M-1 Global/Affliction settle lawsuit
September 5, 2011
Sherdog.com reports that Affliction and M-1 Global have settled its two year old lawsuit. The federal lawsuit, filed in Los Angeles, California, was set to go to trial this October.
Fedor Emilianenko and M-1 Global’s attorneys filed a Notice of Settlement in late August informing the Court that the parties involved in the lawsuit had come to an agreement. The papers filed noted the settlement and requested to vacate all pre-trial deadlines and the October trial date.
As you might recall, this lawsuit stemmed from the failed Affliction PPV, “Trilogy.” More background info is here.
Also, J.R. Riddell of Sherdog.com provides a synopsis:
[Fedor and M-1 Global's] complaint alleged that after Josh Barnett refused licensure by the California State Athletic Commission because of a reported positive stroids test, Affliction breached its contract by refusing to promote the third and final fight called for under their “Fight Agreement.” They claimed Affliction did not undertake “all reasonable efforts” to find a fighter to replace Barnett…
One of the claims made by M-1 was that Affliction was trying to repair its relationship with the UFC and no longer wanted to promote its third PPV.
The lawsuit saw key figures in MMA deposed including UFC head Dana White, at the time Strikeforce head Scott Coker, Affliction’s Tom Attencio and Fedor.
This past June, the Court denied the parties’ motions for summary judgment (requests to dismiss the case on a party’s behalf). At the time, the Court advised the parties that they mediate the case in order to settle the matter short of trial. However, the parties did not settle. But, as with most heavily litigated cases where the result may be in doubt, the parties carved out a settlement short of the trial date.
While the Notice of Settlement filed with the court gave the parties the opportunity to reopen the case within 30 days of the notice, it is unlikely that would happen. In most instances, the parties leave this window in the event a party fails to hold up its end of the settlement (e.g., pay the negotiated settlement). More important to the litigants and their clients, the court deadlines were vacated meaning that further legal work (and legal fees) are avoided.
Details Emerge Involving “Affliction Trilogy” Cancellation and UFC/Affliction Deal in 2009
June 16, 2011
The Affliction vs M-1/Fedor Litigation has provided some great insight on the behind-the-scenes dealings throughout the lifespan of the Affliction/M-1 partnership, which includes the cancellation of the Trilogy event and a last minute deal between Affliction and the UFC.
On June 7, 2011, a 55-page decision document was released, depicting in great detail as to what lead Affliction into dropping its MMA promotional aspirations and concurrently signing a deal with the UFC to get back in their good graces after being banned by the promotion in 2008.
Here are some of the tidbits disclosed in the decision:
- As of March 2008, Fedor had an oral agreement with M-1 that “obliged him to fight for M-1 for a two-year period in exchange for $2 million per bout, as well as a $1.5 million signing bonus”. Fedor also has an 8.5% interest in the company.
- In early 2008, Affliction’s Todd Beard informed M-1 that they were going to form an MMA promotion company after their relationship with the UFC had deteriorated.
- On April 14, 2008, Affliction and M-1 agreed that Fedor Emelianenko would be paid a $300k purse which was reported pay, and received an additional $1.2M consulting fee via M-1 Global, which totaled to a $1.5M purse after re-negotiating an earlier contract which did not include the Consulting Agreement (which was set up after considering some financials regarding taxes).
- Vadim Finkelstein invested $1 Million to open Affliction stores in Russia to make Affliction happy in order to form an Affliction/M-1 Global business, which they were also hoping to team up with Japanese promotion DREAM to run some co-promotional events in Japan, but Affliction was worried about the costs of such venture.
- On December 8, 2008, M-1 and Affliction clothing agreed on a $1 Million sponsorship deal that would heavily feature Affliction on the M-1 Challenge broadcasts for the 2008 and 2009 seasons.
- M-1 contends that each M-1 Challenge event costs around $250K US Dollars, which includes expenses such as venues, visa fees, travel expenses, stage, refs, and production. Affliction paid the first installment of $500K, never paid the rest ($500K). Affliction claims contract calls for 30 “unique” one-hour episodes of M-1 Challenge and only 27 were provided.
- M-1 claims that Affliction had growing concern, noting that Affliction’s Beard probably that the UFC was ready to sign with Fedor on any terms M-1 wanted, but M-1 held back trying to grow a “competitive promotion” with Affliction, using Fedor as the “trump card”.
- On May 13, 2009, the Trilogy event set for August 1st was presented, with Fedor fighting Josh Barnett.
