There is an interesting defamation case that’s just been filed in Kitchener. The Kitchener Rangers, who own the OHL rights to Winnipeg Jets first round pick Jacob Trouba, allege that they have been defamed by a report in a Michigan student newspaper that suggests that they are willing to pay Trouba a significant sum of money in order to skip out on his commitment to play college hockey and come to the OHL.
Assume, for the sake of discussion, that the allegation in the newspaper is untrue and that the Rangers didn’t offer Trouba a dime. Two points have caught my eye. The first is the issue of whether or not it’s defamatory to suggest that the Kitchener Rangers are paying someone to play for them. Now there are two ways to look at this. The first is to view the players as employees and what was printed in the Michigan newspaper as effectively an allegation that Kitchener pays its employees. I’m also told by OHL observers that there is an OHL rule that prohibits paying players. So the other way to look at it is that it’s an allegation that Kitchener cheats.
The test for whether a statement is defamatory has been stated and re-stated by the courts over the years. Last year, the Supreme Court of Canada summarized the common law (common law means, basically law that’s been established by judges over years of decisions rather than statutory law, which is that enacted by legislatures) test of defamation as follows:
The common law also uses an objective standard, that of the right-thinking person, to ascertain the meaning of impugned comments and assess whether they are defamatory. This standard is taken from English common law and is based on the famous case of Sim v. Stretch,  2 All E.R. 1237 (H.L.), in which Lord Atkin stated the following, with which his colleagues concurred:
The conventional phrase exposing the plaintiff to hatred, ridicule and contempt is probably too narrow . . . . I do not intend to ask your Lordships to lay down a formal definition, but after collating the opinions of many authorities I propose in the present case the test: would the words tend to lower the plaintiff in the estimation of right‑thinking members of society generally?
Despite the reservation expressed by Lord Atkin about the test he was proposing, it has not been forgotten. In fact, the right-thinking person standard was subsequently adopted, including in Canadian case law (Chohan v. Cadsky, 2009 ABCA 334 (CanLII), 2009 ABCA 334, 464 A.R. 57 (C.A.); Color Your World Corp. v. Canadian Broadcasting Corp. 1998 CanLII 1983 (ON CA), (1998), 38 O.R. (3d) 97 (C.A.), leave to appeal refused,  2 S.C.R. vii; Botiuk v. Toronto Free Press Publications Ltd., 1995 CanLII 60 (SCC),  3 S.C.R. 3, at para. 62; Cherneskey v. Armadale Publishers Ltd., 1978 CanLII 20 (SCC),  1 S.C.R. 1067, at p. 1079 (per Ritchie J.) and p. 1095 (per Dickson J., dissenting)). In Color Your World, the Ontario Court of Appeal, per Abella J.A., outlined the right-thinking person standard as follows:
The standard of what constitutes a reasonable or ordinary member of the public is difficult to articulate. It should not be so low as to stifle free expression unduly, nor so high as to imperil the ability to protect the integrity of a person’s reputation. The impressions about the content of any broadcast — or written statement — should be assessed from the perspective of someone reasonable, that is, a person who is reasonably thoughtful and informed, rather than someone with an overly fragile sensibility. A degree of common sense must be attributed to viewers.
It’s usually pretty easy to establish that a statement is defamatory – I’m citing my torts prof Phil Osborne’s text here and he says: “Almost all uncomplimentary comment is defamatory.” (Obligatory comment about Cam Barker.) Even with that, if you look at it the first way I mentioned above, that the statement is one about Kitchener paying their employees, I don’t see how the statement can be defamatory. There’s no shame in paying people for the value that they create for your business. Taken the second way, it’s potentially problematic for the newspaper – it alleges that Kitchener is in breach of rules that it has agreed to and is thereby cheating.
Now, there’s an interesting sideline here. I’ll assume for the sake of discussion that Kitchener would be breaking the OHL rules. I’ve always wondered about the legality of rules like that. I’ve never practiced competition law but there was an interesting note on the Canadian Bar Association’s site a little while back, written by a guy named Mark Katz about hiring practices.
For example, section 45 of Canada’s Competition Act makes it a criminal offence for competitors to agree to fix, maintain, increase or control prices for the supply of a product, and to allocate sales, territories, customers and markets for the production or supply of a product. Depending on the circumstances, this provision could be broad enough to cover agreements among competitors to collectively determine wages for employees or to refrain from recruiting each other’s employees.
Alternatively, conduct of this nature could be reviewed under section 90.1 of the Competition Act, which authorizes the Commissioner of Competition to apply to the Competition Tribunal for relief where an agreement between competitors – existing or proposed – prevents or lessens or is likely to prevent or lessen, competition substantially in a market.
A company’s H.R. functions, such as recruitment and compensation, are not typically regarded as antitrust “hot spots” (as opposed to sales and marketing). What the various U.S. proceedings and investigations described above demonstrate is that companies must ensure that they guard against potential antitrust risks in this area as well. In particular, companies must be wary of coordinating their hiring practices with competitors and should carefully assess any such ongoing conduct to determine its legality.
