Plaintiffs file Opposition to UFC’s Motion for Summary Judgment in Antitrust lawsuit

September 21, 2018

Plaintiffs in the Zuffa Antitrust Lawsuit have filed their Opposition to UFC’s Motion for Summary Judgment.  The 47-page long opposition brief includes over 100 exhibits, many of which are redacted, or include deposition transcripts with redactions.

The main argument in the Plaintiffs’ Opposition is that the UFC is the “major league” of MMA and it has done so through predatory means.  The theory asserted is that it has become the top of the food chain in MMA through its retention of top-level fighters.  It argues that “a critical mass” of elite fighters is necessary to compete with the UFC.  But, the UFC’s scheme has foreclosed this opportunity.

Despite the fact Zuffa argued in its motion that there was ample competition within the industry as evidenced through testimony of rival MMA promoters and fighters that left the organization, Plaintiffs argue that the “supposed evidence of Fighter mobility merely reflects that the UFC is the “major league” of MMA and cuts Fighters who do not meet its standard.”

Plaintiffs argue in their brief that Zuffa’s anticompetive scheme was “designed to lock in current and potential top fighters to exclusive contracts for the most valuable parts of their careers.”

Oppos to MSJ – Plaintiffs by on Scribd

It noted that Zuffa used its market leverage to extend exclusivity over its fighters. This was done through coercion, intimidation and other means of forcible persuasion.  This included four ways outlined by Plaintiffs and evidenced through deposition transcripts.  This included:

  • Move Fighters to unfavorable placement on the fight card for an event
  • Control the timing of a bout (refuse to off Fighters bouts)
  • Delay a Fighter from competing for another promoter through the Right to Match and Exclusive Negotiation clauses in its contract.
  • Deprive fighters of title opportunities

Plaintiffs argue that Zuffa’s scheme impaired competition through locking up the majority of top fighters, deprived rival promoters of the key input of top fighters and relegated other promoters to feeder or minor leagues.  It calls out other promoters cited in Zuffa’s motion that indicated that they could compete “are not credible and are disputed.”  In fact, Plaintiffs show why Bellator, OneFC and PFL’s statements indicating that they are on par with the UFC are false.  Also, noted in a footnote to the motion, Absolute Championship Berkut, also recognized as a direct competitor, noted the cancellation of three events due to “organizational and financial problems.”

The Plaintiffs cite Dr. Singer’s expert report regarding the input and output markets and its showing how Zuffa has suppressed fighters’ wages, restricted the output of fighter services and excluded rivals.  Plaintiffs also argue that the acquisitions of other organizations by the UFC stifled competition and restricted fighter mobility.

Payout Perspective:

There is a lot to digest here and MMA Payout will take a deeper dive into the opposition including the evidence used by Plaintiffs.  The crux of their opposition is that the UFC’s anticompetitive scheme is based upon the retention of top tier fighters through exclusive contracts.  It locked in top fighters during their “most valuable parts of their careers” and was to leverage its market power to extend exclusivity.  As a result, it impaired competition despite the views of rival promoters that indicated it had no problem signing fighters it wanted.  As a result of the scheme, the anticompetitive effects included suppression of fighters’ compensation, reduction of “quality” MMA events and it suppressed marketwide output of MMA Events and inflated prices.  Furthermore, Zuffa cannot show that the contractual exclusivity provided procompetitive benefits which may outweigh the anticompetitive effects.

Zuffa has a chance to offer a Reply to this Opposition which will be submitted on November 2nd.

Plaintiffs in UFC Antitrust Lawsuit request Court to file response to MMA Manager Declaration

August 30, 2018

The plaintiffs in the UFC antitrust lawsuit have requested that the Court review its Surreply Brief in opposition to Zuffa’s Motion to Seal Zuffa’s Summary Judgment Motion and Portions of Plaintiffs’ Class Certification Reply.

Specifically, the Surreply Brief addresses the Declaration of MMA Manager Ali Abdelaziz which was included in Zuffa’s Reply Brief.

A Surreply Brief is not automatically considered by the Court, in fact, it is usually disliked since its additionally work for an already overworked court.  These types of briefs must bring up new evidence, facts important to the case not brought up or another exigent reason.  Reiterating arguments that would have been contained in an opposition will likely get poor treatment.

Here, plaintiffs believe the need to address Abdelaziz’s Declaration which Zuffa used to aid its Reply Brief.  The argument in which Zuffa uses Abdelaziz’s testimony is based on the need to seal payout information of fighters.

The manager of many top fighters submitted this declaration on behalf of Zuffa.  He claims that public disclosure raises “legitimate safety concerns” for fighters and their families.  He also believes that public disclosure of terms and compensation of fighters’ agreements.

