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.

Show Money Episode 21 talks antitrust lawsuit, Project Spearhead and more

March 8, 2018

In this episode of Show Money we talk antitrust lawsuit, project spearhead and more with Paul Gift and John Nash of Bloody Elbow.

MPO Year in Review: No. 8 Bellator among the parties pulled into UFC Antitrust Lawsuit

December 28, 2017

Bellator MMA found itself a part of the UFC Antitrust lawsuit as the two companies were opposing sides in a discovery dispute.  Bellator sued the UFC in Los Angeles, but the Court determined that the dispute should occur in the Vegas court handling the case between former fighters and the UFC.

Prior to the filing of the lawsuit in February, Bellator claimed that it had “produced in excess of two thousand pages of responsive documents.”  Yet, the UFC argued that it needed more which included payouts for Bellator fighters, contracts and financial information.

Bellator Motion to Quash Subpoena by JASONCRUZ206 on Scribd

Zuffa Opposition to Bellator Motion to Quash by JASONCRUZ206 on Scribd

The Vegas court issued a ruling in June.  Some of the findings are below:

Bellator was ordered to produce:

  1. A random sample of at least 20 percent of fighters under contract with Bellator between January 1, 2010 and the present. This will include any “amendments, modifications, side letters, or extensions that may exist with respect to any contract that is produced…”
  2. Bellator will produced “Anonymized contracts” with a unique identifier although identifying information “may be redacted.”
  3. The contracts “shall include the fighter’s gender, weight class, number of fights during term of agreements and any compensation to be paid.
  4. The Court limited and modified Bellator’s request for production to the following
    1. A list of all MMA events it promoted or co-promoted from January 1, 2010 through the present.
    2. An unaudited profit and loss statement through the quarter ending March 31, 2017 which will include Revenue, Expenses, Operating Income and Net Income.

In addition, Matt Hume, had a similar discovery issue in which the Plaintiffs sought information from OneFC (Hume is an executive for the company).  A lawsuit in Washington state ensued in which a motion to compel the documents of Hume in July included a request for attorney fees in the amount of $21,000.  Similar to the Bellator lawsuit, the federal magistrate dealing with the dispute decided to kick the case to Vegas for the trial court to handle.  The Plaintiffs demanded certain documents from Hume’s involvement with OneFC as well as to take his deposition.

Motion to Compel Depo of Matt Hume by JASONCRUZ206 on Scribd

Plaintiffs’ Opposition to Motion to Quash Hume Subpoena by JASONCRUZ206 on Scribd

The Washington state court decided that it did not want to intervene in the lawsuit and kicked the case to Vegas.

These were not the only two discovery issues in this case.  Zinkin Entertainment was ordered to produce documents related to the representation of its fighters.  Top Rank also came to terms with the UFC in the lawsuit over discovery.

Zuffa was ordered to hand over a study on fighter pay.

In addition, Zuffa filed a lawsuit to dismiss the claims of plaintiff Nathan Quarry due to statute of limitations.  The Court has yet to issue an order on the motion.

The UFC Antitrust lawsuit was a “discovery year” for the case as depositions were taken and fact discovery took over most of the year.  As expected, there were fights over the discovery of documents which seemed to have resolved.  In 2018, we will see the expert discovery phase start as the wheels of justice move slow on the civil side.

Top Rank and Plaintiffs in Antitrust Lawsuit Resolve Discovery Dispute

October 2, 2017

Top Rank and the Plaintiffs in the UFC Antitrust Lawsuit have resolved their discovery dispute regarding a motion to compel production of documents and for the attendance of the deposition of Bob Arum.

A notice of resolution was filed late last week.  The agreement between the parties avoids a motion to compel brought by Plaintiffs in the Zuffa Antitrust lawsuit seeking financial information and the deposition of company head Bob Arum.

