Zuffa denied motion to stay discovery in antitrust lawsuit

July 30, 2015

A Nevada judge has denied Zuffa’s motion to stay discovery in the antitrust lawsuit filed by former fighters.  In addition, it appears that the court will want the parties to come up with a plan to allow the plaintiffs some of its discovery requests.

A Motion to Dismiss the lawsuit brought by Zuffa has yet to be heard by the court after the case was transferred from San Jose to Las Vegas but the court’s allowance of some of the discovery might infer that this case will not.

U.S. Magistrate Judge Peggy A. Leen denied Zuffa’s Motion to Stay Discovery.  The order indicates that “[t]he parties are directed to meet and confer and submit a proposed form of Confidentiality and Protective Order, as well as ES1 Protocols, within 30 days from today’s date [July 28th].”

In addition, the order stated that the Court “is going to impose restrictions on discovery while the District Judge considers the pending Motion to Dismiss…” it goes on to state, “Plaintiffs’ Counsel are encourage to reconsider their broad discovery requests.”

In federal court, there is a discovery “master” or judge that determines discovery disputes as was done here.  Judge Richard Boulware will preside over the actual court case.  This differs from state court where the trial court judge typically decides discovery motions too.

H/t:  Bloody Elbow

Payout Perspective:

The ruling appears to be a “cookie-cutter” of sorts as you might infer that the encouragement by the Court for Plaintiffs to reconsider its “broad” requests suggests that the Court does not want to grant Zuffa’s motion to halt discovery.  But, it acknowledges that the requests for a broad swath of financial statements, balance sheets and other receipts going back years and years is too cumbersome and unwieldly.  Thus, Plaintiffs will get a chance to obtain some documents but perhaps not everything it is seeking.  Despite not getting everything it asks for, Plaintiffs might get enough information to amend its complaint and survive a motion to dismiss.  In the alternative, you might think of this as the Court allowing Plaintiffs the opportunity to obtain some documents prior to the Court dismissing its case.  Hence, it was given a chance to prove its case.

The parties are to “meet and confer” to come up with a plan for discovery.  This happens a lot in discovery disputes where the Court forces the sides to work together.  Even with the hope of compromise, we still may see issues sprout up and fights over certain requests/documents.  Clearly, Zuffa will want to protect certain information while Plaintiffs will deem it discoverable.  We shall see how expansive this discovery fight continues and whether it plays into the inevitable Motion to Dismiss.

W Silva sued by UFC for claiming it fixes fights

July 29, 2015

Zuffa has sued Wanderlei Silva in the District Court of Clark County Nevada.  The lawsuit alleges Silva wrote on his Facebook that the UFC fixes fights.

The lawsuit was filed on Tuesday by Campbell and Williams, the law firm representing Zuffa in this matter.

A section of the complaint describes Silva’s “Campaign of Harassment Against the UFC.”

The complaint identifies a September 2014 video where he criticizes the UFC “voicing a number of rambling and baseless complaints against the organization” per the complaint.  It goes on to state that it has monitored Silva’s remarks which it largely dismissed but believes he crossed the line when he proclaimed that the UFC fixes fights.  The latest statement from Silva came on July 23rd when he wrote about the UFC on Facebook.  He ended by stating, according to the complaint: “…fixed fights and I can prove this! I still haven’t dropped the bomb, I haven’t told everything I know!!! (emphasis added).

The UFC then cites a second post the same day: “[a]nd I’m going to fight until the end, to unmask those promoters, that are eluding people!! And cheating taking the dignity and the honor of our sport!  It’s turning into “wwe telecte!!!”…With fixed fights we have to stop Those guys since this is the end of the line for us!!!” (emphasis added).  Although both posts were in Portuguese they were easy to translate.

The causes of action include Defamation Per Se and Business Disparagement.  The complaint claims that Silva’s allegations of fight-fixing are “even more heinous” considering the Fertittas are linked to Nevada’s gaming industry.

Zuffa is looking for compensatory damages in excess of $10,000, punitive damages to be proven at trial as well as attorney fees and costs.

H/t: Robert Cardenas.

Payout Perspective:

To prove a claim for defamation, one has to prove a statement either spoken or written injures someone’s reputation.  Here, Silva posted his thoughts about the UFC on his Facebook page.  Clearly, stating that the UFC fixes fights damages the UFC’s reputation.  The relevant defenses to a defamation claim are the truth and/or privilege.  There are also other carveout defenses such as the alleged defamatory statement was one of opinion and there was consent to publicize the alleged defamatory statement.  In this case, there is no privilege, so Silva will need to rely on what he claims he has which is information that the UFC fixes fights.  The business disparagement claim is similar to prove.  Essentially, there must be an injurious statement that is publicized that would discourage people from dealing with the business.   Obviously, claiming the UFC fixes fights would make fans not want to buy its PPVs.  As for defenses, they are similar to defamation as the accused party can claim the statement was the truth.

