Plaintiffs in UFC Antitrust lawsuit file opposition in light of U.S. Supreme Court ruling

July 12, 2018

Earlier this week, the plaintiffs in the UFC Antitrust Lawsuit have filed a response in opposition to Zuffa’s motion seeking to file supplemental authority to support its Motion to Exclude Plaintiffs’ expert Dr. Hal Singer.

Zuffa is seeking to include the recent U.S. Supreme Court Decision in Ohio v. American Express in support of its Motion to Exclude which was filed at the beginning of May.  The U.S. Supreme Court issued its opinion on June 25, 2018.

Zuffa filed a motion requesting the opportunity to file supplemental authority on July 5th.  It explains the reason why it would like the Court to consider the case:

The Supreme Court decided Ohio v. American Express Co., — S. Ct. –, 2018 WL 3096305 on June 25, 2018. As explained in Zuffa’s proposed Notice of Supplemental Authority, this decision clarified that in light of the procompetitive benefits of certain vertical restraints, a plaintiff must define a relevant market to evaluate the anticompetitive effect of an alleged vertical restraint even when using direct evidence. Id. *8 n.7. Plaintiffs argue in their Opposition to the Singer Daubert motion that defining a relevant market is unnecessary when evidence of direct effects on compensation is presented. Accordingly, Amex will inform this Court’s decision on whether to grant Zuffa’s Motion to Exclude the testimony of Dr. Singer in light of this new development in the law that affects the currently pending motion. Plaintiffs are not prejudiced by this filing, as this additional legal authority was unavailable prior to the Daubert briefing, Plaintiffs will receive timely notice through this filing, and Zuffa has not delayed in presenting this authority to the Court or Plaintiffs.

Plaintiffs argue in their opposition brief that Dr. Singer has defined the relevant markets and applies them to his opinion.

Plaintiffs Response in Opposition to Zuffa’s Motion to File Supplemental Authority by JASONCRUZ206 on Scribd

Dr. Singer was retained by the Plaintiffs as an expert economist to opine, in part, that the compensation of all proposed class members is adversely affected by the UFC’s anticompetitive practices.  He also to identify the relevant markets in which this occurs.

The Supreme Court case is detailed here. In a 5-4 decision in favor of American Express, the Court determined that Amex’s anti-steering policies did not violate antitrust law.  The case specifically involves policies set by some credit card banks that prevented merchants from steering customers to use cards from other issuers with lower transaction fees, forcing merchants to pay higher transaction fees to the banks.  The case was based on the relationship between antitrust law and two-sided markets.  Thus, you might infer the parallels with the UFC case where the issue of the defining markets are being challenged.

The court in the UFC lawsuit may or may not take the AmEx case into consideration but Zuffa had a right to file the motion and the Plaintiffs had an opportunity to advise why it did not apply in this case.  MMA Payout will keep you posted.

UFC 226: Payout Perspective

July 11, 2018

Welcome to another edition of Payout Perspective.  In this edition we take a look at UFC 226 taking place at the T-Mobile Arena in Las Vegas, Nevada.

Cormier is a Champ x2

Daniel Cormier knocked out Stipe Miocic to win the UFC Heavyweight Championship.  Cormier becomes just the second fighter (behind Conor McGregor) to hold titles in two divisions at the same time.  The former Olympian described post-fight that video study showed Stipe drops his hands coming out of the clinch and that is exactly how Cormier dropped Stipe with a short shot to the chin.

The bigger news came when Brock Lesnar came into the Octagon after the fight and shoved Cormier.  He then cut a promo on the heavyweight division and he weak it was.

Lesnar has been put back into USADA testing program and should be available by the end of the year.  Cormier, who has already announced his retirement plans on a handful of fights left despite just earning the title.  We shall see if one of those is his arch-nemesis Jon Jones.

Lewis-Ngannou turn in Worst Match of Year Candidate

This fight should have been one round.  Not because there was heavy-slugging and someone would have been knocked out, but because it was such a boring fight.  What most thought would be a back and forth home-run hitting fight, turned into one of the lowest striking fights in the history of the UFC.

