Show Money Episode 15 talks Mayweather-McGregor, Bellator, WME-IMG, Hunt-UFC and more

March 26, 2017

We’re back: Gift and Nash of Bloody Elbow and yours truly discussing Mayweather-McGregor, Bellator, WME-IMG, Hunt-UFC and I get mad at a judge.

Zuffa files opposition to Bellator motion to quash subpoena

March 9, 2017

Zuffa has filed its opposition to Bellator’s Motion to Quash Subpoenas issued by the company in its lawsuit filed by former fighters.  Zuffa argues it is in need of three requests it made to Bellator and made exhaustive attempts (over 18 months) to work with the company on narrowing the scope.

Zuffa claims it does not normally seek non-public information from a competitor but they must have access “to defend against the antitrust lawsuit…”

A Federal Magistrate will hear the arguments from both sides on March 29th in Los Angeles.

The three requests at issue are:

  1. Bellator’s unredacted contracts;
  2. Documents regarding its negotiations with athletes; and
  3. Limited financial information including profit/loss statements and financial projections.

Zuffa claims that the request for contract documents will show the “intense competition” within Plaintiffs’ “Elite Professional MMA Fighter services” market.  Documents regarding negotiations with athletes will also demonstrate that the UFC is not the “only game in town” and there is competition for fighters.  It will also show that Bellator offers its athletes competitive compensation.  Additionally, argues that Bellator’s Financial Information will reveal that it has not been foreclosed from the alleged market set by Plaintiffs.

It also argues that the requests are proportional to the needs of case.  Essentially, Zuffa is asking only what it needs from Bellator and rebuts the Viacom-owned company’s assertion in its Motion to Quash that the requests are not proportional.  In its brief, Zuffa cites the importance of the documents indicating “…issues at stake in the Nevada Action have the potential to fundamentally reshape the entire MMA industry.”

Zuffa attorneys argue that confidential information would not be made public or even disclosed to Zuffa.  The protective order currently in place allows Bellator to designate its information with the title HIGHLY CONFIDENTIAL – ATTORNEYS” EYES ONLY.  This would ensure that the public or Zuffa employees would never see the information.  This discovery designation is sometimes utilized in highly sensitive cases with company documents.  In addition, Zuffa cites case law (notably, no cases in the 9th circuit, the controlling authority for this court) citing that motions to quash are “routinely denied”  when there are “adequate protections for the commercially sensitive information.”

It also argues that in the antitrust lawsuit in Nevada, Zuffa has produced over 651,000 documents with 241,00 identified as Highly Confidential.  The Plaintiffs, according to Zuffa, have produced approximately 64,000 docs with 4,300 docs identified as highly confidential.  Third parties have produced 241,000 docs with 2,800 being designated as highly confidential.  Zuffa makes the point that none of the highly confidential documents were disseminated to anyone other than attorneys and experts in the lawsuit.  Thus, Zuffa and/or the Plaintiffs have not seen any of the documents flagged highly confidential.

The opposition briefing includes two declarations.  One from one of Zuffa’s attorneys highlighting the account of how it attempted to work with Bellator on accessing the documents under the subpoena requests.  Another declaration is from a Zuffa-retained expert citing the need for the documents requested to address the issues in the antitrust lawsuit.

Payout Perspective:

You can expect the Federal Magistrate that will hear this motion to weigh the benefits of producing the documents against the business trade secrets of Bellator.  If you are Bellator, you are fighting this to the end because there is always a chance that someone (knowingly or unknowingly) violates the terms of a protective order.  At that point, you can’t unring the bell.  Zuffa wants to appear reasonable to the magistrate and indicates that it is willing to continue to work with Bellator to get the documents it needs.

The hearing is March 29th in LA.  MMA Payout will keep you posted.

Zuffa Opposition to Bellator Motion to Quash by JASONCRUZ206 on Scribd

Zuffa files Partial Motion for Summary Judgment to dismiss Nate Quarry from antitrust lawsuit

February 2, 2017

Zuffa has filed a motion for partial summary judgment to dismiss the claims of antitrust plaintiff Nate Quarry based on statute of limitations.

The motion was filed yesterday and requests an oral argument although that is not guaranteed.

The motion seeks to dismiss Quarry’s claims based on his promotional, bout and merchandise agreements with the company and deposition testimony.  The motion claims that Quarry’s claim is barred by the Four-Year Statute of Limitations.  In the alternative, it states that the “continuing violation exception” does not apply to his untimely claim.