- On July 9, 2009, Affliction began discussions with the UFC regarding a potential sponsorship deal.
- M-1 used their personal contacts to broadcast the Trilogy event on national TV in Russia, Channel One.
- On July 13, 2009, Affliction’s Bassiri met with UFC’s Lawrence Epstein, UFC’s general counsel, and discussed the possibility that the UFC would assume responsibility of the Trilogy event and postpone the event to September 19, 2009 in Dallas. Affliction wanted to leave the MMA promotion business and re-establish a relationship with the UFC. … MMAPayout: If you recall, this is around the time Zuffa insider’s were prematurely announcing a Fedor vs Lesnar main-event in Dallas for September, since part of the deal involved Affliction’s belief that they had a good enough relationship with Fedor that either he would follow them to the UFC, or would honor the one fight that was left in their contract. No one in Affliction informed M-1 of the meetings they were having with the UFC.
- After M-1 found out that Josh Barnett failed a drug test on July 21, 2009 from the CSAC, both parties started looking for a suitable replacement for the Trilogy event on August 1st. Affliction’s Tom Atencio presented M-1 with Brett Rogers, Roy Nelson, and Alistair Overeem as possible opponents for the Trilogy main event.
- Tom Atencio offered Brett Rogers $500k to fight Fedor on July 22, 2009, but Strikeforce – who Rogers was currently signed with – refused. Strikeforce eventually gave Rogers permission to Rogers to be able to take the fight on July 23, but by that day, Affliction canceled the Trilogy event and on that same day announced a deal with the UFC.
- The agreement between Affliction and the UFC is detailed as follows:
“Paragraph 1 of the UFC/Affliction agreement provided: “[E]xcept for any rights that [Affliction] has with respect to Fedor Emelianenko (‘Fedor’) and conditioned upon [Affliction] . . . assign[ing] the agreements between [Affliction] and the [Affliction] Fighters to the UFC, the UFC agrees to assume [Affliction]’s responsibility for payment of the entire purse of the Affliction Trilogy Event which [Affliction] represents is not in excess of $741,000 purse and $370,000 win bonus. . . .” Paragraph 2 stated that “[w]ith respect to Fedor, in the event the UFC is able to come to an agreement with Fedor on terms and conditions satisfactory to the UFC, the UFC shall assume responsibility for payments of Fedor’s purse for the Affliction Trilogy event or cause Fedor to release [Affliction] from its agreement with Fedor.” Paragraph 6 required that Affliction Promotions cancel the Trilogy event.”
- On July 23, 2009, M-1 didn’t know about the cancellation of the event until after it arrived to Los Angeles with 30 fans from Russia. Fedor was studying some footage on Vitor Belfort and Brett Rogers on the flight to LAX. … MMAPayout: On June 22, Atencio accused Dana White of tampering and trying to sign Vitor Belfort to a UFC contract to face Anderson Silva. White appeared on a TUF 9 Finale promo on Spike TV making the reference.
Court Denies Summary Judgment Motions in Affliction M-1/Fedor Litigation
June 16, 2011
On June 7, 2011, Judge Margaret M. Morrow denied the parties cross-motions for summary judgment in the Affliction v. M-1/Fedor litigation. I have previously posted about the litigation — most recently here.
The 55 page decision is a VERY interesting read especially with respect to the facts surrounding the “Trilogy” non-event — in particular the discussions and ultimate agreement between Affliction and the UFC.
Below are some of the interesting points — note the chronology.
As set forth in the Court’s decision, at a “July 13, 2009 meeting, Bassiri and Lawrence Epstein, UFC’s general counsel, discussed the possibility that UFC would assume responsibility for the Trilogy show and postpone it to September 19, 2009, in Dallas. Bassiri told Epstein that Affliction Promotions wanted to leave the MMA promotion business and re-establish its relationship with the UFC.”
According to the decision, “[o]n July 21, 2009, M-1 learned from Affliction that the California State Athletic Commission would not renew Josh Barnett’s license because he had tested positive for the use of steroids.”
Then, “[o]n July 22, 2009, Atencio offered [Brett] Rogers $500,000 to replace Barnett as Emelianenko’s opponent at the August 1, 2009 Trilogy event,” but “Strikeforce, with whom Rogers then had a promotional contract, was not willing to release him from his contract to fight in the Trilogy event, however.”
“[O]n July 23, 2009, Strikeforce released Rogers to fight in the event. By that time, however, Affliction Promotions had decided to cancel Trilogy. At 4:00 p.m. that day, Affliction concluded a deal with UFC.”
