The reason for the new UFC-NY lawsuit

September 30, 2015

The UFC surprised many with another lawsuit in federal court in New York challenging the constitutionality of the state’s ban on professional MMA.  This time, the UFC is seeking a preliminary injunction to hold an event in the state this April.

The news of a new lawsuit comes when the original lawsuit is in the Second Circuit Court of Appeals.  Paul Clement, the renowned appellate lawyer and former U.S. Solicitor General is representing Zuffa and filed their appeal brief this past August. New York’s response is set for the beginning of November.

But perhaps the road map for the lawsuit filed this week was provided by Judge Kimba Wood, the trial court judge that dismissed Zuffa’s case.

In deciding to dismiss Zuffa’s case, it offered the following in its conclusion (click to enlarge):

Kimba Wood opinion

The opinion is mere “dicta” meaning that Judge Wood’s suggestion is not law or precedent which others may cite as guiding authority. Yet, it created the opportunity for the UFC to open up another line of action in attempting hold an event in New York.

Unlike the November 2011 lawsuit, the UFC is the only plaintiff. The UFC focuses on the claim that the New York law, the Combative Sport Law (“CSL”), violates due process rights as it is unconstitutionally vague as to its application.

UFC Complaint p10

The UFC points out that the CSL exempts “martial arts” from its ban stating that “martial arts shall include any professional match or exhibition sanctioned by any” of the organizations listed in the statute.

It notes in the Complaint that “standing,” the right to bring an action in the court, “could not be clearer.” This directly addresses the previous lawsuit in which Judge Wood determined that there was no standing due to the fact that the UFC had not suffered injury and did not contact a promoter to hold an event in New York. In its Complaint, it now states that it is working with WKA.

Screenshot 2015-09-30 17.27.53

Based on setting a UFC event for April 2016, the UFC states that it will lose “millions of dollars in ticket sales.”  It also will lose a source of marketing for its UFC-branded gyms in New York, as well as for the DVDs, consumer products, video games and other products that it sells.

Notably, the UFC indicates that it has “lost sponsorships and has suffered reputational damage around the world because of its inability to hold professional MMA events in New York.”  It will be interesting to see what evidence it may bring to prove these allegations if it comes to that point.

The UFC Complaint cites the differences from the beginnings of the CSL indicating that the legislature was concerned with “no-holds-barred fighting.” In her opinion Judge Wood states “MMA has changed substantially since the Ban was enacted.”  This provides some guidance as to what a court may decide with respect to the CSL.

Payout Perspective:

It’s clear that the roadmap was provided by Judge Wood for this lawsuit with the exception that it has filed the lawsuit in federal court as opposed to state court as suggested in her opinion. The lawsuit is premised upon the determination by the prior court as this filing is tighter and a shorter (only 37 pages as opposed to 100 plus pages) complaint. It appears that there is a better chance for the UFC in this lawsuit although you should expect stiff opposition from New York. The state will likely argue what it did in the prior lawsuit which is that laws need not change over time.  And despite the change within the sport of MMA, it will focus on the intent of the law with its primary purpose to ban MMA.

UFC files preliminary injunction in New York case

September 30, 2015

The UFC filed its motion for preliminary injunction on Tuesday.  It argues that the UFC is likely to prevail on its claim and should be granted the injunction to hold its event at Madison Square Garden this April.  Notably, it has already spent a non-refundable $25,000 for the anticipated event in April.

No hearing date has been set and we’ll likely see opposition from New York.

Similar to its complaint filed on Monday, it stresses the contention that the statute banning professional MMA in the state is inherently vague.

“Much of the law’s problems stem from its failure to explain with any reasonable degree of clarity what exactly a “combative sport” is,” reads the moving papers submitted by the UFC.  “Rather than define the term expressly, the statue attempts to reverse engineer a definition by exempting from its prohibitions certain sports, including “martial arts.””

Again the UFC stresses its belief that any issues on standing are now answered: “Whatever uncertainty may have existed on the matter in the past, it is now crystal clear that the estate interprets the law to prohibit Plaintiff from doing so.”

The UFC utilizes deposition from the Jones v. Schneiderman lawsuit to provide evidence that even NY officials provided contrary testimony to how they interpreted the statute.

In addition, the UFC notes that it has contracted with the World Kickboxing Organization, an “exempt organization” allowed to hold events in the states.  The motion states, “To eliminate any potential concerns about the imminence of its injury, Plaintiff has contracted to host a live professional MMA event sanctioned by an Exempt Organization.”