Declaration of Ali Abdelaziz by JASONCRUZ206 on Scribd

It is worthy to note that no current UFC fighter signed a Declaration in support.  But, Abdelaziz, who represents a huge swath of UFC fighters supports the sealing of documents.  Although Abdelaziz’s declaration supports the last argument in Zuffa’s brief (and usually the weakest), plaintiffs felt compelled to address it.  The declaration was torn apart by the plaintiffs in its Surreply Brief.

Motion to FIle Surreply by on Scribd

Plaintiffs’ list four reasons why Ali’s Declaration fails: 1) The rationale that disclosure of fighter compensation hinders rather than helps in obtaining negotiating athlete purses rings false lin light of evidence of salaries of players in other major leagues.  2) The Declaration contradicts Zuffa’s own arguments in favor of sealing since it argued that disclosure would put Zuffa in a strategic disadvantage whereas Abdelaziz says non-disclosure is advantageous. 3) The allegation that fighters would be put at risk of kidnapping or extortion is not supported by credible evidence.; and 4) Plaintiffs calls Abdelaziz credibility a question since he’s an MMA manager and alleged principal in the WSOF as a promoter.

Payout Perspective:

While the brief is damaging, its still up to the Court to decide whether or not to take it into consideration.  Of course, we know that Zuffa will file an opposition to this Surreply which means more filings.  MMA Payout will keep you posted.

Details of Zuffa exec deposition reveals questions on exclusivity provisions, right to match and toy deals

August 20, 2018

Zuffa filed its Motion for Summary Judgment in which it wishes to dismisses the antitrust lawsuit filed by ex-fighters.  MMA Payout takes a look at some of the deposition testimony attached as exhibits to the motion.  This is the first of a series.

In order to prove its case, Zuffa attaches portions of the deposition testimony it cites in its motion.  The depositions are not the full transcript but small snippets of pages from the depositions.  There are a portions that are redacted for the public so we cannot see the full transcript.

For instance, Sean Shelby’s deposition attached to the motion reveals nothing. The first question is visible, but the rest of the deposition is redacted.  The question posed to Shelby was an Exhibit which is a text completion between “multiple parties.”   One could only assume that the texts may be between Shelby and/or Dana White, Joe Silva or another UFC employee.

Depo of Sean Shelby by JASONCRUZ206 on Scribd

But, not all transcripts are like Shelby’s.  For instance, UFC Executive, Ike Epstein includes some interesting testimony.

Exhibit 8 – Depo of Ike Epstein by JASONCRUZ206 on Scribd

Reason for Exclusivity

The snippets that were provided in the exhibit provide Epstein’s testimony with respect to the purpose of exclusivity provisions in athlete contracts.  He testified that the UFC were “putting on 40 fights per year, and in order to put on 40 plus fights per year, you have to know that fighters are available to put on those events.”  He added, “[i]f the fighters were not exclusive to us, we could never put on 40 plus events per year, and our output would significantly decrease.”

He stated that the provision was a benefit for all UFC fighters and that no one would be affected negatively by the clause.  He did qualify this statement by testifying “all fighters are different.”  Although lured into the trap that exclusivity prohibits fighters from finding other opportunities elsewhere, Epstein stated that the sole purpose of the provision was to ensure that the company could do 30-40 events per year.  He qualified his answer to the UFC lawyer’s “narrow question” by stating that he disagreed with the “underlying assumption” in the question that assumed there were more opportunities for an athlete but for the exclusivity provision in UFC contracts.

At this point in the testimony it seems to get contentious, as the parties fight over the semantics of the questions.  Here, the plaintiffs’ attorney would like Epstein to agree to the question that based on the UFC’s exclusivity provision, the fighters cannot seek opportunities to fight elsewhere.  However, Epstein is wary of the trap and will not cede to this admission.  He does note that the viewpoint of the question infers something that the UFC does not want to admit, but plaintiffs cannot provide.  And that is that if fighters were given an opportunity to freely contract with others, they would earn more money, find more fights and/or both.

When asked by plaintiffs’ attorney Joseph Saveri whether boxing has the “same sort of exclusivity problems,” Epstein said yes.

He also agrees that most fight contracts are for 4 fights or 20 months, whichever comes first.  However, some fighters have longer terms.

He also testifies about the negotiations surrounding the Gilbert Melendez contract and how they thought the matching offer given to the lightweight was unreasonable.

There is an interesting exchange where Epstein discusses the willingness to match the offer made to Cheick Kongo.  However, the company decided to let the heavyweight go and he signed with Bellator.

Jakks and Round 5

Epstein is questioned about a toy deal with toy makers  Jakks Pacific and Round 5.

The limited testimony addresses Round 5’s ability to sign exclusive agreements with certain fighters.  Epstein notes that Round 5 was able to secure exclusive contracts to do toy deals with UFC fighters and were paid directly.   Jakks Pacific had the official license to replicate UFC fighters but, for a time, were foreclosed from making certain UFC fighters due to an exclusive contract with Round 5.

