Arbitration could determine boxer Trout’s Ali Act claim

December 8, 2017

Although not given enough publicity, the lawsuit filed by Austin Trout against the World Boxing Organization which was moved to U.S. federal court in Puerto Rico continues with the WBO attempting to move the case to arbitration while Trout seeking to maintain it in federal court.

Notably, Trout claims damages for violations of the Muhammad Ali Act, Breach of Contract and Fraud.  The lawsuit was originally filed in November 2015 in New Mexico state court.  It was then removed to New Mexico federal court in February 2016 and then moved for dismissal for improper venue as it argued that the case should be in Puerto Rico where the WBO operates and pursuant to the “Contract Venue Provision” in the contract Trout had with the organization.  Although the Court denied this motion for dismissal, the WBO filed a Motion to Transfer venue to Puerto Rico in August 2016.  In July 2017, the federal court in New Mexico transferred the case to Puerto Rico.

After requesting that the lawsuit be moved to Puerto Rico, the WBO moved to compel arbitration of the matter citing the contract Trout signed with the promotion.  Trout’s attorney argued that the Ali Act claim is based on federal legislation and could not be decided by an arbitration.  It would not be a claim encompassing what was contemplated when resolving a dispute with arbitration.

Trout’s attorneys argue that the WBO never indicated that in its pleadings prior to the Motion to Compel Arbitration that it contemplated moving the case to arbitration.  Arbitration is a form of alternative dispute resolution outside of the court system.  It is decided by one or more arbitrators that renders an arbitration award that is usually binding and cannot be appealed.

The WBO cites Section 35(e) which states that Arbitrations pursuant to the laws of Puerto Rico and the U.S. Arbitration Act is the sole remedy for grievances.  This would be a binding Arbitration which means there would be no means for appeal.

Section 35(e) as cited by the WBO in its briefing:

All WBO participants acknowledge and agree that the mandatory resort to the WBO appeals regulations is the sole and exclusive remedy for any claim, appeal, grievance or contest that arises from any right or status that is or could be subject to these regulations or which result or could result from or relate to the interpretation of application of these regulations. These WBO Grievance Committee determinations are Arbitrations within the contemplation of the arbitration laws of Puerto Rico, 32 LPRA § 3201 et. seq. and the U.S. Arbitration Act, Title 9 of the United States Code and the Inter-American Convention on International Commercial Arbitration of July 30, 1975 and the convention on the recognition and enforcement of Foreign Arbitration Awards, June 10, 1958. All WBO participants stipulate and agree that the nature of the sport requires a prompt, final, and uniform resolution of all disputes concerning application of these regulations by a tribunal experienced with the application of these Regulations and with a special knowledge and experience in world championship professional boxing.

The WBO argues that Trout’s claims “come within the compass of an arbitration clause.”

On November 30th, Trout filed a sur-reply in opposition to the motion.  A sur-reply is an additional reply to a motion filed after the motion has already been fully briefed.  In general, courts frown up these types of briefs because they are not requested by the court and creates more work that many believe is unnecessary.

Nevertheless, the additional brief cites that the contract venue clause contained in the WBO contract governs the forum in the present case and thus should stay in the court system.

The pertinent contract language according to Trout is Section (d).

Section 35(d) of the WBO Championship Regulations states:

These Regulations are to be interpreted in conformity with the Laws of the Commonwealth of Puerto Rico. All WBO participants agree and consent that the exclusive venue for any or all action in which the WBO is made a party, whether it is to enforce, interpret or declare the application of these Regulations or to appeal from any determination of the WBO, including, but not limited to a determination of the Complaints and Grievance Committee, may be maintained only in the Superior Court of the Commonwealth of Puerto Rico, or, if applicable, in the U.S. District Court for the Commonwealth of Puerto Rico.

