests
subject to the provisions of the NHL Constitution.
Defendant Lemieux Group, L.P. (“Lemieux LP”) is a Pennsylvania limited
partnership that owned and operated the Pittsburgh Penguins at the time this action
was filed. 10 Defendant Team Lemieux, LLC (“Lemieux GP,” and with Lemieux LP,
the “Defendants”) is the sole general partner of Lemieux LP.11 Plaintiff Wildfire
Productions, L.P. (“Plaintiff” or “Wildfire”) is a limited partner in Lemieux LP. 12
When Wildfire acquired its membership interest in Lemieux LP in 1999, it
executed two agreements contemporaneously. First, it executed a Consent
Agreement with the NHL dated September 1, 1999 (the “1999 Consent
Agreement”).13 The 1999 Consent Agreement memorialized, inter alia, the NHL’s
consent to the transaction whereby Plaintiff acquired its interest in Lemieux LP.14
Pursuant to the 1999 Consent Agreement, and in exchange for the NHL’s consent to
Plaintiff’s acquisition of its interest in Lemieux LP, Plaintiff agreed “to be bound by
and adhere to all of the terms and provisions of . . . the NHL Constitution.”15 The
9
Acklin Decl., ¶ 4; id., Ex. B (“1999 Consent Agreement”) §§ 3(a), 12(a).
10
Compl. ¶ 16.
11
Id. ¶¶ 14–15.
12
Id. ¶¶ 12–13.
13
Acklin Decl., ¶ 4; see 1999 Consent Agreement.
14
1999 Consent Agreement § 1.
15
Id. § 3(a).
3
1999 Consent Agreement also provides that “[a]ny dispute . . . relating to the subject
matter hereof . . . shall be deemed to be a dispute which shall be resolved in
accordance with Section 6.3 of the NHL Constitution,”16 i.e., arbitration before the
Commissioner. Section 12(g) of the 1999 Consent Agreement states that
in the event of any conflict or ambiguity between any term or provision
contained in this Agreement and any term or provision of any
Transaction Document, the terms of this Agreement shall control and
all such conflicts or ambiguities shall be resolved in a manner that will
provide the NHL with the maximum protection that may be afforded to
it.17
Defendants and the NHL are also signatories to the 1999 Consent Agreement, which
is governed by New York law. 18
Concurrent with their execution of the 1999 Consent Agreement, Wildfire and
the Defendants also executed an Amended and Restated Limited Partnership
Agreement (the “1999 Partnership Agreement”). 19 Thereafter, during October 2007,
the parties executed a Second Amended and Restated Limited Partnership
Agreement (the “2007 Partnership Agreement,” and with the 1999 Partnership
Agreement, the “Partnership Agreements”). 20 The Partnership Agreements cross-
16
Id. § 12(a).
17
Id. § 12(g).
18
Id. § 12(c) & p. 21.
19
Acklin Decl., ¶ 5; id., Ex. C.
20
Acklin Decl., ¶ 6; id., Ex. D (“2007 Partnership Agreement”).
4
reference the 1999 Consent Agreement.21 The NHL is not a signatory to either the
1999 Partnership Agreement or the 2007 Partnership Agreement.
The Partnership Agreements are governed by Pennsylvania law,22 and
designate Delaware as the venue for disputes between the parties to that agreement.
They provide that: “each party hereby agrees that any dispute arising out of this
Agreement or the consummation of the transactions contemplated hereby shall be
heard in the state or Federal courts situated in Delaware . . . .” 23
At the time it executed the 2007 Partnership Agreement, Wildfire
contemporaneously executed another Consent Agreement (the “2007 Consent
Agreement”).24 Both the 2007 Partnership Agreement and the 2007 Consent
Agreement expressly affirm the continued validity of the 1999 Consent Agreement.
For example, Section 2 of the 2007 Consent Agreement states that “[e]xcept as
expressly set forth herein” the provisions of the 1999 Consent Agreement “shall
remain in full force and effect.”25 Section 17.2 of the 2007 Partnership Agreement
provides that a “Partner shall be individually liable to the Partnership for . . . any
21
Acklin Decl., Exs. C & D (“Partnership Agreements”) §§ 17.1–17.2.
22
Id. § 16.3.
23
Id. § 16.12.
24
See Acklin Decl., Ex. E (“2007 Consent Agreement”).
25
2007 Consent Agreement § 2; see also id. § 7(d) (stating that the prior Consent
Agreements “shall remain in full force and effect” except as expressly modified in the 2007
Consent Agreement).
5
breach of the NHL Consent by the Partner” and defines “NHL Consent” as the
“Consent Agreement by and among the National Hockey League, Lemieux Group
LP, Team Lemieux LLC and each of the Limited Partners, dated as of September 1,
1999.” 26 Wildfire, the Defendants, and the NHL are signatories to the 2007 Consent
Agreement.
B. The Challenged Transaction
The Complaint challenges a two-step transaction that would result in Fenway
Sports Group (“FSG”) obtaining control and a majority ownership interest in the
Team. In the first step, on December 31, 2021, two wholly owned subsidiaries of
FSG purchased a controlling interest in Lemieux GP from entities owned and
controlled by Ron Burkle and Mario Lemieux. FSG, through its acquisition of a
controlling interest in Lemieux GP, consequently obtained control of Lemieux LP
and the Team.
In the second step of the transaction, FSG will acquire certain limited partner
interests in Lemieux Group, which, together with FSG’s ownership interest in
26
2007 Partnership Agreement § 17.2, Glossary. The Partnership Agreements refer to the
“NHL Consent” and “NHL Consent Agreement” interchangeably. Compare Partnership
Agreements § 17.1(d) (“NHL Consent Agreement”—the only usage of that defined term
in the agreement), with Partnership Agreements § 17.2 (“NHL Consent”—one of seven
times that term is used). Only the 2007 Partnership Agreement contains a glossary, which
only defines the “NHL Consent Agreement.” 2007 Partnership Agreement, Glossary. All
indications from the parties point to reading these two terms in the Partnership Agreements
interchangeably as well, and the court will do so here.
6
Lemieux LP through Lemieux GP, will give FSG majority ownership of Lemieux
LP, and thus, the Team. Following the consummation of the second step of the
transaction, although FSG will have obtained control and a majority ownership
interest in Lemieux LP, each of Wildfire, Lemieux GP, and Lemieux LP will
continue to hold an ownership interest in the Team.
Wildfire alleges that FSG’s acquisition of a controlling interest in Lemieux
GP (and thus, FSG’s control of Lemieux LP and the Team), violates the 2007
Partnership Agreement, which governs the partnership among members of Lemieux
LP. Wildfire asserts that FSG’s purportedly invalid acquisition of a controlling
interest in Lemieux GP wrongly leaves Wildfire, as a continuing limited partner in
Lemieux LP, subject to the “whims” of FSG.27 Wildfire therefore seeks a variety of
relief, including a declaration that FSG’s acquisition of a controlling interest in
Lemieux GP is null and void.
