Alvarez produces “smoking gun” document
May 13, 2013
Eddie Alvarez produced via twitter a document he claims Bellator altered after he had agreed to the terms of the renegotiation period. Alvarez stated that Bellator changed the matching issue from “all terms” to “material terms.”
20130509155142989.pdf – docs.google.com/file/d/1BtgqH0…Heres the document!!!! Am I still telling Lies ??? @bjornrebney
— Edward Alvarez (@Ealvarezfight) May 12, 2013
In the October 30, 2012 letter from Bellator to Alvarez sent via email and Certified Mail, the letter states in reference to matching terms with Zuffa: “Upon receipt of such an offer, you are thereafter obliged to produce to Bellator a true copy of the proposed agreement with Zuffa, LLC at which time Bellator shall have fourteen (14) business days from receipt of the full agreement to consider whether it will match the material terms of the offer.” (our emphasis in bold and italics). In a subsequent letter, the sentenced was changed from material to all.
Alvarez had noted this change during his interview with Ariel Helwani on The MMA Hour and on MMA Junkie Radio. He essentially cited this as an unethical business practice.
Bjorn Rebney responded to Alvarez’s claims in an article on MMA Fighting. The November 1, 2012 letter was produced which stated “all terms” instead of material terms was produced in the article. Rebney refuted Alvarez’s accusations stating that he was aware of the language and that Alvarez’s attorneys were aware as well. Rebney also responded to several issues regarding pay concerning Zach Makovsky, Cosmo Alexandre and whether or not Bellator attempted to sign Leonard Garcia.
Payout Perspective:
The letter produced by Alvarez attempts to show that Bellator amended terms without his knowledge. Rebney indicated that this is not true and that Alvarez’s attorneys had the chance to review the letters. Did Alvarez’s lawyers not see the November 1st letter? Based on what the Court has opined in the Preliminary Injunction, will the “material” vs. “all” terms matter? If you recall, the Court indicated that it would apply a common sense approach to matching terms. Regardless of one might think, this lawsuit is going to start to heat up. Moreover, arising out of the lawsuit are PR issues which Rebney, Bellator and Viacom must address and determine how to put out the fires. By implicating other issues with fighters, we might see Makovsky, Alexandre and Garcia get pulled into this lawsuit as witnesses.
Alvarez talks about legal case with Bellator
May 9, 2013
After tweeting his displeasure for his legal troubles, Eddie Alvarez made his appearance on The MMA Hour on Monday to give his side of the story in the Bellator battle. He also made an appearance on MMA Junkie radio Tuesday pleading his case.
Although he said he didn’t know too much about law when talking to Ariel Helwani on The MMA Hour, Alvarez gave a legal update on his case. To be fair, Alvarez correctly stated that the case was in the discovery phase.
The MMA Hour interview came after tweeting about Bellator and how Bjorn Rebney was a “grunt” and that Viacom and Spike are “idiots.”
But the bulk of the interview on The MMA Hour dealt with the legal case and a rehashing of the contract matching issue which the Court denied in Alvarez’s motion for a preliminary injunction in January. A favorable ruling would have allowed Alvarez to negotiate a contract with the UFC and leave Bellator behind. However, the Court decided that the factual issue of whether or not Bellator matched the terms of the UFC contract would be determined at a later date. Alvarez stated on MMA Junkie radio that he didn’t expect the Court to grant the Preliminary Injunction.
On MMA Junkie Radio, Alvarez indicated that he talked with Bellator in New Mexico in an effort to settle the case but stated that he could not reveal the substance of the communications. Legally speaking, the settlement discussions are confidential and governed by certain evidentiary rules.
Alvarez claimed that Bellator changed words in his original contract which included an addendum which waived a renegotiation period and allowed an exclusive negotiating period with Zuffa. However, Alvarez claims that a term in the addendum was changed from “all terms” in to “material terms.” The documents do not appear to be in the legal filings in the case. Alvarez indicated he would post the documents on twitter which shows the different terms. However, as of the time of this writing, the documents have not been posted.
Payout Perspective:
Alvarez stated his case well but the issues he argues doesn’t do anything other than the possibility of getting him into more legal troubles. The “matching” issue was already decided by the Court at the Preliminary Injunction in that there would be no decision on the matching issue. Its definitely the Court punting on a key issue in the matter but there is a legal basis for waiting to hear the information provided in the discovery process. However, in the Court PI opinion, it did cite that the Court “must apply a common-sense interpretation to the word “match.” This was in reference to the issue of whether Bellator had to match the Zuffa contract verbatim.