“Distilled to its essence, Mr. Quarry’s claim challenges the scope of the UFC Identity Rights he contractually granted to Zuffa, the duration of those grants, and the payments he received in return—all terms in his 2004, 2005, and 2008 Promotional Agreements; his 2008 Merchandise Rights Agreement; and his January 2010 Bout Agreement.”

Zuffa argues that Quarry’s “last relevant agreement with Zuffa was executed in January 2010, but he chose to file suit in December 2014.”

15 U.S.C. section 15b limits antitrust claims to a four-year statute of limitations.

Zuffa also claims that Quarry’s claim should not be allowed through the “continuing violation exception.” This exception would override a statute of limitations defense.  However, Zuffa argues that relevant case law precludes such an exception since Quarry signed his Identity Rights outside the limitations period.  Even if Quarry argues that he received a benefit after the limitations period (i.e. after January 2010 and within four years from the filing of the lawsuit, thus being within the time to sue), there was not a new “overt act” performed by Zuffa which would restart the statute of limitations.

The motion was filed with Quarry’s promotional, bout and merchandise agreements but they were filed under seal meaning that public does not have access to them.

Payout Perspective:

Quarry was deposed by Zuffa and you can see the strategy was to probe him for information to try to dismiss his claims from the lawsuit.  Similarly, we would probably see this happening with other UFC veterans.  Plaintiffs will have until mid-February to oppose the motion.

White finds fighter association in-fighting ‘hilarious’

December 11, 2016

With an ultimatum made by plaintiffs’ attorneys on behalf of the fighters suing Zuffa to the MMAAA, Dana White appears to be the winner at this point.

In an interview with TSN, White finds the current state of organizing fighters hilarious.  He has specifically called out Bjorn Rebney, the former Bellator head.  On the UFC Unfiltered podcast, he referred to him as “Bjork.”

Last week, the MMAAA was unveiled with Rebney as an unpaid strategic adviser according to the organization.  This week, plaintiffs’ attorneys in the Le, et al. v. Zuffa, LLC, et al. sent a “cease and desist” letter to Rebney on behalf of MMAAA advising them that they were the court appointed representative of the class of fighters that Rebney’s group is seeking.  Moreover, it was revealed in the letter signed by Eric Cramer, that Rebney met with the plaintiffs’ attorneys at CAA offices in New York.  The meeting was to determine whether the two sides would come together.  However, according to Cramer, Rebney wanted input as well as a portion of costs related to his fees associated with putting together what was to become MMAAA.  Of course, MMAAA denies this.

White has called Rebney a “bottom-feeder” stating that he is out to make money implying that he does not have the interests of fighters in mind.

Payout Perspective:

With the PFA, MMAAA and MMAFA seeking to advocate for the rights of fighters but competing with each other at the same time, White has to find it amusing.  While each of these groups are seeking to bargain with the UFC for better pay, pensions and other interests, they need a unified front of fighters.  But, with competing interests on the fighter side, the UFC has no obligation to negotiate with any of these groups.  Aside from the lawsuit, which UFC lawyers are dealing with, the UFC will likely just wait and see if there is any need to address any of these groups.

MMAAA given “cease and desist” ultimatum by antitrust lawsuit plaintiffs

December 7, 2016

The MMAAA issued an “urgent news” statement as it appears that lawyers in the UFC antitrust lawsuit have issued a “cease and desist” letter from signing up fighters from joining the organization.

The statement was issued by Jim Quinn and Eric Hochstadt, outside counsel for the Mixed Martial Arts Association:

As Georges St-Pierre, Donald Cerrone, T.J. Dillashaw, Tim Kennedy, and Cain Velasquez made clear in the official public announcement last week, the Mixed Martial Arts Athlete Association (“MMAAA”) is all about looking out for the fighters and their well-being long-term.

Yesterday, the MMAAA received a “cease and desist” letter from a group of lawyers seeking to stop the MMAAA from signing up fighters and sticking up for their rights against the UFC and its owners WME-IMG.  The MMAAA will do no such thing.  Those lawyers – who represent only a few fighters – are focused on getting some money out of one case, of which they seek a significant portion for themselves.  Those lawyers do not speak for anyone else, and certainly not the MMAAA and all the fighters the organization represents now and will quickly grow to represent in the sport.

Over a year ago, those same lawyers reached out to the MMAAA to join forces with us.  We had a meeting and made clear that the MMAAA’s primary focus would be on achieving three core goals: 1) substantially increasing UFC fighter pay to 50%; 2) securing all-encompassing long term benefits for UFC fighters; and 3) a settlement to compensate past and current UFC fighters for all of the UFC’s wrongs.  To achieve these goals for the benefit of the fighters, we also made clear the MMAAA needed to receive a percentage of a monetary settlement to cover the costs to fund the MMAAA for staffing and attorneys both for past work getting to this point and the long fight ahead.  The lawyers made clear that they did not share the MMAAA’s vision.  They are focused on a short-term monetary recovery, of which they will seek 33%, and then they are gone from this sport.  We parted ways at that point.