The UFC decided to sue Silva as its reputation and integrity was called into question.  While Silva may be disgruntled about a lot of things, claiming the UFC fixes fights goes over the line.  He may argue that his statements were a matter of opinion but the posts clearly indicate that the UFC allegedly fixes fights.  Does Silva have proof?  We will see if this case moves to discovery.  At the outset, I believe Silva’s lawyers will attempt to dismiss this lawsuit prior to it getting any further.  We shall see.

Haymon-Golden Boy file Arbitration Briefs which may decide lawsuit

July 27, 2015

Arbitration briefs have been filed in the Al Haymon-Golden Boy case in which Haymon’s attorneys are seeking to stay the court case claiming that an arbitrator should decide the promotion’s grievances against Haymon and his business entities.  Arbitrator Daniel Weinstein is set to hear the parties’ arguments on July 29th.

Golden Boy argues in its brief to the Arbitrator that it does not have jurisdiction over the federal claims it filed against Haymon and his business entities this past May.  It states that the parties’ agreement was not “clearly and unmistakably” granting authority to arbitrate its particular dispute outlined in the May 5 lawsuit.  In addition, it states that Bernard Hopkins, a party to the lawsuit, is not a party to the Settlement Agreement signed by Golden Boy last December which Haymon’s attorneys claim negate GB and Hopkins’ federal claims which include Antitrust and Ali Act violations.  Hopkins is a plaintiff in the Golden Boy lawsuit.  Even if the Arbtirator claims that he has jurisdiction over the parties, Golden Boy argues that the federal claims are not within the arbitration clause and that the arbitration provision does not cover the term’s end.

The overall suggestion here is that the federal claims cannot be decided by an Arbitrator because the claims were never waived in the Settlement Agreement and/or the release of claims were not arbitrable.

In its opening arbitration brief which includes several sections that are redacted, Haymon’s attorneys argue that the Arbitrator has the exclusive jurisdiction to determine whether the federal claims are subject to the December 2014 Settlement Agreement executed between Haymon and Golden Boy.  It argues that Golden Boy has come up with the date of January 1, 2015 to “plead around” the Settlement Agreement signed by the parties.  Essentially, Haymon argues that the alleged monopoly and claimed violations of the Muhammad Ali Act existed on December 19, 2014.  Thus, the Haymon camp claims that the claims relate to the Settlement Agreement entered into by Haymon and Golden Boy. As for Hopkins, it argues that he is a shareholder in GB and the argument that it was not a party to the Settlement Agreement falls flat.

Haymon’s attorneys stress that “there is no explanation for Golden Boy starting its federal claims on January 1, 2015.”  This contention is in response to Golden Boy’s lawsuit which claims injuries sustained beginning on January 1, 2015.  In its briefing, Haymon attorneys stress that it had signed a bulk of the 100 fighters prior to the December 19th Settlement Agreement.  Thus, any sort of claim violating Antitrust laws or the Ali Act would have occurred prior to the parties entering into the Settlement Agreement.

Haymon’s attorneys also point to the broad release language in the Settlement Agreement in arguing that the release covers the present claims in the Golden Boy lawsuit.  They argue that Golden Boy could have negotiated for terms within the Settlement Agreement that would have addressed the issues currently before them.

Golden Boy's Arb Brief Re Preliminary Issues

Haymons’ Arb Brief by JASONCRUZ206

Payout Perspective:

We could know this week whether one of the two Antitrust lawsuits filed against Al Haymon will be put on hold.  One would think even with an Arbitrator ruling on jurisdiction, we will see an appeal by one of the sides.  It’s clear that the ruling will hinge on the language within the Settlement Agreement regarding the arbitration of the agreement.  We will keep you updated.

Judge denies motion to dismiss in Punk libel lawsuit

July 22, 2015

The Washington Post reports that the lawsuit between WWE doctor Chris Amman and CM Punk and Colt Cabana will continue after a Cook County (IL) Circuit Court judge denied defendants’ motion to dismiss the case.

As a result of the court’s denial to dismiss the case, CM Punk and Colt Cabana must answer Amann’s complaint claiming that the two libeled the WWE doctor during an episode of Cabana’s podcast.

On the Art of Wrestling podcast, Punk called into question Dr. Amann’s treatment of his concussion and an injury on his back with was diagnosed as a MRSA staph infection.  Cabana is being implicated for being the host of the podcast.  He is also a good friend of the now UFC fighter.

The WWE aided Dr. Amann despite not being a party to the lawsuit as it sent out a statement regarding the lawsuit and providing video purported evidence that Punk did not have a lump on his back.