But, why go after Viacom? It may not know anything about MMA, but it is investing money into the sport. Without Fox and Viacom investing in MMA, it would not be as popular as it is today. Certainly, I do feel for Alvarez to a certain extent as he’s been put in a tough position. He no longer wants to work for his employer but his employer is pulling him back in. Perhaps he didn’t know that he’d be in this position when he signed his contract with Bellator or didn’t think that Bellator would put up such a fight.
Regardless of whether or not Alvarez is telling the truth, talking (and tweeting) is a risky move especially in contentious litigation. There is the potential for further claims and using tweets and Alvarez’s interviews as evidence in the future.
Eddie will go…Alvarez proclaims Bellator case will go to trial
May 5, 2013
Eddie Alvarez will be appearing on The MMA Hour Monday to presumably talk about his legal fight with Bellator. The appearance comes after a weekend of tweets in which he went after Bellator, Spike and Viacom.
Alvarez’s official twitter handle, @Ealvarezfight, indicated that he was moving to train with the Blackzillians. It also stated he made money after selling real estate as to imply that money is no issue at this point.
Alvarez tweeted that there would be no settlement and “let the truth come out in the end.” (ed. note: famous last words).
He also wrote to his 9,000 plus followers that he placed blame for the lawsuit with Viacom and Spike rather than Bjorn Rebney.
Payout Perspective:
In a civil lawsuit, most parties position their case toward a favorable settlement. Alvarez proclaiming that there would be no settlement is a bad move from a legal and PR standpoint. Regardless of what you think of what has happened to Alvarez, its not a good move to tweet, write or be interviewed about this lawsuit without gaining clearance from legal counsel. Just like cops say on tv shows, “anything that you may say (or write in this instance) can be used against you.” Even if Alvarez believes what he says is true, what he writes on twitter may be construed differently by Bellator attorneys.
Moreover, if the Court forces the parties into mediation or a settlement conference and the case settles, Alvarez did not speak the truth about going to trial. It just makes him look like he had no understanding about the legal process.
From an overarching perspective, the goal of MMA fighters is to make the most money out of your short career. The reason why the UFC likes the FOX relationship is that there is more money involved and the product is exposed to the mainstream. Alvarez has to look at the situation and determine what’s best for his fight career. Sit and fight a battle he may actually lose, or try to find a resolution as soon as possible. Trials are long and drawn out.
Unless Bellator is unwilling to enter into settlement talks, he should try to settle for a shorter fight deal with Bellator in order to be released from his contract. Alvarez is in the prime of his career and he does not want to end up muddied in a contract dispute. Although under separate circumstances, a similar contract issue sidelined Brandon Vera for some time and he has never been the same fighter since.
Hopefully Alvarez will cancel Monday’s appearance and/or give generalities of his legal situation rather than talk himself into more problems.
The continued fight for MMA in NY
April 23, 2013
The Sports Business Journal (subscription required) is running an in depth perspective on combat sports this week and one of the articles asks whether this will be the year New York finally sanctions MMA.
The article points to several inferences that could position the bill to legalize MMA for a vote in Albany this year. This includes the state senate passing the bill to legalize MMA by a vote of 47-14, comments made by Governor Andrew Cuomo in support of MMA and64 members of the Assembly co-sponsored the MMA bill (12 short of the needed for the bill to be made into law). The most telling inference is the fact that Assembly Speaker Sheldon Silver told the New York Daily News that MMA will “probably” be legalized but did not indicate when this might occur.
An interesting take on the fight to legalize MMA in New York is the position that the lobbying efforts of Zuffa has hurt the overall effort due to the strong opposition against Zuffa. Namely, the Coalition to Legalize Mixed Martial Arts in New York questioned whether if Zuffa played a “smaller role” would MMA have already gained legal status.
A vote on the bill to legalize MMA must take place before the legislature ends on June 21st. But, the Assembly’s Democrats will decide on the bill’s fate at the annual Democratic Conference in May.
