July 4, 2015
Attorneys on behalf of the plaintiffs in the UFC Antitrust Lawsuit have filed an opposition to UFC’s Motion to Stay Discovery in the lawsuit that is now in the U.S. District Court of Nevada.
You might recall that Zuffa filed a Motion to Stay Discovery pending the court decision in its Motion to Dismiss. The Motion to Stay Discovery was to be heard September 10, 2015 when the lawsuits were in San Jose. Since the filing, the court determined that based on the forum selection clause found in fight contracts signed by many of the plaintiffs, the venue should be transferred to the federal district court in Las Vegas, Nevada. Zuffa argued that since there was a likelihood that the curt would grant its Motion to Dismiss and would resolve all issues, discovery would be a moot point. It also stressed the fact that the discovery process is “extensive, burdensome and costly.” Zuffa cited the discovery requests which seek a voluminous amount of financial information from Zuffa. In addition, Zuffa suggested that federal courts in California evaluated a request for stay during the pendency of a dispositive motion based on whether: 1) the pending motion must dismiss the entire case (or the issue in which discovery is aimed), and; 2) whether the court may determine the motion without the discovery. Zuffa argues that the court can dismiss the case without the need for conducting discovery.
In its opposition, plaintiffs claim that the UFC’s motion to dismiss is “highly unlikely to succeed” and due to the fact that there are factual issues to resolve, discovery is required. It also argues that a stay of discovery would hurt the plaintiffs’ case.
Plaintiffs state that the UFC’s Motion to Dismiss raises “at least four contentions” requiring discovery.
- Discovery related to UFC’s assertions that its exclusive contracts with fighters, sponsors, venues and others do not substantially foreclose competition or impair rival promoters.
- Discovery seeking to determine whether “minor league” promoters do not compete with the UFC.
- Discovery related to the argument that “Plaintiffs do not show how excluding would-be rivals from access to some venues, sponsors and TV networks amounts to substantial foreclosure.”
- Discovery regarding the UFC challenge of the term “elite MMA fighter” used in the industry creates a factual dispute.
Perhaps a dig at the UFC, the plaintiffs’ brief (on page 4) cites Bob Arum (a noted Dana White foe) stating that the boxing promoter “pays his boxers approximately 80% of the proceeds of events.” The brief quotes Arum: “[b]ecause of the monopoly that the UFC has, [the UFC] pay]s][its] fighters maybe 20% of the proceeds that come in on a UFC fight.”
Its the standard litigation story that one side is stalling discovery, while the other side wants to facilitate discovery.
The opposition sets forth certain discovery requests it believes necessary for its case. Essentially, it is laying the groundwork to broker a compromise with Zuffa to allow limited discovery. The strategy here is for the court to determine what is fair and the fact that the plaintiffs outline a proposed plan may have the court allow the discovery to “see how it goes.” Probably not what Zuffa wants, but one could see this happening.
If Zuffa wins its motion to stay discovery, it will save a lot of time and money and the litigation will hinge on the Motion to Dismiss. If the court sides with plaintiffs and/or grants limited discovery, the plaintiffs may have a greater opportunity to withstand a dismissal.
We will see what the court decides.
July 2, 2015
WWE has filed a lawsuit against several former WWE stars seeking a declaratory judgment against them. The complaint, filed in federal court in Connecticut is a result of a pre-litigation letter concerning potential concussion lawsuits against the company.
Robert Windham (aka Blackjack Mulligan), Thomas Billington (aka Dynamite Kid), James Ware (aka Koko B. Ware) and Oreal Perras (aka Ivan Koloff) are the named defendants. The WWE is seeking a court order stating that any potential lawsuit alleging traumatic brain injuries “and/or tort claims Defendants have threatened against WWE are time-barred by the applicable statutes of limitations/statues of repose under Connecticut law.”
The WWE strategy is a result of the growing swell of lawsuits filed by former WWE performers claiming that the company knew or should have known about the risks of head trauma and that they suffered injury as a result. Although not a named defendant in the lawsuit, the WWE names (and blames) plaintiff attorney Konstantine Kyros for the litigation. It identifies several notice letters (below) which request that the WWE not destroy any information it may have. The lawsuit identifies the existing lawsuits Kyros has filed on behalf of former WWE stars including Billy Jack Haynes.
The lawsuit requests a court ruling indicating that the defendants’ claims are time-barred by the statutes of limitations/repose under Connecticut law. Essentially, the defendants did not file their claims on time. This is always a very hard issue to consider as most of the claims that wrestlers could make occur when they are still contracted by the company.