The MMAAA is all about the fighters benefitting when the UFC is finally forced to take a powerful group of the fighters seriously.  The MMAAA will be executing on that plan and will not be stopped in this effort on behalf of fighters.

Although the lawyers identified in the statement were not named, but they represent the fighters in the antitrust lawsuit, Cung Le, et al. v. Zuffa, LLC, et al.

John Nash at Bloody Elbow obtained the letter from Eric Cramer, co-lead counsel for the plaintiffs’ attorneys representing the former UFC fighters suing the company sent a letter to Bjorn Rebney.

Letter to Rebney From Cramer by JASONCRUZ206 on Scribd

The letter issues that Rebney’s group cease and desist from operating which essentially means for it to stop pursuing fighters to join the organization.  It argues that the court has granted the attorneys to represent the class of fighters and MMAAA’s effort would be interfering.

Notably, the letter states that Rebney’s group wanted to be a part of the UFC Class Action and met with CAA in New York.  At the meeting, which took place in October 15, 2015, Rebney revealed MMAAA and stated that they would start another antitrust action if certain demands were not met.  The letter also reveals that Rebney and MMAAA might be contemplating an MMA promotion.

The letter gives Rebney and MMAAA December 9th to cease and desist from operations.

Payout Perspective:

The plot thickens.  It’s clear that when Rebney cited a “settlement” from the UFC, it would spark concern from the PFA and the plaintiffs in the antitrust lawsuit.  Clearly, the plaintiffs have invested a great deal thus far in litigating against Zuffa.  For MMAAA to come in at this point, and based on what Cramer reveals in his letter, this is unsettling to the plaintiffs and their attorneys.  Of course, MMAAA explains in their statement the reasons for seeking costs related to its own work on behalf of the fighters.  What is the truth?  Hard to say, but what we can gather is that there may be another lawsuit on the horizon if MMAAA and the plaintiffs in the antitrust case cannot find a way to settle the issue.

Dana White target for deposition in antitrust lawsuit

November 14, 2016

The Sports Business Journal reports that lawyers on behalf of former UFC fighters intend to depose Dana White as part of the antitrust lawsuit ongoing in federal court in Nevada.

The lawsuit is in its discovery phase with both lawyers for the plaintiffs and lawyers for the UFC exchanging documents.  Depositions involving key witnesses has commenced.  Notably, the article indicates that Nate Quarry has been deposed by the defendants.  Plaintiffs lawyers intend to depose Dana White in likely questioning about the UFC’s business practices which relate to their antitrust claim.

Discovery ends May 1, 2017 which means that we should see more UFC executives deposed by the plaintiffs’ attorneys as well as some of the former fighters which may include Cung Le, Jon Fitch and Brandon Vera.

The article indicates that plaintiffs’ attorneys may seek to depose executives from the new ownership group at WME-IMG as well.

Payout Perspective:

It will be interesting to see if and when they depose White.  His deposition is likely imminent since he’s had a major hand in the operations of the UFC when the alleged issues have occurred.  We will see if plaintiffs’ attorneys will be able to obtain his testimony from the FTC investigations as well as previous lawsuits involving the company.  One might expect a lengthy deposition (i.e., multiple days) for White.

Over a year later, Judge Boulware publishes opinion in Zuffa’s Motion to Dismiss

October 24, 2016

Judge Richard Boulware has filed his Order on Zuffa’s Motion to Dismiss Plaintiffs’ Amended Complaint in the antitrust lawsuit venued in Nevada.  The hearing was on September 25, 2015.  The order was finally entered on October 19, 2016.

Talk about a backlog of work for a federal judge.  But, from my understanding, this is typical for federal courts.

As we know, the judge denied Zuffa’s Motion to Dismiss although the written order was signed and dated over a year later by Judge Boulware.

The opinion denying the Motion to Dismiss is below:

Order on Zuffa’s Motion to Dismiss by JASONCRUZ206 on Scribd

Some notable issues in the Order.

Zuffa had the burden to prove that the Plaintiffs had no case since they brought the motion.  Under the Federal Rules of Civil Procedure, a court may dismiss a complaint as a matter of law (1) for lack of a cognizable legal theory or (2) insufficient facts under a cognizable claim.  The standard under Federal Rule 12(b)(6), it may dismiss a complaint for failing to state a claim upon which relief can be granted.