C. Procedural History
Plaintiff filed its Complaint challenging the acquisition on December 9, 2021.
Count I seeks a declaratory judgment that the sale is null and void under the terms
of the 2007 Partnership Agreement. Count II alleges that Lemieux GP breached its
fiduciary duties to Plaintiff. Count III asserts a claim for breach of the covenant of
27
Compl. ¶ 78.
7
good faith and fair dealing under Pennsylvania law. Count IV asserts a claim for
breach of the 2007 Partnership Agreement, which is governed by Pennsylvania law.
Defendants have moved to dismiss the Complaint under Court of Chancery
Rule 12(b)(1) for lack of subject matter jurisdiction. Alternatively, Defendants have
moved to dismiss Counts II and III under Rule 12(b)(6) for failure to state a claim
upon which relief can be granted.
The NHL, which intervened on March 21, 2022, has moved to compel
arbitration of this action. The NHL has made clear that it takes no position on the
merits of the dispute between Wildfire and the Defendants. Instead, the NHL has
intervened solely to enforce its right to compel arbitration of this dispute before the
Commissioner.28
II. ANALYSIS
A. Standard of Review
“A motion to dismiss based on an arbitration clause goes to the court’s subject
matter jurisdiction over a dispute and is properly reviewed under Court of Chancery
Rule 12(b)(1).” Legend Nat. Gas II Hldgs., LP v. Hargis, 2012 WL 4481303, at *4
(Del. Ch. Sept. 28, 2012) (citing Ishimaru v. Fung, 2005 WL 2899680, at *13 (Del.
Ch. Oct. 26, 2005), and Acierno v. New Castle Cty., 2006 WL 1668370, at *1 n.8
28
Neither the parties nor the intervenor sought expedited proceedings.
8
(Del. Ch. June 8, 2006)). Unlike standards governing a motion to dismiss under
Court of Chancery Rule 12(b)(6), “the guidelines for the Court’s review of [a] Rule
12(b)(1) motion are far more demanding of the non-movant. The burden is on the
Plaintiff[] to prove that jurisdiction exists.” Appriva S’holder Litig. Co., LLC v. Ev3,
Inc., 937 A.2d 1275, 1284 n.14 (Del. 2007) (internal quotations omitted). “In
deciding a 12(b)(1) motion to dismiss for want of subject matter jurisdiction, the
court may consider documents outside the complaint.” Legend Nat. Gas, 2012 WL
4481303, at *4 n.25 (citing Acierno, 2006 WL 1668370, at *1 n.8).
The arbitration agreements at issue do not provide for applicability of the
Delaware Uniform Arbitration Act (“DUAA”). Therefore, the Federal Arbitration
Act (“FAA”) 29 governs the motion to compel arbitration.30 The FAA, in turn,
implicates state law contract principles. “When deciding whether the parties agreed
to arbitrate . . . [the issue of] arbitrability” under the FAA, “courts generally . . .
should apply ordinary state-law principles that govern the formation of contracts.”
First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995); Ario v. Underwriting
Members of Syndicate 53 at Lloyds for 1998 Year of Acct., 618 F.3d 277, 288 (3d
Cir. 2010), as amended (Dec. 7, 2010).
29
9 U.S.C. § 1 et seq.
30
See 10 Del. C. § 5702(c); Gulf LNG Energy, LLC v. Eni USA Gas Mktg. LLC, 242 A.3d
575, 579 n.11 (Del. 2020) (“Because the parties did not designate the [DUAA], the FAA
governs their arbitration.”).
9
The FAA reflects a “liberal federal policy favoring arbitration.” AT&T
Mobility LLC v. Concepcion, 563 U.S. 333, 346 (2011) (internal quotations omitted).
“[T]he public policy of [Delaware likewise] favors the resolution of disputes through
arbitration.” Graham v. State Farm Mut. Auto. Ins. Co., 565 A.2d 908, 911 (Del.
1989); see also MacPherson v. Magee Mem’l Hosp. for Convalescence, 128 A.3d
1209, 1219 (Pa. Super. Ct. 2015) (same for Pennsylvania); Smith Barney Shearson
Inc. v. Sacharow, 689 N.E.2d 884 (N.Y. 1997) (same for New York). “A strong
presumption exists in favor of arbitration, and, accordingly, contractual arbitration
clauses are generally interpreted broadly by the courts. However, this presumption
will not trump basic principles of contract interpretation.” NAMA Hldgs., LLC v.
Related World Mkt. Ctr., LLC, 922 A.2d 417, 430 (Del. Ch. 2007).
Accordingly, the FAA requires that a court “shall direct the parties to proceed
to arbitration on issues as to which an arbitration agreement has been signed.” Dean
Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (emphasis in original).
When a contract contains an arbitration clause, there is a “presumption of
arbitrability” unless “it may be said with positive assurance that the arbitration clause
is not susceptible of an interpretation that covers the asserted dispute.” AT&T
Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650 (1986) (internal
quotations omitted). That presumption is particularly applicable when the
arbitration clause is broad—when, for example, it covers any dispute “relating to”
10
or “arising out of” certain subject matter. See Orix LF, LP v. Inscap Asset Mgmt.,
LLC, 2010 WL 1463404, at *7 (Del. Ch. Apr. 13, 2010) (noting the “broad” reach
of the phrase “relating to” in an arbitration clause); ASDC Hldgs., LLC v. Richard J.
Malouf 2008 All Smiles Grantor Retained Annuity Tr., 2011 WL 4552508, at *8 n.38
(Del. Ch. Sept. 14, 2011) (noting broad import of “‘involving or relating to’
language” in an arbitration clause (citation omitted)). Any “[d]oubts” as to
arbitrability “should be resolved in favor of coverage.” AT&T Techs., 475 U.S. at
650; see Centene Corp. v. Accellion, Inc., 2022 WL 898206, at *7, 13 (Del. Ch. Mar.
28, 2022) (discussing the breadth of an arbitration provision governing “any dispute”
regarding the agreement and concluding that it was not limited to colorable or bona
fide claims and that it extended to defenses to a claim).
B. The NHL’s Argument
The Defendants and the NHL make similar, but not identical, arguments in
support of their motions to compel arbitration. The court’s analysis focuses
primarily on the NHL’s arguments, because they are dispositive. The NHL relies on
the arbitration provision in the NHL Constitution and the arbitration provision in the
1999 Consent Agreement. 31
31
The parties and the NHL have proceeded as though the court, and not an arbitrator, has
the obligation to decide whether the claims must be arbitrated.
