World Hockey's Smith sues Hockey Canada
2009-12-02 14:35 ET - Street Wire
by Mike Caswell
The World Hockey Association, a hockey league once owned by Ricky Smith's World Hockey Association Corp., has filed a lawsuit against Hockey Canada, the national governing body for ice hockey. It claims that Hockey Canada and others conspired to keep players from joining the WHA, thereby leading to its shutdown at the start of the 2008-2009 season.
According to the suit, Hockey Canada circulated a memo in July, 2008, threatening to penalize players who joined "outlaw" leagues such as the WHA. Those who played for these leagues would be banned from Hockey Canada membership for up to a year. This effectively discouraged players from joining the WHA, the suit claims.
It appears that Mr. Smith's former pink sheets company, World Hockey Association Corp., is not a plaintiff in the case. The suit names the plaintiffs as Mr. Smith and "Renaissance Hockey Group Inc., operating as World Hockey Association." World Hockey Association Corp. ran the league during 2006 and 2007, but it is not clear what the company has done since then. It stopped issuing news in July, 2007, and it has no filings.
Smith's lawsuit
Mr. Smith filed a statement of claim on Nov. 24, 2009, in the Supreme Court of British Columbia. The defendants are Hockey Canada and two affiliated organizations, B.C. Hockey and the Pacific International Junior Hockey League. Also named are former WHA coach Matt Samson, the District of Squamish and the manager of recreation services in Squamish, Janet Gugins.
The trouble began in December, 2007, when Hockey Canada started considering sanctions for players, coaches, officials, municipalities and arenas who associated with outlaw leagues such as the WHA, the suit states. Hockey Canada officials put the idea to a vote at its May, 2008, annual general meeting. The vote passed (the suit does not state by how much), resulting in Hockey Canada and its provincial affiliate B.C. Hockey writing "action bulletins" throughout the hockey community in Canada, the United States and Europe.
The WHA claims that the bulletins wrongfully discouraged players and others from participating in the WHA. The bulletins, which are attached to the suit, stated that Hockey Canada would not offer regional or national championships to any municipalities or arenas that supported outlaw leagues. Moreover, it would suspend any players who played in outlaw leagues, with the length of the suspension to be determined based on the number of games played. One game in an outlaw league would net a three-month suspension, while more than 10 games would net a 12-month suspension.
During the summer of 2008, the WHA had signed up over 200 players for its 2008-2009 hockey season. According to the suit, these players became hesitant when they learned of the action bulletins. They were concerned how participation in the WHA would affect their future hockey opportunities. "Hesitancy by numerous players to commit to playing ... eventually obliged the Plaintiffs to cancel the season due to uncertainty," the suit states.
In addition to the other allegations, the WHA says the action bulletins were defamatory. They did not refer to the WHA by name, but according to the suit, the WHA was their primary target. They stated that outlaw leagues undermined Hockey Canada, and that outlaw leagues lacked overall outlook in the development of players, officials, administrators and coaches.
The WHA claims it had been successful as a for-profit league prior to the action bulletins. It had run for two seasons, and had teams in six communities that the PIJHL did not serve. It had also planned four expansion teams for the 2008-2009 season.
The WHA's most successful franchise in terms of fan support, sponsors, ticket sales and economics was the Squamish Cougars. Mr. Samson managed and coached the team. The lawsuit states that the success of the team was well known to the PIJHL in 2008.
Unknown to the WHA, Mr. Samson secretly sought and accepted a PIJHL franchise for Squamish, closing the deal in March, 2008, the suit claims. In seeking the deal, he breached the terms of his employment contract with World Hockey and he breached fiduciary duties owed to the WHA.
The negotiations also included the District of Squamish, which had leased the Brennan Park Recreation Centre Arena to the WHA, for use by the Squamish Cougars. The district had agreed to advise the WHA of any negotiation that would conflict with the WHA's use of the arena, but it did not do so, the suit states.
As a result of the conspiracy amongst the defendants, the WHA has suffered the loss of opportunity to expand its league, the suit alleges. The suit seeks general, special, aggravated and punitive damages, plus interest and costs. Vancouver lawyer David Sutherland filed the suit on behalf of the WHA and Mr. Smith.
None of the defendants have replied to the allegations.
Prior World Hockey lawsuits
While the WHA is the plaintiff in this lawsuit, its former owner, World Hockey Association Corp., has been the defendant in many prior suits, at least some of which were for unpaid bills. The plaintiffs in these cases included the cities of New Westminster and Osoyoos, and Vancouver Tours and Transit Ltd., a bus operator. The only suit with a judgment is the one filed by Vancouver Tours, which won a $71,348 order against World Hockey Association Corp. on March 2, 2007, for unpaid bus fares.
The company was also in a lengthy legal dispute with a former shareholder, John Briner's Global Developments Inc. Global sued World Hockey Association Corp. on Feb. 15, 2007, in the District of Nevada, alleging that World Hockey issued 200 million shares and diluted Global's interest in the company. World Hockey responded with a counterclaim, alleging that Mr. Briner and others connected to him were responsible for the dilution. Global Developments won a $4.3-million (U.S.) decision on Jan. 16, 2009.
World Hockey Association Corp. last traded for three-100ths of a penny. The stock's high, since it rolled back 1:100 on June 12, 2006, is 95 cents.
