August 8, 2016
The letter-writing battle between parties in the Wilder-Povetkin lawsuit is heating up as the parties have exchanged terse letters with the court about Wilder’s Motion to Dismiss the Povetkin lawsuit.
For background on the lawsuit, you can look here. Long story short, a bout between Deontay Wilder and Alexander Povetkin set in Russia for this past May was called off by the sanctioning body due to the fact that Povetkin tested positive for Meldonium. While the positive drug test is a factor in the subsequent events that transpired, it was not the key trigger which the parties are seemingly battling over.
At this point, the parties are fighting over Povetkin’s request to release over $4 million in funds lodged in an Escrow Account related to the WBC calling off the fight. Wilder’s attorneys notified the escrow agent not to release the funds. Povetkin’s attorneys claim that this was against the terms of the agreement and as a result it constituted a breach which triggered a liquidated damages clause of $2.5 million. Povetkin’s attorneys also claim that the fight was called off due to the fact that Wilder never intended to go to Russia for the fight. Thus, it was Wilder that breached his contractual duty to the escrow agreement as well as the bout agreement. In addition, Povetkin filed a defamation claim against Wilder and his promoter as a result of the comments regarding failing a drug test.
While the Motion to Dismiss was filed in late July, the court in which the lawsuit is assigned has a rule in which the parties must submit a 3 page letter as part of Pre-Motion Conference prior to filing of a Motion to Dismiss. The letter is to outline the reasons for the motion and give the non-moving party a chance to amend (change based on the argument) the Complaint. Povetkin’s attorney identify this misstep last week as well as arguing its claim to the court.
While Wilder’s attorney gloss over their missteps in a letter to the court dated August 5th they take direct aim at Povetkin’s attorneys for its substantive arguments to the Court. Povetkin’s attorneys responded to the letter and requested a Pre-Motion Conference.
July 27, 2016
UFC has renewed its broadcast rights partnership with United Kingdom and Ireland provider BT Sport per press release.
The deal allows for BT Sport to the exclusive right to air live UFC events throughout the UK and the Republic of Ireland. The deal allows for BT Sport to show over 150 hours of live UFC coverage including all of the numbered UFC PPVs and all EMEA (Europe, Middle East and Africa) events. Terms of the deal were not disclosed although the deal will run through 2018.
According to the Daily Mirror, there was some competition for the UFC rights deal with Sky.
The timing comes prior to the big Conor McGregor-Nate Diaz rematch at UFC 202 which should garner a lot of viewers in the UK and Ireland due to Conor. The deal solidifies the UFC’s broadcast deal in an area with which they hope to grow with the new ownership.
July 20, 2016
The Zachary Light-Bellator lawsuit in California is getting personal. Bellator has filed a Cross-Complaint against Light stating that he stole money from the company and did not pay back a loan given to him due to the fact he was in financial trouble.
Light filed the lawsuit claiming wrongful termination back in May in Los Angeles Superior Court. Bellator was granted an extension to respond to the Complaint and it’s also filed its own Complaint against Light filed July 12th.
The cross-claim digs right into Light stating that Light told Bellator, that, “despite his sizable income, he had difficulty managing his family budget and was experiencing financial distress.” Bellator loaned Light $9,403.00 and entered into a written agreement to pay back the loan. Bellator attached a copy of the alleged agreement as an Exhibit to its Cross-Complaint. The company also claims that Light stole $4,600 in cash from VIP ticket sales from Bellator 136. Bellator claims Light now owes $5,050.00 plus interest.
Conversion, the civil claim alleged by Bellator, is essentially stealing. It also claims theft under California law and a breach of written contract which alludes to the purported failure of Light to repay the loan.
Bellator claims that as part of his job, Light “would collect the money he received from the sale of consignment and VIP tickets in connection with Bellator events, and remit the money to Bellator personnel shortly after he received it from purchasers.” He would then give the money to Bellator’s Chief Financial Officer, Michael O’Roark or Jane Estioko, Manager of Talent Relations. However, Bellator claims that Bellator remitted to Bellator “at least some of the money” he failed to give “thousands of dollars he collected.” The Monday after the event, Bellator 136, Light did not report for work citing medical reasons.