Derrick Lewis came out as the “winner” although he stated he hurt his back during the fight.  Ngannou was buried post-fight by Dana White who claimed that the guy that was deemed a future superstar had an ego.

With Brock Lesnar coming in, Lewis will have to wait in line for a title shot.  More likely he’ll have to go through Curtis Blaydes before he gets a shot post-Lesnar fight.

Max Holloway pulls out of fight with Brian Ortega

Max Holloway was forced to pull out of his fight with Brian Ortega due to “concussion-like” symptoms.  Holloway’s team decided it best he not fight despite going through media obligations.  Ortega took it in stride but declined a fight against Jeremy Stephens as a replacement.  While Dana White was not pleased with missing a fight, Ortega had trained for Holloway and not Stephens.  A loss by Ortega would be a disaster for his title plans.  Remember Luke Rockhold did not have to take the fight with Yoel Romero when he missed weight.  He did and lost.

Attendance and Gate

Despite the loss of one title fight, it didn’t seem to damper the attendance.

Prior to the Holloway-Ortega fight being scrapped SeatGeek reported tickets on the secondary market being the highest since UFC 205 when the company had its first show in New York.

Bonuses

Daniel Cormier, Anthony Pettis, Khalil Rountree and Paulo Costa all received $50,000 bonuses.

Payouts

The Nevada Athletic Commission list of disclosed the full list of payouts prior to the event.  Stipe Miocic earned the most with $750,000 followed by Daniel Cormier’s $500,000.

Promotion of the Fight

The Embedded series seemed to have a focus on Ortega-Holloway from the outset and had to refocus and it appeared that there was a pause between episodes 3 and 4 so that they could do extra filming for Cormier, Miocic, Michael Chiesa, Anthony Pettis, Lewis and Ngannou.

Toyo Tires was active leading up to this event as it had a new commercial with former rivals T.J. Dillashaw and Dominick Cruz starring and former UFC light heavyweight champ Forrest Griffin in a starring role.

The company also ran a marketing campaign with Brian Ortega ads.

Metro PCS ran a social media campaign using Stipe Miocic and Daniel Cormier in promoting their SuperFight.

Did Drake reference Max Holloway in “8 out of 10” on his new album?  I didn’t think so.  The UFC paid homage to the Scorpion album with an Instagram post hyping the main event.

Next Saturday's OFFICIAL tracklist. 🦂 #UFC226

A post shared by ufc (@ufc) on


Ratings (all on FS1)

UFC Weigh-Ins – 239K

UFC Pre-Show – 254K

UFC Prelims – 668K (peaked at 800K in the 9:45-10:00pm ET quarter hr)

UFC Post Show – 155K

Sponsorships

UFC sponsors Harley Davidson, Metro PCS, Toyo Tires, Monster Energy, EA’s UFC 3 and Modelo in the center of the Octagon. It also had signage for EA UFC’s latest version of its video game and the first glimpses of the logo for the company’s 25th Anniversary show in November.

There was an extended promotion for the latest version of EA’s UFC 3 with Tito Ortiz and Kimbo Slice.

Kamaru Usman introduced the promoted movie for this event, Denzel Washington’s

Odds and ends

It was International Fight Week which included the induction of individuals (and a fight) into the Hall of Fame.  Headlining the list was Ronda Rousey.  It also gave us a Chuck-Tito faceoff for a fight that appears to be happening in 2018 or 2019.

Despite an International Fight Week curse of headlining matches scratched, UFC 226 came through with several great main card performances from Khalil Rountree, Anthony Pettis and Daniel Cormier.  Also, the Mike Perry-Paul Felder fight was an entertaining bloodbath with Felder fighting at least 2 rounds with a broken arm or hand.

Dominick Cruz covering the fights during media leadup and as analyst on the PPV broadcast is great.

Chiesa missed weight but wore a Shawn Kemp jersey so he gets some press here.