The WBO advocates that it’s the arbitration clause and not where the case should be litigated governs this issue:

The clauses here are not mutually exclusive. One clause—Section 35(d)—dictates applicable law and a chosen location for possible lawsuits involving WBO, and the other—Section 35(e)—dictates the selected procedure for disputes regarding WBO regulations.

The organization also claims that it has not waived its right to arbitrate.  It contends that there is no trial date and despite the fact that the lawsuit was filed in 2015, the delay in litigation of the case was due to securing proper venue and jurisdiction.  It also argues that the Ali Act violation claimed by Trout is subject to arbitration.

Of course, the argument by Trout’s side is that Section 35 (e) relates to “disputes regarding WBO regulations.”  The Ali Act, according to Trout, is outside the contemplated WBO regulations.  This would be a strong argument to keep it in federal court.

Payout Perspective:

This will be an interesting lawsuit to monitor due to the Ali Act claim.  Trout’s attorneys claim that the WBO had not brought up the issue of moving to compel when moving the jurisdiction and then venue.  But, this argument is not persuasive of whether or not the claims should be arbitrated per the contract.

If the court grants the motion, we could see an arbitration panel deal with an Ali Act claim (barring a motion to dismiss the claim prior to arbitration) and make a final determination on it which might be something of first impression.  The argument that the claims are from federal legislation (i.e., Ali Act) and not related to the WBO Rules is the strongest argument against arbitration.  MMA Payout will continue to follow.

Jon Fitch’s Statement before Congressional Subcommittee supports Ali Act Expansion

November 14, 2017

Former UFC Fighter Jon Fitch submitted a Statement at the Congressional Subcommittee Hearing on MMA as well as an op-ed piece in the Washington Examiner on the day of the hearing.  Each supports the proposed legislation expanding the Ali Act.

The Statement submitted and filed for the Congressional Subcommittee Hearing last week was on MMAFA letterhead.

Fitch’s primary argument is that he was passed over for fights despite being the ranked number 1 contender in the UFC.  He stated that he was criticized for “employing a tactical style” emphasizing his wrestling background rather than fighting in a more “exciting” fashion.

He cites being presented with a merchandising agreement by the promotion which required he give the UFC image rights “in perpetuity and for no compensation” for a video game.  He was released by the UFC for a time due to his refusal to sign the agreement.

Unlike Marc Ratner’s description of the MMA business model, Fitch describes it as a “structurally flawed model inconsistent with sport and designed to achieve a monopoly over an entire sport.”  Fitch gave the anecdote of winning the World Series of Fighting title and then being stripped of the title when “new investors” took over WSOF and it was changed into the Professional Fighters’ League.  He “regained” the title at PFL’s first official event in July.

Fitch goes on to advocate for the amendment to the Ali Act arguing that “sport’s natural growth is stunted” due to the coercive “contractual practices” in the sport.  He cites the lack of disclosure of fight purses by promoters which is required under the Ali Act.  He notes the Chris Algieri situation as a prime example.  We wrote about this in April 2016 and presented the problem with the Ali Act for boxers.

He also stressed that the Ali Act “requires rankings to be based on merit, not contractual subservience.”  Here, Fitch emphasizes the need for objective rankings giving the analogy with Major League Baseball changing the World Series simply based on popularity of team.

In conclusion to his statement, Fitch reiterated the stunting of growth in MMA due to anti-competitive restraints and that when the restraints are removed, “deep-pocketed investors will be made in MMA.”  He believes that the elimination of artificial restraints will cause organic growth benefiting all by increasing revenues for all in the sport.

Similarly, Fitch’s Washington Examiner op-ed was briefer than his Statement to Congress but touched on the same points including the rankings system and the fact that the titles do not matter.  The opinion piece called for sanctioning bodies that would provide the fighter with consistency and ensure that the top contender would have a shot at the title.

