Remember, it's the threat that counts here. Notwithstanding the bylaw provision, there is nothing that would prevent the Devils from advising the league that they would go forward with litigation and challenge the bylaw as unconscionable and unenforceable. A tough argument ultimately to succeed on, but in a game of bluff-calling all bets are off.
As for laches, whether the litigation were so unreasonably delayed such that it should be equitably barred would depend on the facts, and I believe your assumption is too facile here. The arbitration was in January -- waiting five or six months to file would not presumptively be improper under NJ law. Also, even if you filed the lawsuit immediately after the arbitration decision, the PI application need not necessarily be filed and/or decided immediately -- and could plausibly be argued to be premature if brought at that time.
Finally, although likelihood of success is an element of a TRO/PI ruling, we all know that as a practical matter where there is a strong case for irreparable harm (one of the other elements of the test) many courts (state courts in particular) apply a somewhat relaxed standard for likelihood of success (even if they don't admit as much). I strongly disagree that the Devils attorneys would be remotely exposed to sanctions for filing such an application, especially if they included a challenge to the bylaw itself. Judges are loathe to impose sanctions for anything other than the most egregious conduct, and this certainly would not rise to that level.
The penalty came down three years ago. There was no "arbitration" in January. It was the Devils making a case to the league. Yeah, some judges do weird things on occasion, but a judge is ultimately going to look at your papers, and ask why you waited three years to challenge this penalty, and why are you asking me to issue an emergency injunction that you could have sought years ago, or at least a few weeks ago, where this could have been decided on the merits ahead of time.
Ultimately we're talking about a draft pick in a hockey league. It's not a case of a company that's about to go out of business, or a person that's going to be taken off of life support.
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