With the article coming out this week in the Sports Business Journal and the indication that the bill would be decided (whether to vote or not) in the next couple weeks, it was likely that opponents would voice their opposition and will speak out about the bill on Tuesday.
Payout Perspective:
It will be interesting to see how the legislature will play out this spring. If a bill is turned away this year, the litigation efforts will likely not provide any help this year as well. Even though the New York Attorney General conceded in court proceedings that the statute may allow an exempt third party to sanction professional MMA, it has taken a hard line in not entertaining a settlement in the lawsuit if one of the concessions is allowing professional MMA in New York. Despite the financial benefits of MMA in the state, the opposition remains stiff. The union opposition to Zuffa has definitely come back to hurt it in trying to legalize MMA in New York.
Court denies Bellator’s Motion to Dismiss Alvarez Counterclaims
April 18, 2013
The United States District Court for the District Court of New Jersey has denied Bellator’s Motion to Dismiss the Counterclaims of Eddie Alvarez. The litigation between the two sides will continue.
Bellator had brought a Motion to Dismiss Alvarez’s Counterclaims for Tortious Interference with a Prospective Economic Advantage and Breach of Contract. Judge Jose Linares held that Alvarez’s claims survived the Motion to Dismiss standard in that his factual allegations raised a right to relief. This does not mean that Bellator could not eventually win, it just means it cannot win at this stage of the litigation.
With respect to the Tortious Interference claim, Bellator had argued that Alvarez could not prove it had done anything with malice. A prerequisite of the claim. It also argued that Alvarez’s claim must fail because the contract match was privileged.
Although Bellator supported its original arguments with case law, the Court noted that those cases occurred after the Motion to Dismiss stage. Thus, seeking support with the cases was of no relevance for this motion.
Bellator also argued that the contract offer should be privileged and cited a case which appeared to be on point. However, that case was a state law case which the federal court did not have to follow. Moreover, the case cited by Bellator related to correspondence in which counsel threatened litigation. The Court here distinguished that case as Alvarez claims Bellator, in bad faith, matched the offer made by Zufa.
The Court noted that it would not make a factual determination whether Bellator had a “legitimate business-justification” for proposing a purported match to Alvarez. Factual determinations such as these are not determined at the Motion to Dismiss stage.
With respect to the Breach of the Court held that despite Bellator’s assertions, Alvarez identified the contract for which it alleges Bellator breached. Furthermore, the Court determined that it “adequately alleged” that Bellator breached the duty of good faith and fair dealing in which it claims to have matched the Zuffa Offer in spite of “neither having the ability or the willingness to actually match the offer.”
Payout Perspective:
The lawsuit continues. The threshold for prevailing on a Motion to Dismiss is tough if the claims made contain a sufficient enough of facts as Courts tend to want the case to prevail on the merits. Its interesting that the Opinion of the Court did not address the “malice” requirement in Alvarez’s Tortious Interference claim. Rather, it focused on the case law Bellator cited to distinguish it from the present case. Its likely that the two sides will exchange discovery and move on to the deposition phase.
Bellator files Reply Brief in Motion to Dismiss Alvarez’s claims
April 13, 2013
Bellator has filed its Reply Brief in support of its Motion to Dismiss Eddie Alvarez’s counterclaims. Bellator’s motion should be decided sometime this month.
Bellator’s counsel has requested an oral argument although its not known at this point whether the Court will grant this request.
The Reply Brief attacks Alvarez’s position in bringing its two counterclaims against Bellator for tortious interference and breach of contract. Notably, Bellator frames its argument to the Court by suggesting that there is not a case in the whole United States that allows a tortious interference or breach of contract claim where a party has attempted to match a matching rights clause in a contract. Bellator goes so far as using an exclamation point to highlight the fact that there is not one case in the United States supporting Alvarez’s theory. “To emphasize, we have not found one case in the United States!” states Bellator in its brief. An exclamation is a no-no in legal briefing. Its the equivalent of typing in all caps.
The brief supports the argument that Bellator had a legal, contractual right to proffer a contract to Alvarez to match Zuffa’s offer. Thus, Alvarez’s claims for “interfering” with his opportunity to obtain a contract from Zuffa and breach of the Bellator contract should be dismissed.
Bellator’s argument is that its submission of a matching offer does not give rise to a cause of action for tortious interference since Bellator claims its matching offer was not done with malice, a requirement it argues is needed to prove such a claim.