Jon Fitch Statement by JASONCRUZ206 on Scribd

Payout Perspective:

Fitch provides the fighters’ perspective of the MMA industry and it is vastly different from that of Ratner’s viewpoint of MMA.  Ratner believes that MMA is devoid of the corruption that plagued boxing which led to the Ali Act.  Fitch sees it differently.  He provides a first-hand account of the issues he knows of in MMA including the issue with the UFC related to the forfeiting of his image rights for the EA video game and giving up his WSOF title when new owners took over.  Certainly, you can point to the fact that neither addresses that he is a plaintiff in an antitrust lawsuit against the UFC which may sway the reader’s view when objectively looking at the opinion.

Ratner’s Statement before Congressional Subcommittee outlines Opposition to Ali Act Expansion

November 13, 2017

The UFC’s Marc Ratner submitted a Statement to the Congressional Subcommittee Hearing on MMA.  The statement opposes the expansion of the Ali Act to combat sports citing issues such as state’s rights and

Ratner, the company’s Senior Vice President of Government and Regulatory Affairs, highlighted his long-time work with boxing and assisting in the passage of the original Ali Act.  He testified about 20 years ago in which he expressed concerns about “conflicts, cronyism, and corruption” in boxing.  He stated that the problems he saw in boxing are “absolutely not present in MMA.”

He highlighted the UFC’s “rags to riches” story of a business that worked its way up from the bottom and did most of the lobbying from state to state by itself, without help from any other MMA organization or promotion.

Ratner emphasized that state regulation works and federal oversight were be an overreach by government.

In addition, he addressed the many mixed martial artists, including female fighters, that have worked themselves into positions where “[d]ozens upon dozens” are millionaires because of the opportunities provided by the UFC.  He also expressed the fact that only a “very small minority of fighters” are supporting this legislation.

Ratner also argued that the reason for the Ali Act was to address corruption in “so-called sanctioning organizations.”  He described these as “privately run businesses that rank fighters for a fee.”  Unlike these boxing sham organizations that either pushed or held back boxers, MMA does not rely on sanctioning organizations.  He cited the UFC rankings which are voted on by sports reporters.  He added, “[w]e put on the fights that fans want to see and they want to see competitive fights.”

He concluded that the proposed legislation would impose boxing’s sanctioning organization model onto MMA.  He claimed that MMA is predictable and transparent in its current state.  He also warned that the growing number of sanctioning organizations in boxing has created a lack of uniformity in the sports and its rankings.

Marc Ratner Statement by JASONCRUZ206 on Scribd

Payout Perspective:

Ratner’s argument against the proposed legislation is plausible based on his viewpoint of the reasons behind the enactment of the original Ali Act.  At this point, the proposed legislation mirrors the Ali Act without any specific differences between the original and the proposed expansion of the law.  The argument that there is nothing wrong with MMA is a bright line view and in comparison to boxing at the time that lawmakers sought to enact the Ali Act might be true.  But, it’s hard to say that just a minority of MMA fighters support the act.  Of course, there are some that do not want to publicly support the Ali Act expansion for concern of repercussions.

Ratner also suggests that the UFC rankings are independent because sports reporters provide the rankings.  Who is it that picks these sports reporters?

His point that numerous sanctioning bodies in boxing creates uncertainty in the rankings is a viable argument.  But does that mean that the expansion of the Ali Act would mean multiple fighter rankings?

The old argument of state’s rights versus federal rights is argued by Ratner as he suggests that state athletic commissions are able to oversee MMA rather than having a federal authority.  It is true that the current system is working, but take the Conor McGregor incident at Bellator 187 as an example.  Who has the authority to oversee McGregor’s actions.  The Association of Boxing Commissions?  Bellator?  The UFC?  The regulatory body overseeing the Bellator event in Dublin?  While state athletic commissions and tribal regulators can enforce actions in its jurisdictions what happens with interstate issues like that of McGregor.

While Ratner provides some arguments against the Ali Act expansion, there are indeed issues in MMA that a federal law can address.  The question is whether this proposed version can do it.

