Taking a look at the Motion to Dismiss hearing in the Mark Hunt lawsuit

July 12, 2017

It’s not often that you get the transcript from a court hearing for free (relatively speaking).  But Brock Lesnar’s attorneys have attached the entire hearing from the parties’ Motion to Dismiss on May 22, 2017 as an exhibit to its current Motion to Dismiss the First Amended Complaint of Mark Hunt.  MMA Payout takes a deep dive into the hearing.

Transcript Exhibt a to Lesnar’s MTD by JASONCRUZ206 on Scribd

There were three parties present.  Howard Jacobs, representing Brock Lesnar, J. Colby Williams and Donald Jude Campbell on behalf of Zuffa, LLC and Dana White and Scott Ingold and Joseph Gonnella on behalf of Mark Hunt.  Jacobs, Williams and Ingold were the attorneys that argued the motion before the Honorable Jennifer A. Dorsey.

The Court complimented the parties on how well-briefed the parties were in arguing the Motion to Dismiss.  As such, he made the introductory note that he had read all of the cases cited by both parties and thus did not need a rehash of the cases.  In my experience, this is helpful and shows the court’s competence.  Also for judicial efficiency, he does not want a party to go too deep into the cases they cite by bringing up the underlying facts in that case unless its central to the point of the parties.

I will let everyone know, first of all, I have read every word of all of the very nicely prepared briefs. I want to thank all of you for the care and attention that went into those briefs. And, because I think everything was so well briefed, I definitely don’t need a reiteration of every argument and every point raised. I’ve spent a lot of time with these motions. I’ve read all of the cases that are cited in them. So I’m prepared to hear what else or what else you would like to stress.

The Court takes time asking questions of Hunt’s attorney about their tort-based claims as well as their theory for the RICO claim.  Defendants seem to have successfully pegged the RICO claim as one that circumvents the rationale behind the purpose of the claim and more of one where attorneys attempt to frame a RICO claim in order to triple their damage claim.  As such, there’s no standing for Hunt to assert his RICO claim.

Colby Williams:

Here, Mr. Hunt’s Complaint is a prime example of the overenthusiastic use of RICO and its specter of criminal wrongdoing to seek a financial windfall in the context of a routine commercial dispute. And, while RICO has unquestionably been stretched in scope and meaning beyond the organized crime context, certain guiding principles remain no matter what the subject matter is of the case.

The most fundamental of those requirements, Your Honor, we would submit, would be that a plaintiff has to have RICO standing under 18 U.S.C. 1964(c) and that’s a two-pronged inquiry. First prong, you’ve got to demonstrate a cognizable injury to a property or business interest. And, Your Honor, most respectfully to opposing counsel, that is not determined by trying to squeeze yourself into some other interest that has been found suitable for RICO injury in a prior case. The courts are unanimous when they tell us business and property interests are a categorical inquiry based on state law. The second inquiry that must be established for RICO standing is that there has to be proximate cause between the injurious conduct and the claimed injury. These are questions of law for the court; they are proper for determination at the 12(b)(6) stage; and, if a plaintiff fails to satisfy either prong, the RICO claim must be dismissed. We submit Mr. Hunt doesn’t satisfy either one.

Defendant’s stress the fact that personal injury and reputational harm are “simply not recoverable” under RICO.  Hunt’s alleged lost opportunities, according to the defendants, are future claims that are speculative and contingent which do not fall under a remedy under RICO.

Notably, the defendants wanted to make known that Hunt was still gamely contracted by the UFC and performing under the contract at issue.

Williams:

Mr. Hunt, on March 4th, fought Alistair Overeem. He references it in his opposition. He was paid $750,000 for that fight, Your Honor. More money than he made in the summer of 2016 at UFC 200 when he fought Mr. Lesnar. He hasn’t lost a single opportunity. He’s continuing to get fight opportunities. He’s making more money. There is no RICO injury here at all.

Jacobs, the attorney for Brock Lesnar, argued that the claims against Lesnar are baseless as they lack proximity.  The RICO claims, which are based on Hunt fighting Bigfoot Silva and Frank Mir do not apply to Lesnar argued Jacobs.  He claimed that Hunt cannot show that he relied on any omissions or misrepresentations from Lesnar which is a requisite for a fraud claim and the underlying actions for a RICO violation.  Jacobs argues the use of the ESPN interviews with Brock Lesnar and Dana White would defeat his own claim.