11
1. The NHL Constitution
Article 6.3(b) of the NHL Constitution provides the Commissioner with
full and exclusive jurisdiction and authority to arbitrate and resolve: (1)
any dispute that involves . . . two or more holders of an ownership
interest in a Member Club of the League; . . . and (5) any dispute
involving a Member Club . . . that in the opinion of the Commissioner
is detrimental to the best interests of the League or professional hockey
or involves or affects League policy. 32
The NHL Commissioner has invoked both provisions to enforce the NHL’s right to
arbitration.33
There is no disagreement that Wildfire’s claims in this action present a dispute
that involves two or more holders of an ownership interest in the Team. As Wildfire
alleges, Lemieux LP is a limited partnership that “owns the Pittsburgh Penguins,”
and Lemieux GP is the sole general partner of Lemieux LP in which it possesses
about a “31.34% interest.” 34 Wildfire, in turn, is a limited partner in—and “owns
approximately 7.5%” of—Lemieux LP. 35 The Complaint details Wildfire’s dispute
with Lemieux GP and Lemieux LP over the transfer of ownership interests in the
Team. Wildfire also does not contest that this dispute is one involving the Team that
32
NHL Constitution, art. 6.3(b) (emphasis added).
33
Dkt. 57 (“Hrg.”) at 34:5–12.
34
Compl. ¶¶ 1, 15.
35
Id. ¶¶ 12–13, 27.
12
the NHL Commissioner has opined to be detrimental to the best interests of the NHL
or involves or affects NHL policy.
The NHL points to the decision in Commodore Trust v. Predators Holdings,
LLC, 16-674-BC (Tenn. Ch. Ct. July 29, 2016), as further support to compel
arbitration under Article 6.3(b) of the NHL Constitution. In Commodore Trust, the
Tennessee Chancery Court held that Article 6.3(b)(1) and 6.3(b)(5) of the NHL
Constitution compelled holders of an indirect ownership interest in the Nashville
Predators to submit their claims to the Commissioner’s full and exclusive arbitral
jurisdiction. Based on their owners’ consent agreements, the court first held that the
parties “agree[d] to be bound by the NHL Constitution and its arbitration
provisions.” Id. at 5. Next, the court held that Article 6.3(b)(1) of the NHL
Constitution required the plaintiffs to arbitrate their claims before the Commissioner
because the plaintiffs’ indirect holdings in the Predators constituted an “ownership
interest” as that term is defined in Article 3.5 of the NHL Constitution. Id. at 10.
Because the plaintiffs’ claims involved a member club (the Predators) and could be
detrimental to the NHL, the court likewise ordered arbitration before the
Commissioner under Article 6.3(b)(5) of the NHL Constitution. Id. at 12–13. As
the court explained, the plaintiffs’ claims and request for relief could be detrimental
to the best interests of the NHL because the plaintiffs alleged that holders of
ownership interests in the Predators “breached duties and contracts and have
13
committed torts” against others in the ownership chain, and such issues “link back
to the Commissioner’s duty in Article 6.1 [of the NHL Constitution] to preserve
public confidence in the League.” Id. at 12.
As in Commodore Trust, Wildfire signed the 1999 Consent Agreement as a
condition to acquiring an ownership interest in the Team, and in doing so, expressly
agreed “to be bound by and adhere to” the NHL Constitution.36 Wildfire then
reaffirmed that agreement again in October 2007 at the same time it entered into the
2007 Partnership Agreement.37 In particular, Wildfire confirmed and agreed that
except as “expressly set forth” therein, nothing in the subsequent owners’ consent
agreements shall amend, modify, waive or otherwise affect any term or provision of
the 1999 Consent Agreement, each of which “shall remain in full force and effect.”
As in Commodore Trust, NHL Constitution Article 6.3(b)(1) and 6.3(b)(5) each
independently require Wildfire to arbitrate its claims before the Commissioner.
First, Article 6.3(b)(1) requires arbitration before the Commissioner because
Wildfire, Lemieux LP, and Lemieux GP all hold an “ownership interest” in the
Penguins, as that term is used in the NHL Constitution—i.e., “any . . . partnership
36
1999 Consent Agreement §§ 1(a), 3(a)(A).
37
Prior to executing the 2007 Consent Agreement, Wildfire had executed three other
agreements with the NHL between October 2000 and August 2007 that confirmed the
vitality of the 1999 Consent. See Dkt. 39, Unsworn Declaration of David Zimmerman
(“Zimmerman Decl.”), Exs. D–F.
14
(general or limited) or other proprietary holding in any . . . partnership, or other
organization which holds, directly or indirectly, the franchise of Member Club.”38
As in Commodore Trust, Article 6.3(b)(5) of the NHL Constitution requires Wildfire
to arbitrate its claims before the Commissioner because the Commissioner
reasonably considers that matters in dispute could be “detrimental to the best
interests” of the NHL. 39
2. The 1999 Consent Agreement
The NHL also invokes the Section 12(a) of the 1999 Consent Agreement as
an independent basis to compel arbitration. Section 12(a) provides:
Any dispute between or among the Acquiring Parties [including
Wildfire and the Defendants], or any of them, relating to the subject
matter hereof . . . shall be deemed to be a dispute which shall be
resolved in accordance with Section 6.3 of the NHL Constitution and
the Commissioner shall have full and exclusive jurisdiction and
authority to arbitrate and resolve such dispute.40
Wildfire asserts that this clause does not apply to its claims against the
Defendants because the claims asserted in this action do not relate to the “subject
matter” of the 1999 Consent Agreement. 41 The NHL argues that Wildfire’s
construction of Section 12(a) is contrary to the plain language of the agreement. The
38
NHL Constitution, art. 3.5.
39
Id., art. 6.3(b)(5).
40
1999 Consent Agreement § 12(a) (emphasis added).
41
Dkt. 43 (“Pl.’s Ans. Br.”) at 39–41.
15
NHL again relies on Commodore Trust, which analyzed a nearly identical provision.
The provision at issue in Commodore Trust required owners of the Predators to
arbitrate before the Commissioner “any dispute . . . relating to the subject matter” of
their owners’ consent agreement. Commodore Tr., 16-674-BC, at 3. The court
reasoned that because the owners’ consent agreement contained numerous terms
relating to future, “ongoing events,” the “subject matter” of the owners’ consent
agreement—and thus, its provision requiring arbitration before the Commissioner—
covered the “ongoing operations of the Club.” Id. at 4–5. Because the plaintiffs’
claims concerned the “ongoing operations of the [Predators],” the court compelled
arbitration before the Commissioner. Id. at 5–6.
