By: Alexander Dourian
John Chayka unexpectedly stepped down from his role as General Manager of the Arizona Coyotes NHL club in late July 2020, right as the team was preparing to enter the NHL’s 2020 playoff tournament held in Edmonton, Alberta.[1] It came as quite a shock to the hockey world as Chayka had previously accepted a major extension from Coyotes ownership in November 2019.[2]
Once Chayka stepped down, it became known that earlier this year, he requested permission from Coyotes ownership to interview for a position with another NHL organization.[3] He positioned the interview as more of an information meeting and told ownership he had been granted permission for activities like this in the past to gather intel on the rest of the league.[4] Coyotes ownership denied Chayka permission to interview, citing his contractual commitments to the Coyotes organization.[5] After ownership denied Chayka permission to interview, their relationship reportedly withered away.[6] Despite the growing animosity, ownership, according to sources, attempted to maintain Chayka as part of the organization.[7] In a call between the parties, ownership affirmed their commitment in Chayka; however, when asked for his commitment in return, Chayka declined to give it.[8] This rapidly deteriorating situation is what ultimately drove Chayka to his surprise resignation on the cusp of the 2020 Stanley Cup Playoffs.[9]
After Chayka’s resignation, each party produced statements addressing the situation. Coyotes ownership said Chayka had “quit.”[10] On the other hand, Chayka released a statement explaining how he wished to join the team for the playoffs; however, ownership “made that an impossibility.”[11] Additionally, some sources indicated that Chayka decided to terminate his contract with the Coyotes only after hearing ownership was taking meetings with prospective free agents—something that generally falls within a General Manager’s purview.[12]
While disputes such as this—between an executive of a club and that club’s ownership—are generally resolved through arbitration by the league Commissioner, it is interesting to look at this situation through the lens of common law contract principles.[13]
By stating that Chayka “quit,” ownership is likely attempting to spin the narrative that Chayka repudiated his contractual duties in some way. This would constitute a material breach of his contract; assuming Chayka has a non-compete clause in his contract, ownership could seek an injunction against Chayka to enforce it.[14] A remedy such as this could restrict Chayka from pursuing any opportunity, for a stipulated period of time, in the NHL that has similar responsibilities to his former position.[15] On the flip side, Chayka could argue that the Club breached its contract with him by slowly stripping away duties it prescribed to him in his contract, such as meeting and negotiating with potential free agent players for purposes of signing them to contracts.[16] Chayka could argue that the Coyotes breached contractual terms first, which allowed Chayka an out on his contract. If this was the side a neutral decision maker took, Chayka might find his contract with the Coyotes all but voided, which would allow him the freedom to seek employment anywhere in the League, in any capacity. One caveat however, that works in ownership’s favor, is that there are reports indicating Chayka not only knew of the meetings ownership was taking with free agents, but in fact set them up himself and refused to attend.[17] If this were the case, Chayka’s argument becomes much weaker. Arizona ownership can rebut by simply saying Chayka refused to perform his own duties by declining to attend the dinner with prospective free agent Taylor Hall.
Ultimately, it is difficult to envision Commissioner Gary Bettman siding with Chayka on this matter. While Arizona ownership may have taking a meeting without Chayka’s presence, there is no evidence out there that indicates that ownership tried to negotiate a contract with Taylor Hall at that meeting.[18] Further, a neutral decision maker would likely not consider such a meeting as a material breach of contract—the element needed for Chayka to claim that his contract should be void, setting him free of any non-compete restrictions that exist. To contextualize why a neutral decision maker would rule this way, we can look to the Restatement (Second) of Contracts § 241, which lays out the considerations for determining whether a failure to render or offer performance is material.[19] If Chayka is unable to prove ownership attempting to negotiate a contract with a free agent without his presence, he may have difficulty arguing how ownership is depriving him of the contractual benefit of negotiating with free agents on his own terms as General Manager. Moreover, even if ownership stripped Chayka of this benefit, he would have even more difficulty proving they would not be willing to cure this breach given the reports of management reaffirming its long-term commitment in Chayka, and Chayka refusing to do so in return.[20]
[1] Kent Somers, Coyotes make quite the statement in announcing GM John Chayka’s departure, AZ Central (July 26, 2020), https://www.azcentral.com/story/sports/nhl/coyotes/2020/07/26/john-chayka-and-coyotes-blame-each-other-ugly-split/5515868002/.
[2] Greg Wyshynski, Why were the Arizona Coyotes so angry that GM John Chayka quit?, ESPN (July 29, 2020), https://www.espn.com/nhl/story/_/id/29555087/why-were-arizona-coyotes-angry-gm-john-chayka-quit.
[3] See Craig Morgan, NHL source: ‘John Chayka is a liar and a quitter,’ AZ Coyotes Insider (July 26, 2020), https://azcoyotesinsider.substack.com/p/nhl-source-john-chayka-is-a-liar.
[4] See Wyshynski, supra note 2 (stating the interview was reportedly with the owner of the New Jersey Devils, and that the position was much more rooted in hockey operations than Chayka led Coyote’s ownership to believe).
[5] Id. (stating that Coyotes ownership felt “betrayed” by Chayka’s request, especially after handing him a three-year contract extension in the same season).
[6] Id.
[7] Id.
[8] Id.
[9] See Somers, supra note 1 (quoting Coyotes ownership as saying Chayka had quit right as the team prepared to enter the Edmonton playoff bubble); see also Wyshynski, supra note 2 (Chayka effectively removed himself from the organization by taking himself out of COVID-19 protocol (required to enter Edmonton), which ownership considered a “material breach” of his contract).
[10] See Somers, supra note 1.
[11] See Morgan, supra note 3.
[12] See Somers, supra note 1 (stating that Coyotes ownership allegedly took meetings with high-profile pending free agent Taylor Hall without Chayka present).
[13] See Constitution of the National Hockey League, Nat’l Hockey League (2009), Art. 6, § 6.3(a)-(b)(2), https://pennstatelaw.psu.edu/sites/default/files/documents/Sports-Law/nhl%20constitution.pdf (NHL Commissioner has full and exclusive jurisdiction to arbitrate and resolve any dispute among players, coaches, or other employees of any Member Club or Clubs of the League, unless the dispute is unrelated to an outside the scope of the employment of the disputants).
[14] See Somers, supra note 1.
[15] See generally Enforceability of Non-Compete Clauses in Arizona, Law Offices of William D. Black (Feb. 19, 2015), https://www.billblacklawfirm.com/enforceability-non-compete-clauses-arizona/.
[16] See Somers, supra note 1 (mentioning the allegations of Coyotes ownership taking meetings with prospective free agents).
[17] See Wyshynski, supra note 2.
[18] See generally Morgan, supra note 3.
[19] Restatement (Second) of Contracts § 241 (Am. Law Inst. 1981) (determining whether failure to render or offer performance is material, look to (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing).
[20] See Wyshynski, supra note 2.
