Disgruntled May-Pac fans get oral argument in appeals court

March 12, 2019

On March 7th, the U.S. Court of Appeals for the Ninth Circuit heard oral arguments in the appeal of the lawsuit brought by plaintiffs that purchased the Floyd Mayweather-Manny Pacquiao in May 2015.  The case was dismissed but appealed by the plaintiffs.

The underlying facts of the lawsuit brought by multiple individuals and consolidated into one case claim that they were victims of fraud when they purchased tickets and/or PPV for the fight without the knowledge that Pacquiao had an injured shoulder.  The details of the dismissal of the lawsuit were covered by MPO this past September.

Three parties representing the plaintiffs, the defendants including HBO and Showtime and separate counsel for defendant Floyd Mayweather and his company argued their briefs before the Night Circuit.

The appeal came down to two differing theories.  Plaintiffs viewpoint that the case is a consumer protection action where fans were duped into thinking that they were purchasing tickets and/or a $100 PPV to watch a healthy Paquiao and Mayweather.  But it was not revealed that Pacquiao was fighting with a significant injury.  As a result, consumers were taken advantage of by the promoters and those with business interests tied to the event.  Plaintiffs, in part, infer that the defendants were not going to cancel or postpone the event regardless of Pacquiao’s condition.

Defendants maintain the District Court ruling and uphold the ruling that the case is premised upon a revocable license.  The fans paid for what they received and despite the fact that they did not get the fight they wanted, they received the fight that they paid for.

The appellate court seemed to probe the question of whether Charpentier could be distinguished from this case based on the business-side of sports.  Charpentier was premised upon the fact that in the mid-1990s the Los Angeles Rams franchise was leaving for St. Louis, and despite its knowledge that it would, stated that it was staying.  While in Pacquiao, he indicated that he felt fine going into the fight, Mayweather asserted he knew everything within his opponent’s camp yet did not speak about a shoulder injury pre or post-fight.  HBO and Showtime did not claim to know about a pre-existing injury and promoted the fight as the Fight of the Century  It believed it to be so big that it set the ticket prices and PPV price point at astronomical prices.

Hart Robinovitch, arguing on behalf of the plaintiffs, stressed that facts were intentionally concealed from consumers set against the backdrop upon quotes from commentators inferring that the fight less that what was expected.  He portrayed the plaintiffs as the little guy that paid big prices for the event.

The Court asked about where the line might be drawn on a failure to disclose theory, here the omission of Pacquiao’s injury, where it is common that athletes play with injuries at all times.  Plaintiffs argued that the failure to disclose Pacquiao’s injury was material to this case.  Notably, Pacquiao did not publicly disclose the injury until 30 minutes into the PPV based on his request to the commission for a pain reliever for his shoulder. The Court grilled Robinivitch on the claim that Pacquiao omitted any claim of injury prior to the fight.  But, premised upon the omission, there must be a duty to disclose.  The Court also asked about “puffery” claims made by athletes (i.e., “I feel great,”) and whether something like this would give rise to a claim.

Plaintiffs argue that the license approach is premised on a contract claim, which differs from what it is arguing here.

They claim that the district court erred when it did not interpret Plaintiffs claim that Pacquiao concealed his injury for the sole business reason of making money.  Plaintiffs argue that there is a material fact, which cannot be dismissed on a Motion to Dismiss stage.

During oral arguments, Plaintiffs stressed the Charpentier case which was central to its case.  The case was brought by Los Angeles Rams season ticket holders that claimed the franchise publicly denied moving while concealing material facts that its intention was to move.   The court in that case stated, “Defendant knew these statements were false, but defendant made them purely to maintain and manipulate the sales of tickets.”  In that lawsuit, the court dismissed the contract-based claims but maintained the plaintiffs’ fraud claim.  The distinction is important when set upon the footprint of the Pacquiao case because plaintiffs argue that the material misrepresentation of Pacquiao’s injury in addition to the affirmations that he was fine is sufficient for this case to go forward.

While the question of disclosing an athlete’s injury is a debatable question, Plaintiffs cited the NFL’s policy of injury reports which discloses the nature and reason a player does not practice in the week prior to the game.  It notes this as an example of an affirmative

Daniel Petrocelli represented the defendants except the Mayweather defendants.  He argued that there are reasons why an athlete’s private health information is not disclosed.  First, there is a right to privacy issue regarding health issues.  Second, there should not be an expectation to know an up-to-date status of an athlete’s physical condition.  Finally, its common knowledge that boxers do fight with injuries.

The Court questioned Petrocelli if whether there are cases where there are material misrepresentations or omissions that give rise to a consumer claim.  But, Petrocelli argued that the cases are segmented between off the field business cases versus athletic case.  He argued Charpentier was based on the misrepresentation of the business aspect of sport and differed from Pacquiao’s shoulder.  He claimed that the case was extrinsic to the case and this was where the line can be drawn.  He gave the example of an announcement that a team had signed LeBron James and consumers made purchases based on the representation but in actuality it was another individual, not the famous basketball player.  In that instance, would there be an issue regarding a material misrepresentation.

While the Court did not side with either about the ultimate question of the veracity of the case, it did question Petrocelli if there were material facts about the omission of Pacquiao’s injury with respect to whether or not consumers were defrauded.

Mark Tratos, the attorney for Defendants representing Manny Pacquiao, Bob Arum, Todd duBoef, Top Rank, Inc. and HBO argued that the district court correctly dismissed the lawsuit arguing that the license approach applied.  They also claimed that there is no carve-out exception to the license approach where there is a fraudulent inducement to purchase an event.

Notably, the Defendants argued an alternative scenario in which Pacquiao was cleared by the Nevada State Athletic Commission which would relieve any liability on behalf of the defendants since a third party allowed the fight to occur.  This would place some level of liability on the commission.

During oral arguments, Tratos argued a floodgates of litigation scenario if there is a duty of a fighter to disclose an opponent injury.  The implication here would be that it would be implausible for a fighter to know whether or not there is a pre-fight injury of an opponent.  But there would be hundreds of lawsuits filed if there was an affirmative duty for a fighter to know another’s injury.

Payout Perspective:

One can expect an opinion in this case later this year.  If the court were to side with Plaintiffs, it would go back to the district court and continue as the lawsuit was dismissed just at the pleading stage.  If it sides with the defendants, the case would likely go away.  While most from the outside would see this as an easy case to decide in favor of the defendants, it brings up interesting theories with respect to consumer fraud.

Plaintiffs claim that there are material facts that would overcome a motion to dismiss the case purely on the filed lawsuit.  This is the initial goal of the Plaintiffs. Will this actual happen?  It would be surprising.  The Court seemed to wrestle with the necessity of disclosing an athlete’s injury prior to an event.  While Plaintiffs attempt to carve out the analytical argument that Pacquiao’s omission of disclosing the injury to generate sales as a business reason which would buttress its fraud claim, defendants argue that this is purely athletic strategy.  Defendants note that consumers are only entitled to watch an event and cannot dictate if its exciting or not.  It stresses that Pacquiao fought all 12 rounds and even won certain rounds based on the scorecards.  The cases argued before the court are carved out between a license approach (fans entitled to watch an event and nothing more) and those which follow the Los Angeles Rams case (Charpentier) where the court allowed a fraud claim when the Rams misrepresented that it would not move but did.  It does seem that the case will be decided upon whether there is a belief that there are material facts to determine whether the defendants had a duty to disclose the alleged injury.

The Court will be setting a new precedent when it decides this case as it will guide future lawsuits where sports fans feel duped by sports teams and/or events.

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