The court looked at the main arguments set forth by Zuffa in its opinion.

  1. Strong Competition v. Antitrust Violation

This argument was quickly dismissed by the court.  Essentially Zuffa argued that its business practices are examples of “strong competition” whereas Plaintiffs argue that Zuffa’s conduct “has foreclosed competition and thereby enhanced and maintained the UFC’s monopoly power in the Relevant Output Market and monopsony power in the Relevant Input Market.”  For purposes of meeting the threshold to satisfy a motion to dismiss, the Court sided with Plaintiffs.

  1. Properly Defined Relevant Markets

The court looked at whether the plaintiffs properly defined a “relevant market.”  Plaintiffs identified two relevant markets: 1) live Elite Professional MMA bouts (Relevant Output Market), and…live Elite Professional MMA Fighter services (the ‘Relevant Input Market’).  Zuffa claimed that these definitions were made solely for the purpose of litigation and that they were vague and subjective.

However, the Court sides with the Plaintiffs for purposes of this motion to dismiss.  The Court noted that the validity of the ‘relevant market’ is typically a factually element and not a legal element.  Remember, here the Court is looking at whether the lawsuit can be dismissed as a matter of law.  As the court notes the market may survive an initial scrutiny under the motion to dismiss, but may not under a motion for summary judgment or at trial.  But, the Court found that the Plaintiffs’ relevant market is sufficient for “Section 2” antitrust purposes

  1. Specificity of Anticompetitive Conduct

Zuffa argued that exclusive dealing arrangements are common, procompetitive and a part of sports and entertainment, Plaintiffs failed to allege specific facts showing that the exclusive arrangements foreclosed competition in either the input or output market and the UFC has no duty to deal with competitors.

The Court did not address the last argument (dealing with competitors) as it did not construe the complaint that it had to deal with competitors.

The Court does side with Plaintiffs in finding that its allegations that exclusive dealing arrangements are a part of the anticompetitive scheme.  It also dismisses the argument that Plaintiffs’ claims are a “monopoly broth” – the term given to the use of various allegations to satisfy an antitrust scheme.

  1. Ancillary Rights and Reduced Competition

The Court looked at the rights issue related to fighters signing off on their likenesses for purposes of Zuffa using for things such as video games.  Here, the Court utilized the same analysis as it did with the exclusive dealing contracts in finding that Plaintiffs pled sufficient facts to show an anti-competitive scheme.  Once again, the Court is not ruling on the actual evidence, but whether the Complaint states a sufficient amount of facts.

Payout Perspective:

The Motion to Dismiss should not be taken as a commentary on the strengths or weaknesses of Plaintiffs’ Complaint as a whole.  It is only a ruling on whether or not the Complaint was sufficient to past standards required by the rules under 12(b)(6) of the Federal Rules of Civil Procedure.  It was Zuffa’s burden to carry in order to prove that the Complaint could not pat muster.  The Judge, weighing the evidence in light of the rules, determined that the Plaintiffs had pled a sufficient amount for the case to go forward.  If this case goes to trial, the Plaintiffs would have to prove the claims in its Complaint.  Zuffa will likely bring a Motion for Summary Judgment after the discovery stage ends.  Essentially, it is similar to the Motion to Dismiss but would argue that none of the facts would support the claims and as a result, the lawsuit should be dismissed prior to trial.  Of course, discovery is ongoing so we shall see if there are facts that have been uncovered which would strengthen either party’s case.

Show Money Episode 8 talks MMA Free Agency, PBC and more

February 8, 2016

We’re back with Episode 8 of Show Money.  Myself and Bloody Elbow’s John Nash and Paul Gift talk MMA Free Agency, the state of PBC, the Conor effect, the UFC lawsuit and more…

 

UFC files Answer to Plaintiffs’ Complaint, parties fight over discovery process

January 27, 2016

Last week, attorneys for the UFC filed its Answer to Plaintiff’s Amended Complaint in the ongoing Antitrust lawsuit venued in Nevada.  The rather long (27 pages to be exact) goes through each and every paragraph of the Plaintiffs’ Complaint.

After the court denied the UFC’s motion to dismiss, per the rules of federal civil procedure, the company had to file an Answer to the Complaint.  Per rule 8(b) of the Federal Rules of Civil Procedure, the answering party must admit, deny or state that they do not have knowledge to admit or deny the allegation.  However, according the rules stating that you lack knowledge serves as a denial.  It is standard that parties address each and every sentence in a Complaint and even if the statement or allegations may not need an admission or denial, attorneys are ultra-careful and deny most allegations to ensure that there is nothing that might be construed as an admission.