Resolution Re Top Rank Motion to Compel by JASONCRUZ206 on Scribd

Originally, the motion was to be heard in early September but was continued until later in the month, but the parties came to an agreement.

Top Rank argued that a subpoena for the production of documents from the company was not relevant to the Zuffa lawsuit.  It also argued that the Plaintiffs failed to show a “substantial need” for Top Rank’s information. It also stated that the Plaintiffs’ document request were overly burdensome.

Top Rank Oppo to Motion to Compel by JASONCRUZ206 on Scribd

Plaintiffs argued that they were entitled to the discovery as it is relevant to their lawsuit against Zuffa, there is a substantial need for the documents and believe the discovery is not overly burdensome.

Reply to Opposition to Top Rank MTC by JASONCRUZ206 on Scribd

Top Rank noted in its opposition that it “cannot have it both ways.”  It argued that in its lawsuit it claimed that the “relevant market” was limited to the sport of MMA and noted that it was different from boxing.  Yet, it was requesting “ten years’ worth of revenue, profit, loss and payment information.”  Yet, Top Rank claimed that However the Plaintiffs lawsuit against them, claimed that it had differentiated itself from pro boxing and thus its financial information was not relevant to the instant lawsuit.

Top Rank argues that the document requests are intrusive and it is a way for Plaintiffs’ experts to “compare financial data from Top Rank’s promotion of boxing events to Zuffa’s promotion of MMA events and create “benchmark percentages of revenues.”  Moreover, it claims that Plaintiffs do not explain why they are unable to obtain this information from other sources.  Top Rank’s opposition brief claims it has told Plaintiffs where it might obtain public data about the company.

Top Rank lists some of the requests in its brief:

REQUEST NO. 1: Your Company’s Income Statements, including event-level profit and loss statements for the Relevant Time Period [defined to be from January 1, 2005 to present], including without limitation All Documents, including depositions, declarations, affidavits, or other statements under oath, You produced in any lawsuits or arbitrations, or to any governing athletic commission or sanctioning body, relating to TOP RANK’s accounting of its revenues, expenses, and profits.

• REQUEST NO. 2: Data in as granular form as it is maintained (itemized ledger entries, if they exist) sufficient to show all bout-related revenues and expenses (including for championship bouts, bouts where victory leads to championship, and all other Professional Boxing Events), payments made to individual Professional Boxers (including purses, bonuses, pay-per view, and any other event and non-event related payments), and non-bout related revenues and expenses.

• REQUEST NO. 3: To the extent not included in Your response to Request Nos. 1 and 2 above, documents sufficient to substantiate Bob Arum’s statement that TOP RANK pays 80% of event revenue to the Professional Boxers who participate in bouts promoted by TOP RANK….

• REQUEST NO. 4: A Representative Sample of All Agreements between TOP RANK and any Boxers, relating to participation in a Professional Boxing Fight or Professional Boxing Event, and any Documents and Communications relating to the negotiation, termination, cancellation or transfer thereof. Responsive Documents include, without limitation, executed Agreements, draft Agreements, side letters, all negotiations between TOP RANK and any Boxer, including any Professional Boxer,
or their agents, managers, promoters, or other representatives (regardless of whether such negotiations resulted in an executed Agreement), copies of any form agreements; and all Documents relating to the effects any such actual or potential Agreements between TOP RANK and any Athlete, including any professional Boxer, had on TOP RANK’s revenues, valuation, or ability to operate profitably as a Boxing Promoter.

Zuffa Plaintiffs claim that the information is vital for their case and that the UFC denied the differences between boxing and MMA in its answer to the lawsuit with the inference that they were interchangeable.  Notably, in its Reply brief it claimed that the business of promoting fights is the same for all combat sports.

Payout Perspective:

Plaintiffs Reply Brief includes quotes from Lou DiBella and Dana White’s deposition but most of the citations are redacted.  The order which spells out what Top Rank and the Plaintiffs had agreed upon is heavily redacted so we specifically do not know what the parties agreed to provide and whether or if the deposition of Bob Arum will take place.  It could be that Top Rank agreed to provide a portion of documents so long as Arum is not deposed and/or someone else within the company is deposed.