With respect to his financial issues, Light and Bellator entered into an “Authorization for Deduction” on December 18, 2014 for $6,974.57 in which he would repay the loan in monthly installments of $240.50 from his paychecks. It also appears that Bellator was charging him interest on this loan. The exhibit to the Cross-Complaint is below.
Light will have an opportunity to respond to these allegations. Obviously, these claims were filed as a result of Light’s lawsuit. The lawsuit is turning personal as Bellator infers the fact Light has had financial difficulties throughout. The loan was from December 2014 and the alleged theft occurred in April 2016. Were there any other issues in between this time that Bellator is holding back for the lawsuit or are these two issues the only claims against Light? Certainly Light will deny both claims.
The one question is why would Bellator give Light the responsibility of handling money on the company’s behalf if it believed he had an issue with finances. MMA Payout will keep you posted.
July 18, 2016
On Friday, Brock Lesnar was flagged by the United States Anti-Doping Association (USADA) of a potential violation of the UFC anti-doping policy due to an out of competition test from June 28, 2016. Although testing results of Lesnar’s “B” sample are yet to be revealed, the fallout from Lesnar’s appearance hurts the UFC and possibly the WWE.
On June 5, 2016, it was announced that Lesnar would fight at UFC 200 on July 9, 2016. The signing was unprecedented because he was under contract with the WWE. Yet, the WWE granted Lesnar the chance to fight in the Octagon once again. Despite the fact that the WWE has its own drug testing policy (known as the Wellness Policy – Lesnar has never been flagged for a violation), Lesnar was tested by USADA eight times in just the month lead-up to his fight against Mark Hunt. He took 5 tests in the first two weeks after it was announced he was returning. Multiple tests came up clean.
Despite the tests, the UFC policy handled by USADA dictated that a returning athlete to the UFC most give the company four months written notice so that USADA can put the athlete in the pool of those it may selectively test. But, the UFC anti-doping policy allows an exemption for a returning athlete that may be subject to drug testing. Per 5.7.1 of the UFC anti-doping policy:
An Athlete who gives notice of retirement to UFC, or has otherwise ceased to have a contractual relationship with UFC, may not resume competing in UFC Bouts until he/she has given UFC written notice of his/her intent to resume competing and has made him/herself available for Testing for a period of four months before returning to competition. UFC may grant an exemption to the four-month written notice rule in exceptional circumstances or where the strict application of that rule would be manifestly unfair to an Athlete.
The key sentence here is the last sentence: “UFC may grant an exemption to the four-month written notice rule in exceptional circumstances or where the strict application of that rule would be manifestly unfair to an Athlete.”
Since the UFC Anti-Doping Policy did not begin until July 1, 2015 and Lesnar’s last fight in the UFC prior to UFC 200 was December 2011, he was considered a new athlete. There has not been an official statement as to whether the UFC granted the 4-month exemption due to an “exceptional circumstance” or if it was “manifestly unfair to an Athlete.” Of course, either waiver could be easily explained.
But, one has to think that Lesnar and the UFC had contemplated his return as he had been training prior to the June announcement of his return to the Octagon. One might suggest that Lesnar could have notified the UFC of his return in the requisite 4 months to allow for the proper testing to occur.
However, it would seem that the parties wanted the Lesnar announcement to be a surprise. Recall, that Ariel Helwani and others from MMA Fighting were thrown out of a UFC event and Helwani was banned for life due to his report of Lesnar’s return prior to the UFC’s opportunity to make it themselves. Helwani along with his colleagues were reinstated a couple days later.
Notwithstanding the notice issue, let’s take a look at what Lesnar could face as a result of testing positive for a banned substance. First, Lesnar’s “B” sample, a second sample taken to determine the validity of the finding in the first sample, must confirm the initial finding of a banned substance. If this happens, Lesnar will face discipline from Nevada and the UFC per the anti-doping policy.
Since the infraction took place in Nevada, Lesnar will have to appear before the Nevada State Athletic Commission to address the drug test failure. At that time, we should know what drug(s) Lesnar tested positive for in his out-of-competition sample. In 2015, Nevada adopted guidelines for combat sports which included a 36-month suspension and 50-75% of the purse for a first-time offender for someone taking anabolic steroids.
