Escape from EliteXC: The Legal Strategy

November 11, 2008

As the attempted auction of ProElite fighter contracts by Showtime on November 17th draws near, there are sure to be a flurry of legal proceedings and attacks being launched by all parties involved. MMAPayout.com has obtained documents detailing one fighter’s strategy for liberation from ProElite, using legal precedents and CSAC bylaws to make the case for the voiding of his ProElite/EliteXC contract.

The fighter in question is looking to use California law and past precedent in George Foreman Associates LTD vs George Foreman and Oscar De La Hoya vs Top Rank Inc, both of which require going before CSAC to obtain its approval of the contract and Section 230 of CSAC regulations which requires contracts to be done using official CSAC forms as well as any blanket contracts (multi-bout agreements) necessitating Commission approval.

According to the document obtained by MMAPayout.com, said fighter is arguing that such approval was never sought or obtained from the commission, ProElite never had the contracts executed before the commission, and never filed them with the commission. The fighters lawyers argue that such failure leaves the contract void and unenforceable.

The document also argues that the suspension of the ProElite license activates a CSAC code that prohibits a fighter from having any dealings with any person or club that is currently under suspension, thereby voiding the contract.

An alternative theory presented in the document is that the contract is a personal services contract and under California law cannot be assigned without the consent of the parties thereto, with case law being put forth that supports this contention.

On the other side of the coin, some things indicate the agents for the fighters may have an uphill battle. ProElite in its filings (PELE.PK) was Sarbanes-Oxley compliant. There was full PUBLIC disclosure about its financial situation. It used its fighter contracts as leverage and pledged them as an asset. This is all in the public files.

The argument for this tack goes that ProElite isn’t/wasn’t a private company that made these contracts in bad faith. The agents knew or could have known that the organization is in financial peril. How do you have a two year contract with a company that says it has less then 6 months of capital? The time to challenge the contract may have been when the company made that 8k disclosure.

However the contracts are adjudicated, lawyers are one sure-fire winner as there will doubtless be many billable hours put in between now and next Monday.

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