…I think, all of the causes of action. Certainly RICO, fraud, false pretenses — all of those claims require an allegation of reliance on the false representations. And so the plaintiff in his Complaint and then as supplemented by his opposition says that he relied on either Brock Lesnar’s alleged misrepresentation that he wasn’t doping or he relied on the material omission of the fact that he was doping. So those are the allegations. And there have to be damages pled which he has to show that he relied on these misrepresentations or omissions.

 … And what he [Hunt]wants to do here is have it both ways. He wants to use the interviews that Mr. Lesnar gave as part of his RICO claims and the predicate acts, but then he wants you to somehow find that his own statements, the very same types of interviews, where he said: I know that Brock Lesnar was doping and I don’t care. I’ll beat him anyway. He wants you to ignore those and you can’t because they show that the allegations here are false.

“He wants to use the interviews that Mr. Lesnar gave as part of his RICO claims and the predicate acts, but then he wants you to somehow find that his own statements, the very same types of interveies, where he [Hunt] said: I know that Brock Lesnar was doing and I don’t care.  I’ll beat him anyway.  He wants you [the Judge] to ignore those and you can’t because they show that the allegations here are false.”

Jacobs also attempts to extinguish Hunt’s purported theories for a RICO claim:

And the pattern of racketeering, it’s been alleged that it’s both an open-ended pattern and a closed-ended pattern. And I just wanted to address some of the statements that are made on both of them. On the closed-ended continuity, the claim seems to be that — at least in part because you have to go further back in time — that the prior retirements of Brock Lesnar somehow factor into this closed-ended continuity. There’s a couple problems with that. One, it has not been pled in the Complaint. Two, any allegation that Brock Lesnar’s prior retirements that predated 2015 is somehow being a pattern of activity because they were used to avoid drug testing under the UFC Anti-Doping Policy, they have one significant problem and that is there was no UFC Anti-Doping Policy before 2015 and there’s also no allegation that Mark Hunt ever was in line to fight Brock Lesnar prior to 2015. So it’s — those allegations to establish closed-ended continuity simply are factually impossible in this case.

 As to open-ended continuity, it seems to be thatlooking forward, well, Brock Lesnar could unretire and again avoid testing at any time. Again, if you look at the UFC Anti-Doping Policy, specifically at Article 5.7 which we asked that judicial notice be taken of, it specifically says that if he unretires he — basically he has to serve his suspension from that point going forward. So, if he has 11 months left on his suspension, he has to be in the pool for 11 months if he unretires for testing. So this notion and these arguments that he could somehow step out of retirement and straight into the ring is also factually impossible.

Hunt’s attorney first brings up the fact that it is the burden of the moving party thus setting the landscape for his argument that despite possible omissions, the non-moving party (Hunt) would have deference for any vague or ambiguous facts.  He stresses based upon case law that Hunt need only set forth “plausible” facts for their claims.  Further, he need not provide specifics on damages.

He notes that the RICO claim is based on “an ongoing course and conduct by the enterprise and the parties that make the enterprise,” including Brock Lesnar.  He notes that reliance on fraud need not be alleged to make his RICO claim.

He addresses the Defendants’ issues with Hunt’s standing (re question of damages) and proximate cause.  He notes that Lesnar was allowed by the UFC through a “fraudulent agreement by the enterprise.”  He goes on to state that Defendants “defrauded Mr. Hunt when they did that.  They defrauded the Pay-Per-View subscribers. They defrauded many people who were paying or relying on the fact that Mark Hunt was going to get fight a fair fight.”

But the Court asked whether the allegations were “patently speculative” including whether Hunt would have beaten Brock Lesnar if he had fought clean.  The Judge also questions how a fighter that uses PEDs would be able to increase the value of the company based on Hunt’s allegations in the Complaint.  In fact, the Court seems to question the theory of case and alleged damages posed by Hunt.  The attorney for Hunt does not go into the problems only that it needs discovery to determine more detailed matters.

Yet, he seems to have a hard time with the questioning and focusing on the rationale of the RICO claim.

THE COURT: How is it — how can you — I guess the question may be ultimately is what facts have you alleged currently to demonstrate and how — as opposed to just conclusory allegations that these damages, these lost opportunities, are from the RICO activity and the racketeering activity and not merely from the fact that he got beat?

INGOLD: Well, Your Honor, the defendants seem to say, well, we would have to prove that but for the cheating by Mr. Lesnar, Mark Hunt would have won the fight.