It strikes me that one plausible argument that could be raised by the defendants in this defamation action is whether or not the OHL’s restraints are legal under Canadian law. Restraints that are unilaterally imposed by teams and leagues do not have a good track record when they run into competition or anti-trust law in the United States, United Kingdom and Europe. It’s not something that’s arisen frequently in Canada – junior hockey and the CFL are about the only leagues we have that are ours or almost entirely ours. The CFL has a collective bargaining relationship with its players, pursuant to which there can be some agreement about limiting wages and such; junior hockey does not.
As such, I would think that the legality of the manner in which junior hockey is arranged and, in particular, agreements not to pay players more than a small stipend, in Canada is an open question. It’s not a question that would necessarily end up being litigated. Elite players tend not to spend a lot of time in junior hockey and have long been rumoured to receive some form of payment anyway. Mid and lower tier guys likely have very little value, such that it’s not really worth it for them to pursue the issue. An agreement not to pay wages beyond the low stipend is exactly the sort of thing that could float by for years without ever really being challenged, because nobody has any incentive to do so.
Another quote from Osborne’s torts text:
In one case, for example, it was held not to be defamatory to allege that a member of a golf club informed the police of the presence of illegal gambling machines on the club’s premises. The allegation certainly lowered the plaintiff in the esteem of fellow club members, particularly those who enjoyed gambling, but the Court took the lofty view that no “right-thinking” person would think less of a person for informing the police of illegal activities.
Osborne goes on to suggest that it isn’t always the case that the Court will take this view but it raises what is, to me, an interesting question. It strikes me that one potential argument would be that the OHL’s internal agreement not to pay players more than a certain amount is illegal and unenforceable. Would a right-thinking member of society think less of a person who didn’t comply with an illegal agreement? I wouldn’t think so – to me it seems similar to the case of the golf club member who tells the police about the illegal gambling machines. Does the OHL want the issue of whether its internal agreement to limit payment to players conforms with Canadian competition law considered by a court? I wouldn’t if I was them – right now, it presumably puts at least some brakes on the payment of players. Why test it? The experience in other leagues where maximum wages have disappeared suggests that people start getting paid more.
There are other interesting questions such as whether or not, given the not uncommon belief (expressed by people who would know) that payments to junior hockey players are pretty common, it damages the reputation of a club for an allegation to be made that it’s paying players. If it’s widely assumed that this occurs, does it matter to be accused of doing it? I’ll leave those aside though, because I’m more interested in something else. The Americans have apparently passed a piece of legislation called The Securing the Protection of our Enduring and Established Constitutional Heritage (SPEECH) Act in order to combat what’s known as libel tourism.
Basically, the British have pretty strict libel laws, the Americans have incredibly lax libel laws and Canada is somewhere in between. One route that people who feel that they’ve been libeled in the United States can choose, if they can establish British jurisdiction over the matter, is suing in Britain. This provides them with a far more favourable legal regime. Historically, they could get a judgment in Britain and then seek to enforce it in America – I’m grossly oversimplifying here but courts generally respect the judgments of other courts.
This situation was problematic because it effectively created a circumstance in which people who publish in America, with its preference for freedom of speech, could be subject to the laws of Great Britain, with its preference for reputation over freedom of speech. The SPEECH Act, as I understand it, effectively reverses that in that it makes foreign libel judgments unenforceable unless the judgment would have been available to the plaintiff in America. Now, so long as you keep all of your assets in America, it seems to me that you only have to worry about the American standard and you’re free to publish whatever you want in other jurisdictions, safe in the knowledge that your assets are safe so long as your comments would not constitute libel in America.
I’m not particularly wild about that solution. I have a strong preference for freedom of speech but it seems to me that the effect of the SPEECH Act is that if an American newspaper, I can write about the Kitchener Rangers and only have to worry about American law. This strikes me as sort of unfair because a) due to the reach of the internet, anyone in the world can read this and b) if the Kitchener Rangers have suffered damage, they’ll suffer it in Canada, which is where they conduct their business. When an American newspaper outlet publishes on a matter of substantial public interest outside of America, one wonders why they shouldn’t be subject to the law of the jurisdiction in which they’re publishing, at least when they’re dealing with countries that have reasonable court systems. Who are the Americans to decide, for practical purposes, what people can and cannot say in Canada?
In any event, it seems to me that one consequence of the SPEECH Act is that, if your assets are in America and you’ve received advice that a foreign defamation action against you could not succeed in America, you’d never bother to defend it. Let the plaintiff have his default judgment and then who cares. This is, of course, more true of corporations then it is of individuals – a judgment against him personally would kind of limit the career opportunities of Matt Slovin, the reporter in question, because the judgment could be enforced against him if he ever moved to Canada and acquired some assets.
The fact of the individual journalist apparently being named in the litigation is the one thing that might make it sensible to fight the thing here. Here’s hoping the case goes all the way to trial – a trip through the sausage factory of junior hockey could be a considerable amount of fun.
(Obligatory: I don’t practice in the areas referred to above and have no special knowledge about defamation law, competition law or the SPEECH Act. I am not a Kirby-Simon Fellow at Yale Law School. The preceding is the result of a few hours reading and some general background knowledge acquired in law school about these matters. If you have legal questions, you should consult a lawyer.)