Bellator files Statement on Ali Act for Congressional Hearing

November 12, 2017

Bellator MMA submitted a statement to last week’s Subcommittee Hearing on MMA.  The Statement was written by Tracey Lesetar-Smith, Vice President of Business and Legal Affairs at Viacom Media Networks and supports the expansion of the Ali Act to combat sports.

The statement, which becomes part of the Congressional record on MMA, gives a brief history of the boxing and MMA ecosystems.  Lesetar-Smith states that boxing had a pre-existing, sanctioning-body architecture while MMA “organically developed” under a “league” system.  This is described as a different business model than that of boxing.  Unlike the UFC, Bellator states that it “co-promotes events with smaller domestic local promoters and international fight promoters to enhance [its] events and allow them [local promoters] opportunities to showcase their league talent.

Lesetar-Smith made it clear that boxing and MMA use “multi-year, multi-fight, exclusive promotional contracts” and it is not prohibited in the original Ali Act.  There was a distinction made between these contracts and those “coercive contracts” addressed in the Ali Act.

She explained why the organization uses exclusive contracts.  “Bellator invests a great deal of time, resources, and capital into promoting and marketing each long-term athlete and therefore the exclusivity and duration of each contract reflects a desire to seek a return on investment.”  The multi-fight contracts also allow for Bellator to plan and budget for events in advance.  There is also an “outlay” of money for fighters that they do not immediately recoup.

The Statement notes that the UFC “utilized tactics that made competition in the MMA industry very challenging.”  This has made it a challenge to compete with the UFC.

The “unimpaired movement of skilled athletes to organizations” is one of the primary things that can overturn UFC market share according to Bellator.

Bellator states that it relies upon State and Tribal Athletic Commissions to regulate its events.  However, lack of funding, staff and resources have made regulation a challenge.  Bellator requests that the federal government “advocate for and support the work of these Commissions.”  It also champions the health and safety of its fighters and expressed concerns regarding traumatic brain injury and Chronic Traumatic Encephalopathy (CTE) and pushed for further safeguards.

Bellator Statement in Support of Ali Act by JASONCRUZ206 on Scribd

Payout Perspective:

The issue of fighter safety as it relates to TBI or CTE is not addressed in the proposed legislation although Bellator advocates for it.  The requests that the federal government support further health and safety measures is admirable but it also would mean a budget and allocation of federal spending which may not be feasible in this present economic client.  Whether or not you believe that free agency over time will level the field for which Bellator may catch up to the UFC, it is plausible but may not be possible especially with the mainstream appeal of the brand and its new owners.  Yet, Bellator’s statement is the flip side of the UFC’s position on the Ali Act.  It’s an interesting position but remember, among other key differences between the organizations, Bellator does not rely on PPV revenue as much as the UFC nor does it pay its fighters as much.

Show Money Episode 20 takes a look at the Congressional Hearing on MMA and more

November 12, 2017

Its another episode with Paul Gift and John Nash discussing this past week on the Subcommittee Congressional Hearing on MMA.

Hearing on Expansion of Ali Act gets heated

November 9, 2017

Testimony was heard before a Congressional Subcommittee on the possibility of expanding the Muhammad Ali Boxing Reform Act to combat sports.  Randy Couture, Marc Ratner, Greg Sirb and Dr. Kristen Dams-O’Connor testified at Thursday morning’s hearing.

The testimony centered around the business of MMA and the possible expansion of the Ali Act and at times became contentious especially when the bill’s sponsor, Oklahoma congressman Markwayne Mullin asked questions of the UFC’s Marc Ratner.

There were three central issues related to today’s hearing.  First, the issue of fighter rankings came up as Congressman Mullin grilled Ratner about the rankings and questioned how Georges St Pierre, a fighter that has been retired for 4 years, receive an immediate title shot against UFC middleweight champion Michael Bisping.

h/t @jedigoodman

He also asked how Bisping’s first challenger to the title was an unranked Dan Henderson.