Moreover, it states that the communications between Bellator and Alvarez’s counsel in regard to Bellator’s efforts to match the contract offered to Alvarez by Zuffa are confidential communications. As a result, the Court should not consider it and therefore the claims must be dismissed.
Also of note in Belltor’s Reply is the argument that Alvarez’s cannot bring his Breach of Contract claim because the purported matching contract offered by Bellator to Alvarez has yet to be breached. The main argument by Alvarez is that Bellator cannot match the PPV terms as well as the platform (Spike vs. Fox).
Payout Perspective:
A very strong Reply Brief that seemed a bit too strong. Its rare to use an exclamation point in legal briefing. Its almost a faux pas to do so. The brief attempted to pick apart Alvarez’s opposition brief to the point of criticizing Alvarez’s attorneys. It appears that the issue will boil down to whether Bellator’s attempt to match Zuffa’s contract was proper. This might not be determined at this stage of the lawsuit. Of course, Alvarez’s attorneys have requested the Court an opportunity to amend its Counterclaims if they are found insufficient. Thus, we may not see the end of this lawsuit anytime soon.
UFC Releases Fighter Code of Conduct
April 10, 2013
Kevin Iole of Yahoo! Sports reports on the released UFC’s Code of Conduct. In light of the comments made by Matt Mitrone, the UFC revealed its Code of Conduct each contracted fighter must follow.
First, a comment on Mitrione. UFC CEO Lorenzo Fertitta told Yahoo! Sports:
It doesn’t mean he’ll [Mitrione] be cut, or suspended long-term, or even fined… But the UFC will review the incident and, at the very least, try to educate Mitrione about why his comments were harmful.
The UFC sought assistance from the Washington D.C. firm of Covington Burling to draft its Code of Conduct Policy. The written policy was patterned after those drafted by the NHL, MLB and the NFL.
The policy’s intent is not to punish, but to educate and prevent flippant, ignorant comments that mainly occur via social media.
Payout Perspective:
The Code of Conduct which you can see here has a provision to appeal (page 4). If a fighter does not agree with the UFC determination, it may appeal via binding arbitration. The determination of the binding arbitration as well as the proceedings will be confidential and “subject only to such disclosures as required by law.”
The other interesting note is that the fighter who engages in misconduct “may be required to undergo clinical evaluation.” If the fighter does not agree to do this, there may be a separate basis for discipline. Thus, it sounds like fighters are bound to do this “or else.”
This Code of Conduct is likely a part of the contract the fighters sign with the UFC. Obviously, if there was a negotiating unit for the fighters (the “u” word), it might be able to bargain with the UFC for some of these requirements.
The Iole article itself, is a partial editorial about the aftermath of Mitrione’s comments on Fallon Fox.
Bellator files Motion to Dismiss in Alvarez Case; Alvarez responds
April 2, 2013
Bellator has filed a Motion to Dismiss Eddie Alvarez’s Counterclaims against the organization. The motion will be decided by the Judge without oral argument sometime this month.
As you may recall, the parties had agreed to a couple delays in filing Bellator’s answer in hopes of a possible settlement. Instead, Bellator filed a Motion to Dismiss the substantive legal claims in Alvarez’s countersuit.
The motion seeks to dismiss counts 3 and 4 of Alvarez’s Counterclaims. Those are Tortious Interference with Prospect of Economic Advantage and Breach of Contract.
Bellator’s argues that the matching agreement was confidential and pre-litigation correspondence holds a privilege and is not actionable. It further claims that Bellator had a right to match Zuffa’s offer and Alvarez’s breach of contract claim lacks a factual basis.
Tortious Interference with a Contract must show the following:
1) Plaintiff was in pursuit of business;
2) Interference was done intentionally and with “malice”;
3) Interference caused the loss of prospective gain; and
4) The injury caused damage.
Bellator suggests that Alvarez did not prove this because it had a contractual right to match. Bellator stresses the fact that for Alvarez to prove his claim, there must be a showing that Bellator submitted its matching contract with intentionally doing this without justification or excuse (i.e., the “malice” component). It also cites case law which states that “legitimate business reasons” was “justification” significant to deny a successful tortious interference claim. Here, Bellator’s right to match Zuffa’s offer is its argument that Alvarez’s claim for tortious interference would fail.