In the Answer the defendant may set forth “Affirmative Defenses” which are facts not within the plaintiffs’ complaint which might defeat the plaintiffs’ allegations.

The Answer filed by the UFC’s attorneys, Boies Schiller and Campbell and Williams does not include many revelations as most Answer’s do not reveal too much.

Zuffa Answer to Plaintiffs' Consolidated Amended Complaint

Here are some of the more interesting parts of the Answer:

  • Probably not too interesting, but Zuffa denies it violated the Sherman Act or engaged in any anticompetitive activity, or that it has injured the Plaintiffs in any way.
  • Zuffa’s annual gross revenues for 2015 exceeded $500 million dollars (page 3, paragraph 7). Although Zuffa remains vague on its revenues, the statement is a conservative estimate from Lorenzo Fertitta’s assertion it made $600 million in 2015.
  • When plaintiffs cited an article or photo included in its Amended Complaint (see paragraph 8 and 12, page 4) and, the UFC did not admit to the veracity of the article or photo. Instead, it indicated the source of the article would be the place to determine the truth of the statement.
  • Zuffa objects to the definition of “Elite Professional MMA Fighter” for being “vague, unclear, confusing, misleading and without any objective or quantifiable basis or any standard usage in any industry.”
  • It notes that the video games UFC Undisputed 2015 sold over 2 million units while UFC Undisputed 2009 sold over 3.5 million units.
  • It notes that Fedor Emelianenko turned down offers to fight in the UFC.

In addition, Paul Gift of Bloody Elbow took at look at the discovery efforts ongoing in the lawsuit.  So far, according to the report 17,909 documents totaling 239,923 pages have been provided from Zuffa’s electronic fighter files.  It is in addition to 108,000 documents provided late last year.  The parties are still haggling over details in the discovery process including custodians (individuals who might have discoverable documents), search terms (the words/phrases used to identify potential relevant documents), relevant time frame among others.

The discovery phase continues as the parties indicate that they have served discovery requests on third parties which should add another level of complexity to this process as the third party lawyers will get into this situation.  Certainly, the attorneys for these third parties will want to ensure that its clients are protected.

Payout Perspective:

Nothing terribly earth-shattering from the Answer.  As in most lawsuits, you want to be as vanilla as possible when providing an Answer.  The Affirmative Defenses do not reveal too much about litigation strategy as well as many are very much form defenses to the lawsuit.  Watch for the discovery fight to continue as third parties were served discovery requests.  Do not be surprise if we see attorneys for the third parties file motions to narrow the scope of discoverable information.

Top Rank survives Haymon’s Motion to Dismiss

January 12, 2016

Top Rank Boxing withstood another motion to dismiss from Al Haymon in the ongoing lawsuit filed in federal court in Los Angeles.  The Honorable John Walter ruled, without oral argument, that Top Rank’s Second Amended Complaint was sufficient enough to survive a motion to dismiss.

A hearing on the motion to dismiss was to be heard on Monday but the court nixed this hearing ruling without the need for oral argument.  Previously, the court had dismissed Top Rank’s lawsuit but allowed it to re-file and amend, which it did.  But, Haymon had filed another motion to dismiss citing that nothing had changed in its amended filing.

Perhaps an ominous sign from Judge Walter for Top Rank was the notion that the arguments set forth in Haymon’s motion to dismiss might be best addressed in a motion for summary judgment.  A summary judgment is a motion brought by a party would dismiss a lawsuit prior to trial due to the fact that one side’s claim(s) that there is no general dispute as to any material fact and the case should be dismissed as a matter of law.  Of course, Judge Walter indicated in his order that he expects both parties to file motions for summary judgment.  The brief order inferred that it while it sided with Haymon’s arguments, the rule of law dictated that Top Rank’s Second Amended Complaint had sufficient information to go forward.

Top Rank sued Al Haymon for alleged violations of antitrust and state laws with respect to Haymon’s PBC promotion which includes its alleged managing and promoting of fighters.

The court opinion indicates that while it was not persuaded that Top Rank had cured all of its deficiencies in its state law claims, it will not entertain any more motions to dismiss.

Order on Motion to Dismiss by JASONCRUZ206

Payout Perspective:

And now we enter the discovery phase of the lawsuit as the court essentially tells the parties they have exhausted all of the motion to dismiss.  Haymon will now have to answer the 105 page Second Amended Complaint.  From there, it will be written discovery and depositions.  We shall see if the elusive Al Haymon will be summoned for deposition.  MMA Payout will keep you posted.

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