Another issue was that of coercive contracts which Randy Couture addressed the problem.  He noted that he was prevented to fight Fedor Emelianenko due to the fact he had an exclusive contract with the UFC and could not fight outside of the promotion.  Additionally, Pennsylvania Athletic Commissioner, a proponent of the proposed bill stated, “[i]f the fighter does not know how big the financial pie is then how is he to know how big of a piece of the pie he should bargain for?”  Although a proponent, he noted that there has been no legal case brought forward by the U.S. Attorney enforcing the current Ali Act.  While there have been lawsuits brought by fighters, the law allows for the government to enforce the act.  According to Sirb, this has not happened.

Also, the issue of head trauma was discussed as Dr. Kristen Dams-O’Connor testified about traumatic brain injury, or TBI.  Her research centers around understanding and improving long-term outcomes experienced by individuals who sustained TBI.  Her testimony concluded that despite the fact that not participating in sports such as MMA or football would greatly reduce the number of TBI cases, that is not the reality.  She seemed resigned to the conclusion that these sports provide a certain amount of reward despite the inherent risk.  She did distinguish the two sports, MMA and football, by noting that it is the goal in MMA to deliver TBI to your opponent as knocking out someone is a part of the sport whereas football players avoid sustaining a concussion during their athletic careers.

The hearing had members of congress ask questions.  The star of the hearing (in my opinion) was Illinois congresswoman Jan Schakowsky who stated that she attended last year’s hearing on MMA.  She did her researched and watched some fights.  Admittedly, it was too bloody for her but she was interested in the safety of the sport and supported the Ali Act’s passage.  Later in the hearing, she asked Dr. Dams-O’Connor informative questions about TBI and youth participation in MMA.

On the other spectrum of the “question asking” was New Jersey Congressman Frank Pallone.  Pallone is a proponent of sports betting and utilized his time to ask questions related to sports betting.  Essentially, Pallone did not really care about the answers but used this stage to push his stance on sports betting.

But the main event of the hearing was Mullin going after UFC representative Marc Ratner.  The congressman was short with Ratner and often cutting him off from filibustering his limited time.  He was pointed with Ratner about the rankings system to which Ratner attempted to talk about how the fights were made for the fan’s benefit.  He queried whether Conor McGregor was stripped of his Featherweight title for lack of defending it.  Ratner noted that he had no say in the rankings and did not know.  The attack by Mullin on Ratner seemed calculated.  Mullin proclaimed that the UFC was the “Don King of MMA.”  This was meant as a pejorative swipe at the organization.

Payout Perspective:

We’ll have more on this interesting hearing from Thursday.  The hearing seemed to flesh out some of the basic issues of why expand the Ali Act to combat sports and the reasons why it is not needed.  It essentially boils down to a state’s right to govern versus federal oversight.  At the outset, Mullin seemed to stress the “interstate commerce” nature of MMA which would imply that the business crosses states lines and due to this, a federal law would be appropriate.  MMA Payout will keep you posted.

Live Stream: Congressional Hearing on Perspectives on MMA

November 9, 2017

This morning, the Subcommittee on Digital Commerce and Consumer Protection will hear from Randy Couture, Marc Ratner, Greg Sirb and Dr. Kristen Dams-O’Connor on MMA and the proposed expansion of the Muhammad Ali Act.  You can watch below:

The witnesses have provided their statements that they will deliver to the committee. You can find them here.

MMA Payout will have reaction and analysis after the hearing.

Background Memo Produced for Congressional Hearing on MMA set for Thursday

November 8, 2017

On Thursday, Randy Couture, Marc Ratner, Dr. Kristen Dams-O’Connor and Greg Sirb will testify before a Congressional Subcommittee discussing MMA and the proposed bill which would expand the Muhammad Ali Boxing Reform Act to combat sports.

Currently, there are 7 co-sponsors to the bill introduced by Republican congressman Marwayne Mullin in May 2016.