We are underway in Vegas! #TUF27 #UFC226

A post shared by ufc (@ufc) on

Conclusion

This was the biggest UFC event to date and with the 25th Anniversary Show being announced in November and a possible Cormier-Lesnar fight to end in December the latter half of 2018 could be exciting. The loss of Holloway-Ortega did not hurt the gate, but it may have hurt the PPV. Despite being one of the best ever, Cormier has yet to prove he is a PPV draw without Jon Jones. So, this event likely does above average but still nowhere near Conor/Ronda levels. Look for estimates between 450,000 to 500,000.

Kenny Omega is the most interesting man in pro wrestling

July 6, 2018

Kenny Omega is the most interesting man in pro wrestling.

It’s not because he is one of the most athletic and entertaining wrestlers inside of the ring and a great promotional speaker, it’s his thoughtful delivery that makes him one of the best today.

Via AXS TV

In a recent teleconference to promote this Saturday’s New Japan Wrestling show at the Cow Palace in San Francisco, Omega answered a variety of questions about the upcoming event, video games and how he learned Japanese.  It was impressive to see how thoughtful and articulate he was in answering and responding to all of the questions.

If you have watched Omega, he has the versatility to converse with Japanese audiences in their native languages.  Omega promised to speak more in Japanese to the fans.  The Japanese promos are done in a conversational way and it took Omega time to learn.  He started to learn from a book in 2008.  But, he stated that he couldn’t learn from a book because that was not really used in everyday conversation.  He had a Japanese friend that he was fluent in both English and Japanese.  He’d ask about words and phrases and kept them in a notepad.  From the words and phrases, he began to recognize sentence structure and grammar.  By 2011, he had a breakthrough where he could approach someone and have a conversation.  It was also the first time that he was able to cut a promo.  He noted that it was difficult at first to cut a promo in Japanese as the intent is to be intense and strong and to do it without stumbling over the words.  But now, he’s able to do it with confidence and without having to search for the correct words.  The out-of-the-box thinking to learn Japanese to use in front of audiences is bold and dedicated for a non-Japanese wrestler.

The strategy, commitment and execution of learning Japanese is similar to his in-ring ability.  His ability to put on 60 minutes plus matches with the same intensity and athleticism is remarkable in a day and age when most WWE fans are used to short, TV-style snippet match.

Pro wrestling fans are beginning to see more and more of what he can do.  “I don’t want to be limited to strictly America, I would love for New Japan to have a multiple presence in numerous countries,” stated the NJPW champion.  “I’ve increased my training,” Omega said of his ability to perform in the ring as a heavyweight.  “I’m a better athlete and a more healthy athlete as of now,” said the NJPW champion in response to his move to heavyweight from junior heavyweight.

At 34, Omega does not see an end in sight.  Omega stated that he modeled his career similar to Chris Jericho, a man who he faced early last year.  He spoke highly of Jericho’s career outside the ring.  He noted his work with E3.  Omega is a gamer and did some work at the annual video game expo in Los Angeles this past June which included a face-off with the WWE’s New Day.  It’s clear that he would like to expand his reach into some of his interests.  During the teleconference he talked about shooting commercials and other promotional activities on behalf of his brand and New Japan.  “If it brings eyes to our company [New Japan], that’s what I’m going to do.”  As a veteran of the New Japan roster, he sees himself in more of a senior role for the company. “It’s not just to carry the belt out for every house show,” he added, “We have such and deep and talented roster, I think that they will be fine on the house shows. I think it’s my job to bring more eyes to the product and with the skill set that I have I can do more that is equipped.”

Omega noted that the wrestling is only just the surface to the package.  “I think as wrestlers we have to show ourselves as multi-layered.”  He eschews the meat-head moniker of pro wrestlers.  “That’s why I really want to have my voice heard.”

He preached being a positive role model and as pro wrestlers have more of their voices be heard.

Earlier this year, Omega was indifferent about perceptions about whether his character was a homosexual as he and Kota Ibushi reformed The Golden Lovers. “I can’t lie, that story was created for us,” Omega said about getting back together with Ibushi.   He told Yahoo, “If LGBT people can identify with our story, if they think ‘the Golden Lovers are my team,’ I’m good with that.  It’s the story of two wrestlers who share dreams on their way up, who became fast friends, who are now reuniting at the top of their game.” Omega’s viewpoint reflects an open-mindedness and sense of inclusion which is welcoming of all types regardless.

