Court denies Bellator’s Motion to Dismiss Alvarez Counterclaims

April 18, 2013

The United States District Court for the District Court of New Jersey has denied Bellator’s Motion to Dismiss the Counterclaims of Eddie Alvarez. The litigation between the two sides will continue.

Bellator had brought a Motion to Dismiss Alvarez’s Counterclaims for Tortious Interference with a Prospective Economic Advantage and Breach of Contract. Judge Jose Linares held that Alvarez’s claims survived the Motion to Dismiss standard in that his factual allegations raised a right to relief. This does not mean that Bellator could not eventually win, it just means it cannot win at this stage of the litigation.

With respect to the Tortious Interference claim, Bellator had argued that Alvarez could not prove it had done anything with malice. A prerequisite of the claim. It also argued that Alvarez’s claim must fail because the contract match was privileged.

Although Bellator supported its original arguments with case law, the Court noted that those cases occurred after the Motion to Dismiss stage. Thus, seeking support with the cases was of no relevance for this motion.

Bellator also argued that the contract offer should be privileged and cited a case which appeared to be on point. However, that case was a state law case which the federal court did not have to follow. Moreover, the case cited by Bellator related to correspondence in which counsel threatened litigation. The Court here distinguished that case as Alvarez claims Bellator, in bad faith, matched the offer made by Zufa.

The Court noted that it would not make a factual determination whether Bellator had a “legitimate business-justification” for proposing a purported match to Alvarez. Factual determinations such as these are not determined at the Motion to Dismiss stage.

With respect to the Breach of the Court held that despite Bellator’s assertions, Alvarez identified the contract for which it alleges Bellator breached. Furthermore, the Court determined that it “adequately alleged” that Bellator breached the duty of good faith and fair dealing in which it claims to have matched the Zuffa Offer in spite of “neither having the ability or the willingness to actually match the offer.”

 Payout Perspective:

The lawsuit continues. The threshold for prevailing on a Motion to Dismiss is tough if the claims made contain a sufficient enough of facts as Courts tend to want the case to prevail on the merits. Its interesting that the Opinion of the Court did not address the “malice” requirement in Alvarez’s Tortious Interference claim. Rather, it focused on the case law Bellator cited to distinguish it from the present case. Its likely that the two sides will exchange discovery and move on to the deposition phase.

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