In addition, the UFC anti-doping policy would discipline Lesnar.
Under Section 10 for Sanctions on Individuals, Section 10.1 specifically states:
An Anti-Doping Policy Violation occurring during, or in connection with, a Bout may, upon the decision of UFC, lead to Disqualification of all of the Athlete’s results obtained in that Bout with all Consequences, including, without limitation, forfeiture of title, ranking, purse or other compensation, except as provided in Article 10.1.1.
Read broadly, under the UFC-USADA Anti-Doping Guidelines, Lesnar could have his purse for the bout and “other compensation” taken from him. It would hurt enough that Lesnar would lose out on his $2.5 million reported purse but “other compensation” could mean money he makes from his PPV “upside.”
Not only could that happen, but the section further states that UFC could fine Lesnar up to $500,000 per Section 10.10 of the UFC-USADA Anti-Doping Guidelines. In addition, he could have his win against Mark Hunt overturned to a no decision per discretion of the Nevada State Athletic Commission according to section 467.850. This would not sting as much since Lesnar did not have a win bonus to forfeit. Regardless, he still could have a substantial amount of money taken away.
The monetary fine would be the hardest penalty for Lesnar. The $2.5 million is the largest reported payout for a UFC fighter in its history. But, Lesnar was going to make more from his PPV guarantee. It is being reported that the UFC 200 PPV drew 1.1 to 1.2 million PPV buys. In most markets, the PPV for UFC 200 was $59.99 HD and $49.99 SD. Lesnar was projected to make $3-5 million in addition to his $2.5 million.
Mark Hunt, Lesnar’s opponent has demanded that he receive half of Lesnar’s $2.5 million or else he is requesting his release from his UFC contract. Hunt, who made $700,000 for taking on Lesnar, will be disappointed to learn that under the UFC-USADA guidelines, any money forfeited by an athlete would be under the UFC’s discretion “to be applied to offset the costs of the Program or given to anti-doping research.”
The UFC could also fine Lesnar pursuant to its Code of Conduct which imposes discipline based on misconduct. Under its Code, “misconduct” may include, “Conduct that undermines or puts at risk the integrity and reputation of the UFC.” A violation of its drug program could fall under this.
There is precedent for a fine as Jon Jones was docked $25,000 for failing a drug test in December 2014. Of course, Jones’ drug test failure was for cocaine use. We note that the detection of this drug was done out of competition and should have not been tested for according to the rules.
Lesnar’s only statement related to Friday’s news of his potential violation was a vague “we’ll get to the bottom of this.”
The WWE does not seem to be concerned with the potential violation and has indicated his next appearance will be at its big event Summerslam, August 21st. They have not addressed the potential violation. From its perspective, its an MMA matter, that a WWE matter.
However, the question looms as to whether a Nevada State Athletic Commission suspension would affect his wrestling career. Some state athletic commissions oversee professional wrestling. Most commissions honor suspensions of an athlete in other states. Would a suspension in combat sports carry over to professional wrestling? We will see.
June 26, 2016
Although Deontay Wilder is scheduled to fight Chris Arreola on Fox next month, he’s embroiled in a court battle against Alexander Povetkin and his promoter, Andrey Ryabinskiy due to a purported failed drug test which scratched the fight between the two.
On June 13, 2016, Wilder filed a lawsuit against Povetkin, Ryabinskiy and World of Boxing, LLC (“WOB”) for breach of contract and seeking the court for a declaratory judgment. In addition to the money that has been put up in escrow for the fight
10 days later, World of Boxing, Povetkin and Ryabinkiy (“WOB”) filed sued against Wilder, Lou DiBella and DiBella Entertainment, Wilder’s promoters. WOB is filing claiming causes of action for breach of contract as well as defamation.
Both lawsuits were filed in the U.S. District for the Southern District of New York.
Wilder and DiBella Entertainment, Inc. v. World of Boxing, LLC and Alexander Povetkin
The lawsuit claims breach of contract against WOB and Povetkin.
The facts, as told by Wilder’s attorney are below. Also added, are additional facts from the WOB lawsuit which we identify as well.
- The World Boxing Council (“WBC”) ordered Wilder and Povetkin (as the mandatory challenger) to begin negotiations for Wilder’s mandatory title defense of his WBC World Heavyweight Championship.