One can see the strategy for the WWE here as it recognizes the growing litigation on the horizon. It need only look at the NFL and NHL lawsuits to know that it needs to block the potential floodgates of litigation. The estate of Matt Osborne was the latest to file a lawsuit against the WWE. Recently, a court in Oregon where the Haynes lawsuit was filed transferred the case to Connecticut upon WWE motion. The WWE is seeking to do the same in other lawsuits filed across the country. Based on the WWE’s filing here, it would seem that once it brings the case under Connecticut jurisdiction, it will file a motion to dismiss based on the applicable statute of limitations under Connecticut law.
We will keep you posted.
July 1, 2015
Top Rank Boxing has sued Al Haymon and Waddell & Reed Financial in the U.S. District Court for the Central District of California in Los Angeles. Similar to the lawsuit filed by Golden Boy in May of this year, it claims that Haymon and his business holdings violate antitrust law, the Muhammad Ali Act and California state Unfair Competition law.
The lawsuit, provided by the Los Angeles Times, filed on July 1st claims that Haymon attempts to circumvent the above-mentioned laws through his Premier Boxing Champions promotion. Top Rank claims that Haymon and Waddell & Reed are seeking to “buy up and monopolize the entire vertical channel” of top fighters, “tying out” promoters, excluding promoters from major venues and using its “time buy” strategy as a “predatory ‘payola’ scheme.”
As stated in the Golden Boy lawsuit two months prior, the lawsuit identifies the scheme in which it claims that Haymon is using his market power in one business to take over a different business. Haymon has a deep stable of boxers that fight exclusively on PBC/Haymon promoted cards thus foreclosing out the fighter market as well as the promotion for these fighters.
In an update from the Golden Boy lawsuit, Top Rank identifies a June 2015 issue in which California state regulators identified Haymon reserving venues such as Staples Center and The Forum so that other promotions would not be able to hold events there. Per the LA Times, this was a reason why a fight between Lucas Matthysse and Ruslan Provodnikov was sent to a New York casino rather than a more attractive venue in Los Angeles.
Seeking to twist the dagger a little more, Top Rank picks up on Haymon’s music promoter background to accuse him of “payola.” This is based on brokering “time buys” with a host of networks to air PBC exclusively. Thus, the argument would be that other promoters are excluded from negotiating with those networks.
The lawsuit states that losses could exceed $200 million in PBC’s first two years in existence. And while PBC may operate in the red, its “loss leader” strategy allows Haymon to gain an unfair advantage in the promoter market.
The Complaint seeks $100 million in damages against Haymon, et al.
“The enemy of my enemy is my friend,” is an ancient proverb that might prove true in federal court in Los Angeles as both Golden Boy and Top Rank are digging in its heels against Al Haymon. While it’s still too early to tell whether the two longtime adversaries will work together in its fight against Haymon, it will be an intriguing sidebar to this legal heavyweight battle. The allegations mirror one another and offer some interesting legal issues. One of interest to the boxing industry is Haymon’s alleged conflict of interest in serving as a “de facto” manager (although he’s labeled as an advisor) and promoter. This is something specifically addressed in the Ali Act as prohibited. MMA Payout will keep you updated.
June 28, 2015
The estate of another former WWE wrestler has filed a lawsuit against the organization. The mother and son of Matt Osborne (aka “Matt Borne” and “Doink the Clown”) have filed a wrongful death lawsuit against the company for the alleged negligent and fraudulent mistreatment of Osborne while he was a wrestler with the company.
The Osborne lawsuit was filed on June 26th in the U.S. District Court for the North District of Texas, Dallas Division. The Dallas Morning News covered the lawsuit. Osborne died in 2013 of a painkiller overdose at the age of 57 in Plano, Texas. The family claims brain injuries caused while a professional wrestler caused depression and drug abuse which led to his death.
The WWE, utilizing the same public relations strategy as in similar lawsuits, claims that the lawyers are the ones driving these lawsuits pegging the attorneys as opportunists. The WWE indicates that the Osborne lawsuit is merely seeking “NFL money” in reference to the NFL concussion lawsuits which likely will result in settlements for those involved.
In a similar lawsuit, Billy Jack Haynes’ case against the WWE that was filed in Oregon has been transferred to Connecticut upon motion by the WWE on the basis that he signed WWE booking contracts which indicated that the forum of choice was the home state of the WWE.
Osborne spent limited time in the WWE throughout his wrestling career which may make his claim hard to prove. However, it does not negate the alleged negligence that the WWE may have contributed to his injuries. The complaint points out specific instances where Osborne was injured during his stint in the WWE. It also claims the WWE knew and/or knew but did not warn him about the perils of head injuries. Notably, the complaint has a similar template as other lawsuits filed by former WWE wrestlers. However, at least one part of the lengthy complaint has been updated to include a photograph embedded in paragraph 139 of the complaint which shows the WWE is taking precautionary steps with its talent now with helmets used in training.
