Zuffa files its Motion for Summary Judgment against former fighters in the UFC Antitrust Lawsuit

July 31, 2018

On Monday, Zuffa filed its Motion for Summary Judgment against the Plaintiffs in the UFC Antitrust lawsuit.  The filing argues that despite the lengthy and voluminous amount of discovery taken place, the former fighters have not provided factual evidence to support their antitrust claims.  It also argues that the expert opinion of the Plaintiffs should be excluded, and if not, they do not set forth evidence to establish a market, examine the correct wage comparison exhibiting losses and show causal injury.

Zuffa notes that it has filed Daubert motions which seek to exclude the testimony from Plaintiffs’ two economic experts.  If the court grants those motions, Plaintiffs will not have evidence of market definition, causation or damages.  Even without the court granting those motions, Zuffa argues that Plaintiffs’ allegations for monopolization and monopsonization must fail.  Zuffa argues that based on the testimony from rival organizations such as Bellator, PFL, OneFC and ACB that none had issues securing fighters and thus had the necessary inputs to compete.  The company argues that Plaintiffs changed its alleged “scheme” and omitted any monopoly claims.  The new theory is comprised of a “free floating” monopoly “broth” which comprises different allegations and Zuffa argues that the claims fail due to the lack of a sufficient input or output market.

Zuffa cites to the ruling in the Golden Boy-Al Haymon lawsuit in which Haymon won on summary judgment.  Essentially, Zuffa contends “Plaintiffs have not met their burden of proving an input market of buyers (where Zuffa competes with other promoters to acquire athletes’ service) or an output market of sellers (where Zuffa competes to offer sports entertainment to viewers).”

The motion attempts to poke holes at Dr. Hal Singer’s findings in its expert report supporting the former fighters’ argument for an “Elite MMA Fighter” market.  Zuffa argues, “Dr. Singer has not even attempted to define a market using the accept SSNIP [Significant Non-transitory Increase in Prices] test because he has not defined buying promoters to whom a price decrease by a monopsonist would cause a shift in business.”  It once again cites to the Golden Boy-Haymon opinion for the example where a product market for “Championship-Caliber Boxers” is not sustainable where expert fails “to analyze the qualifications or backgrounds of the current managers in the market.”  Zuffa states, “Dr. Singer merely uses the ranking data combined with his own subjective analysis to include or exclude athletes rather than promoters.”

Zuffa goes on to argue Dr. Singer’s definition of the output markets stating that the proper market definition is broader than just MMA and his expert opinion does not consider the reasonable substitutes.

In arguing that the court dismiss its Monopsonization Claim, Zuffa argues that the testimony from competing MMA promoters have access to the inputs needed to compete refutes the monopsony claim that the promotion is a “monopsony purchaser of athletes’ services.”

Zuffa brings across multiple examples of its promoters thriving despite it being a competitor in the same market.  Bellator’s recent “nine-figure deal” with DAZN to produce 22 annual events is used as evidence to argue that other promotions do not have barriers to entry.  They also cite to PFL’s recent deal with NBC Sports and One Championship’s boast that it broadcasts to “1.7 billion potential viewers across 138 countries.”

Scott Coker’s deposition testimony is quoted in the motion stating, “there’s not going to be a free agent fighter that Bellator can’t affor or have access to” to support the claim that other promotions are comparable to the UFC.

In addition, Zuffa claims that Plaintiffs have failed to evaluate the effect of the challenged conduct on actual compensation levels.  It claims that actual compensation for fighters rose during the Class Period in question.  This goes back to the overarching theme of “wage share” versus “wage level.”  Wage share is the total compensation as a percentage of relevant revenues whereas wage level are the actual wages. Here, Zuffa argues that wage share is an unacceptable measure of anticompetitive conduct because it would have the “practical effect of stifling companies’ innovation and investments for fear of incurring treble damages liability based on a lower than average wage share.”

One of the interesting arguments made by Zuffa is that it did not engage in exclusionary anticompetive conduct.  It claims it did not engage in “predatory hiring,” which is the hiring of talent for purposes of keeping them away form a competitor.  The motion denies that the UFC signed Gilbert Melendez and Antonio Rogerio Nogueira to prevent them from leaving for another organization as claimed by Plaintiffs.  It also mentions the “benching” (i.e., “forced periods of inactivity”) of three UFC athletes: Andrei Arlovski, Roger Huerta and another fighter which is redacted.

The motion also argues that Plaintiffs did not prove that Zuffa’s Exclusive Contracts Foreclose a “Substantial Share of Competition.”  Zuffa claims that Plaintiffs contention that the company’s 30-month exclusive fighter contract (including the right to match period) is illegal is wrong.  “Contrary to Dr. Singer’s assertion that 30-month exclusive contracts are unlawful, courts have routinely held that exclusive contracts even up to six years are not anticompetitive so long as there is sufficient opportunity to compete for each contract at the time it is signed.”

Motion for Summary Judgment by JASONCRUZ206 on Scribd

Payout Perspective:

MMA Payout will continue to examine this motion as we have yet to talk about the plethora of exhibits which were attached to support it.  The arguments are similar to the ones made at the outset with its motion to dismiss. Zuffa’s introductory section which explains its success based on taking risks on the industry, its investment and its business acumen to get where it is today.

Zuffa stresses the competition in its motion utilizing evidence from testimony of its competitors to show that they are competing with the UFC and in certain instances have had no issues in attaining athletes similarly sought by the promotion.  This would seem to contradict the Plaintiffs argument that it had a monopsony over the market for “Elite Professional MMA Fighter services.”  As for its monopoly claim, Zuffa states the plaintiffs have conceded this claim based on inferences from prior pleadings.

Although it notes it is moving to exclude Plaintiffs’ expert, Hal Singer, it takes direct aim in rebutting his analysis which supports the claims made by the former UFC athletes.  It argues that they have wrongly identified the input or output market by attempting to define the market by the athletes and not by the MMA promoter.

Plaintiffs will have an opportunity to respond in the coming weeks and MMA Payout will keep you posted.

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