The NHL argues that, as in Commodore Trust, Section 12(a) of the 1999
Consent Agreement requires Wildfire to arbitrate its claims before the
Commissioner because the 1999 Consent Agreement also contains terms that apply
to ongoing events beyond the ownership transaction consummated in 1999. Thus,
the “subject matter” of the 1999 Consent Agreement—and in turn, its provision
requiring arbitration before the Commissioner—covers claims relating to the
ongoing operations of the Team, as do Wildfire’s claims here. For example,
Wildfire’s claims relate to the ongoing operations of the Team because they concern
whether FSG validly obtained a controlling interest in Lemieux GP, through which
16
it obtained control of Lemieux LP and the Team.42 Indeed, Wildfire alleges that its
claims “arise[] out of the attempted sale of a controlling stake in [Lemieux LP],” and
concern issues of “voting control,” including whether Wildfire will have “any
meaningful vote on Partnership matters” going forward.43 Those “Partnership
matters” reasonably include the operation of the Team. Any uncertainty as to who
operates and controls the Team—regardless of whether Wildfire or the Defendants
are ultimately correct on the merits of their dispute—necessarily affects the Team’s
continued relationship with the NHL, other NHL member clubs, NHL licensees,
sponsors, players, and fans alike. Wildfire’s cramped reading of the 1999 Consent
Agreement is unpersuasive and is contrary to the sound reasoning in Commodore
Trust. Accordingly, because Wildfire’s claims concern the “subject matter” of the
1999 Consent Agreement, they must be submitted to the Commissioner’s full and
exclusive arbitral jurisdiction pursuant to Section 12(a) of the 1999 Consent
Agreement.
C. Wildfire’s Reliance on the 2007 Partnership Agreement
Wildfire insists that the 2007 Partnership Agreement controls this case, not
the NHL Constitution or the 1999 Consent Agreement. Wildfire essentially
advances three arguments as to why the motions must be denied and that the 2007
42
See, e.g., Compl. ¶¶ 1–10.
43
Id. ¶¶ 1, 3 n.1, 45–46.
17
Partnership Agreement mandates that its claims be litigated in this court. First,
Section 16.12 of the 2007 Partnership Agreement provides for Delaware to be the
exclusive venue for disputes between the parties, and the agreement is fully
integrated under Section 16.14. Second, Wildfire asserts that the NHL “approved”
the Partnership Agreements. Third, although the NHL insisted that the 2007
Partnership Agreement incorporate certain provisions from the 1999 Consent
Agreement, an arbitration provision—which is notably absent from the 2007
Partnership Agreement—was not one of them.
1. The Exclusive Venue Provision
Wildfire contends that an exclusive forum provision in the 2007 Partnership
Agreement allows Wildfire to proceed in this forum. 44 That provision states, in
pertinent part:
Dispute Resolution. As a material term of this Agreement, each party
hereby agrees that any dispute arising out of this Agreement or the
consummation of the transactions contemplated hereby shall be heard
in the state or Federal courts situated in Delaware and, in connection
therewith, each party hereby consents to the jurisdiction and venue of
such courts and waives its right to a jury trial. Each party agrees that
any challenge to the provisions of this Section 16.12 shall constitute a
material breach of this Agreement.45
44
Id. ¶ 11.
45
2007 Partnership Agreement § 16.12 (emphasis added).
18
Wildfire maintains that the 2007 Partnership Agreement trumps the arbitration
provisions of the 1999 Consent Agreement and the NHL Constitution because the
2007 Partnership Agreement is a fully integrated contract that contains no arbitration
provision, and purportedly “supersedes” all other agreements. 46 Wildfire’s
argument suffers from at least two fatal flaws. First, the dispute resolution provision
in the 2007 Partnership Agreement expressly binds “each party” to that agreement.
The NHL is not a party to that agreement. Wildfire, the Defendants, and the NHL
are, however, parties to the 1999 Consent Agreement and the 2007 Consent
Agreement, both of which require arbitration of certain disputes, either directly or
by the parties’ acceptance of the NHL Constitution.47
The 2007 Partnership Agreement does not supersede the NHL Constitution or
the 1999 Consent Agreement, because the NHL is not a party to the 2007 Partnership
Agreement (or the 1999 Partnership Agreement). As a matter of black letter contract
law, parties cannot modify a contract without the “assent” of “all . . . parties to the
contract.” Brooklyn Union Gas Co. v. NewFields Cos., LLC, 2020 WL 7770993, at
*5 (E.D.N.Y. Dec. 30, 2020); Trombetta v. Raymond James Fin. Servs., Inc., 907
46
Pl.’s Ans. Br. 12–14.
47
1999 Consent Agreement §§ 3(a)(A) (agreeing to be bound and adhere to the NHL
Constitution), 12(a) (agreeing to arbitrate disputes regarding the 1999 Consent Agreement
in accordance with the NHL Constitution); 2007 Consent Agreement §§ 2 (reaffirming the
validity of the 1999 Consent Agreement), 7(b) (agreeing to arbitrate disputes regarding the
2007 Consent Agreement in accordance with the NHL Constitution).
19
A.2d 550, 558 (Pa. Super. Ct. 2006) (same under Pennsylvania law). Accordingly,
“a later contract’s forum-selection clause” cannot “supersede[] a prior contract’s
choice of forum” clause when “not all parties to the prior agreement signed the later
one.” Brooklyn Union, 2020 WL 7770993, at *5 (citing PB Life & Annuity Co. v.
Universal Life Ins. Co., 2020 WL 2476170, at *10 n.6 (S.D.N.Y. May 12, 2020));
see also Oldcastle Precast, Inc. v. VPMC, Ltd., 2013 WL 1952090, at *20–21 (E.D.
Pa. May 13, 2013) (holding that under Pennsylvania law, obligations in a prior
contract cannot be “extinguishe[d]” or “superseded by” a “subsequent contract” that
is not “between the same parties”). Thus, the 2007 Partnership Agreement, to which
the NHL was not a party, does not abrogate the NHL’s express contractual right
granting the Commissioner full and exclusive jurisdiction to arbitrate this dispute
under the NHL Constitution and the 1999 Consent Agreement, which Wildfire and
the Defendants reaffirmed in their Consent Agreements with the NHL.