As set forth in the decision, that agreement provided, in part, as follows:
Paragraph 1 of the UFC/Affliction agreement provided: “[E]xcept for any rights that [Affliction] has with respect to Fedor Emelianenko (‘Fedor’) and conditioned upon [Affliction] . . . assign[ing] the agreements between [Affliction] and the [Affliction] Fighters to the UFC, the UFC agrees to assume [Affliction]’s responsibility for payment of the entire purse of the Affliction Trilogy Event which [Affliction] represents is not in excess of $741,000 purse and $370,000 win bonus. . . .” Paragraph 2 stated that “[w]ith respect to Fedor, in the event the UFC is able to come to an agreement with Fedor on terms and conditions satisfactory to the UFC, the UFC shall assume responsibility for payments of Fedor’s purse for the Affliction Trilogy event or cause Fedor to release [Affliction] from its agreement with Fedor.” Paragraph
6 required that Affliction Promotions cancel the Trilogy event.
According to the decision, “[p]rior to the time M-1 learned of the cancellation, it had put Emelianenko on his scheduled flight to Los Angeles, and given him footage of both Rogers and Vitor Belfort so that he could study the fighters while in flight. Emelianenko did not learn that Trilogy had been cancelled until he arrived at Los Angeles International Airport with thirty fans from Russia.”
Here is the decision:
Affliction SJ Decision
Fight Lawyer
Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry. He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website. He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training. Justin lives in New York City where he trains in jiu jitsu and boxing.
DISCLAIMER
The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship. I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.
Affliction opens up largest store in Seal Beach
May 25, 2011
MMA lifestyle apparel brand Affliction Clothing is set to open a 5,000 square foot retail location at its world headquarters in Seal Beach, California. According to a press release, the SoCal location is holding a grand opening June 4th.
This will be the 10th Affliction Clothing store.
Via Affliction’s press release:
Consistent with Affliction’s attention to quality and design, the store will exemplify the Affliction esthetic, offering custom made fixtures with signature rivet detail, unique display pieces, such as a custom Rat Rod car and memorabilia autographed by Affliction’s loyal celebrity following.
Payout Perspective:
The opening of Affliction’s largest store indicates that the MMA apparel industry is growing. In this week’s Sports Business Journal (subscription required but more on this later) there is a featured article about the growth and expansion of the UFC. One of the areas that was cited as needing work was the lifestyle component of the UFC brand. While there can be a debate as to where the design and concepts for clothing should go, Affliction has defined its style and based on its growth, it is hitting the mark with its demographic.
GSP v. Koscheck: T-Shirt Edition
December 10, 2010
Before they enter the octagon at UFC 124, pay attention to the walk out of Georges St. Pierre and Josh Koscheck as they will be wearing t-shirts of their respective sponsors: Affliction and Dethrone.
The GSP shirt is touted as a limited edition Affliction shirt with only 500 made. With a price point of $57.99, its more than buying the PPV (if you purchase the PPV on DirecTV HD – $54.95).
Josh Koscheck’s Dethrone “walkout t-shirt” is not a limited edition, but comes in all black and all red (pictured) and has a “Kos” logo. Koscheck’s shirt is “reasonably” priced at $27.99.
Payout Perspective:
Similar to replica jerseys in team sports, for fight fans, t-shirts are a practical way to support your favorite fighter. Although many people do not like the huge designs, depictions of destruction, skulls or devils, I expect many fans wearing Affliction and Dethrone gear at the fight on Saturday. As for the two shirts above, I think the price point for GSP’s t-shirt is too expensive for an average MMA fan. Even a $28 Koscheck shirt seems a bit high, but is much more manageable on the wallet.
It would be a nice coup for Dethrone if it could claim to have the UFC Heavyweight Champ and the UFC Welterweight Champ. Possible slogan: “The brand of champions”?
*Note: I realize GSP may be wearing his gi during the walkout, but he should have his shirt on at the end of the match.
Affliction Sued for Trademark Infringement
November 22, 2010
On November 16, 2010, a complaint was filed against Affliction, Inc., Affliction Retail, Inc., Affliction Holdings, LLC, Affliction Retail, LLC, and Affliction Entertainment Group, LLC in the United States District Court for the Central District of California by Timothy Sean O’Brien and Livfast, LLC.
According to the allegations in the complaint, “O’Brien is a professional motocross rider and a businessman.” The Livfast webpage provides that the company “is owned and operated by Tim O’Brien.”