Via AXS TV

Perhaps the only concern fans have with Omega is that he might become to big of a star that the WWE will come calling.

Yet, he has amassed a following without the help of the WWE and is on the cusp of being a bigger star with AXS TV’s second United States show for the Japanese promotion.  Later this summer, he’s sure to be one of the headliners for the “All In” event in Chicago, an all-independent wrestling show which sold 10,000 tickets in one day, a remarkable feat.

Omega is in the main event against Cody Rhodes Saturday night at the ‘G1 Special in San Francisco’ on AXS TV.

Max Hollway out of UFC 226

July 4, 2018

Max Holloway has been pulled from his title fight defense against Brian Ortega at UFC 226.  Holloway’s team noticed Holloway was experiencing “concussion-like symptoms” and his fight has been taken off of the card.

Holloway’s management team released a statement to ESPN’s Ariel Helwani:


Hollway follows a string of main card fights being scratched including last year’s Cody Garbrandt and Amanda Nunes last year, the Jon Jones debacle in 2015 and Jose Aldo unable to fight Conor McGregor in 2015.  July’s International Fight Week is promoted as one of the premier events in the UFC calendar but its main events have fell through for one reason or another.  While most of the cards are very strong, this year’s Holloway-Ortega fight was one of those fights many MMA fans wanted to see.

Payout Perspective:

While the Cormier-Miocic fight is still in tact (cross your fingers), the real main event felt like Holloway-Ortega.  Although there is a scramble to find a replacement for Holloway on just three days’ notice, its likely that we will miss seeing Ortega altogether.

Parties file joint motion on Michael Mersch depo testimony in Zuffa Antitrust Lawsuit

July 1, 2018

This past Friday, Plaintiffs a joint motion in the UFC Antitrust lawsuit filed a Motion to Seal Reply In Support of Its Motion to Seal Plaintiffs’ Class Certification Reply.  The motion, which includes both plaintiffs and defendants’ position seeks to seal certain deposition testimony from Michael Mersch as well as certain confidential information from his deposition.

Zuffa points out that the motion to seal is based on what’s included in its Reply Brief and unrelated to the merits of the case.  Zuffa is requesting to seal information in Mersch’s deposition testimony regarding the purse information of a UFC athlete based on privacy concerns expressed to Mersch.  It claims that evidentiary objections made by Plaintiffs are improper.

Plaintiff asserts that Zuffa has failed to meet its burden to seal portions of the Mersch deposition.  They believe that the earnings that fighters receive and Zuffa’s strategy of preventing its fighters from learning what others maker are not compelling reasons or good cause to seal the information.  The overarching argument is that there is no legal argument for the sealing of the information and the information (i.e., purse information) has been disclosed publicly by other sources.  Moreover, Plaintiffs argue that the information sought to seal is four years old and would have no trade secret value in present day.

Joint Motion Re Motion to Seal by JASONCRUZ206 on Scribd

Payout Perspective:

It would seem that the parties are making more of a battle over sealed information.  The payouts appear to be over two fighters if you infer from the exhibits attached to this joint motion.  Wikipedia pages are attached regarding payouts for UFC heavyweights Ben Rothwell and Alistair Overeem. The declaration of the Plaintiff’s attorney states as much.  Clearly, Zuffa wants to seal the testimony because they believe there is something there that might influence the Court or is previously not publicly disclosed.  Plaintiffs would like this information unsealed because they believe it would be useful.

NLRB sends Smith case to D.C. for further review

June 30, 2018

Leslie Smith’s chances with the National Labor Relations Board filing a lawsuit on her behalf against Zuffa may have taken a detour after the Regional board was instructed to send the case to Washington D.C. for review by the Division of Advice.

On Friday, Smith’s attorney, Lucas Middlebrook announced that the NLRB Investigation on Zuffa based on Leslie Smith’s Charging Letter had merit and would file a complaint against Zuffa in Federal District Court.  Under 10(j) of the National Labor Relations Act, the NLRB could file an injunction against Zuffa which would likely prohibit the company from designating its contracted athletes as independent contractors and make them statutory employees.

