Le, Quarry and Fitch file lawsuit against Zuffa

December 16, 2014

Attorneys for plaintiffs on behalf of Cung Le, Nate Quarry and Jon Fitch have filed a lawsuit in U.S. District Court in Northern California in San Jose, California on their behalf.  A press conference held Tuesday afternoon announced the lawsuit which was filed earlier in the day which may add more plaintiffs to the lawsuit.

Three plaintiffs’ firms with significant experience in antitrust and class action litigation are the attorneys of record with two others assisting as well.  At this point, the UFC has issued a brief statement indicating its aware of the lawsuit but has not been served with it or had a chance to review it.

Cung Le, et al. v. Zuffa, LLC is the 63 page Complaint that maps out the claims of a UFC monopoly and monopsony which is in violation of Section 2 of the Sherman Antitrust Act according to the Plaintiffs.

Below is a portion of the press release from the announcement today:

The lawsuit filed by fighters Cung Le, Nathan Quarry and Jon Fitch, who seek to represent a class of similarly situated current and former UFC professional combatants, alleges that the plaintiffs are victims of the UFC’s illegal scheme to eliminate its competition in the sport of MMA and suppress compensation for UFC Fighters from bouts and fighter identities and likenesses.

According to plaintiffs’ counsel Benjamin Brown, of Cohen Milstein Sellers & Toll PLLC, “The UFC was built on the battered bodies of MMA fighters who have left their blood and sweat in the Octagon.  Those fighters are entitled to the benefits of a competitive market for their talents.”

The lawsuit targets defendants Zuffa LLC, the Las Vegas-based company that conducts business as the UFC. Zuffa is primarily owned by billionaires Lorenzo and Frank Fertitta, along with the UFC’s front-man, President Dana White.  White has publicly boasted about the success of the UFC’s alleged illegal scheme, allegedly claiming that “there is no competition” because “I am the grim reaper[.]”

The lawsuit claims that the UFC’s alleged anti-competitive acts, in particular its actions over a period of years,have made and maintainedthe UFC asthe onlyoption for MMA fighters who want to earn a viable living in the profession.

“All UFC Fighters are paid a mere fraction of what they would make in a competitive market,” said Brown.“Rather than earning paydays comparable to boxers – a sport with many natural parallels –MMA fighters go substantially under-compensated despite the punishing nature of their profession.”

Above all, the lawsuit alleges thatthe UFC prevents fighters from working with other MMA promoters, mounting self-promotional efforts of their own or signing with outside sponsors – monopolistic practices that suppress fighters’ incomes.

According to named plaintiff Cung Le, of San Jose, Calif., an internationally acclaimed MMA combatant, “Because  of the UFC’s coercive practices, competitive market forces have been strangled, future earnings power of the athletes is stripped away, and purses to the fighters are artificially depressed.”

The lawsuit alleges that the UFC has pursued an aggressive strategy of depriving key inputs to potential rival promoters or merging with them to maintain its monopoly position.  The complaint alleges “exclusionary scheme” to impair and foreclose competition, whereby the UFC deprives potential competitors in the fight promotion market access to elite MMA fighters, premium live event venues and sponsors.

According to plaintiffs’ co-counsel Michael Dell’Angelo, of Berger & Montague, P.C., “the lawsuit alleges that the UFC has engaged in an illegal scheme to eliminate competition from rival MMA promoters by systematically preventing rivals from gaining access to ingredients critical to successful MMA promotions, including by imposing extreme restrictions on UFC Fighters’ ability to fight for rivals during and after their tenure with the UFC.  The UFC also takes the rights to fighters’ names and likenesses in perpetuity.  As a result of the UFC’sscheme, we allege that UFC Fighters are paid fraction of what they would earn in a competitive marketplace.”

The lawsuit alleges that as a result of these and other anti-competitive acts, including the UFC’s acquisition of rival Strikeforce, the UFC has maintained control of more than 90 percent of the revenue derived from live MMA bouts nationwide.

The lawsuit also alleges that the UFC has retaliated against fighters who have worked with or who have announced intentions to work with rival promoters or sponsors by refusing to book their bouts and/or eliminating them from key UFC promotional activities such as advertising campaigns and video games.