Nevada Court denies Zuffa’s Motion for Partial Summary Judgment dismissing Nathan Quarry…for now

September 26, 2017

Judge Richard Boulware has denied Zuffa’s Motion for Partial Summary Judgment to dismiss plaintiff Nathan Quarry from the lawsuit.  However, the Court has indicated that Zuffa may refile at the close of discovery.

In a minute order issued on Tuesday, the Nevada Court determined that the motion for summary judgment to dismiss one of the plaintiffs in the Zuffa antitrust lawsuit was premature.

“The arguments raised in these motions would be more properly considered with the full set of motions that will be filed at the close of discovery,” stated the minute order issued by the Court in denying the motion at this time.  “IT IS THEREFORE ORDERED that Motions for Partial Summary Judgment are DENIED without prejudice to being refiled at the close of discovery.”

In this context, without prejudice is legal terminology which indicates that a party’s rights are not precluded from refiling.

Oral arguments were heard on September 21st for a little over an hour.  Zuffa claimed that due to antitrust statute of limitations, Quarry’s alleged claims of injury were barred by his promotional agreement.  The former UFC fighter argued that his claims still exist as the UFC still use Quarry through the selling of merchandise on its web site and showing his fights on UFC’s Fight Pass.

Payout Perspective:

It appears that Judge Boulware would like to see all of the facts that may come out in fact discovery prior to hearing the dispositive motion set forth.  It’s also clear that he anticipates Zuffa to file a motion for summary judgment on all of the plaitniffs.  At this point, he believes that the motion was premature.  In my opinion, dismissing a plaintiff on summary judgment prior to the close of discovery is rare considering the information that may surface during the fact-finding process.  It’s not clear if there will be any further opinion released past this minute order.  MMA Payout will keep you updated.

Washington state court moves Hume/OneFC discovery dispute to Vegas

September 25, 2017

A federal district court in Washington state has decided to grant the plaintiffs motion to transfer the discovery dispute it has with Matt Hume and OneFC to Las Vegas.  The magistrate handling the Zuffa lawsuit discovery issues will determine the outcome of plaintiffs’ motion to compel Hume’s deposition and documents from OneFC.

Similar to a federal court in LA transferring Bellator’s dispute with the plaintiffs and the UFC in a discovery dispute earlier this year, the federal court judge determined that the complexity of the case and the familiarity with the subject matter were defining reasons why the case should be transferred to Nevada.  Hume, who resides in Washington state, filed a motion to quash a subpoena and objected to document requests by the plaintiffs in the UFC lawsuit.

In addition to being the trainer for Demetrious Johnson, he is an officer within OneFC.  The plaintiffs in the antitrust lawsuit filed against Zuffa had requested documents from OneFC and Hume’s deposition as it relates to their litigation.  Hume had provided a written declaration in which he stated that “One Championship is not a minor league or feeder league for the UFC” and it “competes with Zuffa to sign professional MMA fighters.”

Plaintiffs wanted documents supporting Hume’s statement and also to depose him.  Hume’s Washington state attorneys objected to the deposition and document requests citing that it was an attempt to make an end around from requesting documents from the Singapore-based company.  It also argued that Hume did not have access to the documents requested.  In response, plaintiffs filed a motion to compel and requested attorney fees in excess of $21,000 dollars.

Payout Perspective:

Once again, a federal court decides not to intervene in a nonparty discovery dispute despite the fact that one of the residents in its jurisdiction is seeking relief.  While I understand the court’s reasons to punt the motion to Nevada, it appears that this type of hand off is oppressive for the non-party resident.  However, unlike the Bellator case, Hume did avail himself to the lawsuit by submitting a declaration.  It is within the right of the plaintiffs to seek Hume out for his deposition as well as documents related to the statements.  With the case moving to Nevada, we shall see how the magistrate determines the dispute.