In 2009, Jakks, the master toy licensee for the UFC sub-licensed with Round 5 Corp to share UFC and MMA talent in the selling and distribution of action figures.  This brought all of the UFC athletes under the same umbrella and all were paid the same.

The example underscored the limited freedom that athletes had to resource other forms of revenue.  Ultimately, this was consolidated within Zuffa.  This testimony also related to Identity Rights for fighters.

Who is this?

There is a snippet where they discuss an individual that is hard to decipher without more information.  All that can be gathered is that “he regularly reports on ratings of UFC events,” and Epstein viewed reports as “business intelligence.”

Payout Perspective:

We’ll take a look at other depo transcripts as we await the plaintiffs response to this motion.  Epstein, a lawyer, understands the depo process so its no surprise that his testimony did not illicit anything of substance aside from the fact he liked Cheick Kongo.

Zuffa files its Motion for Summary Judgment against former fighters in the UFC Antitrust Lawsuit

July 31, 2018

On Monday, Zuffa filed its Motion for Summary Judgment against the Plaintiffs in the UFC Antitrust lawsuit.  The filing argues that despite the lengthy and voluminous amount of discovery taken place, the former fighters have not provided factual evidence to support their antitrust claims.  It also argues that the expert opinion of the Plaintiffs should be excluded, and if not, they do not set forth evidence to establish a market, examine the correct wage comparison exhibiting losses and show causal injury.

Zuffa notes that it has filed Daubert motions which seek to exclude the testimony from Plaintiffs’ two economic experts.  If the court grants those motions, Plaintiffs will not have evidence of market definition, causation or damages.  Even without the court granting those motions, Zuffa argues that Plaintiffs’ allegations for monopolization and monopsonization must fail.  Zuffa argues that based on the testimony from rival organizations such as Bellator, PFL, OneFC and ACB that none had issues securing fighters and thus had the necessary inputs to compete.  The company argues that Plaintiffs changed its alleged “scheme” and omitted any monopoly claims.  The new theory is comprised of a “free floating” monopoly “broth” which comprises different allegations and Zuffa argues that the claims fail due to the lack of a sufficient input or output market.

Zuffa cites to the ruling in the Golden Boy-Al Haymon lawsuit in which Haymon won on summary judgment.  Essentially, Zuffa contends “Plaintiffs have not met their burden of proving an input market of buyers (where Zuffa competes with other promoters to acquire athletes’ service) or an output market of sellers (where Zuffa competes to offer sports entertainment to viewers).”

The motion attempts to poke holes at Dr. Hal Singer’s findings in its expert report supporting the former fighters’ argument for an “Elite MMA Fighter” market.  Zuffa argues, “Dr. Singer has not even attempted to define a market using the accept SSNIP [Significant Non-transitory Increase in Prices] test because he has not defined buying promoters to whom a price decrease by a monopsonist would cause a shift in business.”  It once again cites to the Golden Boy-Haymon opinion for the example where a product market for “Championship-Caliber Boxers” is not sustainable where expert fails “to analyze the qualifications or backgrounds of the current managers in the market.”  Zuffa states, “Dr. Singer merely uses the ranking data combined with his own subjective analysis to include or exclude athletes rather than promoters.”

Zuffa goes on to argue Dr. Singer’s definition of the output markets stating that the proper market definition is broader than just MMA and his expert opinion does not consider the reasonable substitutes.

In arguing that the court dismiss its Monopsonization Claim, Zuffa argues that the testimony from competing MMA promoters have access to the inputs needed to compete refutes the monopsony claim that the promotion is a “monopsony purchaser of athletes’ services.”

Zuffa brings across multiple examples of its promoters thriving despite it being a competitor in the same market.  Bellator’s recent “nine-figure deal” with DAZN to produce 22 annual events is used as evidence to argue that other promotions do not have barriers to entry.  They also cite to PFL’s recent deal with NBC Sports and One Championship’s boast that it broadcasts to “1.7 billion potential viewers across 138 countries.”

Scott Coker’s deposition testimony is quoted in the motion stating, “there’s not going to be a free agent fighter that Bellator can’t affor or have access to” to support the claim that other promotions are comparable to the UFC.

In addition, Zuffa claims that Plaintiffs have failed to evaluate the effect of the challenged conduct on actual compensation levels.  It claims that actual compensation for fighters rose during the Class Period in question.  This goes back to the overarching theme of “wage share” versus “wage level.”  Wage share is the total compensation as a percentage of relevant revenues whereas wage level are the actual wages. Here, Zuffa argues that wage share is an unacceptable measure of anticompetitive conduct because it would have the “practical effect of stifling companies’ innovation and investments for fear of incurring treble damages liability based on a lower than average wage share.”

