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Thursday, August 17, 2006
NHL "Stealing" Russia's Star Hockey Players?

There's an interesting story released this week on as well as in USA Today about hockey star Evgeni Malkin, who bolted from his Russian professional hockey league team, the Metallurg Magnitogorsk, last Saturday after it arrived for training camp in Helsinki, Finland. Malkin is widely considered the best in the world not currently playing in the NHL. Malkin's agents in the U.S. will not confirm where he is at the moment, though they believe he is "out of harm's way". This is good news for the Pittsburgh Penguins because, although Malkin is currently under contract with Metallurg, they own the rights to Malkin here in the States as he was their No. 2 overall pick in the 2004 draft. Now that he is out of Russia, Malkin is expected to sign with the Penguins, if he hasn't already done so, and report to their rookie camp. However, Metallurg general director Gennady Velichkin is threatening legal action against the Penguins: "We all are really shocked by his departure and we will take legal actions against the NHL club Penguins from Pittsburgh. Americans like to speak about democracy and teach the whole world how to live but engage in sport terrorism and simply steal people."

In the U.S., it is well established that if a player under an existing contract "jumps ship" and signs a contract with another team in a different league, the team that loses the player would generally have two claims. First, the team could sue the player for breach of contract and seek a court order by way of a "negative injunction" to prevent the player from playing for the new team. Second, the team could sue the new team on a tort claim for intentional interference with contractual relations if the new team signs (or attempts to sign) the player to a contract that overlaps with the player's term under his existing contract. However, the new team is not prohibited from negotiating a contract with the player for a term to commence after the expiration of the term under the player's existing contract because, from a policy standpoint, courts are sympathetic to the defendant's right to compete with the plaintiff for the personal services of others.

So this situation presents an interesting international sports law issue because the two teams are located in different countries, and each country has its own set of laws governing the issue. One major distinction between the two countries' laws is that Russian law apparently permits any employee under contract, even a professional athlete, to leave his or her job upon giving two weeks' written notice. Thus, unlike in the States, it appears that it might be difficult for Mettalurg to establish a claim against Malkin for breach of contract.

But what about a tortious interference claim against the Penguins? This is a complicated question. Mettalurg would most likely sue the Penguins in a Pennsylvania court and, assuming the court determines that jurisdiction is appropriate, the court would most likely apply Pennsylvania law. It then becomes a factual issue regarding the extent of interference committed by the Penguins. Mettalurg could argue that the Penguins were aware that Malkin was already under contract when they made Malkin their first round draft pick. However, that act alone probably wouldn't rise to the level of tortious interference on the part of the Penguins unless the Penguins also negotiated a contract with Malkin (or his agents) for a term to commence prior to the end of the Mettalurg contract term.

If the Penguins ultimately sign Malkin to a contract that overlaps with the Mettalurg contract term, it would make Mettalurg's case much stronger. On the other hand, even if the Penguins do sign Malkin, the Penguins could argue that the interference is not substantial (i.e that the Penguins didn't really do something that either prevents performance of the Mettalurg contract or makes performance substantially less likely) if Malkin could in fact terminate the Mettalurg contract by simply giving two weeks' notice. Mettalurg might have a good argument that the two week notice termination right simply allows the player to essentially opt out of the contract and not play, but such right does not permit a player to nullify an existing contract and sign with another team because that would make all multi-year terms in Russian professional sports contracts superfluous.

As the USA Today article indicates, Malkin isn't the only Russian player invoking the letter of resignation as a way to leave a team and play in the NHL. Draft picks Alexei Mikhnov (Edmonton Oilers) and Andrei Taratukhin (Calgary Flames) also sent such letters to their Russian teams this summer in order to join the NHL. It will be interesting to see if Mettalurg ultimately acts on its threat....


Huge issue for Russia. They had been using Malkin as leverage to get a better transfer deal from the NHL. Meanwhile, there's been pressure on Malkin to simply terminate his agreement with the Russian club. Russia has had no success filing lawsuits against NHL clubs for tortious interference. This will put pressure on Russia to agree to a transfer deal with the NHL. Otherwise, like in this case, they'll get nothing.

Anonymous john -- 8/18/2006 9:12 AM  


I'm glad you raised the issue about Russia not having success filing law suits, because the USA Today article says that without any details. However, I'm not aware of a U.S. court addressing the tortious interference issue. I am aware of the Dynamo v. Ovechkin district court decision in January of this year (which USA Today references), but in that case the Russian team was merely seeking to enforce a Russian arbitration award finding Ovechkin in breach of contract and banning him from playing for another club. The court dismissed the case solely on the grounds that there was no evidence that Ovechkin and the Russian club had effectively agreed to arbitration. If anyone knows of a U.S. court decision on the tortious interference issue, please pass it along.

Blogger Rick Karcher -- 8/18/2006 9:26 AM  

If this item goes to the court and the ruling is in favor of the Penguins, what would be the implications of such a decision? Say the Pens sign him today, during the terms of his Russian contract, but the court rules that Malkin had the right to terminate his contract and it wasn’t interference by the Pens (by drafting him and making a contract offer).

What if a Canadian league wants to bring their hometown hero back and offers Crosby a lucrative contract to play in Canada, say that because of this offer, Crosby refuses to play or finds some clause that leads to termination of the contract.

Even though the labor laws are different, would it be legitimate for a Pa. court to hold Crosby liable for breach of contract but not Malkin, especially if Crosby followed a procedure to termination his contract (such as not playing leading to insubordination, etc.) while Malkin just simply left without giving the 2 weeks notice first, as seems the case?

And could the same court rule that while it wasn’t tortuous interference by the Pens in the Malkin case, it was by the Canadian team with Crosby? Could it be argued that Malkin’s decision wasn’t based on the contract he might have had awaiting him, but rather the fame of playing in the NHL? Whereas, Crosby’s decision would have been because of the contract? What is Crosby argued that he just simply decided he wanted the fame of playing in his home country all the time?

Anonymous George -- 8/19/2006 10:57 AM  

THanks for doing the post Rick. You answered all of my questions...I just can't wait to see him play.

Blogger WMUpsci_student -- 8/21/2006 10:09 AM  

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