Wildfire, the Defendants, and the NHL all executed the 2007 Consent
Agreement contemporaneously with the Defendants’ and Wildfire’s signing of the
2007 Partnership Agreement. The 2007 Consent Agreement confirms that all parties
agreed that “[e]xcept as expressly set forth herein, nothing in this Agreement shall
amend, modify, waive or otherwise affect in any way any of the provisions of the
20
[1999 Consent Agreement] . . . , each of which shall remain in full force and effect.”48
The terms of the 1999 Consent Agreement include Wildfire’s agreement to be bound
by and adhere to the NHL Constitution, along with its agreement to arbitrate disputes
before the Commissioner under Section 12(a). Those agreements were express
conditions of the NHL’s consent to Wildfire acquiring its ownership interest in the
Team.49
2. The NHL’s “Approval” of the 2007 Partnership Agreement
Wildfire next argues that, even though the NHL is not a party to the 2007
Partnership Agreement, the NHL should be held to the terms of the 2007 Partnership
Agreement because it “approved both the original 1999 Partnership Agreement and
the 2007 Partnership Agreement, each of which contain the Mandatory Dispute
Resolution Clause.” 50 Wildfire cites no authority to treat the NHL as a party to the
2007 Partnership Agreement merely because it purportedly approved the Partnership
Agreements.51
48
2007 Consent Agreement § 2 (emphasis added).
49
1999 Consent Agreement §§ 1(a), 3(a)(A); see also Zimmerman Decl. ¶ 10.
50
Pl.’s Ans. Br. 18.
51
The NHL argues that Wildfire overstates the extent of the NHL’s approvals in 1999 and
2007 in connection with the Partnership Agreements. First, Wildfire cites no specific
document or evidence indicating that the NHL “approved” the Partnership Agreements
themselves. Hrg. 40:6–9. Second, the NHL argues that it approved the transaction, but
not all of the terms of the transaction documents. Id. at 40:11–23. That argument finds
support in Section 7(h) of the 2007 Consent Agreement, which states that the Defendants
and Wildfire “acknowledge and agree that the NHL has reviewed the Transaction
21
The NHL argues that there is no evidence or allegation in the Complaint that
the NHL approved the Partnership Agreements. In addition, Wildfire’s assertion
that in 2007, the NHL purportedly “approved” Section 16.12 of the 2007 Partnership
Agreement as the controlling dispute resolution provision contradicts the plain
language of Section 2 of the 2007 Consent Agreement. Section 2 of the 2007
Consent Agreement, which was signed the same day as the 2007 Partnership
Agreement, incorporates the terms of the 1999 Consent Agreement, stating that:
“[e]xcept as expressly set forth herein, nothing in this [Consent] Agreement shall
amend, modify, waive or otherwise affect in any way any of the provisions of the
[1999 Consent Agreement] . . . , each of which shall remain in full force and effect.”52
Wildfire does not identify any language in the 1999 Consent Agreement or the 2007
Consent Agreement wherein the NHL expressly “approved” Section 16.12 of the
2007 Partnership Agreement as amending or waiving the NHL’s right to arbitrate
disputes pursuant to the 1999 Consent Agreement or the NHL Constitution.
Documents that have been supplied to it for certain limited purposes only and that the NHL
is not charged with knowledge of, or deemed to have any independent obligations under,
any of the Transaction Documents. 2007 Consent Agreement § 7(h). That provision goes
on to say that “in the event of any conflict or ambiguity between any term or provision
contained in this Agreement and any term or provision of any Transaction Document, the
terms of this Agreement shall control and all such conflicts or ambiguities shall be resolved
in a manner that will provide the NHL with the maximum protection that may be afforded
to it.” Id.
52
2007 Consent Agreement § 2 (emphasis added).
22
Wildfire argues that the simultaneous entry into one agreement containing an
arbitration provision and another agreement which does not (the 2007 Partnership
Agreement) is “‘convincing evidence that in instances in which the parties intended
a particular dispute to be subject to arbitration, a provision creating such an
obligation was included in the controlling agreement.’” Pl.’s Ans. Br. 29 (quoting
Bianchini v. Waco Int’l Distrib. Corp., 1992 WL 7038, at *2 (E.D. Pa. Jan. 9, 1992)).
Bianchini does not support Wildfire’s position. Bianchini involved several
agreements executed by the same parties. Unlike in Bianchini, the NHL is not a
party to all of the agreements. It is, however, a party to the agreements with Wildfire
that require arbitration of disputes before the NHL Commissioner.
3. The Absence of an Arbitration Provision
Next, Wildfire argues that the exclusive forum provision in the 2007
Partnership Agreement controls this dispute because the NHL demanded, and the
parties to the 2007 Partnership Agreement included, express restrictions and
requirements that supersede any other provision in the 2007 Partnership Agreement
and arbitration was not one of them. 53 Wildfire argues the decision not to include
an arbitration provision in the 2007 Partnership Agreement was a deliberate decision
of the parties to the agreement and the NHL. 54
53
Pl.’s Ans. Br. 13.
54
Id. at 14.
23
Wildfire’s argument is inconsistent with the plain language of the agreement.
Section 17.1 of the 2007 Partnership Agreement begins as follows: “The NHL
Consent requires the inclusion of the following provisions . . . .” 55 The
corresponding section 5(d) of the 1999 Consent Agreement sets forth those required
provisions. 56 Section 17.1 of the Partnership Agreements reflects language that the
NHL required to be included in the agreement between the Defendants and the
members of the limited partnership. Nowhere in the Partnership Agreements or the
1999 Consent Agreement did the NHL indicate it was waiving its contractual right
to require members to arbitrate disputes.
D. The NHL Has not Waived its Rights Under an Estoppel Theory.
As a general rule, “only the formal parties to a contract are bound by its
terms.” Weygandt v. Weco, LLC, 2009 WL 1351808, at *3 (Del. Ch. May 14, 2009)
(internal quotations omitted). Wildfire seeks to circumvent that rule through the
equitable doctrine of estoppel. Specifically, Wildfire relies on a line of cases that
prevents non-parties to a contract from avoiding exclusive forum or mandatory
arbitration clauses. Under that line of cases, a court may enforce a forum selection
provision against a non-signatory if:
(i) the agreement contains a valid forum selection provision; (ii) the
non-signatory has a sufficiently close relationship to the agreement,
55
2007 Partnership Agreement § 17.1.
56
1999 Consent Agreement § 5(d).
24
either as an intended third-party beneficiary under the agreement or
under principles of estoppel; and (iii) the claim potentially subject to
the forum selection provision arises from the non-signatory’s standing
relating to the agreement.