One of the interesting arguments made by Zuffa is that it did not engage in exclusionary anticompetive conduct.  It claims it did not engage in “predatory hiring,” which is the hiring of talent for purposes of keeping them away form a competitor.  The motion denies that the UFC signed Gilbert Melendez and Antonio Rogerio Nogueira to prevent them from leaving for another organization as claimed by Plaintiffs.  It also mentions the “benching” (i.e., “forced periods of inactivity”) of three UFC athletes: Andrei Arlovski, Roger Huerta and another fighter which is redacted.

The motion also argues that Plaintiffs did not prove that Zuffa’s Exclusive Contracts Foreclose a “Substantial Share of Competition.”  Zuffa claims that Plaintiffs contention that the company’s 30-month exclusive fighter contract (including the right to match period) is illegal is wrong.  “Contrary to Dr. Singer’s assertion that 30-month exclusive contracts are unlawful, courts have routinely held that exclusive contracts even up to six years are not anticompetitive so long as there is sufficient opportunity to compete for each contract at the time it is signed.”

Motion for Summary Judgment by JASONCRUZ206 on Scribd

Payout Perspective:

MMA Payout will continue to examine this motion as we have yet to talk about the plethora of exhibits which were attached to support it.  The arguments are similar to the ones made at the outset with its motion to dismiss. Zuffa’s introductory section which explains its success based on taking risks on the industry, its investment and its business acumen to get where it is today.

Zuffa stresses the competition in its motion utilizing evidence from testimony of its competitors to show that they are competing with the UFC and in certain instances have had no issues in attaining athletes similarly sought by the promotion.  This would seem to contradict the Plaintiffs argument that it had a monopsony over the market for “Elite Professional MMA Fighter services.”  As for its monopoly claim, Zuffa states the plaintiffs have conceded this claim based on inferences from prior pleadings.

Although it notes it is moving to exclude Plaintiffs’ expert, Hal Singer, it takes direct aim in rebutting his analysis which supports the claims made by the former UFC athletes.  It argues that they have wrongly identified the input or output market by attempting to define the market by the athletes and not by the MMA promoter.

Plaintiffs will have an opportunity to respond in the coming weeks and MMA Payout will keep you posted.

Plaintiffs in UFC Antitrust lawsuit file opposition in light of U.S. Supreme Court ruling

July 12, 2018

Earlier this week, the plaintiffs in the UFC Antitrust Lawsuit have filed a response in opposition to Zuffa’s motion seeking to file supplemental authority to support its Motion to Exclude Plaintiffs’ expert Dr. Hal Singer.

Zuffa is seeking to include the recent U.S. Supreme Court Decision in Ohio v. American Express in support of its Motion to Exclude which was filed at the beginning of May.  The U.S. Supreme Court issued its opinion on June 25, 2018.

Zuffa filed a motion requesting the opportunity to file supplemental authority on July 5th.  It explains the reason why it would like the Court to consider the case:

The Supreme Court decided Ohio v. American Express Co., — S. Ct. –, 2018 WL 3096305 on June 25, 2018. As explained in Zuffa’s proposed Notice of Supplemental Authority, this decision clarified that in light of the procompetitive benefits of certain vertical restraints, a plaintiff must define a relevant market to evaluate the anticompetitive effect of an alleged vertical restraint even when using direct evidence. Id. *8 n.7. Plaintiffs argue in their Opposition to the Singer Daubert motion that defining a relevant market is unnecessary when evidence of direct effects on compensation is presented. Accordingly, Amex will inform this Court’s decision on whether to grant Zuffa’s Motion to Exclude the testimony of Dr. Singer in light of this new development in the law that affects the currently pending motion. Plaintiffs are not prejudiced by this filing, as this additional legal authority was unavailable prior to the Daubert briefing, Plaintiffs will receive timely notice through this filing, and Zuffa has not delayed in presenting this authority to the Court or Plaintiffs.

Plaintiffs argue in their opposition brief that Dr. Singer has defined the relevant markets and applies them to his opinion.

Plaintiffs Response in Opposition to Zuffa’s Motion to File Supplemental Authority by JASONCRUZ206 on Scribd

Dr. Singer was retained by the Plaintiffs as an expert economist to opine, in part, that the compensation of all proposed class members is adversely affected by the UFC’s anticompetitive practices.  He also to identify the relevant markets in which this occurs.

The Supreme Court case is detailed here. In a 5-4 decision in favor of American Express, the Court determined that Amex’s anti-steering policies did not violate antitrust law.  The case specifically involves policies set by some credit card banks that prevented merchants from steering customers to use cards from other issuers with lower transaction fees, forcing merchants to pay higher transaction fees to the banks.  The case was based on the relationship between antitrust law and two-sided markets.  Thus, you might infer the parallels with the UFC case where the issue of the defining markets are being challenged.

The court in the UFC lawsuit may or may not take the AmEx case into consideration but Zuffa had a right to file the motion and the Plaintiffs had an opportunity to advise why it did not apply in this case.  MMA Payout will keep you posted.