Plaintiffs alleged that “[n]o later than October 8, 2004, Livfast first used the Livfast name on its clothing, including shirts, pants and hats and has extensively used the Livfast Trademark (defined below) on its goods and services on a continuous basis since that time.” Further, plaintiffs allege that Livfast applied for a trademark registration on July 31, 2003 “for the word mark “Liv Fast” with the United States Patent and Trademark Office [] and the USPTO granted Livfast a registration for its Livfast trademark (Registration No. 2957726) on May 31, 2005 [].”
Livfast claims that it “recently discovered that Affliction bas been infringing upon the Livfast Trademark by using a virtually identical name, the Live Fast name and the Affliction Live Fast name, on its clothing as well as other uses, which is likely to lead to confusion in the marketplace and has actually caused confusion in the marketplace.”
According to the allegations in the complaint, (1) in March 2010, the USPTO “rejected Affliction’s request to register the ‘Affliction Live Fast’ name as its trademark” because “‘of a likelihood of confusion with the mark in U.S. Registration No. 2957726’”; (2) in July 2010, “the USPTO rejected Affliction’s request to obtain a trademark registration in the name ‘Live Fast,’ stating that the ‘Live Fast’ name and the Livfast Trademark are ‘highly similar overall,’ that the goods are ‘very closely related and some are identical and/or legally identical’ and that the trade channels are similar”; and (3) in October 2010, “after Affliction requested the USPTO to reconsider its position on its use of the ‘Live Fast’ name, and after Affliction submitted specimens showing how it uses the ‘Affliction Live Fast’ name on its clothing goods, the USPTO again rejected Affliction’s request to register the ‘Live Fast’ mark.”
Plaintiffs allege that through “Affliction’s continued use of these names, Affliction has committed and continues to commit willful trademark infringement.”
Plaintiffs assert claims for “Federal Trademark Infringement,” “False Designation of Origin,” State Trademark Infringement and Unfair Competition,” Unfair Competition,” “Unjust Enrichment,” Cancellation of Trademark Registration,” “Accounting,” and Declaratory Relief.”
Affliction is no stranger to litigation.
As I have posted at my Fight Lawyer website, Affliction recently settled a trademark infringement action with Chrome Hearts with similar allegations, it recently settled a copyright infringement action with Freeplay Music, LLC; it recently filed a lawsuit against Oficina De Representaciones Mundiales S.A De C.V. and Eduardo Kurian (and is a counterclaim defendant in that litigation), its alleged “exclusive distributor in Mexico for the Affliction and Sinful clothing brands[],” and its litigation with Fedor and M-1 appears to still be going strong.
Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry. He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website. He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training. Justin lives in New York City where he trains in jiu jitsu and boxing.
DISCLAIMER
The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship. I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.
Fedor Deposed and an Affliction attorney withdraws from M1/Affliction case
August 24, 2010
Last week we gave you an update on the case involving M-1 and Fedor Emelianenko suing Affliction for breach of contract due to Affliction abruptly canceling its third PPV.
According to Marc Hines, the attorney for the plaintiffs, Fedor and Fedor’s manager, Vadim Finkelstein were deposed two weeks ago in Southern California. Fedor’s deposition took one day and he utilized a court interpreter to respond to questions. “I thought our guys came across really well. We are really pleased with their testimony,” said Hines of his clients.
Hines stated that Todd Beard, the former co-owner of Affliction, will be deposed this week.
Also, Judd Burstein, the high profile New York attorney that served as co-counsel for Affliction has filed a motion to withdraw as its counsel. Burstein had represented Affliction for a little over a month as on July 20th the court granted Burstein’s application to represent Affliction. According to court filings, Affliction determined it “unnecessary to employ two sets of counsel in this matter.” A motion on this issue will be heard on November 1st. Hines indicated that Fedor and M-1 would not oppose Burstein’s motion for withdrawal. The law firm of Silverstein & Huston remains as attorneys of record for Affliction.
Update on Fedor/Affliction Lawsuit
August 18, 2010
It has been a little over a year since Affliction had to cancel its third PPV at the last minute. Fedor Emilianenko, the company’s main attraction filed suit as a result of Affliction’s sudden demise.
In October 2009, Fedor Emilianenko and M-1 filed suit against Affliction for breach of contract in Los Angeles. Fedor and M-1 Global, Fedor’s promotional group, seek damages as a result of Affliction’s cancellation of its third PPV. Fedor’s contract guaranteed three fights. The lawsuit claims that Affliction did not make reasonable attempts to find a suitable replacement for Fedor’s opponent, Josh Barnett. Barnett was taken off the card as he was denied a license to fight due to a failed drug test.