Fla. Chem. Co., LLC v. Flotek Indus., Inc., 262 A.3d 1066, 1090 (Del. Ch. Aug. 17,
2021); Cap. Grp. Cos., Inc. v. Armour, 2004 WL 2521295, at *5 (Del. Ch. Oct. 29,
2004).57
The doctrine of equitable estoppel serves to bind “non-signatories who, during
the life of the contract, have embraced the contract despite their non-signatory status
but then, during litigation, attempt to repudiate the forum selection clause in the
contract.” Armour, 2004 WL 2521295, at *6. The doctrine “prevents the non-
signatory from accepting the benefits of the agreement without also accepting its
burdens, including the forum selection provision.” Flotek, 262 A.3d at 1074. When
applying the doctrine, a court must “proceed with a good deal of caution . . . lest
nuanced concepts of equity be allowed to override established legal principles of
contract formation.” NAMA Hldgs., LLC v. Related World Mkt. Ctr., LLC, 922 A.2d
57When determining whether the non-signatory has embraced the contract, the court may
also consider whether “(i) the non-signatory accepted a direct benefit from the agreement
or (ii) the non-signatory had a close relationship to the agreement, a signatory to the
agreement controlled the non-signatory, and the circumstances establish that the signatory
agreed to the forum selection provision on behalf of its controlled affiliate.” Flotek, 262
A.3d at 1090. The benefit may be pecuniary or non-pecuniary. Neurvana Med., LLC v.
Balt USA, LLC, 2019 WL 4464268, at *4 (Del. Ch. Sept. 18, 2019). But the party must
have actually received the benefit; “the mere ‘contemplation’ of a benefit does not directly
confer one.” Id.25
417, 433 n.35 (Del. Ch. 2007). Because “significant due process considerations [are]
implicated where forum-selection clauses are applied to a non-signatory,” courts
must be doubly cautious when asked to expand the doctrine’s reach. Europa Eye
Wear Corp. v. Kaizen Advisors, LLC, 390 F. Supp. 3d 228, 232 (D. Mass. 2019).
The estoppel paradigm is ill equipped to address this case. Wildfire is not seeking
to compel the NHL to defend against claims in Delaware.
Wildfire’s estoppel theory, in essence, is akin to arguing that the NHL has
implicitly waived its right to enforce the express arbitration requirements of the 1999
Consent Agreement and Article 6.3(b) of the NHL Constitution as a result of the
2007 Partnership Agreement, to which the NHL is not a party. Under Pennsylvania
law,
a waiver of a right to proceed to arbitration pursuant to the term of a
contract providing for binding arbitration should not be lightly inferred
and unless one’s conduct has gained him an undue advantage or
resulted in prejudice to another he should not be held to have
relinquished the right.
Keystone Tech. Grp., Inc. v. Kerr Grp., Inc., 824 A.2d 1223, 1226 (Pa. Super. Ct.
2003) (quoting Kwalick v. Bosacco, 478 A.2d 50, 52 (Pa. Super. Ct. 1984)); see also
Singer v. Jefferies & Co., 575 N.E.2d 98 (N.Y. 1991); accord Halpern Med. Servs.,
LLC v. Geary, 2012 WL 691623, at *3 (Del. Ch. Feb. 17, 2012). Here, Wildfire fails
to establish that any such circumstances exist, and its waiver argument is without
merit. See Agspring, LLC v. NGP X US Hldgs., L.P., 2022 WL 170068, at *7 (Del.
26
Ch. Jan. 19, 2022) (affirming that party was not “estopped” from enforcing and had
not “waive[d] its rights” under “arbitration provisions” of one contract, on the
ground that the party allegedly took an “inconsistent position” in another contract).
The NHL is not asserting claims against Wildfire in another jurisdiction. Of
the nine cases Wildfire cites as a basis to support its estoppel theory, none applied
equitable estoppel to bind a party to a term in a contract it did not sign, in lieu of and
in order for a plaintiff to evade an express requirement in its own contract with the
other party.58
In Plaze, Inc. v. Callas, 2019 WL 1028110 (Del. Ch. Feb. 28, 2019), Justice,
then-Vice-Chancellor, Montgomery-Reeves rejected a similar estoppel argument to
what Wildfire makes here. The plaintiff in Plaze sued various signatories to a
contract, in which only some were defined as “Parties” covered by a forum selection
clause. Id. at *1–3. Invoking equitable estoppel, the plaintiff argued that those
signatories who were not defined as “Parties” covered by the forum selection clause
58
See Pl.’s Ans. Br. 20–27. See, e.g., McWane, Inc. v. Lanier, 2015 WL 399582, at *6–8
(Del. Ch. Jan. 30, 2015) (holding non-signatories subject to forum selection clause where
the agreement to which they were parties contained only a consent to jurisdiction
provision); River Valley Ingredients, LLC v. Am. Proteins, Inc., 2020 WL 2220148, at *3–
5 (D. Del. May 7, 2020) (exclusive forum provision in one contract that bound non-
signatory); BE&K Eng’g Co., LLC v. RockTenn CP, LLC, C.A. No. 8837-VCL (Del. Ch.
Sept. 27, 2013) (TRANSCRIPT), at 120–21 (non-signatory to contract held subject to its
exclusive forum provision as to claims it was asserting under the contract); Armour, 2004
WL 2521295, at *5–7 (applying equitable estoppel in the alternative to obtain personal
jurisdiction over non-signatory who did not assert existence of a competing contract).
27
should nevertheless be bound to that clause because they were “third-party
beneficiaries or entities closely related to the contract.” Id. at *8. The court rejected
that argument, holding that the non-Party signatories did “not seek to benefit from
the contract without accepting their obligations,” but rather, expressly “bargained”
for specific rights, which equity would not override in favor of terms for which
“other parties bargained.” Id. at *9.
Wildfire’s argument is even weaker. Unlike the plaintiff in Plaze, who
unsuccessfully attempted to invoke equity to bind a signatory to a forum selection
term in its own contract when the signatory did not agree to that term, Wildfire seeks
here to bind the NHL to the forum selection provision of the 2007 Partnership
Agreement that the NHL did not sign and to which it did not agree. Additionally,
Wildfire seeks to do so in contravention of express arbitration requirements agreed
to by Wildfire, the Defendants, and the NHL pursuant to the 1999 Consent
Agreement and Article 6.3(b) of the NHL Constitution, as reaffirmed in four
subsequent owners’ consent agreements, including the 2007 Consent Agreement,
which Wildfire, the Defendants, and the NHL executed on the same day that Wildfire
and the Defendants executed the 2007 Partnership Agreement. The estoppel theory
breaks down when the non-signatory and the party seeking to enforce a forum
selection clause are also parties to a separate, contemporaneous agreement with a
28
broad arbitration provision.59 Otherwise, a plaintiff could vitiate the parties’
“freedom . . . in commerce to strike bargains,” when the law instead requires
contracts to be “honor[ed] and enforce[d] . . . as plainly written.” TR Inv’rs, LLC v.
Genger, 2013 WL 603164, at *20 n.198 (Del. Ch. Feb. 18, 2013) (internal quotations
and citation omitted). The court declines to accept an equitable estoppel theory to
override Wildfire’s express contractual bargain with the NHL.60
E. The Arbitration and Delaware Venue Provisions Are Easily
Harmonized.