Still, in that scenario, Zuffa would have an opportunity to defend itself in Court and oppose an injunction and file a motion to dismiss the lawsuit.

But, late Friday night, Middelbrook stated that post-decision, Region 4 had been instructed to send the case to D.C. for review.  He opined that this was a favor done by the Republican-led NLRB to the UFC.  As you recall, Dana White and President Donald Trump are friends.  There is no timetable on how long it would take for the Board of Advice to get through with its review.

According to its web site, the Board of Advice, “provides guidance to the General Counsel and to the Regional Officers with respect to difficult or novel legal issues arising in processing of unfair labor practice charges. It determines whether charges have merit and, if so, what legal theories should be advanced in support.”

Payout Perspective:

Its an unfortunate turn of events for those rooting for Smith and her cause.  What this means is that despite a green light from the regional office, it was recommended to send to D.C. for further review.  So, while an initial determination was made, it seems as though someone thought it needed another set of eyes.  Could this case get buried and not be heard of a while?  Likely.  Middlebrook told MMA Fighting that it was in a “holding pattern” at this point.  This is not good news for those wishing for swift justice which appeared to be the timeline as Smith filed her letter with the NLRB in May and a determination was made one month later.  Now, we could be waiting months to see when a complaint will be filed.  Or if it will be filed.

NLRB to file complaint against Zuffa based on evidence submitted by Leslie Smith

June 29, 2018

Region 4 of the National Labor Relations Board has determined that Leslie Smith’s labor case against the UFC has merit and will be filing a complaint against the UFC unless a settlement is brokered.  The lawsuit will indeed include a request by the NLRB for an injunction.

According to Smith’s attorney, Lucas Middlebrook, the NLRB investigator determined that there was merit to her Charging Letter filed in May which questioned her work status as an independent contractor as opposed to an employee of Zuffa.

Middlebrook told MMA Fighting that he was informed by the NLRB investigator that the complaint will be filed in about a month.  The court, not the administrative law judge, will determine whether an injunction will be granted.

There are three types of injunctions:  a temporary injunction, a preliminary injunction and a permanent injunction.  It would appear that the NLRB would seek a temporary injunction which would last until the end of the case in which point they would seek a more permanent form of relief (here, the change of status of UFC athletes from independent contractors to employers.)  Permanent injunctions are just what you think of, a permanent halt to the practice (in this case, labeling UFC athletes as independent contractors).  A temporary injunction could be obtained immediately upon filing of a lawsuit and a request from the moving party.

Payout Perspective:

This is a big win for Smith as the NLRB will likely seek a temporary injunction which will upset the status quo of the company’s independent contract athletes.  If nothing else, the decision to go forward with a Complaint against Zuffa will cast a light on the UFC practice.  It does not mean that the NLRB (and Smith) will prevail at the end, but it does show that the case had merit and the NLRB is willing to devote resources to it.

50 Cent says he sold trademark to Bellator for $1 million

June 28, 2018

Did Curtis Jackson really sell a catchphrase to Bellator for $1 million?  If so, it would be his best business deal since he invested in Vitamin Water.  But, likely it’s a ruse to get MMA fans to talk about Bellator.

Jackson posted on social media (and reported by MMA Junkie) that he met with Scott Coker and made the transaction.  The reason?  Jackson, who has been using the hashtag “Get the Strap” in social media posts claims that he has sold the trademark phrase to Bellator for use on t-shirts, etc.

l did a deal today l sold (get the strap) for a million dollars to Viacom’s Bellator. So you will see lt on some cooler clothing shortly. 👀see how l make something out of nothing. LOL

A post shared by 50 Cent (@50cent) on

It is true that Jackson has applied for the trademark “Get the Strap” in a class of goods for clothing, “namely T-Shirts, Sweathshirts; Hats.”  Jackson filed for the phrase with the USPTO on April 17, 2018.  With the filing of the mark so recent, there has not been a determination by a USPTO examiner as to whether or not his mark would be approved.  Moreover, there’s no transaction listed that Bellator owns the mark.  The owner is listed as Curtis Jackson.