“UFC’s threats are taken seriously by fighters because they know that a UFC ban will substantially diminish, if not end, their ability to earn a living at their chosen profession,” said plaintiffs’ co-counsel Joseph Saveri of Saveri Law Firm, Inc.“These MMA professionals deserve the right to take back their careers.”

In their complaint, the Plaintiffs claim that the UFC has been able to suppress compensation “to a very low percentage of the revenues generated from bouts.”  The Complaint claims that UFC fighters are paid “approximately 10-17% of total UFC revenues generated from bouts.   They claim that all fighters “have had their compensation artificially reduced due to the anticompetitive scheme challenged in this Complaint.

In addition, the Complaint challenges several clauses that Plaintiffs’ claim exist in standard UFC contracts including the “Exclusivity Clause,” the “Champions Clause,” (allowing UFC to extend a champion’s contract for as long as they are champion), the “Right to Match Clause” (recall Eddie Alvarez lawsuit), “Ancillary Rights Clause” (granting UFC exclusive and perpetual worldwide identity rights of contracted athlete) and the “Sponsorship and Endorsement Clause” (allows UFC sole discretion on approving sponsors and endorsements of fighters).

The attorneys declined comment on how much they would be asking (likely due to the fact that the actual amount of damages has yet to be quantified by an expert) in terms of monetary relief although the statute in which they are suing under allows for treble damages (three times the actual amount of proven damages)

Cung Le, et al. v. Zuffa, LLC

Payout Perspective:

The press conference did not provide a lot of granular information but one must assume that was done on purpose.  Since the Complaint was filed today, the lawsuit and everything that comes with it begins.  The process for a lawsuit, especially one that will be detailed, complex and may involve more plaintiffs will take years and lots of money to litigate.  Cohen Milstein, one of the law firms representing the plaintiffs, was selected as one of the “most feared plaintiffs’ firms for 2013 and 2014 by Law360.  Suffice it to say, the attorneys filing this Complaint and litigating this matter are very good at what they do.  The UFC will have good lawyers as well.

It will be interesting to see how many other fighters decide to join the class.  We assume that there are more that will join based on the amount of law firms that are joining together on this matter. We will see what happens if there is a groundswell of fighters that will join the lawsuit.

MMA Payout will have more info on the lawsuit in the coming days.

33 Responses to “Le, Quarry and Fitch file lawsuit against Zuffa”

  1. JF on December 16th, 2014 4:28 PM

    I’d bet you’ll see Shamrock, Ortiz, Rampage, Wanderlei ad others join in.

  2. d on December 16th, 2014 4:33 PM

    Cung Le should be no where near this lawsuit, he was a proven cheater and doesn’t have a leg to stand on in the court of morality.

    I’m surprised Quarry is going along with this. Zuffa paid for his back surgery when he needed it and they were not required to do so. He also was never a top 5 fighter, and was gifted a title fight when there still wasn’t much money around at the time.

    Fitch, I can see why. He was fucked over on a number of occasions. The whole likeness thing was crazy, they should have sued zuffa back then though.

    Just waiting for Ortiz, Jackson, Shamrock and Couture to join.

    Best case scenario here for both the fighters and the UFC is minimal reparations, but rules in place so Zuffa can’t manipulate the marketplace.

  3. jjjjjj_ffffff on December 16th, 2014 5:00 PM

    i think this suit leads to a Fighters Union..

  4. tops E on December 16th, 2014 5:01 PM

    Hahahahaha….good day today!!!!….domino effect more fighters to join in

  5. LeonThePro on December 16th, 2014 5:31 PM

    The UFC better start selling some PPVs so they can pay the lawyer fees. Oh wait, CM punk to the rescue in 2015 lol. By the time this thing gets going there will be dozens of fighters on that list.

  6. FightBusiness on December 16th, 2014 5:52 PM

    socialism never works. eventually people find out that they are getting screwed by the people that claim to be “helping them”.

  7. jjjjjj_ffffff on December 16th, 2014 8:28 PM

    While Payout was taking a pee pee break, Meltzer just broke down the Zuffa lawsuit…
    http://www.mmafighting.com/2014/12/16/7406409/the-key-questions-in-the-lawsuit-filed-against-the-ufc

  8. d on December 16th, 2014 11:35 PM

    Hey, Leon the Schmo is back. .