The following are developments in the case:
- In February, Affliction’s original attorney, Michael Bassiri, was replaced by Judd Burstein of New York. Steven Silverstein of Orange, California is Affliction’s local counsel. According to Burstein’s web site, he currently represents Oscar de la Hoya and has represented boxer Lennox Lewis, Don King and Donald Trump.
- On July 15th the Fedor/M-1 legal team filed a motion to depose Affliction co-owner’s Tom Atencio and Todd Beard. Legal filings between the opposing sides show a failure to agree on dates to schedule the depositions.
- On July 28th, on a motion filed by the Fedor/M-1 legal team, the court moved the trial date from November 16, 2010 to June 7, 2011.
Payout Perspective:
Based upon the recent court filings, the lawsuit aims to be a tough battle inside and outside the courthouse. The depositions of Atencio and Beard should be interesting, if not contentious. The hiring of a New York attorney that has handled high profile figures reveals a possible shift in litigation strategy for Affliction. It will be interesting to see the amount of information that will be obtained through the discovery process. Hopefully, the information may shed light on the unique contractual relationship between M-1 and Affliction.
Affliction Countersues M-1 Global
May 31, 2010
Loretta Hunt of Sherdog.com is reporting that Affliction has countersued M-1 Global by asking for declaratory relief on the validity of a “consultation agreement” between Affliction and M-1.
Affliction Entertainment filed a countersuit against M-1 Global, the management and promotional group that reps Fedor Emelianenko, in Los Angeles federal court on Thursday, asking for declaratory relief on the validity of a “Consultation Agreement” signed into by the two parties in April 2008 — allegedly under false pretenses. Affliction is also asking the court to rule that M-1 Global return $2.4 million in consulting fees it was paid in conjunction with two Affliction MMA events the two groups co-promoted in July 2008 and January 2009.
In the filings obtained by Sherdog.com, Affliction claims it, under M-1 Global’s directive, entered into two separate agreements with Emelianenko and the Holland-based organization to procure the services of the world’s No. 1 heavyweight as a headliner for three events.
According to Affliction, the California-based promotion inked a “Fight Agreement” that tendered $300,000 to Emelianenko per bout he participated in, while Affliction was directed to pay the remaining $1.2 million of Emelianenko’s $1.5 million asking purse per bout directly to M-1 Global under the auspice of a “Consultation Agreement.”
“The reason for the two agreements, Affliction was told, was for personal tax implications,” reads the countersuit.
Affliction claims no consultation was ever agreed upon or given by the M-1 Global group for the two events.
“Because the consulting agreement was a sham contract designed to avoid tax obligations, M-1 had no obligations to perform pursuant to the consulting agreement and therefore rendered no performance under the consulting agreement,” alleges Affliction’s filings.
Affliction is asking the court to deem the consulting agreement unlawful and that M-1 Global refund the $2.4 million it initially collected for the two events, plus a 10 percent interest rate per year along with attorney’s fees.
Payout Perspective:
We’d all heard of these so called “consulting agreements” when the Affliction-M1 deal was signed. Most viewed it for what it was: purely a tactic designed to extract more money out of the organization. It was the price Affliction had to pay for playing the Fedor game. Now they’ve conveniently turned around and said, “hey, this probably wasn’t on the up and up.”
I guess my question is, whose fault is that? Affliction – and Strikeforce, for that matter – knew what it was getting into when it signed the deal.
Hopefully the MMA community can learn from this: don’t sign the wrong deal for the wrong reasons. Moreover, you can’t bet the farm on one fighter (especially an unknown within your own domestic market).
This could get ugly. It would seem that both sides are prepared to battle this out in court, which could take a while (and a fair degree of money).
GSP-Affliction Ad in GQ Magazine
February 1, 2010
Here’s a look at the Affliction advertisement featuring Georges St-Pierre that appears on the back page of GQ’s February edition of the magazine.
Payout Perspective:
Brock Lesnar may be the biggest draw in the sport right now, but if St-Pierre continues to increase his profile with high-level sponsorships, magazine covers, and television appearances, it won’t be long before he becomes the biggest attraction MMA has to offer. He’s not a heavyweight, sure, but he’s one hell of a fighter and his appeal goes also transcends that mainstream divide – he has serious cross-over potential.