Wildfire acknowledges that “[t]he Court’s task is to harmonize various
agreements, not go looking for hypothetical conflicts with other agreements.”61
59
See, e.g., Chapter 7 Tr. Constantino Flores v. Strauss Water Ltd., 2016 WL 5243950, at
*13–15 (Del. Ch. Sept. 22, 2016) (holding that when a party who sought to use equitable
estoppel to compel arbitration was “a party to another agreement with the party” against
whom it sought to use estoppel, and “that other agreement [was] central to the dispute and
it contain[ed] an express forum selection provision,” the party invoking estoppel could not
rely on such a doctrine to “have the Court vary the terms of its contracts [with the other
party] to compel a result for which it did not bargain”); TR Inv’rs, LLC v. Genger, 2013
WL 603164, at *3, 20 (Del. Ch. Feb. 18, 2013) (declining to “override the parties’ bargain”
based on equity).
60
See Heartland Del. Inc. v. Rehoboth Mall Ltd. P’ship, 57 A.3d 917, 925 (Del. Ch. Aug.
27, 2012) (“Equity . . . will not rewrite a contract to save a party from its own negligence.”);
Kan. City S. v. Grupo TMM, S.A., 2003 WL 22659332, at *5 (Del. Ch. Nov. 4, 2003)
(“TMM cannot invoke general equity principles” when it has “contracted away its right to
undertake actions . . .”); Absalom Tr. v. Saint Gervais LLC, 2019 WL 2655787, at *6 (Del.
Ch. June 27, 2019) (observing that a court should not “invoke equitable principles to
override the plain language of [a contract]”); MHS Cap. LLC v. Goggin, 2018 WL
2149718, *13–14 (Del. Ch. May 10, 2018) (“[H]aving bargained for certain contractual
rights against [the defendant], and for certain remedies, [the plaintiff] cannot use equity to
circumvent the results of its bargain.”).
61
Pl.’s Ans. Br. 30.
29
Accepting that invitation, the court finds it relatively easy to harmonize the forum
provision in the 2007 Partnership Agreement and the arbitration provisions of the
NHL Constitution and the Consent Agreements.
The NHL Constitution and the Consent Agreements give the Commissioner
the authority to require arbitration of certain disputes involving the league and its
Member Clubs before the Commissioner. Among those disputes are disputes
between owners of any Club. The NHL Constitution and the 1999 Consent
Agreement do not mandate arbitration in all qualifying disputes; instead, they give
the NHL Commissioner the option to assert jurisdiction over those disputes. For
example, Section 6.3(b) of the NHL Constitution provides, in pertinent part: “The
Commissioner may elect not to arbitrate a dispute in any circumstances that he
determines appropriate.” 62 Similarly, Section 12(a) of the 1999 Consent Agreement,
provides: “If the Commissioner shall give written notice to the parties that he has
elected not to arbitrate and resolve such dispute, such dispute shall be resolved in
accordance with any applicable agreements between the parties and any applicable
law.” 63
Viewed in this light, the arbitration provisions in the NHL Constitution and
the 1999 Consent Agreement give the Commissioner the preemptive right to assert
62
NHL Constitution § 6.3(b).
63
1999 Consent Agreement § 12(a).
30
jurisdiction and to arbitrate qualifying disputes. But if the Commissioner declines
to exercise that authority, then the parties to the 2007 Partnership Agreement are free
to provide for an exclusive forum to govern their dispute. Here, the parties to the
2007 Partnership Agreement chose the courts of Delaware as the exclusive forum
for disputes under that agreement which either: (1) were not within the scope of
matters subject to arbitration under the NHL Constitution and the Consent
Agreements or (2) were within the scope of those provisions, but the Commissioner
elected not to assert jurisdiction. The claims in this action fall within the scope of
the arbitration provisions, and the Commissioner has invoked his authority to
arbitrate this dispute. Doing so does not vitiate the venue provision of the 2007
Partnership Agreement. Section 16.12 of the 2007 Partnership Agreement is
subordinate to the arbitration provisions of the NHL Constitution and the 1999
Consent Agreement, to which Wildfire and the Defendants have agreed and
accepted.
F. The Consent Agreements Provide that Any Conflict or Ambiguity
Must be Resolved in favor of the NHL.
Section 12(g) of the 1999 Consent Agreement (hereinafter the “Conflicts
Clause”) states:
[I]n the event of any conflict or ambiguity between any term or
provision contained in this [Consent] Agreement and any term or
provision of [the 1999 Partnership Agreement], the terms of this
Agreement shall control and all such conflicts or ambiguities shall be
31
resolved in a manner that will provide the NHL with the maximum
protection that may be afforded to it.64
An identical provision is found in the 2007 Consent Agreement. 65 Pursuant to the
Conflicts Clause, the Consent Agreements “control” in all respects over the
concurrently executed Partnership Agreements. Plaintiff seeks to defeat the parties’
express intent by arguing that the venue clause in Section 16.12 of the 2007
Partnership Agreement (the “Venue Clause”) controls over the arbitration clause in
Article 6.3(b) of the NHL Constitution mandated by the Consent Agreements, and
the separate arbitration clauses located in the Consent Agreements. Plaintiff’s
argument is antithetical to and belied by the Conflicts Clause.
The court concludes that the Venue Clause in the 2007 Partnership Agreement
and the arbitration clauses in the 1999 Consent Agreement and the NHL Constitution
can and do co-exist. But even if these provisions could not co-exist, Section 12(g)
of the 1999 Consent Agreement resolves any conflict in favor of arbitration. In
Karish v. SI International, Inc., 2002 WL 1402303 (Del. Ch. June 24, 2002), the
parties executed two related agreements on the same day; both agreements included
integration clauses, but only one agreement included an arbitration clause. Id. at *1–
2. The agreement with the arbitration clause included the following conflicts clause:
64
1999 Consent Agreement § 12(g) (emphasis added).
65
2007 Consent Agreement § 7(h).
32
“wherever a conflict exists between this Agreement and any other agreement, this
Agreement shall control.” Id. at *2 (bracketing omitted). The plaintiff sued under
the agreement without the arbitration clause. Id at *3. This court held that, because
the two agreements were executed concurrently and coordinated, “they form[ed] one
contract and must be examined as such.” Id. Next, the court held that the conflicts
clause “provide[d] the solution” and, because the agreement with the arbitration
clause controlled the other agreement, “the arbitration clause [would] control.” Id.
Hence, the court ordered arbitration. Id. at *5. That reasoning is equally applicable
here as an alternative basis for compelling arbitration.
G. Wildfire’s Challenge to the Commissioner’s Impartiality and
Qualifications Is Premature and Unpersuasive.