It also indicates that it has committed $25,000 as a non-refundable deposit and stands to lose millions of dollars in ticket sales and media revenue.

As we’ve learned from previous injunction requests in MMA, there are hurdles the injunction-seeker must prove that “the probability of his prevailing is better than fifty percent.”

  1. “a likelihood of success on the merits [of the lawsuit],”’
  2. That it will suffer “irreparable harm” with a preliminary injunction, and
  3. “that a preliminary injunction is in the public interest.”

We should also note that the UFC also challenges NY Liquor Law as it did in the November 2011 lawsuit as that law mirrors the Combative Sports Law (or “CSL” as it is referred to in the pleadings).

Payout Perspective:

This will be an interesting, and an important injunction for the UFC in its fight to hold an event in New York.  I believe that the first element, “likelihood of success on the merits,” is the biggest hurdle for the UFC.  Obviously, the monetary investment in holding an event reflects the “irreparable harm.”  You can argue the “public interest” element.  Despite the ban, and the inability to get a law passed in Albany to legalize MMA, there is still a lot of support for the sport in the state.  The “likelihood of success” could be a toss-up and based on the court’s interpretation of the CSL ban.

UFC announces April 2016 event in New York but it hinges on new lawsuit

September 28, 2015

The UFC has announced per press release that it is filing a new lawsuit in federal court in New York once again challenging the legislative ban on professional MMA in the state.  In a show of confidence, it has also scheduled an event on April 23, 2016 in New York’s Madison Square Garden assuming that the court will grant a preliminary injunction.

Via UFC press release:

“We believe fight fans have waited long enough to experience live UFC events in the state of New York and we are thrilled to announce our first event at Madison Square Garden,” UFC Senior Executive Vice President and Chief Operating Officer Lawrence Epstein said. “Professional MMA is legal around of the world and it is about time New York followed suit.”

In August, UFC filed an appeal in the United States Court of Appeals for the Second Circuit – the federal appellate court with jurisdiction over New York – stating that New York’s prohibition of regulated professional MMA events violates the First Amendment rights of athletes and fans throughout the state.

On September 28, UFC filed a new case in federal court, reiterating its claim that the New York law banning MMA events is unconstitutional.  This out-of-date law is too unclear for the public to understand, and has allowed regulators in New York to pick and choose arbitrarily what events they will permit.  Events featuring every combat sport except MMA seem to be allowed in New York, though this is not explicitly stated in the law.  The statute, and the state’s pattern of enforcing it, violates the Constitution’s prohibition on unconstitutionally vague laws.

Later this week, UFC will ask a federal judge to issue a preliminary injunction against New York state officials enforcing its unconstitutional law. Without such an injunction, the event at Madison Square Garden will not be able to proceed.

The appeal by the UFC of its original lawsuit against New York filed in November 2011 is still ongoing with Paul Clement filing a brief on behalf of the UFC in early August and the state set to file its brief at the beginning of November.  The lawsuit filed by the UFC today looks to be different than the appeal currently pending.

A preliminary injunction seeks equitable relief (as opposed to monetary damages) from a court prior to a final determination of the merits.  A key distinction here for the UFC to get an event in New York by this spring.

In general the factors determining whether a court will grant a preliminary injunction are:

  1. The substantial likelihood of success on the merits of the case;
  2. The party seeking the injunction faces a substantial threat of irreparable damage or injury if the injunction is not granted;
  3. The threat is immediate;
  4. The balance of harms weighs in favor of the party seeking the preliminary injunction;
  5. There is no other available remedy;
  6. The grant of an injunction would serve the public interest.

Notably, MMA has seen its share of preliminary injunctions recently.  Eddie Alvarez sought a preliminary injunction in a New Jersey state court case when he sought to be released from Bellator to fight in the UFC.  He lost.  However, as we now know, he made it to the UFC.

Bellator MMA filed a preliminary injunction in New Jersey attempting to prevent Rampage Jackson from fighting at UFC 186.  The trial court granted the injunction but the state appellate court overturned the injunction and allowed Jackson to fight at UFC 186.