Zuffa to hand over 6 documents previously privileged in Antitrust lawsuit

August 9, 2017

The Court in the UFC Antitrust Lawsuit has reviewed 86 documents from the company’s privilege log which identifies documents that it is withholding due to Attorney Client Privilege.  Of the 86, it has ordered it hand over 6 documents from the list.

The Order, dated August 4, 2017, relates to an Emergency Motion to Compel Production of Documents Withheld on Privilege Ground and for Other Relief.  Plaintiffs had requested the motion be decided before depositions scheduled in mid-July and early August.  The Court could not comply with the request but required Zuffa to produce 25% of Dana White’s documents withheld on the basis of privilege for “in camera” review.  This essentially means that the Court reviews the withheld documents to determine whether or not they are privileged.  Due to the voluminous amount of documents, the Court requested a sliver of the documents.  Of 86 total documents reviewed, 6 were deemed not privileged.

Order re In Camera Review by JASONCRUZ206 on Scribd

In general, documents that are cited as Attorney client privilege are those in which ask an attorney for its legal impression, opinion or asking for legal advice.

The Order below details the documents.  Briefly, they are:

  1. An August 16, 2011 press release which UFC claimed was reviewed by legal counsel. The release was about an agreement reached with Fox.  Likely, the news of the rights agreement with the network.
  2. An October 3, 2006 email chain between Kirk Hendrick (UFC legal counsel) to Lorenzo Fertitta which appears to be about a bonus for Mirko CroCop for signing a contract.
  3. An October 8, 2007 email chain regarding a “Joe Hand Update.” Hand is the PPV distributor for the UFC.  It appears to be negotiations between the two sides related to a new deal.
  4. A May 23, 2003 email which claims to be providing legal advice regarding broadcasting agreements. It is an email from Hendrick to Lorenzo Fertitta and Dana White regarding “iN Demand and DirecTV paying for Lindell (sic) vs. Ortiz?”  According to the Order it requests, “input from the recipients about Mr. Hendricks’s proposal for “aggressively” telling Zuffa’s PPV partners to reduce their fees for major fights.  The last paragraph of the email does include legal advice which the Court will require Zuffa to redact prior to disclosing.
  5. A September 29, 2008 email from Hendrick to Lorenzo Fertitta, Dana White, Lawrence Epstein and John Mulkey regarding “our final draft” of an agreement with Affliction. It relates to an agreement “Zuffa believes it reached with Affliction.”  It is hard to decipher whether the acquisition was related to the clothing brand or short-lived fight promotion or something else.
  6. An October 10, 2005 email chain which discusses the dollar amount of a media buy Zuffa will purchase from DirecTV. There were portions of the chain that was produced but an email between Bonnie Werth of the UFC and Hendrick were not disclosed.  The Court determined that Werth did not ask for legal advice from Hendrick and privilege does not apply.  Werth discusses Zuffa’s evaluation of DirecTV net revenue from 2003 to 2005 without UFC media buys and provides the media buys Zuffa is willing to purchase.

Payout Perspective:

In certain instances, in the discovery process, when documents which include an attorney on them or in the email chain, it is flagged by attorneys as the potential as having attorney-client privilege.  Did the UFC withhold documents on purpose or were they being aggressive with its protection of possible privileged information?  Maybe both.  Notably, the Court could only review a smattering of documents and thus there might be documents UFC has in its possession that are still withheld that should not be.

Zinkin Entertainment ordered to produce more documents to Plaintiffs in Zuffa Antitrust Lawsuit

August 3, 2017

Last week a Federal Court in Fresno, California has ordered MMA Fighter Management firm to hand over more documents in the UFC Antitrust Lawsuit.  The fighters suing the UFC had requested documents from the company related to Zinkin’s clients within the requisite period of time related to clients’ “image and likeness.”