Parties file joint motion on Michael Mersch depo testimony in Zuffa Antitrust Lawsuit

July 1, 2018

This past Friday, Plaintiffs a joint motion in the UFC Antitrust lawsuit filed a Motion to Seal Reply In Support of Its Motion to Seal Plaintiffs’ Class Certification Reply.  The motion, which includes both plaintiffs and defendants’ position seeks to seal certain deposition testimony from Michael Mersch as well as certain confidential information from his deposition.

Zuffa points out that the motion to seal is based on what’s included in its Reply Brief and unrelated to the merits of the case.  Zuffa is requesting to seal information in Mersch’s deposition testimony regarding the purse information of a UFC athlete based on privacy concerns expressed to Mersch.  It claims that evidentiary objections made by Plaintiffs are improper.

Plaintiff asserts that Zuffa has failed to meet its burden to seal portions of the Mersch deposition.  They believe that the earnings that fighters receive and Zuffa’s strategy of preventing its fighters from learning what others maker are not compelling reasons or good cause to seal the information.  The overarching argument is that there is no legal argument for the sealing of the information and the information (i.e., purse information) has been disclosed publicly by other sources.  Moreover, Plaintiffs argue that the information sought to seal is four years old and would have no trade secret value in present day.

Joint Motion Re Motion to Seal by JASONCRUZ206 on Scribd

Payout Perspective:

It would seem that the parties are making more of a battle over sealed information.  The payouts appear to be over two fighters if you infer from the exhibits attached to this joint motion.  Wikipedia pages are attached regarding payouts for UFC heavyweights Ben Rothwell and Alistair Overeem. The declaration of the Plaintiff’s attorney states as much.  Clearly, Zuffa wants to seal the testimony because they believe there is something there that might influence the Court or is previously not publicly disclosed.  Plaintiffs would like this information unsealed because they believe it would be useful.

Plaintiffs in UFC Antitrust Lawsuit oppose sealing of documents

June 19, 2018

Plaintiffs in the UFC Antitrust Lawsuit are opposing a Motion to Seal brought by Zuffa to seal documents in Plaintiffs’ Motion to Seal Plaintiffs’ Reply in Support of Motion to Certify Class and Related Materials.  The opposition is the first in this litigation which has gone without any challenges to the redaction and/or sealing of documents.

Plaintiffs’ Opposition to Motion to Seal by JASONCRUZ206 on Scribd


Plaintiffs cite 4 points why the Court should deny Zuffa’s Motion to Seal:

  • The materials Zuffa seeks to seal are not trade secrets, but rather largely, outdated aggregate data, and Zuffa would suffer no competitive harm if they were disclosed;
  • Zuffa’s justifications for sealing do not satisfy the applicable “compelling reasons” standard;
  • The right of the public, the press, the named Plaintiffs, and Class members to access judicial materials is especially robust….; and
  • Zuffa is attempting to gain an advantage by overdesignating materials that support Plaintiffs’ claims and their motion for class certification, when Zuffa has selectively revealed similar information that served Zuffa’s purposes.

Plaintiffs argue that Zuffa’s claim that redacting certain section of its documents “could permit..competitors to gain unfair insights into Zuffa’s strategic business practices and gain an unearned advantage in competition” is a red herring.  It contends that it is sealing information to control the flow of information to the public, the press, the named Plaintiffs’ and the class members, and prevent Plaintiffs from telling their side of the story to the public.  It’s not that its protecting its trade secrets argues plaintiffs it is concerned about the public learning about its misconduct.

Focusing on the issue of unsealing documents for the media, John Nash of Bloody Elbow sent correspondence to the Judge Richard Boulware requesting access to certain documents including portions of the expert reports that were redacted. Nash pointed out inconsistencies with what was being redacted, withheld for public consumption with what was allegedly trade secrets.  Zuffa’s counsel responded to the letter indicating that the likes of Nash, Paul Gift and yours truly had ample information to pontificate on the subject.  It claimed that the information sealed was trade secrets and precluded from public consumption.  Zuffa argued that the right to access of pleadings was not absolute.  Nash responded with a detailed letter outlining the reasons why certain sections should not be redacted.  The letter also cites a federal court judge order from last month in which it sanctioned attorneys for frivolous motions to seal.  The pertinent section that is applicable is as follows with emphasis being ours:

At the hearing on the order to show cause, there was discussion of the fact that attorneys – particularly attorneys for corporate clients – are under great pressure to file motions to seal information that their clients would prefer to keep secret, even if there is no legitimate basis to keep the information secret. This is no doubt a significant issue for corporate lawyers, but the answer is not to file frivolous sealing requests. The answer is to firmly explain to their clients that litigation is a public process, and that the public has the right to know what the litigation is about, subject only to very limited exceptions. Mere embarrassment to a corporation is not one of those exceptions

In that case, the Judge fined the law firm filing frivolous sealing requests $500 per lawyer involved (which was 5) for a total of $2,500.