Bellator also claims that the correspondence between itself and Alvarez’s representation constitute a privileged “pre-litigation correspondence” which New Jersey law recognizes.
As for the Breach of Contract claim, Bellator argues that it cannot discern which “contract” Alvarez claims to have been breached. It labels Alvarez breach of contract claim as devoid of a factual premise. It also adopts the “pre-litigation correspondence privilege” to this claim.
Eddie Alvarez’s attorneys have filed its opposition brief arguing that Bellator submitted its offer to Alvarez in bad faith. In its brief, it argues that Bellator knew that it had no intention or ability to perform the terms of the contract and it was done with the intent to prevent or obstruct Alvarez from signing with Zuffa.
Alvarez’s brief argues that much of the legal cases that Bellator cites in its Motion to Dismiss came at Summary Judgment rather than at a Motion to Dismiss. For those nonlawyers, Summary Judgment usually occurs after discovery (depositions, answering of written interrogatories, etc.) while a Motion to Dismiss occurs around the beginning of the lawsuit. At most times, a Motion to Dismiss happens before a party must file a response to allegations in a lawsuit.
Alvarez argues a similar premise to what went against him at the Preliminary Injunction hearing in January. Essentially, Alvarez argues that Bellator cannot have the Court assume that it would be able to perform the matching terms in the Offer to Alvarez until further discovery is performed in this case. At the Preliminary Injunction hearing, the Court deferred on ruling whether or not Bellator offer matched the Zuffa contract offer to Alvarez. Notably, whether Bellator would have a PPV with Alvarez as the headliner. Here, Alvarez argues that his Counterclaims cannot be dismissed because as the Court determined it cannot decide on whether Bellator could rightfully match Zuffa. Thus, in this Motion to Dismiss, the Court cannot decide on whether Bellator’s offer was not done in bad faith.
Alvarez also requests that the Court allow him to Amend his Counterclaims if the Court finds in favor of Bellator. Something like this is normal and the Court would likely allow him to at least bring a Motion to Amend his Counterclaims.
Payout Perspective:
Both sides make plausible arguments for and against Alvarez’s claims. Alvarez’s logic that the Court cannot determine whether or not Bellator submitted the matching offer in bad faith and thus his claim should not be dismissed is a nice bit of irony considering Alvarez’s legal team wanted the Court to determine that Bellator’s offer was not on par with Zuffa’s in their Preliminary Injunction hearing. Long story short, it’s likely that the litigation in this dispute will continue past Bellator’s Motion to Dismiss.
Zuffa Copyright Claim Correct Action Under DMCA
March 28, 2013
Can Zuffa have YouTube take down a video of Nick Diaz being told by a UFC official that the Quebec Athletic Commission would grant the fighters a 0.9 pound allowance of the mandatory 170 pound weight limit? Short Answer: Yes.
The UFC’s decision to take down the video of UFC Senior Vice President of Business and Legal Affairs and Assistant General Counsel (what a title) Michael Mersch has sparked controversy as many have questioned whether its legal. It is.
Bloody Elbow took issue with the UFC making a copyright claim:
The video was of a conversation, the UFC does not own a copyright on conversations that take place in the stadium seats. Nor does it own a copyright on anything actually shown in the video. The video doesn’t even show something like the Octagon which the UFC could try to make some sort of (wrong) claim that violated their copyright. It is strictly a conversation in the stadium seats.
But the issue is not the substance of the video but where the video was taken. It was taken backstage at the weigh-ins. In order to get there, one must obtain access from the UFC. And while we do not have definitive information on this, it’s likely that the UFC made each person sign something and/or wear a pass to get to the back. We also assume that the UFC limits its liability as well as has language which states that it owns rights to videos, images, sounds, etc. for those entering the backstage area. Its not a public area although we might think it is. Certainly, we all would want to hang out before weigh-ins if we could. But we cannot. Why? We don’t have the necessary access.
If we may infer from the UFC fighter contracts, the UFC has contemplated the control of pre and post-bout access. One can look to the Eddie Alvarez contract which was produced in the Bellator litigation to take note that pre and post bout happenings are covered by the UFC.