Wildfire suggests that it should be permitted to proceed in this court because
the Commissioner is “conflicted” and “biased” and cannot be trusted to impartially
arbitrate this dispute.66 According to Wildfire, the Commissioner cannot resolve
this matter impartially because the NHL “has already approved and supports the
Proposed Transaction at the heart of” this dispute.67 In addition, Wildfire suggests
that only a “Delaware judge” has “the special expertise necessary to resolve”
Wildfire’s claims. 68
66
Pl.’s Ans. Br. 44–48.
67
Zimmerman Decl., Ex. L at 1; Pl.’s Ans. Br. 45–46.
68
Zimmerman Decl., Ex. J at 5.
33
None of these arguments defeat the Commissioner’s jurisdiction. First, “it is
well established” that a court “cannot entertain an attack upon the qualifications or
partiality of arbitrators until after the conclusion of the arbitration and the rendition
of an award.” Hojnowski v. Buffalo Bills, Inc., 995 F. Supp. 2d 232, 239 (W.D.N.Y.
2014) (internal quotations omitted) (rejecting challenge to NFL Commissioner as
arbitrator); Commodore Tr., 16-674-BC, at 17–18 (rejecting challenge to NHL
Commissioner’s impartiality because the remedy for any such claim “is upon the
completion of the arbitration”); Alexander v. Minn. Vikings Football Club LLC, 649
N.W.2d 464, 467 (Minn. Ct. App. 2002) (similar ruling regarding NFL
Commissioner). Any challenge to the Commissioner’s qualifications or impartiality
therefore fails as premature.
Second, Wildfire cannot “be heard to complain” about the Commissioner’s
“asserted biases” when the claimed biases were “known prior to the selection of the
arbitrator.” Nat’l Hockey League Players’ Ass’n v. Bettman, 1994 WL 738835, at
*13–14 (S.D.N.Y. Nov. 9, 1994). In such circumstances, courts reject challenges to
league commissioners acting as arbitrators. See, e.g., id.; Commodore Tr., 16-674-
BC, at 15–18 (rejecting challenge to the Commissioner’s impartiality when
challenger “had notice” of the claimed bias, and nonetheless provided “informed and
knowledgeable consent to arbitration” before him); Nat’l Football League Mgmt.
Council v. Nat’l Football League Players Ass’n, 820 F.3d 527, 548 (2d Cir. 2016)
34
(rejecting partiality challenge to NFL Commissioner as arbitrator, when parties
knew of alleged bias and contracted for his authority over the disputes); Hojnowski,
995 F. Supp. 2d at 239 (similar). Here, Wildfire knowingly signed at least five (5)
separate owners’ consent agreements dating back over twenty years to 1999,
including in connection with other ownership transactions, and in doing so,
expressly agreed to arbitrate disputes like the present one fully and exclusively
before the Commissioner.
Additionally, Wildfire’s assertion that the Commissioner lacks impartiality
because the NHL Board of Governors approved FSG’s acquisition of a controlling
interest in Lemieux LP is unpersuasive. Notwithstanding its express agreement to
arbitrate its claims fully and exclusively before the Commissioner pursuant to the
1999 Consent Agreement and the NHL Constitution, Wildfire elected not to raise
with the Commissioner any issues relating to FSG’s two-step transaction at any time
prior to the Board of Governors’ vote on the matter,69 even though Wildfire alleges
that it knew of FSG’s plans to acquire a controlling interest in Lemieux LP as far
back as early-to-mid November 2021.70 Wildfire does not provide any basis to
conclude that the Board of Governors’ vote reflects any prejudgment or rejection by
the Commissioner of arguments that Wildfire may make as to the merits of this
69
Zimmerman Decl. ¶ 22.
70
Compl. ¶¶ 36–37.
35
dispute. In addition, Wildfire cannot rely on its own failure to submit this matter to
arbitration before the Commissioner prior to the Board of Governors’ vote as a basis
to allege any pre-judgment of this matter, and thus, to challenge its express
agreement to arbitrate disputes like the present fully and exclusively before the
Commissioner.
Third, Wildfire’s assertion that the Commissioner is not qualified to resolve
this dispute is conclusory and contrary to the record. The current Commissioner has
served in that position for nearly 30 years. The NHL asserts—and Plaintiff does not
challenge—that over the course of his tenure, the Commissioner has been
responsible for and integrally involved in, among other things, team-related
ownership transactions, franchise expansion transactions, financing transactions,
and other complex commercial transactions, including, for example, negotiating
broadcasting agreements, collective bargaining agreements with the National
Hockey League Players’ Association and the National Hockey League Officials’
Association, and contracts with material NHL licensees. 71 He also has mediated and
arbitrated numerous disputes pursuant to his authority under the NHL Constitution
and various owners’ consent agreements, including, for example, as ordered by the
Tennessee Chancery Court in Commodore Trust. 72 Finally, far from disqualifying
71
Zimmerman Decl. ¶ 6.
72
Id.
36
him as arbitrator, the Commissioner’s role within the NHL and intimate knowledge
of its business render him uniquely positioned to resolve disputes like the one
presented here, as holders of ownership interests in Member Clubs, such as Wildfire
and Defendants, acknowledge when they agree to resolve disputes fully and
exclusively before him pursuant to the NHL Constitution. The dispute resolution
provisions of the NHL Constitution, including Article 6.3(b)(5), are, in part,
recognition by the Member Clubs of the value of maintaining autonomy over the
NHL’s internal affairs. Indeed, for this reason, courts have expressed an
“unwillingness to intervene in matters that involve the business operations of
professional sports organizations,” including because “judicial intervention in such
disputes” would unduly “interfer[e] with the [l]eague’s autonomy in matters where
the [league] and its commissioner have much greater competence and understanding
than the courts.” Oakland Raiders v. Nat’l Football League, 32 Cal. Rptr. 3d 266,
284 (Cal. Ct. App. 2005); see also Crouch v. Nat’l Ass’n for Stock Car Auto Racing,
Inc., 845 F.2d 397, 402 (2d Cir. 1988) (similar); Charles O. Finley & Co., Inc. v.
Kuhn, 569 F.2d 527, 543 (7th Cir. 1978) (similar). Here, the Commissioner is well-
suited to resolve Wildfire’s claims, which likewise concern the business operations
of the NHL, because the claims challenge the ongoing operation and control of one
of the NHL’s thirty-two member clubs. Accordingly, Wildfire cannot avoid the
Commissioner’s full and exclusive arbitral jurisdiction based on unsupported
37
assertions that the Commissioner is neither “neutral” nor “qualified” to resolve this
dispute.73
III. CONCLUSION
For the foregoing reasons, the NHL’s motion to compel arbitration of this
dispute before the NHL Commissioner is granted, and this action is, accordingly,
dismissed pursuant to Court of Chancery Rule 12(b)(1).
IT IS SO ORDERED.
73
See id., Ex. L at 1.
38