This lawsuit may be moved to Connecticut like Haynes’ lawsuit as one might infer that Osborne signed a WWE contract with a forum selection clause which would dictate where a lawsuit would take place if one should happen. We will see if more wrestlers continue to file lawsuits which appear to be similar to the NFL and NHL concussion litigation.
June 25, 2015
A bill to legalize mixed martial arts in the state of New York has failed to reach an Assembly vote once again this year. Despite a concerted effort to attempt to push the bill through, which included revamping the bill to attempt to appease legislators, it appears that it will not make it to a vote on what is the last day of an extended legislative session in Albany.
Jim Genia relayed the bad news. Genia among other New York MMA supporters gave up to the minute details on the sausage making in Albany and relayed the news to MMA fans that hoped to see the UFC in Madison Square Garden this December.
This year seemed different in Albany due to the removal of Speaker Sheldon Silver and a more MMA-receptive speaker in Carl Heastie. But once again, the MMA bill was not brought before the Assembly for vote despite an extended session which many thought would produce one.
Assembly Majority Leader Joseph Morelle, the sponsor of the MMA bill, indicated that it needed 76 votes in the Democratic conference for a bill to come to the floor. Prior to the revamp of the MMA bill a couple weeks ago, they had 70.
MMA Payout will have more on this as more information comes out but this is a definite blow for MMA and the UFC. Many believed that this would be the year that MMA would become legal in the state. But, politics once again rears its ugly head. As for options, we must wait another year in Albany but the Zuffa lawsuit against New York continues. Its appeal of the dismissed lawsuit claiming the bill prohibiting MMA in the state is unconstitutional is in the Second Circuit and Zuffa’s briefing is due by August 4th.
June 24, 2015
Alexander Shlemenko was suspended three years and fined $10,000 by the California State Athletic Commission as it is the harshest penalty against an MMA fighter since it began regulating the sport. In addition, Shlemenko’s win against Melvin Manhoef at Bellator 133 has been overturned.
The commission voted unanimously by a 7-0 vote in favor of the penalty. Although Shlemenko’s attorney, Howard Jacobs, argued that there was a lack of a “B” sample and a possible violation for not splitting the urine sample. The commission did not agree with Jacobs’ arguments.
But the commission did not agree. The fact that Manhoef was knocked out by Shlemenko may have played a role in his penalty. Of course, Shlemenko’s tests were another reason. Per MMA Junkie, the tests revealed the steroid oxandrolone and oxandrolone metabolites as well as a testosterone-to-epitestosterone (T/E) ratio of 50-1 in Shlemenko’s post-fight urine test (the commission’s limit is 4-1).
It is not known if Shlemenko will appeal but if he does not, at 31 years old, it’s unlikely we’ll see him fight again.
UPDATED: According to Combat Sport Law’s Erik Magraken, Shlemenko will seek judicial review of the commission ruling. I would expect that this will happen more if commission’s seek to dole out these stiff penalties. Realistically, what does Shlemenko have to lose? His career is likely over if he accepts the punishment.
One would think that if Shlemenko has a compelling case, his attorney could still appeal the commission decision by seeking a judicial review in a California Superior Court. The heavy-handed penalty reflects a newfound position by athletic commissions in light of the UFC’s stance on PEDs. There is an argument that the penalty is unjust but the commission can point to the glaring test results and the T/E ratio to justify its suspension. Moreover, the TKO victory might have persuaded commissioners to allow the penalty as one commissioner put it that Shlemenko could have killed Manhoef. We shall see if this decision will be appealed.
June 12, 2015
On June 11th, Judge Richard Boulware of the U.S. District Court for the District of Nevada signed an order which would consolidate all of the cases in the Zuffa Antitrust Lawsuit.
Earlier this month, the U.S. District Court in Northern California determined that the venue of the lawsuit filed by Cung Le and several other former-UFC fighters should be transferred to Zuffa’s home district of Las Vegas, Nevada. As a result, the five lawsuits filed by the former fighters were sent to federal court in Las Vegas. However, the cases had not been consolidated by one judge which resulted in the initial set up of having multiple judges handling several cases.
Judge Boulware, who was assigned the Le case, indicated in his June 11th order that the presiding District Judges determined that the actions are related and “there is good cause to consolidate them under the same District Court Judge and Magistrate Judge.” The order stated that neither party opposed the consolidation.