  9. saldathief on December 17th, 2014 12:12 AM

    This case is hardly a slam dunk for the fighters, too many variables. Its a shame that Zuffa are a bunch of greedy pricks! That being said, if Zuffa grossed 483 million in 2013 and had a EBITDA, thats Earnings before interest, taxes, depreciation, and amortization, of 110 Million, I don’t see how they were profitable in 2013 and surely have lost money in 2014. After interest which is around 40 million and Taxes at about 35% federal , You are looking at around 24 million before depreciation and amortization. state and local taxes for 2013, UFC fights in many states and have local taxes and foreign taxes as well. So in 2014 if we go by the 40% down number we have a EBITDA much lower, 44 million, now pay the loan interest of 40 million, leaves them with EBITDA of 4 million before D and A and local and foreign taxes, there is nothing left!! . Just one headliner boxer makes more than the UFC does in one year! Hardly a successful company IMO, more like a squirming joke, no wonder they can’t pay fighters, they are in the hole bad and are paying their debts. 2014 was a year where I will guess they spent even more and took in, less then 2013 so its even worse. This is the tip of the ice burg of bad news for Zuffa, I see a serious bankruptcy on the way. The lawyers know this and are lining up with the lawsuit to get paid when zuffa goes into bankruptcy, they are posting their bets early. More numbers will come out as this case goes forward and the UFC is going to look like a bunch of idiots like I and many more have been saying for years., Stay tuned folks. WOW this lawsuit is the most interesting UFC fight in years bahahahahahahaha too bad they can’t up their declining PPV numbers with it ha ha ha

  10. d on December 17th, 2014 12:58 AM

    HAHAHAHA!!! Look at Sal attempt to analyze with his absurd delusions. First off, if you think they pay 35% in federal income tax, you are fucking retarded. Second, if you think they weren’t profitable in 2013 where they are carrying the FOX deal, big int’l tv deals, had a very good year on ppv, licensing deals through the roof, and carried good credit by people who audited their books, once again, you are a fucking retard. But then again, everyone already knows you are a fucking retard.

  11. Logical on December 17th, 2014 1:31 AM

    “the lawsuit which was filed earlier in the day which may add more plaintiffs to the lawsuit.”

    How does this work outside of the three initial plaintiffs? Do new plaintiffs get added automatically as part of a class with the option to opt out? Please explain.

  12. Logical on December 17th, 2014 2:22 AM

    By the way, glancing through all those 63 pages of documents I can’t help but laugh at all the idiotic quotes from Dana White that are coming back to haunt the UFC. When you have the President of the organization basically admitting to destroying all competition and having a monopoly on all top level talent, it’s just mind-boggling how they let this guy run his mouth for so long.

  13. saldathief on December 17th, 2014 3:19 AM

    D once again shows his lack of knowledge of any true business cleaning the floors at 7 eleven doesnt make you an expert. My numbers are relative and examples of what is going on. Its easy to see the financial trouble this company is in. FOX DEAL LMFAO that number goes into to the gross before the EBITDA you complete retard! Besides the UFC never saw close to that fictional 100 million dollar number bahaha the fox views suck ass!! D cant handle facts, numbers and reality when its right in his third world face. Please tell us D what corporate federal tax is on a company like the UFC, plus all state and local tax. Wow what an idiot bahahah. Wait till more UFC numbers come out its a house built on lies and bullshit, They are paying companies they own huge sums on from the loan and plan to go bankrupt just like they did with other companies they have. bahaha those boys are crooks and will end up ass out like your 7 eleven family bahahaha
    2015 will be a dark year for zuffa

    Class action suits have a period when others can join the complaint, so basically others can join as plaintiffs up until a certain point usually a year or 2. Even after a settlement is reached people can claim they were damaged, money is put aside.
    Dana on vacation in Fijii what and asshole, you never throw your wealth in peoples faces, always be humble rule 101. Goes to show no one at zuffa gives a fuck, they knew this was coming down. What a shit year for the UFC bahahaha

  14. Jason Cruz on December 17th, 2014 6:43 AM

    @Logical

    The hope is that this lawsuit will obtain class action status. In fact, that is the likely strategy to get as many fighters to join the lawsuit which may persuade the UFC to do something (i.e., consenting to some sort of settlement/compromise)

    So, they can add plaintiffs to the lawsuit. At some point, the court will need to certify this as a class action lawsuit. And all this might happen before the meat of the lawsuit even begins.