“Perspectives on Mixed Martial Arts,” as the hearing is entitled will start on 10:00 a.m. ET on Thursday.  Couture, Ratner and Pennsylvania’s Athletic Commissioner Gregory Sirb will testify.  Also added is Dr. Kristen Dams-O’Connor, Director, Brain Injury Research Center, Icahn School of Medicine at Mount Sinai.

Since May 2016, the proponents of the bill have been actively lobbying Washington D.C. to garner support from legislators.  On the other side, the UFC has spent money to lobby against the passage of the bill.

With news that Dana White is interested in promoting boxing, the bill has a new twist depending on the structure of the anticipated UFC Boxing promotion.

The background statement for the hearing has been produced and is below.

HHRG-115-IF17-20171109-SD003 by JASONCRUZ206 on Scribd

Among the topics that may be explored at the hearing:

-How has MMA evolved and changed since its beginnings in the early 1990s? Do these changes suggest a need for new business or regulatory approaches?

-How does MMA compare to other combat sports? Do any similarities or differences offer insights into public policy options?

-How does current regulation of MMA protect the interests of fans, fighters, and sponsors? Are there areas for improvement?

Payout Perspective:

MMA Payout will have a breakdown of the testimony taken on Thursday.  While I don’t expect anything earth shattering, I anticipate that this is a sign of attempting to determine the level of support out there is for the bill.  The bill is far from a vote in the House, but the hearing is a step in the right direction.  It will be interesting to see the level of education on the subjects in MMA will take place and the advocacy by the parties.

Congressional Hearing on MMA set for next week

November 3, 2017

There will be a Congressional Hearing on Mixed Martial Arts on Thursday, November 9th.  The subcommittee on Digital Commerce and Consumer Protection will hear testimony from Randy Couture, the UFC’s Marc Ratner and the Executive Director of the Pennsylvania Athletic Commission Greg Sirb.

Entitled, “Perspectives on Mixed Martial Arts,” it appears the hearing will discuss the Expansion of the Muhammad Ali Boxing Reform Act.

You may recall last December, Couture and others testified at a similar subcommittee hearing which served as a general primer on the issues in mixed martial arts although it did not discuss in detail the legislation proposed by Markwayne Mullin.  Since then, the bill has secured more co-sponsors in support.

Payout Perspective:

Another hearing on MMA, and this time directed to the Ali Act Expansion.  It will be interesting to see the amount of education/information that the testimony will provide.  Moreover, how much will the subcommittees know about the sport and what the law will be applied.  Well, will the people testifying know what the expansion will do.  With the talk about the UFC expanding into boxing (which is a question I hope will come up), we will see the pros and cons of the expansion.

Report indicates McGregor willing to testify in support of Ali Act expansion

September 22, 2017

According to a report from Reuters, Conor McGregor may address the U.S. Congress in support of the expansion of the Muhammad Ali Boxing Reform (aka “Ali Act”) to combat sports.  Congressman Markwayne Mullin, the Oklahoma legislator that is sponsoring the bill told the news outlet.

The Republican congressman indicated that McGregor’s team wanted to come to Capitol Hill to talk about the Ali Act.  There is no date certain for McGregor to speak before Congress nor is there another date for the Ali Act Expansion.

However, supporters of the Ali Act has racked up supporters with 49 congressman, both Republican and Democrat, signing on in support of the bill.

Payout Perspective:

McGregor’s support and possible testimony would lend some positive public relations in support of the legislation.  McGregor, who has indicated that he would like to both box and compete in MMA, could testify about his experiences in both sports and would be able to convey the differences in each since he was in the ring against Floyd Mayweather in August.  McGregor’s experience is different from MMA fighters since he would have been subject to the current Ali Act when boxing but not covered by the Ali Act when competing in MMA.  Will it turn the tide for the bill?  It would provide some more momentum to move this along through the house.

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