Payout Perspective:

Procedurally, a motion to dismiss the lawsuit prior to answering the claims in a complaint is necessary and occurs when the one being sued believes that there is no merit to the claims.  Here, Punk and Cabana took their shot at dismissing the lawsuit.  But, there was a sufficient amount of information pled by Dr. Amman according to the court.  Its likely Punk and Cabana will deny the allegations in the Complaint when they file an Answer and we may see prolonged litigation.

Viacom sued by early investor in Bellator MMA

July 15, 2015

An early investor in Bellator MMA is suing Viacom in Los Angeles Superior Court claiming that the company has diverted revenue from the organization while leaving investors in the dark about its finances.  The Hollywood Reporter provided details of the lawsuit.

Koloni Reklam, Sanyi, Tcaret LTD/STDI (“Koloni”), a Turkish company, invested $1 million in Bellator in March 2009 according to the lawsuit. At the time, the company was owned by Bjorn Rebney.

In December 2010, Viacom purchased a 50% stake in Bellator.  It made an additional purchase of a controlling interest in Bellator in December 2011.  It also made further purchases in January 2013, April 2014 and June 2015 per the Complaint.  Based on its purchases it amassed a 97% interest in Bellator.  Viacom, the plaintiff in the lawsuit and two others not named in the lawsuit comprise the ownership of Bellator.  Viacom owns a 97% controlling interest while Koloni has a 1 percent interest.

An Operating Agreement manages the structure of ownership.  Koloni claims that Bellator “acted in a manner contrary to the Operating Agreement by causing Bellator to breach provisions of the Operating Agreement to Viacom’s benefit and at the expense of the remaining members.”

Specifically in the Operating Agreement, Koloni claims that Viacom was to provide unaudited financial information to its members which included “unaudited balance sheets, unaudited income statement, cash flow statements, and changes in the Members’ equity.”  This information was to be supplied to Koloni on a “monthly, quarterly, and year-end basis.”  Koloni claims that prior to May 2015, they had not been provided a report in a year and before that there was a 15 month gap in statements.

The Complaint claims that in May 2015 Viacom “hastily provided financial statements that only highlight Viacom’s failure to pursue all profits Bellator would be entitled to if Viacom had been acting in Bellator’s interests rather than its own.”

In addition, Koloni claims that Viacom diverted sponsorship revenue from Bellator to its own interests and subsidiaries.  Essentially, Viacom is using its subsidiary to breach a licensing agreement which would divert revenue tied to Bellator in-show sponsorship integrations.  Per the terms of the licensing agreement Bellator should receive 50% of “net sponsorship revenue” received from ads that “integrate multiple methods of promotion, such as televised commercial break advertisements combined with in-show logo placement on cage mats” according to the Complaint.  Koloni claims that ad revenue for in-show sponsors “run tens to hundreds of millions of dollars” and that Viacom has obscured the terms of these ad contracts so as to divert money owed to Bellator to its other affiliates.

It also requested Spike TV to reduce the number of Bellator-produced events.

The causes of action includes breach of contract, breach of fiduciary duty, breach of the covenant of good faith and fair dealing, unjust enrichment, judicial dissolution and equitable relief for LLC member oppression.

The plaintiffs are seeking a jury trial and request monetary damages which include an accounting of finances.  As indicated in the cause of action, one of the requests is for a judicial dissolution of Bellator and/or the request that Koloni is paid out his share of the company.  At this point, dissolving Bellator seems like a far-flung claim.

A copy of the lawsuit is provided by THR’s Eriq Gardner

Payout Perspective:

The lawsuit boils down to Koloni believing that it is not receiving as much as it should be from its investment in the company.  The claim that it has not received updates and there were gaps in reporting from Viacom regarding Bellator’s finances seems to highlight its lawsuit.  Notably, Rampage Jackson’s attorneys are likely interested in this lawsuit for the financial information that might be obtained through the discovery process of the lawsuit. Also of note is the indication that Koloni received financial information in May 2015.  A couple months earlier, Jackson filed a lawsuit against Bellator claiming that he had not received information from the company.  Certainly Viacom will deny these allegations in defending the lawsuit.  MMA Payout will keep you posted.

Plaintiffs file opposition to Zuffa’s Motion to Stay Discovery

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.

  1. 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.
  2. Discovery seeking to determine whether “minor league” promoters do not compete with the UFC.
  3. 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.”
  4. 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.”

Response to Motion to Stay Discovery

Payout Perspective:

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.

WWE files lawsuit against former performers

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.

WWE v. Windham, et al.

Ex A – Kyros Letter on Behalf of Windham

Payout Perspective:

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.

Top Rank files suit against Al Haymon

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.

Payout Perspective:

“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.

Estate of former WWE wrestler files head injury lawsuit

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.

Payout Perspective:

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.

With no vote in Assembly, MMA Bill dead in New York

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.

Payout Perspective:

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.

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