THE COURT: But for the racketeering activity

INGOLD: Well, if — if the defendants had not, in our view, committed wire fraud; if they had said, we’re going to make Mr. Lesnar go through the same testing protocols; we’re going to hold him to the same standards as every other fighter, as Mr. Hunt in fact, then it would have likely turned up that Mr. Lesnar was cheating; he would have not been able to compete; they would have substituted another fighter. Even if Mr. Hunt would have fared better against a clean Lesnar, that would have helped his brand.

 THE COURT: How is all of what you’ve just described not patently speculative?

 INGOLD: Well, Your Honor, Mendoza says that we’re allowed to allege damages generally at the pleading stage.

Ingold goes on to analogize the issue of damages:

Your Honor, I would submit that if Michael Jordan never won a basketball game kids wouldn’t be buying Air Jordan sneakers from Nike for hundreds of dollars; that if Mike Tyson never won a boxing fight, people wouldn’t have paid hundreds of dollars in Pay-Per-View fees to see him fight.

The fact of the matter — and we put this in our brief — is that losing fights is bad for business.

The Court also questions why his claims for false pretenses is based upon a criminal standard rather than a civil one.  The Judge read it more like a fraud-in-the inducement claim and Hunt’s attorney could not really address why the False Pretenses claim was based on a Nevada criminal statute.  The Judge also questioned Mr. Ingold as to whether they were challenging the enforceability of the contract.  It was clear that Mr. Ingold did not want to argue that the contract was unenforceable or voidable.

The Court noted that if there was not a false pretense, it would impact his claim for unjust enrichment and other claims made by Hunt.  Basically, under Nevada law, could not claim damages covered by a contract and then have an unjust enrichment claim against the contracting party.  Mr. Ingold cited a case in which there could be more damages claimed outside the contract under unjust enrichment.

It was curious to note that Hunt is not alleging that his fight contract is unenforceable despite the fact that he claims that portions of the contract were breached.

Notably, the Campbell & Williams attorney, Colby Williams, started by quoting a case in which it attempts to frame its argument that RICO does not apply in this case.

“…Mr. Hunt’s Complaint is a prime example of the overenthusiastic use of RICO and its specter of criminal wrongdoing to seek a financial windfall in the context of a routine commercial dispute.”  Williams goes on to state that Hunt has failed to satisfy the two-prong test set out to claim that they can sue (“standing”) under the federal RICO statute.  First, you have to “demonstrate a cognizable injury to a property or business interest.  Second, the UFC brings up a fact that had not been brought up which actually helps their case here.  Jon Jones failed a USADA test and was not allowed to fight at UFC 200.  This factual distinction serves as circumstantial evidence that the UFC would not have allowed Lesnar to participate at UFC 200 if it had known that he was taking a banned substance, he would not have allowed him to fight at the event.  Thus, the plausibility of a conspiracy claim falls flat here.”

The Judge does side with Mr. Williams here in citing that the claim was “overenthusiastic” use of the civil statute.  He dismissed the cause of action with the right to amend which Hunt did.  However, the Court did warn that the threshold for a plausible civil RICO claim was high.  Whether or not Hunt met this hurdle will be determined in the upcoming Motion to Dismiss of the First Amended Complaint.

The primary problem found by the Judge was “the lack of demonstrated RICO standing.”  The Court did not buy a “specialized business personal injury” as asserted by Hunt regarding his loss opportunities and damage to his Juggernaut brand.  Personal injuries are not recognized under this statute.   He also could not infer proximate cause.  Essentially, the Judge could not determine that the claim that the UFC concealed exemptions “to cause clean fighters to fight doping fighters” caused Hunt’s injury.

Once again, I am curious as to why Hunt’s attorney did not include USADA in its Complaint for damages.  Certainly, there could be a level of liability on USADA, a third party (and nonparty in this lawsuit) that administers and enforces the UFC Anti-Doping Policy.  With the claims that Lesnar was allowed clearance to fight without proper drug testing, USADA could have been an entity to point the fighter.  Secondly, based on the argument and Hunt’s briefing, Juggernaut brand could have its own claims here.  As pointed out by Defendants, the company owned by Hunt should bring its own claim if it had one.

We shall see how Hunt’s attorneys respond and what they will argue to the Judge has changed (specifically the RICO claim) from the original complaint to the First Amended Complaint.

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