    The key thing, which Mike McCann pointed out is whether this lawsuit will survive the UFC’s anticipated Motion to Dismiss. If so, and discovery begins in which the UFC will likely have to divulge key financial details of its company, then we would see a settlement. But this may happen years down the road.

  15. d on December 17th, 2014 9:38 AM

    Sal believes his experience 30 years ago as a custodian at the MGM makes him an expert at how the event promotions are run. Too bad he is really just an idiotic, gay, disciple of Bob Arum that doesn’t know the first thing about a business which is why he thinks a company that brings in hundreds of millions per year pays a 35% income tax.

    As for the taxes, what is the actual number? Well, first off, the UFC doesn’t pay corporate income taxes, you colossal moron, because they aren’t a corporation. HAHAHA! You are so goddamn dumb it is unreal. Also, even if the corporate tax rate was 35%, they would pay no where near that figure. No one does who brings in this type of revenue, because what you are too stupid to realize is the fact that these guys have tax lawyers figuring every loophole imaginable so they limit the amount of federal income taxes. When was the last time corporations like GE paid any corporate taxes? Haha. Idiot.

    Your numbers are fabrications and although, they are dealing with some financial issues this year because of the ppv injuries, and the imminent lawsuit settlement that is going to go down, the sky isn’t falling as you claim(like you do every week regardless of what is going on).

    Right, the FOX deal was fictional, because you have the actual contract in front of you, right? You stupid fucking idiot. Stop drinking toilet water again Sal, it is affecting your brain.

  16. Logical on December 17th, 2014 12:30 PM

    @Jason Cruz

    Thank you for explaining that, it all makes sense now. This is why I love this site 🙂

  17. saldathief on December 17th, 2014 1:25 PM

    too D YAWWWWWWWWN!!!!!!

  18. Logical on December 17th, 2014 2:28 PM

    “In or about January 2014, it [The UFC] added provisions—such as, e.g., the ‘unilateral demotion-in-pay’ provision which resets a Fighter’s pay to lower purse levels if a given UFC Fighter loses a bout”.

    This is just appalling, the UFC is brutal with those contracts. No wonder the fighters are scared to lose. This really puts new meaning on “It’s all about the W”, because it really is the only way to guarantee you don’t get payed less.

  19. John N. on December 17th, 2014 4:20 PM

    saldathief,

    Zuffa is an LLC so the taxes are paid by the shareholders. So the EBTDA (basically minus the interest) is the cash flow available for distribution. $110m minus loan costs of $25m would leave available $85m for the shareholders who would then pay the taxes out of their shares much like income tax.

  20. d on December 17th, 2014 11:35 PM

    HAHAHAHA!!!

    Sal, I guess that is all you can say after you proved what kind of moron you are not even knowing what a corporation is. Idiot. HAHAHAHA!!

  21. d on December 17th, 2014 11:39 PM

    Logical, that isn’t appalling, that actually makes sense. The appalling thing that I see is the champions clause where they can extend a fighter’s contract at any given time of their discretion. I can’t imagine how something like this will hold up.

    Most of the numbers in the lawsuit are exaggerated. Mid tier and low level fighters really don’t have a leg to stand on with this, but the high level fighters do and it is good to see some changes are coming. The Fertittas should also consider taking Dana White away from the spotlight, because his words have gotten them in a ton of trouble here.

  22. saldathief on December 18th, 2014 8:14 AM

    Yea D Zuffa LLC is a non profit bahahahah you are a complete idiot Its a company , they pay taxes that pays for government programs that fund your third world family to own a 7 eleven and paid for all your filthy relatives to come to america. Please stop trying to split hairs The UFC pays enormous taxes you fuck tard please go sell your bullshit to someone else. You make no sense and are showing your lack of any sense, its so sad and pathetic go get a real job and pay some taxes yourself and please move out of your parents hut and try to go out on your own. You’re such a retard!!