The Alvarez Promotional and Ancillary Rights Agreement is a section entitled, Ancillary Rights. The section provides an exhaustive list of rights that the fighter agrees to grant Zuffa. Among the rights is Section 2.3(b) which states:
2.3. The Rights include the following:
b. All media, including, but not limited to, motion picture, radio, television (which term whenever referred to herein shall include, without limitation, live or delayed, interactive, home or theater, over-the-air broadcast, pay, pay-per-view, satellite, closed circuit, cable, subscription, Video On Demand, Near Video On Demand, Subscription Video On Demand, multi-point, master antenna, or other), telephone, wireless, computer, CD-ROM, DVD, any and all Internet applications (including,without limitation, netcasting, podcasting, direct download, streamed webcasting, internet channels (e.g., Youtube) or any other form of digital media download or web syndication), films and tapes for exhibition in any and all media and all gauges, including but not limited to video and audio cassettes and disks, home video and computer games, arcade video games, hand-held versions of video games, video slot machines, photographs (including raw footage, out-takes and negatives), merchandising and program rights, in connection with or based upon the UFC brand, the Bouts or activities pertaining to the Bouts, including but not limited to, training, interviews, press conferences, weigh-ins and behind-the-scenes footage for the Bouts (the “Pre-Bout Events”), post-fight interviews and press conferences (the “Post Bout Events”) and any parts thereof on a commercial, sustaining, theatrical or other basis, and by any and all means, methods and devices whatsoever, now existing or hereafter devised. (our emphasis)
An interesting note about the Ancillary Rights that Zuffa will retain from the fighter. It lasts in perpetuity – even after the fighter dies. Yes, its repetitive but emphasizes that Zuffa owns the rights forever.
Based on this particular language, it means that someone like Nick Diaz probably signed over his rights to any “Pre-Bout Events” such as a “behind-the-scenes footage.” Even if the video was shot by someone else, it still features a UFC official and Diaz talking backstage at a UFC weigh-in. Thus, the UFC could make the copyright claim.
There are steps that an individual can do to reclaim their video. The first is to send a counter-notification.
Via YouTube re counter-notification:
A counter notification is a legal request for YouTube to reinstate a video that has been removed for alleged copyright infringement. The process may only be pursued in instances where the upload was removed or disabled as a result of a mistake or misidentification of the material to be removed or disabled, such fair use. It should not be pursued under any other circumstances.
Bloody Elbow via MMA Junkie’s Stephen Marocco states that the person that uploaded the video has filed a counter-notification.
If the video does reappear as a result of the counter-notification, the UFC could file suit.
The Digital Millenium Copyright Act (DMCA) is the center of this copyright claim controversy as all of the claims to take down videos online are based on this law. It is used by media companies to protect its intellectual property. It can be a confusing law as to what rights an individual may have to upload videos to sites like YouTube.
This issue of a spectator’s rights at a sporting event came up with NASCAR this past February. NASCAR has flipped on its stance on the reasons for taking down spectator videos of the crash but the fact remains that NASCAR had licensed its rights to the images. Poynter.org has an interesting recap of the NASCAR event as well as arguing whether NASCAR had a legit claim to take down a video of the crash. One of the arguments made is that facts cannot be copyrighted. One of the commenters (with a legal background) noted a case, NBA v. Motorola, which found in favor of a pager service that would provide live scores and stats of NBA games. The Court held that while the official recordings of the NBA may be protected by copyright law, actual athletic events are not copyrightable. The commenter believed that the holding in the case was premised on the logic that the NBA could assert protections over its official recordings, but not over every recording in the arena.
Certainly this rationale goes against the UFC’s copyright claim here and our argument that it is valid. But the contractual issue probably would hold the day here. If Diaz and other contracted UFC fighters in the video signed Zuffa fight contracts, they likely signed over their Ancillary Rights as well. Thus, the UFC would have a strong case to stake its claim to have YouTube take down the video.
MMA Payout on Sports Law Chat this Sunday
March 7, 2013
I’ll be the featured guest discussing legal issues in mixed martial arts on SportsLawChat this Sunday, March 10th from 5:00-6:00pm PST/8:00-9:00EST.
The discussion will take place on Twitter and you can follow the happenings with the hashtag #SLChat. You could also find me @dilletaunt tweeting this information.
I’ll be talking about the Zuffa-New York lawsuit, Bellator-Alvarez, unions, drug testing, international expansion and Ronda Rousey. Hope you hop on and check it out.