Plaintiffs have offered to provide a third party discovery vendor to Zinkin to collect this information at Plaintiffs’ expense per Court Order.  The MMA Management firm which currently represents Luke Rockhold and Daniel Cormier was served a subpoena by Plaintiffs in 2015.

Zinkin Entertaintment – Order to Produce Docs by JASONCRUZ206 on Scribd

Payout Perspective:

Zinkin had produced documents to the Plaintiffs but based on the motion Plaintiffs believed the documents to be insufficient.  The documents are being produced as “Attorney Eyes Only” which means that only the Plaintiffs’ Attorneys, and not their clients – the fighters, will be able to have knowledge of these documents.  This designation usually occurs where sensitive and confidential information is provided.  It provides some security that the discovery documents are not disclosed to a broad group of people.  It is a condition that Zinkin’s attorneys likely wanted if they had to produce documents.

Parties stipulate to legal briefing schedule contesting Matt Hume deposition

July 31, 2017

The Motion to Compel the deposition of Matt Hume and have him produce documents has been given dates for legal briefing.  But, Plaintiffs seeking the deposition will also face a Motion to Quash from Hume’s attorneys and OneFC.

The parties in the discovery dispute agreed to a briefing schedule.  Originally, the Motion to Compel was to be submitted on July 28th.  However, Hume’s attorneys also filed a Motion to Quash the Deposition as they believe that the deposition notice and subpoena are not valid despite the Nevada court ruling.  With a looming discovery deadline and the parties having dueling motions, they came together to stipulate to when the oppositions and replies would take place.

The briefs will be due July 31st with the reply briefs due August 4th.  It does not appear that there will be oral argument although its not clear.

Plaintiffs are seeking over $21,000 (and perhaps more) in legal fees in addition to commanding Hume sit for a deposition and produce documents.  Hume’s attorneys are seeking to invalidate the subpoena and request for documents.  Hume’s attorneys had offered him for deposition on a limited number of documents.  But, Plaintiffs did not agree to the limited scope.

Order on Stipulation between Plaintiffs and Matt Hume by JASONCRUZ206 on Scribd

Payout Perspective:

One would assume that the Court will have a decision shortly after submission of the briefs since the discovery deadline for fact discovery was/is today, July 31st.  Expect an order which will allow the deposition with some disclaimers.  MMA Payout will keep you updated.

Plaintiffs in UFC Antitrust lawsuit file Emergency Motion to Compel

July 1, 2017

On Friday, Plaintiffs in the Zuffa Antitrust lawsuit filed an Emergency Motion to Compel citing the UFC’s withholding of 30,000 documents due to alleged privilege.  The Plaintiffs are requesting an expediting hearing on the matter for July 13, 2017 due to the pending fact discovery deadline of July 31, 2017.

The motion states that the UFC has withheld documents citing privilege which Plaintiffs deem are too broad.  The parties have “met and conferred,” a requisite process in which the opposing sides are to make a good faith effort to resolve their discovery disputes.  However, as likely predicted, the parties are at an impasse.

Central to the dispute is the fact that the privilege log of withheld documents provide vague descriptions from which Plaintiffs cannot assess whether it is truly a privileged document or not.  Plaintiffs contend that the privilege log is not per the rules of discovery.

The Plaintiffs are requesting that the UFC produced non-privileged documents within 5 court (business) days and a revised privilege log.

Payout Perspective:
Privilege logs are a list of documents that parties provide to the other side to let them know that they are withholding the information but there is a valid reason (i.e. attorney-client privilege).  Usually the key in determining if a document is privileged if its from an attorney to a client and it contains or provides legal advice.  The interpretation of this meaning is used narrowly by parties seeking documents and broadly by those seeking to protect the disclosure.  You can predict that the UFC will oppose this motion and will be upset due to the shorter time to respond.  MMA Payout will keep you posted.

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