2018-06-10 S Grigsby Ltr to Judge Boulware Re J Nash Email by JASONCRUZ206 on Scribd

Response to Ms Grisby Jun 10 2018 Letter by JASONCRUZ206 on Scribd

Payout Perspective:

According the plaintiffs’ motion, a party seeking to seal a judicial record bears the burden of overcoming “a strong presumption in favor of access” by meeting the “compelling reasons” standard.  While the disclosure of information might prove embarrassing, incriminating or put the party in a false light, it is not a reason to seal information from a public court filing.  From a media perspective, it is hard to be accurate if the information is not provided.  One need only look to Zuffa’s attorney proclaiming an industry insider report that UFC 225’s buy rate was less than 150,000 was a “material misrepresentation” and off by six figures.  But, the attorney did not correct the information with accurate data.  A later report, noted that the buy rate including streaming and traditional PPV buys was 250,000.

The federal court order from last month is persuasive considering the overarching theory is that sealing documents has “very limited exceptions.”  The burden is on Zuffa to show why they are allowed to redact certain sections.  Previously in this lawsuit, these types of motions were not opposed and therefore the court did not really examine the information sealed.  Now, it appears that the Court might review the redacted sections.

The motion creates more work for Zuffa and plaintiffs with another motion to handle.  However, this is not a frivolous motion from the perspective of the media.  There are a lot of instances where things like this go by without being questioned.  Here, at least there will be some examination as to the veracity of what can and cannot be sealed.

Plaintiffs file Reply Brief supporting class certification in Antitrust lawsuit

May 31, 2018

The Plaintiffs in the UFC Antitrust lawsuit have filed its Reply Brief in support of its motion for class certification.

Plaintiffs Reply ISO of Class Certification by JASONCRUZ206 on Scribd

Zuffa Oppo to Class Cert by JASONCRUZ206 on Scribd

The four factors for class action certification are the number of potential members of a class, the commonality of questions of law or fact, the typicality of the claims or defenses of the class and the adequacy of the representative classes.  In its, opposition brief, Zuffa took aim at the four factors in concluding that Plaintiffs have not served

Plaintiffs stress “four fundamental errors” in its reply brief.

First, Zuffa errs that there can be no legal challenge to its business practices.  Plaintiffs cite illegal conduct that allowed Zuffa an advantage in its industry.  The Plaintiffs rebut Zuffa’s assertion that wage level is the only way to evaluate compensation citing that its use is a way to masks Zuffa’s abuse of monopsony power.  Again, this is the overarching argument between wage level which measures compensation in dollars versus wage share which measures compensation as a percentage of revenues.

Second, Plaintiffs argue that Zuffa misunderstands the antitrust violation which is a scheme to acquire and maintain monopsony power.

Third, plaintiffs claim that Zuffa failed to respond to the ways in which they show common impact.  Plaintiffs claim that common evidence was capable of proving widespread harm across a class, courts usually certify classes in antitrust cases.

Finally, Plaintiffs’ claims are typical of the class as it refutes Zuffa’s claim that challenges the typical damages may have left some proposed class members uninjured.  In refuting this argument, Plaintiffs argues that there is no law which must show all class members were harmed to satisfy the typicality requirement.

Zuffa also argues that since Plaintiffs are ex-fighters, they will not protect the interests of the current Fighters.  However, Plaintiffs cite case law stating that former employees may represent present employees.  Plaintiffs also cite the “transitory” nature of a fighters’ career.  Since they are independent contractors, it would be easy for Zuffa to insulate itself from a class action lawsuit as the promotion could release a fighter it believed would be part of a lawsuit.  Moreover, Plaintiffs argue that former fighters have less of a concern with retribution from the organization versus a current fighter bringing a lawsuit.

Payout Perspective:

As in most Reply Briefs, Plaintiffs support its initial motion while rebutting opposition from Zuffa’s response to the motion.  As will be one of the bigger issues in the “battle of the experts” is the calculation of damages through wage share or wage level.  Plaintiffs endorse the wage share model to determine whether fighter wages were suppressed through illegal conduct versus Zuffa’s claim that wage level should be used to evaluate whether there were any factors to show such illegal conduct on the part of Zuffa.  Of course, each version supported by the party helps their respective viewpoint.  The Reply addresses Dr. Singer’s expert report and his theory of Zuffa’s Foreclosure Share – the proportion of fighters subject to its exclusive contracts – affects its Wage Share.  Dr. Singer’s theory of liability model suggests that Zuffa’s Exclusive Contracts are part of an unlawful scheme which correlates with underpayment of fighters due to illegal foreclosure (i.e., the measure of damages).  MMA Payout will keep you updated.

Catching up with Zuffa’s Reply Briefing in Antitrust Lawsuit

May 30, 2018

As we prepare for another filing in the UFC Antitrust lawsuit this week, MMA Payout takes a look at the briefing in supporting the motion to exclude plaintiffs’ experts.

