Arbitration could determine boxer Trout’s Ali Act claim

December 8, 2017

Although not given enough publicity, the lawsuit filed by Austin Trout against the World Boxing Organization which was moved to U.S. federal court in Puerto Rico continues with the WBO attempting to move the case to arbitration while Trout seeking to maintain it in federal court.

Notably, Trout claims damages for violations of the Muhammad Ali Act, Breach of Contract and Fraud.  The lawsuit was originally filed in November 2015 in New Mexico state court.  It was then removed to New Mexico federal court in February 2016 and then moved for dismissal for improper venue as it argued that the case should be in Puerto Rico where the WBO operates and pursuant to the “Contract Venue Provision” in the contract Trout had with the organization.  Although the Court denied this motion for dismissal, the WBO filed a Motion to Transfer venue to Puerto Rico in August 2016.  In July 2017, the federal court in New Mexico transferred the case to Puerto Rico.

After requesting that the lawsuit be moved to Puerto Rico, the WBO moved to compel arbitration of the matter citing the contract Trout signed with the promotion.  Trout’s attorney argued that the Ali Act claim is based on federal legislation and could not be decided by an arbitration.  It would not be a claim encompassing what was contemplated when resolving a dispute with arbitration.

Trout’s attorneys argue that the WBO never indicated that in its pleadings prior to the Motion to Compel Arbitration that it contemplated moving the case to arbitration.  Arbitration is a form of alternative dispute resolution outside of the court system.  It is decided by one or more arbitrators that renders an arbitration award that is usually binding and cannot be appealed.

The WBO cites Section 35(e) which states that Arbitrations pursuant to the laws of Puerto Rico and the U.S. Arbitration Act is the sole remedy for grievances.  This would be a binding Arbitration which means there would be no means for appeal.

Section 35(e) as cited by the WBO in its briefing:

All WBO participants acknowledge and agree that the mandatory resort to the WBO appeals regulations is the sole and exclusive remedy for any claim, appeal, grievance or contest that arises from any right or status that is or could be subject to these regulations or which result or could result from or relate to the interpretation of application of these regulations. These WBO Grievance Committee determinations are Arbitrations within the contemplation of the arbitration laws of Puerto Rico, 32 LPRA § 3201 et. seq. and the U.S. Arbitration Act, Title 9 of the United States Code and the Inter-American Convention on International Commercial Arbitration of July 30, 1975 and the convention on the recognition and enforcement of Foreign Arbitration Awards, June 10, 1958. All WBO participants stipulate and agree that the nature of the sport requires a prompt, final, and uniform resolution of all disputes concerning application of these regulations by a tribunal experienced with the application of these Regulations and with a special knowledge and experience in world championship professional boxing.

The WBO argues that Trout’s claims “come within the compass of an arbitration clause.”

On November 30th, Trout filed a sur-reply in opposition to the motion.  A sur-reply is an additional reply to a motion filed after the motion has already been fully briefed.  In general, courts frown up these types of briefs because they are not requested by the court and creates more work that many believe is unnecessary.

Nevertheless, the additional brief cites that the contract venue clause contained in the WBO contract governs the forum in the present case and thus should stay in the court system.

The pertinent contract language according to Trout is Section (d).

Section 35(d) of the WBO Championship Regulations states:

These Regulations are to be interpreted in conformity with the Laws of the Commonwealth of Puerto Rico. All WBO participants agree and consent that the exclusive venue for any or all action in which the WBO is made a party, whether it is to enforce, interpret or declare the application of these Regulations or to appeal from any determination of the WBO, including, but not limited to a determination of the Complaints and Grievance Committee, may be maintained only in the Superior Court of the Commonwealth of Puerto Rico, or, if applicable, in the U.S. District Court for the Commonwealth of Puerto Rico.

The WBO advocates that it’s the arbitration clause and not where the case should be litigated governs this issue:

The clauses here are not mutually exclusive. One clause—Section 35(d)—dictates applicable law and a chosen location for possible lawsuits involving WBO, and the other—Section 35(e)—dictates the selected procedure for disputes regarding WBO regulations.

The organization also claims that it has not waived its right to arbitrate.  It contends that there is no trial date and despite the fact that the lawsuit was filed in 2015, the delay in litigation of the case was due to securing proper venue and jurisdiction.  It also argues that the Ali Act violation claimed by Trout is subject to arbitration.

Of course, the argument by Trout’s side is that Section 35 (e) relates to “disputes regarding WBO regulations.”  The Ali Act, according to Trout, is outside the contemplated WBO regulations.  This would be a strong argument to keep it in federal court.

Payout Perspective:

This will be an interesting lawsuit to monitor due to the Ali Act claim.  Trout’s attorneys claim that the WBO had not brought up the issue of moving to compel when moving the jurisdiction and then venue.  But, this argument is not persuasive of whether or not the claims should be arbitrated per the contract.

If the court grants the motion, we could see an arbitration panel deal with an Ali Act claim (barring a motion to dismiss the claim prior to arbitration) and make a final determination on it which might be something of first impression.  The argument that the claims are from federal legislation (i.e., Ali Act) and not related to the WBO Rules is the strongest argument against arbitration.  MMA Payout will continue to follow.

One Response to “Arbitration could determine boxer Trout’s Ali Act claim”

  1. AK on December 11th, 2017 3:54 PM

    What’s all this CRAZY nonsense about “With the UFC lobbying against the Ali Act Expansion, this matchmaking is what proponents of the bill are seeking to stop. A fight made without care for the rankings.” How, how .. HOW in the whole damn WOOORLD is it the government’s business to eff w/ the operations of a private business???

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