Payout Perspective:

It’s a risky gamble by the UFC.  Before the event can even happen in April, the court must grant a preliminary injunction to allow the company to hold it.  Thus, the UFC could be out a lot of money.  But that’s the strategy.  Planning the event in April will shows there’s a “threat of irreparable damage,” it is “immediate” and “would serve the public interest.”  Thus, three of the requisite 6 factors (possibly more) to grant a preliminary injunction would be satisfied.  The legal strategy seems to hang on the opinion which dismissed the original lawsuit as Judge Kimba Wood seemed to entertain the argument that the statute banning professional MMA was vague but since no event actually occurred in the state, there was no harm.  Judge Wood stated that Zuffa could not establish “injury in fact.”  However, in what probably precipitated this new effort, Judge Wood indicated that it might have a claim based on events occurring after the filing of the November 2011 lawsuit.  But, Judge Wood stated that a re-filing likely would be better if it was in state court.  According to the press release, the new lawsuit is in federal court.

We have not seen the lawsuit as since it was filed today, it is still not up on Pacer.  MMA Payout will keep you posted

Judge denies UFC’s Motion to Dismiss antitrust lawsuit

September 26, 2015

Judge Richard Boulware denied UFC’s Motion to Dismiss the antitrust lawsuit brought by former UFC fighters at a hearing in the U.S. District Court of Nevada Friday.  The lawsuit will continue with the parties hammering out a process to conduct discovery.

The UFC provided a statement after the Friday afternoon hearing:

The United States District Court in Las Vegas, Nevada held a hearing on UFC’s motion to dismiss today.  The Court correctly explained that on a motion to dismiss it must consider all the factual allegations in the complaint as true, and the complaint must be liberally construed in favor of the plaintiffs.  Using that standard, the Court denied the motion to dismiss.  As we have consistently stated, UFC competes in a lawful manner that benefits athletes around the world and has created a premier organization in the sport of mixed martial arts (MMA).  We look forward to proving that the allegations in the complaint are meritless.

BE’s Paul Gift provided a running commentary on the courtroom arguments.  As the moving party (i.e., UFC’s motion to dismiss), it was the UFC’s burden to prove that the plaintiffs’ motion failed to state a claim for which relief could be granted.

Almost in anticipation that the motion would be denied, the parties filed a Joint Status Report on Friday which outlines the status of the case.  There’s no trial date as of yet as the parties continue to map out discovery which will probably entail a voluminous amount of documents.  It appears that the parties will quarrel over the amount of information to be produced (a standard that occurs in almost every lawsuit).

Payout Perspective:

Good news for the plaintiffs but not a monumental loss for the UFC.  Although people watching this case may see the court’s denial of the motion to dismiss as a huge precedent victory, the plaintiffs are not out of the woods yet.  As we’ve discussed (and maybe someone actually reading this has followed), the Motion to Dismiss was just a standard part of the litigation playbook.  Thus far, the UFC has succeeded in transferring the case to Vegas and the parties are grappling over discovery issues.  At some point, the UFC will once again attempt to dismiss the case on a Motion for Summary Judgment.

But, the plaintiffs will get a chance to probe UFC documents and potentially depose some UFC officials.  This may reveal some information that may help their case as well as paint the UFC in a bad light.  We shall see.

MMA Payout will keep you posted.

Hearing Friday could decide Zuffa Antitrust case

September 24, 2015

The Zuffa Antitrust lawsuit may come to a head tomorrow as a federal court in Nevada will hear Zuffa’s Motion to Dismiss which could end the lawsuit brought by former UFC fighters against the organization.

The Motion to Dismiss was filed by Zuffa lawyers when the lawsuit was venued in Northern California.  The original date for the Motion to Dismiss was in late July.  However, when the federal court in San Jose transferred the case to Las Vegas, the dates were continued.

A summary of pleadings are below:

Zuffa’s Motion to Dismiss

Plaintiffs’ Opposition to Zuffa’s Motion to Dismiss

Zuffa’s Reply Brief

However, if you want to read them in full, you can find them here as well:

Zuffa Motion to Dismiss

Opposition to Motion to Dismiss

Reply Brief – Motion to Dismiss

Payout Perspective:

It’s hard to fathom that Judge Richard Boulware, the presiding judge assigned to the case in Nevada, will dismiss this lawsuit.  More likely, if Judge Boulware determines that the Complaint filed by the former UFC fighters is insufficient, he may allow them to “Leave to Amend the Complaint.”  Essentially, he would grant them time to amend their complaint so that it would conform to the rules outlined in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal.  With a discovery fight over the documents on the horizon, we could see the court allowing the lawsuit to continue so that the Plaintiffs will have an opportunity to make their case.  It would still leave open the opportunity for Zuffa to file a Motion for Summary Judgment which would dismiss the case short of having to go to trial.  Of course, this would mean time and expense for Zuffa’s lawyers as they hope to do away with the lawsuit through this motion.  In the end, even if the court were to flat out dismiss the plaintiffs, they would still have an opportunity to appeal the decision.