Earlier this month, Zuffa filed briefs in support of its Motion to Exclude the testimony of Dr. Andrew Zimbalist.  They seek to exclude the testimony pursuant to Federal Rule of Evidence 702 and the Daubert case which allows the Court to determine whether certain expert testimony may be used at trial prior to trial.  The standard for admissibility is based on 5 factors which look to the scientific means of the method and whether they are generally accepted within the industry.  Zuffa argues that Dr. Zimbalist’s expert testimony as indicated in his submitted report conducted “no analysis and used no standards in his yardstick method.”

Zuffa Reply ISO Motion to Exclude Zimbalist by JASONCRUZ206 on Scribd

Zuffa argues that there are standards for the ‘yardstick method’ which Dr. Zimbalist uses, but he chose not to do so.   Specifically, Zuffa argues that Dr. Zimbalist did not conduct an empirical analysis of product markets, business models, revenue sources, or inputs.  According to Zuffa, Dr. Zimbalist did not consider any of the other factors that must be assessed using the yardstick method including “demand conditions or whether the comparators stand in the same relative position in their markets.”

In its analysis, the Dr. Zimbalist is measuring damages by wage share.  However, Zuffa argues that this measure is not accurate since it neglects to use individual salaries.  Zuffa argues, “[i]t is highly speculative for Dr. Zimbalist to assume without foundation that these hundreds of negotiations would add up to a similar wage share as the contractually define wage shares collectively bargained by the unions in the comparator sports.”

Zuffa goes on in its brief to argue that Dr. Zimbalist’s comparison to boxing is premised on faulty data as he uses Golden Boy to measure the entire boxing industry.  Zuffa argues that Dr. Zimbalist utilized data from another’s expert report in Golden Boy’s lawsuit against Al Haymon without independently verifying the data.

Finally, it argues that Dr. Zimbalist’s expert reports do not support Dr. Hal Singer’s expert reports and analysis and vice versa.

In supporting its motion to exclude Dr. Singer, Zuffa argues once again that wage share is not an acceptable practice for measuring damages.  Specifically, Zuffa takes issue with a regression analysis performed by Dr. Singer in his model.  Zuffa argues that the expert report finds anticompetitive effect which “directly contradicts” the fact that actual compensation has increased.  Second, the regression analysis performed by Dr. Singer shows that there is no anticompetitive effect and there is no relationship between the conduct and actual wages.

Zuffa Reply ISO Motion to Exclude Dr. Singer by JASONCRUZ206 on Scribd

The reply briefing to plaintiffs’ opposition to exclude their retained experts’ reports are based on the difference regarding wage share and actual wages.  The assertion by Zuffa is that “an analysis of wage share does not provide a reliable means of inferring anticompetitive effect, antitrust injury or damages because it cannot distinguish between a decrease in wage share as a result of the challenged conduct and a decrease as a result of legal and procompetitive business developments that increase overall revenues.”  Zuffa argues that there is no case law or economic literature supporting a regression analysis with wage share as a dependent variable inferring anticompetitive conduct.  Defendant also points out that the method would assume that a mandatory share of revenue is allocated for compensation. Yet, Zuffa compensates athletes based on “its perception of the athlete’s value and market forces, leading to a wide range of athlete compensation.”

Zuffa also argues that Dr. Singer’s reports do not show causality between his findings an the alleged anticompetitive conduct.  Zuffa claims that Dr. Singer’s regression analysis does not answer the key question of what proportion of increased revenues are attributable to athletes.  Rather, Dr. Singer relies upon economic theory which cannot replace Daubert standards according to Zuffa.

Zuffa files opposition to Plaintiffs’ Motion for Class Certification in Antitrust Lawsuit

April 16, 2018

Earlier this month Zuffa filed its opposition to the Plaintiffs’ motion for class certification in the Antitrust lawsuit filed in Nevada.  Back from Spring Break, MMA Payout takes a look at the motion.

Zuffa Oppo to Class Cert by JASONCRUZ206 on Scribd

Under Federal Rule of Civil Procedure 23 are four elements needed to show class action status is viable: Numerosity, Commonality, Typicality, and Adequacy.  Zuffa argues against each element for class action status.

The opposition brief goes in depth on the reasons why the 6 named Plaintiffs cannot represent the two broad classes contracted by Zuffa.  They argue that the claims are not the kind that should be decided as a class.  Rather, one of their main arguments is that the factual claims set forth by each plaintiff differ and there is no “typicality” of defenses or “commonality” of evidence.  Zuffa argues that the expert reports and opinions submitted by Plaintiffs are insufficient to buttress the argument that the claims are those that can be tried through class action certification.

The two classes that Plaintiffs seek to represent are the “Bout Class,” the class of athletes who competed in UFC bouts during the class period and the “Identity Class,” those athletes alleged to have their identities “expropriated” by Zuffa.  Nathan Quarry is the only named plaintiff to be a part of the Identity class according to Zuffa.