It does appear that 50 will be involved with Bellator in some way, or at least, he would like to be based on the below tweet regarding the promotion’s latest deal with DAZN.

Payout Perspective:

It looks like Jackson will be a part of Bellator in some way or another.  Whether or not he sold the mark to Bellator is another question for the promotion really.  Why would you buy (or likely pay for a license) for a catchphrase that hasn’t even proven to be notable?  At this point, its not clear if the mark will be cleared by the USPTO as it must go through a process that will take several months and may meet opposition.  For instance, the NHL’s Las Vegas Golden Knights dealt with opposition over its name and the dispute went on throughout the hockey season and was not resolved until the Stanley Cup.  If Bellator has paid Jackson to license the catchphrase, you have to give it to the rapper for his business acumen.  He flipped a phrase without even a determination as to if he can be owner.  He just filed for it first.  But, perhaps not his real estate choices.

World Series of Fighting and PFL file appeal against former officers of WSOF

June 20, 2018

The World Series of Fighting litigation continues in Nevada.  Despite re-emerging earlier this month as the Professional Fighters’ League, the lawsuit(s) continue over the power struggle between individuals, entities and now with a new investment group, more litigants. In this instance, the lawsuit hinges on a licensing agreement which contained an arbitration provision.

The licensing agreement between the parties described below is related to a prior Settlement Agreement and Operating Agreement between the two sides.  As you might infer, this business divorce is a mess.

There has been a plethora of lawsuits filed by different people and entities and this one is the latest involving the inception of WSOF.  The lawsuit in question pits rival entities over the split up and sale of World Series of Fighting when it was sold to investors that repackaged it as the PFL.

In this lawsuit plaintiffs are WSOF Global and its head Vince Hesser and Zion Wood Obi Wan Trust (Zion) and Shawn Wright (collectively referred to as Plaintiffs).  The defendants include MMAWC, LLC doing business as World Series of Fighting, MMAX Investment Partners, Inc., doing business as PFL, Bruce Deifik, Carlos Silva, Nancy and Bruce Deifik Family Partnership and Keith Redmond, Inc.

The lawsuit claimed that MMAWC, LLC, which did business as WSOF experienced several financial shortfalls during 2012 to 2015.  The plaintiffs had made “extensive loans” to the promotion to allow the promotion to continue and operate.  But, WSOF refused to repay the loans.

Zion Wood Obi Wan Trust Complaint by JASONCRUZ206 on Scribd

Additionally, Shawn Wright and Vince Hesser had written agreements with WSOF for other contractual payments and worldwide licensing.  WSOF Global had acquired rights to the intellectual property of WSOF overseas and had invested in the brand under the assumption it was planning to expand.  But, WSOF refused to honor the terms of the agreement per the Complaint.  Zion’s membership interest was 10.5% and WSOF executed agreements that it was non-dilutable.

The dispute was thought to have been resolved after the organizations entered into a Settlement Agreement.  As part of the agreement, Zion agreed to reduce its 10.5% non-dilutable interest in WSOF to 4.50% of the total outstanding ownership units in WSOF, which interest shall remain non-dilutable.  But, Zion believed that Bruce Deifik created a new entity and put all of the WSOF assets into the PFL organization.

Zion did not have an interest in the “Successor Company,” PFL.  As a result, it believed that its shares were being diluted.

The Complaint stated WSOF sold the company for $15 million, but without input from Zion and WSOF Global, Inc., who held shares in the WSOF.  Additionally, Plaintiffs claimed it was being shut out from finding out the real value of the deal which would help them assess the purported amount that they would have been entitled.

The Complaint also mentioned a WSOF event in New York City on New Year’s Eve 2016.  The WSOF reported $0 income from broadcasting rights to New York State.  But, it reported to Zion that they spent $190,000 in broadcasting revenue from NBC to the NYC event.  This would be inconsistent reporting.