According to a Las Vegas Review-Journal article, Senator Harry Reid proposed Judge Boulware to the bench to the White House. Of course, Senator Reid is (or was) a big supporter of the UFC. This should not play into how Judge Boulware conducts the trial but there it is for everyone to speculate.
I don’t believe anyone was surprised by this ruling and it makes sense. Judge Richard Boulware will preside over the legal battle between the former UFC fighters and Zuffa. He was appointed to the federal bench by President Obama in 2014. He is a graduate of Harvard and Columbia Law School. Prior to joining the bench Judge Boulware was a trial attorney for the Federal Public Defender’s Office in Las Vegas and in New York. He also served as law clerk with Judge Denise Cote of the US District Court for the Southern District of New York after graduating from law school.
June 7, 2015
For those that want additional information on the PBC lawsuit discussed in Show Money Episode 5, we provide it here. On May 5, long-time Golden Boy Boxing attorney Bertram Fields filed a Complaint in the U.S. District Court for the Central District of California (Los Angeles to be specific) against Al Haymon and a variety of Haymon’s associated companies as well as Waddell & Reed Financial Inc.
The complaint seeks an injunction against Haymon’s business practices as well as a sum of $100 million plus the statutory damages which would be three times the amount in its claim. Thus, $300 million.
The lawsuit argues that Haymon, et al. violates sections 1 and 2 of the Sherman Antitrust Act, the Clayton Act, the Muhammad Ali Act and California state unfair practices law. Golden Boy breaks down the pro boxing industry into two different parts which comprise two distinct markets: boxing managers and boxing promoters.
The alleged scheme mapped out by Golden Boy indicates that Haymon, et al. have market power in one business (i.e., management of boxers) to “monopolize another business” (i.e., promoting fights).
Golden Boy claims that the market deals “primarily with ‘Championship-Caliber Boxers’ – that is professional boxers who, during the last three years, have demonstrated through such factors as purse size, television rights, viewership, ticket revenue and other objective factors to be ‘the cream of the boxing business.’”
Specifically, the Muhammad Ali Boxing Reform Act creates a “[f]irewall between promoters and managers.” The Ali Act prohibits “a direct or indirect financial interest in the promotion of a boxer” and from being “employed by or receiv[ing] compensation or other benefits from a promoter.”
Golden Boy argues that Haymon, et al. violate this law by managing fighters without a license in most instances. It also claims that Haymon, et al. violate the law as it acts as promoter as well. In this capacity, promoters are to make “extensive financial disclosures to state boxing commissions and to boxers, and imposes an obligation on promoters to notify the state boxing commission before any professional boxing match is held.”
From the Senate Report which discussed the Ali Act: “It is not plausible for a boxer to receive proper representation and counsel from a manager if the manager is also on the payroll of a promoter. This is an obvious conflict of interest which works to the detriment of the boxer and the advantage of the promoter.”
In paragraph 22 of the Complaint, Waddell (the Haymon investment fund) offers to purchase 100% of the equity interest in Golden Boy but the transaction was predicated on a “lengthy non-competition agreement from De La Hoya (Golden Boy founder).”
This allegation suggests that Waddell, a fund with different assets, was mainly funded by Haymon, et al. in order to purchase Golden Boy. The transaction was structured this way in order to “conceal” the identity of Haymon so as not to alert Golden Boy or anyone else of the potential monopoly.
Golden Boy attacks the Haymon “time buys” on the network by arguing that it is “patently an act of promotion by a boxing manager…” It also claims that it has entered into “coercive contracts” with Haymon fighters as fighters must sign “multi-year” contracts with the Haymon Defendants.
The scheme claimed by Golden Boy indicates that Haymon, et al is willing to take on losses in the “hundreds of millions of dollars” initially for future gain to control the “promotion of boxing on American network television.” Golden Boy suggests that once they have secured its market dominance, it will “reverse the financial arrangements, recoup their losses, pay less to boxers and reap massive profits, far in excess of their temporary losses, by charging supracompetitve prices to networks, sponsors and consumers.”
The argument by Golden Boy is that the time buys “lock out” other promoters from attempting to secure television deals. The issue with the scheme laid out by Golden Boy is that while it may be true that the business strategy by Haymon, et al. may one day seek to switch its current time buys to network deals in which the networks would pay Haymon, it does not means it is not against antitrust laws.
One of the issues Golden Boy points out is that boxing managers negotiate with boxing promoters on behalf of their boxers. Golden Boy claims Haymon, et. al circumvents this practice in violation of the laws cited in its Complaint.
With the alleged scheme, Golden Boy claims that Haymon contracts create an illegal “tying relationship between relationships between services sold in separately defined markets (management and promotion of boxing).