Zuffa outlines reasons why the Bout Class is defective:

  1. Plaintiffs cannot adequately represent the class because none of them currently compete in UFC promoted bouts, and their claims are not typical of others in the putative class, such as the current athletes they seek to represent.
  2. Plaintiffs cannot establish the requisite elements of an antitrust violation with common evidence. Essentially, Zuffa argues that the class of purported affected individuals is vast and a finding that the entire class was “coerced” into exclusive contracts is unlikely.  Zuffa also cites that the existent of local markets for live MMA entertainment means that individual issues predominate for all of those markets.
  3. Zuffa does not have a pay structure or follow a policy of “internal equity” according to the legal filing. They argue that the regression theory posited by Plaintiffs “cannot distinguish whether common or individual factors account for the variations in athlete compensation.”
  4. Zuffa also claims that the putative class is “unmanageable” due to the inability for Plaintiffs to identify which athletes would still be competing for Zuffa or any other MMA Promoter

Zuffa argues that the Plaintiffs’ cases are not typical of one another.  The “test of typicality” looks to “whether other class members have been injured by the same course of conduct.” The requirement evaluates whether defendant’s defenses would be similar for the Putative class representative.  Zuffa argues that the defenses vary based upon the athlete.  It identifies having varied defenses when dealing with Plaintiff Nathan Quarry, Brandon Vera, Cung Le, Javier Vazquez, Jon Fitch and Kyle Kingsbury.

The purpose of “adequacy” is to “uncover conflicts of interest between named parties and the classes they seek to represent.”  Here, Zuffa argues that the Plaintiffs are retired or compete elsewhere.  None of the Plaintiffs currently fight in the UFC.  Thus, they would not be representative of the current class of UFC fighters as Zuffa argues that they would be more interested in money damages rather than injunctive relief.

In its argument rebutting the commonality element for class action status which allows certification if questions of law or fact common to class member predominate, Zuffa argues that Plaintiffs’ alleged theory of liability is incapable of proving liability with common evidence.  Here, Zuffa argues that the factual issues for each case differs and the commonality requirement would not apply here.  Zuffa goes on to argue with respect to the allegation that athletes were “coerced” into UFC contracts, Plaintiffs’ claims require “mini-trials for each plaintiff and class member on the issue of whether they voluntarily entered into their contracts.” Additionally, they claim that individualized evidence will be required to determine injury and show an antitrust violation.

The opposition motion includes declarations from Stephan Bonnar, Kenny Florian and Jim Miller which reflect the tone that the fighters made a choice to fight in the UFC instead of being forced to do so because of the economic market conditions.

Here are some other observations:

-Zuffa cites the U.S. Supreme Court case of Comcast Corp., et al. v. Behrend, et al. which found that the plaintiffs in that case failed to establish a sufficient connection between their alleged theory of liability and their claimed damages.  Highlighted in the opinion was the need to conduct a “rigorous analysis” to determine whether the standard has been met.  Similarly, Zuffa argues that the Plaintiffs have a similar problem with their case.

-According to an excerpt from Michael Mersch’s deposition, in order to re-sign Zuffa athletes before their contracts expire, the company offers higher guaranteed compensation for their next bout as an incentive to sign a new agreement.  Zuffa argues that the individual athlete makes the decision as to whether to sign or not and their reasons differ on the decision.

-Zuffa notes that there is “no testimony that promoters could not obtain MMA athletes during the class period.”

-The opposition argues that Plaintiffs have switched course in the argument of a combination of monopoly and monopsony allegations but a “multi-faceted “Scheme” of only monopsony-related claims.”

-Zuffa argues that Plaintiffs’ attempt to merely offer proof of harm that is widespread across the class is not sufficient as they must need to prove class wide harm.  They also state that the antitrust claims asserted here are not routine for class action lawsuits.

-Zuffa notes, “[A]lthough Plaintiffs suggest class certification in antitrust cases is routine, no court has

granted class certification in a Sherman Act Section 2 monopsonization case involving allegations

based on unilateral conduct.”

-With respect to their motion to exclude the opinions of Plaintiffs’ experts Drs. Singer and Zimbalist under Daubert, Zuffa argues that regardless of the outcome from the Court, it may still conclude that class certification should be denied.

Payout Perspective:

 The obvious objective of the opposition is to show that Plaintiffs’ claims cannot be tried as a whole and must be tried individually.  If this were to occur, the Plaintiffs would be in a bind logistically and economically as they would be left to prosecute cases for each of the athletes involved in the lawsuit.  Additionally, this would lessen their leverage of settling the cases as well as foreclosing a potential for larger award if they prevail.  Zuffa also stresses the Comcast case in its argument that under a “rigorous analysis” that Plaintiffs liability theory and damages are not tied.

Next Page »