But, the big issue here is the licensing deal between Vince Hesser, the owner of WSOF Global, and WSOF.  An Amended Master License Agreement gave Mr. Hesser the exclusive right to license the WSOF brand outside the United States.  A dispute arose over the licensing agreement and was thought to have been subsequently settled.  WSOF Global claims to have rights that “consist of over 100 international events per year, at a cost to produce of tens of millions of dollars, which dwarf the mere 8-10 events per year” from WSOF.

But, when the WSOF sold to PFL, it failed to comply with the licensing agreement.  The obvious breach was the change of the name to the Professional Fighters League which plaintiffs claimed damage them.  The PFL did not grant WSOF Global the right to use the PFL name in the Settlement Agreement and Amended License Agreement.

Prior to the name change, WSOF Global claimed that it was working on a sports partnership to bring MMA content to China.  It claims it received $16 million to further the promotion of WSOF in China and to promote foreign fighters in their events alongside Chinese fighters.  This would appear to be part of the damages to be claimed in this lawsuit.

WSOF stated that the parties should be compelled to arbitration to resolve these disputes and pointed to the clause in the Amended Licensing Agreement.

The arbitration clause in the parties’ licensing agreement compels the Court to dismiss this case and force the parties to arbitration.  But, the plaintiffs contend that they did not specifically authorize the arbitration agreement.  Under the state law in Nevada, a party must grant “specific authorization” that they have agreed to their arbitration provision otherwise it is void.  Plaintiffs cite the lack of specific authorization in the contract to show that the arbitration provision was void.

In its reply to the opposition of moving the case to arbitration, WSOF argued that the parties jointly drafted and authorized the agreement which included the arbitration clause.  Thus, despite WSOF’s assertion that Plaintiffs had knowledge of the clause and the opportunity to point out the issue, it did not.  Moreover, it agreed to the overall agreement.

The Court found in favor of Plaintiffs’ arguments and voided the arbitration provision and denied WSOF’s motion to compel arbitration.  Shortly after the ruling, WSOF filed to appeal the decision.

In its appeal statement WSOF noted, “When the parties finalized the Arbitration provision, however, the parties did not include language and initials or separate signatures to further manifest their agreement to the Arbitration provision…”

WSOF Case Appeal Statement by JASONCRUZ206 on Scribd

Despite the fact that WSOF believed that the Arbitration provision should have been allowed, the Court found it void due to the lack of a “specific authorization.”

The appeal will be heard in the state appellate court in Nevada.  The lawsuit was filed in the District Court of Clark County, Nevada.

Payout Perspective:

While there is the possibility that the Plaintiffs in the lawsuit may amend its RICO claim, it was dismissed by the Court.  However, the case is not going to Arbitration due to the fact the Court voided the provision.  While WSOF may allege that having the parties sign a section consenting to Arbitration is duplicative if you consider they signed the Agreement.  Also, in this instance, the parties allegedly collaborated on putting together the Agreement.  Yet, the Nevada state rules are explicit that there must be a specific authorization which appears to be more than just signing the contract overall but making an affirmative concession to the clause.

As it goes for the overall transaction, it appears that Hesser and Wright are creditors to the WSOF entity and were not privy to the sale of assets to the successor company, PFL.  While there was a transaction to do business under the WSOF brand, there was not one to do under any successor brand.  It would seem that either poor business acumen, lack of communication or a bad business deal has transpired.  Maybe all of the above.

One thing is for certain, both sides have shown errors in contractual drafting.  Plaintiffs should have included clauses that would have protected itself form any sale of assets from the debtor (i.e., WSOF).  For WSOF, it should have drafted an Agreement in compliance with the Nevada state law that would ensure specific authorization for Arbitration.  While Arbitration may have been a faster, cost-efficient way to resolve a dispute, it looks like this case will be litigated.  But first, the appeal.

MMA Payout will keep you posted.

Plaintiffs in UFC Antitrust Lawsuit oppose sealing of documents

June 19, 2018

Plaintiffs in the UFC Antitrust Lawsuit are opposing a Motion to Seal brought by Zuffa to seal documents in Plaintiffs’ Motion to Seal Plaintiffs’ Reply in Support of Motion to Certify Class and Related Materials.  The opposition is the first in this litigation which has gone without any challenges to the redaction and/or sealing of documents.