It will be interesting to see how this lawsuit will proceed. One hurdle that Golden Boy may have to overcome is the allegations related to the “time buy” on networks as it is hard to argue the future business dealings for Haymon. This is discussed in Show Money Episode 5. There might be an allegation of anticompetitive behavior in the future if Haymon were to secure deals with all of the television networks PBC currently airs on. But, networks such as FS1, TruTV, HBO and Showtime have non-PBC boxing on its networks.
An interesting part of the litigation will be the information that might surface considering Haymon’s alleged attempt to purchase Golden Boy from Oscar De La Hoya.
We will keep you posted.
June 7, 2015
Show Money Episode 5 is back with Bloody Elbow’s John Nash and Paul Gift. In this episode we discuss the status of the UFC antitrust lawsuit and the PBC lawsuit filed by Golden Boy.
If you would like to know a little more about the PBC lawsuit, you can find some more information here.
June 3, 2015
The Honorable Edward Davila has granted Zuffa’s request to transfer the venue of the class action antitrust lawsuit filed by former UFC fighters to Las Vegas, Nevada. In an order dated June 1, 2015, the U.S. District Court for Northern California, San Jose Division granted Zuffa’s Motion to Transfer Venue to the U.S. District Court of Nevada, Las Vegas Division.
In an homage to the parties before it, the court offered in its order, “At the final bell, it is Defendants arguments that clinch this round because the relevant forum selection clause and the sec 1404(a) convenience considerations both favor a Nevada forum.”
The preceding paragraph of the order offered more fight references:
“…Plaintiffs allege that Defendant, now the heavyweight of the industry, has violated Section 2 of the Sherman Act…”
“Defendant now seeks to knock these cases out of the Northern District of California and into its home venue…”
As stated above, the court found in favor for Zuffa based on two arguments. First, it held that the forum selection clause in the fighters’ fight contracts/bout agreements should be recognized. With those clauses pointing to Zuffa’s home district of Nevada (or Las Vegas), the case should be decided in that forum. This finding was directly opposite to the plaintiffs’ argument that the contracts and its forum selection clauses in the underlying contracts should not be addressed in an antitrust claim such as this.
Thus, the question was whether the plaintiffs’ antitrust claim is one “to interpret or enforce” any provision of Zuffa’s agreements so that they are transferred to the contractual venue. The court held that the “substance of a claim is what matters, not its title.” It therefore decided that the lawsuit was an action “to interpret” the contracts and thus the forum selection clause should be followed.
In case you were wondering, for those plaintiffs that did not sign contracts with forum selection clauses, the court stated that since they joined this lawsuit, their claims would follow the disposition of the case. Thus, they go to Nevada too.
While most of the court order reflects on the forum selection clause, it also addressed the convenience of venue factor in deciding in favor of Zuffa. Essentially, it determined that the relevant parties and witnesses reside in Nevada and most of Zuffa’s employees would need to travel to San Jose if the case stayed in Northern California. The court did not buy the plaintiffs’ convenience of venue arguments stating it did not convince the court that “Nevada is any less convenient” for the plaintiffs despite arguing that Le and a couple other fighters resided in San Jose and that the San Jose area has a local interest in the lawsuit.
The court also shot down plaintiffs’ argument that San Jose was familiar with antitrust cases and is more efficient in getting them to trial than Las Vegas. The court acknowledged this fact but stated, “ [e]ven assuming Plaintiffs are correct that the legal process in Nevada generally takes longer than it does in this [San Jose] district, that is simply not enough to overcome those other factors showing why this specific litigation is appropriately venued there.”
The Order is below and can also be pulled of Pacer for free. Of course, if you pull it from here, please give us an h/t since we did the work for you.
The case would appear to swing in favor of Zuffa now that it is being moved to federal court in Las Vegas. The pending Motion to Stay Discovery and Motion to Dismiss will be heard in the new venue in Las Vegas. For the Motion to Stay Discovery, the parties have agreed to allow the plaintiffs to file opposition to the motion 30 days after the disposition of the Motion to Transfer. So, the pleadings will be filed by plaintiffs by the end of June with a Reply by Zuffa following 14 days after the opposition is filed.
While it may not be the end for Zuffa, the loss could be considered as significant. Its clear there was a reason why the plaintiffs filed in San Jose. They were aware of the potential risks of filing with just a small amount of its plaintiffs having ties to the district. But, the key was how much weight the court would give the forum selection clauses in the contracts. Its clear from the order that the court took a pragmatic approach to the issue (i.e., what do the underlying contracts state) rather than a theoretical one.
We shall see what transpires with the transfer to Nevada.