  23. saldathief on December 18th, 2014 8:17 AM

    Bahaha The UFC is falling apart, numbers are down in all aspects, ppv sucks, fighters suing, tv numbers down tuf down, pay down, no more sponsors, the list goes on and on and all D can say is Zuffa doesn’t pay taxes , or Zuffa LLC isnt a corporation, WHAT AN IDIOT!!!!!! Please

  24. Pink Pig on December 18th, 2014 9:05 AM

    The ship sinks

  25. d on December 18th, 2014 6:00 PM

    SAL YOU FUCKING IDIOT!!! AN LLC IS NOT A CORPORATION YOU DUMB FUCK!!! THEY ARE NOT SUBJECT TO CORPORATE TAXES!! MY GOD YOU ARE A FUCKING RETARD!!

    You don’t know basic business information and you have to buy the biggest moron I’ve ever seen on here which speaks volumes.

    Get Bob Arum’s dick out of your mouth you fucking queer. It is affecting your brain.

  26. d on December 18th, 2014 6:04 PM

    *be*

  27. John N. on December 19th, 2014 5:43 PM

    “D” An LLC is a company, a Limited Liability Company. The taxes though are usually paid by the shareholders and not the company after it’s been distributed to them.

  28. Sampson The One And Only on December 19th, 2014 6:04 PM

    Yes, I am aware of what an LLC is.

  29. d on December 19th, 2014 6:05 PM

    Hahaha. Sampson.

  30. saldathief on December 20th, 2014 1:15 PM

    Hey ass clowns look at personal tax rates for income in the range the llc partners are making Its around 40% you guys love splitting hairs!! An LLC is by no means a tax benefit to share holders. My numbers are right in the ballpark, whether its a corporation or an LLC its a dimes difference. So stop with your bullshit and spins. Now they have tax breaks and write offs loop holes but if you fucktards think that they aren’t t paying huge taxes you need to stop playing x box and read a financial journal. So in fact they probably pay more taxes at the end of the day. Also they will pay personal taxes in every state and some cities that a ufc event is in. If Dana is on TV when they are in a foreign country there is a huge “entertainer” tax in most european countries. PLEASE STOP SPINNING GARBAGE, seriously you fuck tards should be in politics with all your bullshit. Wait till numbers come out in the law suit Morons like D will see!!!

  31. d on December 20th, 2014 5:33 PM

    Just the fact that you didn’t know what a corporation was, one would figure you would run away from this argument. You’ve already been humiliated because you are a moron who is extremely misinformed, now you are just digging your ditch deeper with more of your bullshit.

    You still can’t comprehend the difference. Idiot, an llc isn’t subject to double taxation like a corporation is you moron. For corporations, there are taxes for the business and then there are dividend taxes for the shareholders, which would certainly be more here, because you are only dealing with 1 tax for the llc. Guys like the Fertittas and co. have the tax code loopholes down to a tee. You aren’t aware of this because you are a world class idiot. Why do you think rich people/big businesses don’t want a low flat tax on their income or business taxes(depending on what kind of business they run)? Their tax rate would be lowered. The reason is because they don’t actually pay the tax percentage they are grouped with. They find every deduction/write off humanly imaginable and it reduces their taxes lower than a low flat tax.

    Sal, keep this up. I love making you eat crow. It is very entertaining mr. llc is the same as a corporation fucking retard.

  32. saldathief on December 20th, 2014 7:28 PM

    D you make no sense, Where did I say double tax you fuck hard Just face it the UFC is in shambles. Ready ass boy here is the UFC’s defense when this law suit goes forward. UFC: WE CAN’T BE A MONOPOLY AND WE TREAT OUR FIGHTERS GREAT, WE ACTUALLY LOSE MONEY AND ARE IN COMPLETE DEBT AND ARE GOING BANKRUPT!! D you are the only one humiliated with your bullshit look at the numbers you clown bahhaahah try to spin it any way you want WAIT and see hahaha in the toilet baby.

  33. d on December 21st, 2014 11:00 AM

    Sal, you fucking idiot, you are beyond retarded. The problem is you don’t know what is double taxed because you don’t know what a corporation is. HAHAHAHA!! You got embarrassed really bad here and you are trying to spin it in a million different directions smelly old man. You don’t even what a corporation is. That is day 1 stuff, you filthy usher, who thinks he’s a event producer.

    The funny thing is when they along with the sport continues to go strong for years to come, you will still be spewing more of your mentally ill laced bullshit because you desperately need medication. Take a shower Sal, you really need one.

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