MMA Payout will keep you posted.

Bellator MMA Dynamite 1 draws 800K viewers

September 22, 2015

Bellator MMA’s Dynamite 1 drew an average viewership of 800,000 viewers on Spike TV Saturday night.  The third “tent pole” event for Bellator was ranked #2 in the timeslot in the coveted male 25-54 and 35-49 demos on cable behind ESPN’s college football per Nielsen sources.

The event aired from 9-12:42am ET and then replayed immediately after.  The highest quarter hour for the event occurred in the 9:15-9:30pm ET time period when it drew an average of 930,000 viewers.  This would mean that the highest quarter occurred during the King Mo-Linton Vassell fight.  Mo won the two round fight.

Spike logo

Notably, the show on Spike TV went up against the Ole Miss-Alabama college football game on ESPN.  The game, which saw Ole Miss pull off an upset of Alabama drew 7.6 million viewers.

Bellator “tent pole” events under Scott Coker

November 2014 – Ortiz-Bonnar: 1.24M viewers (peak 2M)

June 2015 – Slice-Shamrock:  1.6M viewers (peak 2.1M)

September 2015 – Ortiz-McGeary 800,000 viewers (peak 930K)

Payout Perspective:

Clearly this was the worst rating out of the 3 “tent pole” events.  Whether the mix of kickboxing and MMA, or the tournament turned off viewers, it’s a definite decrease from the past two events which set the bar for these quarterly shows.  You cannot discount the impact of a huge SEC college football game on ESPN to detract from viewers.  Also, Showtime replayed the Mayweather-Berto fight although that was likely less of a factor.  We shall see if the replay which occurred later in the evening but in prime time on the west coast picked up viewers.  MMA Payout will keep you posted.

Fedor returns to MMA as part of Spike New Year’s Eve show

September 19, 2015

Fedor Emelianenko returns to MMA as part of “an MMA mega-event” airing on Spike TV this New Year’s Eve Thursday, December 31st.  Emelianenko will main event a show taking place from Tokyo, Japan and be a part of partnership with Bellator and a new global MMA promotion run by former Pride President Nobuyuki Sakakibara.

The co-promotion will include Bellator fighters.  No opponent was named for Emelianenko whose last fight was in June 2012.

The announcement was made during Bellator’s event Saturday night, Dynamite 1.

Payout Perspective:

A rumor had it that Emelianenko was going to sign with the UFC.  It appears that that is not the case although he did not necessarily sign a deal with Bellator.  Instead, it appears that he may still be a “free agent” of sorts even with this scheduled fight.  It will be interesting to see who will be matched up against Emelianenko.  A New Year’s Eve event on SpikeTV will be an interesting concept for American audiences as many will be out on New Year’s Eve.

Haymon-Golden Boy lawsuit to proceed in federal court

September 18, 2015

Golden Boy Promotions won a round against Al Haymon in court earlier this week as Judge John Walter denied Haymon’s motion to stay the court action to arbitrate the issues before the court.  As a result, the case will proceed in the U.S. District Court for the Central District of California.

The Court chided Haymon’s attorneys as on September 1st, Arbitrator Daniel Weinstein determined that Golden Boy’s claims related to events post-January 1, 2015 were not within the scope of the arbitration provision signed by the parties in the lawsuit.  Thus, while a portion of the claims presented in Golden Boy’s lawsuit may have been subject to an underlying arbitration agreement, some claims, namely the Antitrust claims were not subject to arbitration.  The Arbitrator also ruled that Bernard Hopkins, another plaintiff in the lawsuit, might not be subject to the Arbitration agreement and indicated further discovery was needed to determine this issue.

Some background from our July 8th post on this issue:

According to court documents, the Settlement Agreement was signed by the parties (including Richard Schaefer and Oscar De La Hoya) on December 18-19, 2014 and exercised by Haymon on January 8, 2015.  According to Haymon, it was a “global” settlement of all issues between the parties.  Haymon made “a substantial payment to Golden Boy” which Golden Boy accepted when the parties decided to end its business relationship.  The Settlement includes an arbitration provision which would require that the parties be subject to an Arbitrator rather than litigate the matter in court.

The Arbitrator evaluated briefing from both parties on the jurisdiction issue and the settlement agreement and on September 1st decided that it did not have jurisdiction over the federal claims.

Order on Motion to Stay

Judge Walter was upset with the persistence of the defendants.