Plaintiffs’ Opposition to Motion to Seal by JASONCRUZ206 on Scribd


Plaintiffs cite 4 points why the Court should deny Zuffa’s Motion to Seal:

  • The materials Zuffa seeks to seal are not trade secrets, but rather largely, outdated aggregate data, and Zuffa would suffer no competitive harm if they were disclosed;
  • Zuffa’s justifications for sealing do not satisfy the applicable “compelling reasons” standard;
  • The right of the public, the press, the named Plaintiffs, and Class members to access judicial materials is especially robust….; and
  • Zuffa is attempting to gain an advantage by overdesignating materials that support Plaintiffs’ claims and their motion for class certification, when Zuffa has selectively revealed similar information that served Zuffa’s purposes.

Plaintiffs argue that Zuffa’s claim that redacting certain section of its documents “could permit..competitors to gain unfair insights into Zuffa’s strategic business practices and gain an unearned advantage in competition” is a red herring.  It contends that it is sealing information to control the flow of information to the public, the press, the named Plaintiffs’ and the class members, and prevent Plaintiffs from telling their side of the story to the public.  It’s not that its protecting its trade secrets argues plaintiffs it is concerned about the public learning about its misconduct.

Focusing on the issue of unsealing documents for the media, John Nash of Bloody Elbow sent correspondence to the Judge Richard Boulware requesting access to certain documents including portions of the expert reports that were redacted. Nash pointed out inconsistencies with what was being redacted, withheld for public consumption with what was allegedly trade secrets.  Zuffa’s counsel responded to the letter indicating that the likes of Nash, Paul Gift and yours truly had ample information to pontificate on the subject.  It claimed that the information sealed was trade secrets and precluded from public consumption.  Zuffa argued that the right to access of pleadings was not absolute.  Nash responded with a detailed letter outlining the reasons why certain sections should not be redacted.  The letter also cites a federal court judge order from last month in which it sanctioned attorneys for frivolous motions to seal.  The pertinent section that is applicable is as follows with emphasis being ours:

At the hearing on the order to show cause, there was discussion of the fact that attorneys – particularly attorneys for corporate clients – are under great pressure to file motions to seal information that their clients would prefer to keep secret, even if there is no legitimate basis to keep the information secret. This is no doubt a significant issue for corporate lawyers, but the answer is not to file frivolous sealing requests. The answer is to firmly explain to their clients that litigation is a public process, and that the public has the right to know what the litigation is about, subject only to very limited exceptions. Mere embarrassment to a corporation is not one of those exceptions

In that case, the Judge fined the law firm filing frivolous sealing requests $500 per lawyer involved (which was 5) for a total of $2,500.

2018-06-10 S Grigsby Ltr to Judge Boulware Re J Nash Email by JASONCRUZ206 on Scribd

Response to Ms Grisby Jun 10 2018 Letter by JASONCRUZ206 on Scribd

Payout Perspective:

According the plaintiffs’ motion, a party seeking to seal a judicial record bears the burden of overcoming “a strong presumption in favor of access” by meeting the “compelling reasons” standard.  While the disclosure of information might prove embarrassing, incriminating or put the party in a false light, it is not a reason to seal information from a public court filing.  From a media perspective, it is hard to be accurate if the information is not provided.  One need only look to Zuffa’s attorney proclaiming an industry insider report that UFC 225’s buy rate was less than 150,000 was a “material misrepresentation” and off by six figures.  But, the attorney did not correct the information with accurate data.  A later report, noted that the buy rate including streaming and traditional PPV buys was 250,000.

The federal court order from last month is persuasive considering the overarching theory is that sealing documents has “very limited exceptions.”  The burden is on Zuffa to show why they are allowed to redact certain sections.  Previously in this lawsuit, these types of motions were not opposed and therefore the court did not really examine the information sealed.  Now, it appears that the Court might review the redacted sections.

The motion creates more work for Zuffa and plaintiffs with another motion to handle.  However, this is not a frivolous motion from the perspective of the media.  There are a lot of instances where things like this go by without being questioned.  Here, at least there will be some examination as to the veracity of what can and cannot be sealed.

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