In his order, Judge Walter stated, “[a]lthough the Court was confident that Defendants’ counsel would realize that the Mtion was now moot and withdraw it to avoid wasting judicial resources, counsel made the puzzling decision to pursue the Motion and patently frivolous arguments in the Reply [brief].”

Judge Walter denied the motion as moot.

To compare rulings on this issue:  The Arbitrator’s order was 17 pages long whereas the Judge’s order was just 2.

It appears that the sides will actually be dealing with an arbitration occurring at the same time as a lawsuit.

Payout Perspective:

Now comes the interesting part of the lawsuit as discovery should now commence (it was previously stayed pending the determination of the motion).  Dependent on how much information is kept confidential, we might see the emergence of Al Haymon (at a deposition) and piece together the inner workings of PBC and his business strategy.  While it’s not out of the ordinary for one side to push the envelope in trying a motion (knowing the likelihood it will be denied), it’s a not a good look when the judge calls you out on wasting their time.  Certainly, not a good start for Haymon’s attorneys in this case.

Report: Mayweather-Berto draw 400-550K PPV buys

September 16, 2015

ESPN’s Dan Rafael reports that the Floyd Mayweather-Andre Berto PPV drew between 500-600K PPV buys according to industry sources contacted by Rafael.  It is the lowest PPV output by Mayweather under his contract with Showtime.

UPDATED: Kevin Iole of Yahoo! Sports is reporting that his source says it did “roughly” 400K PPV buys.  145,000 buys come from DirecTV which is always one of the first to report its buys.

The first disclaimer is that these are estimates from industry sources.  Showtime’s Steven Espinoza proclaimed that it would never reveal actual PPV numbers after Maidana I.  Of course, Espinoza added the proviso that it would reveal the PPV numbers if it set a record.  For instance, Mayweather-Pacquiao.

550,000 PPV buys is not bad….for a UFC PPV but when it comes to Floyd Mayweather, it is a disappointment.  It’s the last fight on his Showtime contract and we’ll see if he will actual retire.

Payout Perspective:

With the start of college football season and five boxing events on various networks starting the Sunday prior to the PPV fight, one might see why the PPV buy rate was so low.  Moreover, many casual fans were not impressed with Mayweather’s last fight against Manny Pacquiao – a fight that cost many $100 to watch.  The casual viewer probably did not want to spend another $75 to watch it again.  With no real ethnic audience to draw upon and Mayweather’s fighting style, the buy rate (if accurate) seems about right.

Diaz suspended by NSAC 5 years, fined $165K

September 14, 2015

The Nevada State Athletic Commission handed out a 5 year suspension to Nick Diaz after his drug test failure for use of marijuana following UFC 183.

In addition to his 5 year suspension, he was fined $165,000 which is 33% of his $500,000 fight purse from UFC 183. Diaz’s attorney, Lucas Middlebrook, indicated that they would appeal the commission’s decision.  Middlebrook believes that the suspension was a “personal vendetta” against Diaz by the NSAC (h/t Brett Okamoto).

Diaz, who was present at the hearing, did not provide substantive testimony when asked questions by the commission asserting his Fifth Amendment right not to incriminate himself.  Still, the commission asked him questions where Diaz continued to repeat “Fifth Amendment.”  The commission believed that the Fifth Amendment relates to criminal issues whereas this was a civil proceeding.  Diaz’s lawyers argued that the U.S. Constitution and the Nevada State Constitution trumps the commission rules.

It was a contentious hearing in which a lifetime ban for Diaz was discussed by the commission members.  The 5 year ban may still end Diaz’s career.

Diaz passed the first and last of the three tests he took for UFC 183.  Two different labs analyzed the tests.  He failed the second test. The attorneys for Diaz, who were far more prepared for this hearing than Anderson Silva’s lawyers, provided a medical expert that it was “medically implausible” that Diaz could register the levels of marijuana measured by the three different labs.  The AG for Nevada argued that the conflicting results did not negate each other and pointed to Diaz’s pre-fight questionnaire (which seems to be the silver bullet in these proceedings) where Diaz did not indicate he took marijuana leading up to his fight.

Payout Perspective:

We will see how this plays out but it looks like that Diaz’s attorneys will be filing a lawsuit in Nevada seeking judicial review of the commission’s ruling.  The hefty suspension cannot be easily justified when you consider that Diaz was not taking a performance enhancing drug (i.e. anabolic steroids).  Perhaps it is due to the fact that Diaz did not correctly report his drug use on the questionnaire or his past history of marijuana use which caused the severe suspension.  Regardless it’s a stiff sentence which almost invites further legal action.

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