- No agreement could be made and a purse bid was ordered. WOB won the purse bid at a price of $7.15M. Notably, the WOB lawsuit claims DiBella’s bid was for $5.1M.
- The agreed payout would include 10% of the amount bid ($715K) to the winner as a bonus and then a 70-30 split thereafter. But, the parties still had to negotiate other parts of the fight including drug testing. The amount would also cover a 3% WBC sanction fee.
- According to the WOB lawsuit, Wilder would receive $4,504,500, Povetkin $1,930,500 and the winner would receive $715,000.
- Wilder’s side wanted to institute a drug program conducted by the Voluntary Anti-Doping Association (“VADA”).
- Negotiations continued but suspicions by Wilder’s camp about Povetkin’s use of performance enhancing drugs increased.
- With the parties at an impasse, the WBC stepped in and instituted an agreement on April 6, 2016. In the agreement, the drug testing program included VADA testing under the “WBC Clean Boxing Program.”
- Since WOB won the purse bid, the fight was to take place in Moscow, Russia on May 21, 2016.
- An agreement was signed on April 11, 2016. A copy is attached to the Wilder Complaint and is below.
- On April 19, 2016 an Escrow Agreement was entered into in which $4,369,365 was put into an Escrow (identified as Chicago Title in the WOB lawsuit). The Escrow Agreement contained a (confidential per Wilder’s attorneys) liquidated damages provision.
- Povetkin tested positive for Meldonium in an April 27, 2016 test.
- The WBC issued a ruling that the fight would not take place as scheduled.
- Wilder’s side advised the Escrow Agent not to disburse any of the money in escrow until it received a “joint instruction from the parties or a non-appealable order from a court of competent jurisdiction.”
Word of Boxing, LLC, et al. v. Deontay Wilder, et al.
The WOB lawsuit mitigates the finding that Povetkin tested positive for Meldonium. This substance was the same one that tennis star Maria Sharapova tested positive for and has received a two-year ban from the International Tennis Federation. In the UFC, Islam Makhachev tested positive for Meldonium and was pulled from the UFC on Fox 19 card. The ban on Meldonium was instituted by the World Anti-Doping Agency (“WADA”) on January 1, 2016. It was added to the list of banned substances and notice was given to athletes three months earlier in September 2015.
However, earlier this year, WADA acknowledged that there was a lack of clear scientific information on excretion times. Thus, this new revelation may actually overturn certain notices of infraction. In fact, this was noted by WOB’s attorneys in its lawsuit.
It argues that Meldonium found in Povetkin’s sample were traces and could not impact an athlete’s performance. It should be noted that both “A” and “B” samples found Meldonium. Povetkin admits to using Meldonim in 2015, prior to its ban. But, the facts reflect that he had a negative sample in April 7 and 8, 2016 but then tested positive in an April 27, 2016 sample.
WOB’s breach of contract claim cites that Wilder did not allow the WBC, the governing body for this fight, make a determination on the Povetkin drug test. Rather, Wilder and his promotion decided not to participate which WOB claims as the breach.
It also cites a breach of the escrow agreement with respect to the monies lodged in an Escrow Account which was to pay for the purses. WOB claims that since the bout did not occur, it should receive its money back from the trust but Wilder has “taken actions to prevent Chicago Trust from releasing such funds…including through a letter directing Chicago Trust to refrain from disbursing the Escrow Property to World of Boxing.
The defamation claim is rather unique as it claims Wilder and his promotion arm instituted a “Smear Campaign” against Povetkin. The WOB Complaint lists multiple news reports where it claims Lou DiBella and his promotion provided the outlets with false statements. WOB claims Povetkin did not cheat or lie and the “trace amounts” in Povetkin’s April 27, 2016 sample do not support the fact that he attempted to do so per the WOB lawsuit. WOB claims the statements were made to avoid their contractual obligation of Wilder having to fight in Moscow, Russia.
WOB is seeking $34.5M in its lawsuit. It is looking for the $4,369,365.000 in the Escrow Account and its defamation claim seeks $10 million.
Leave it to boxing to provide us with some of the more unique contractual legal issues in the sport. There is an issue of who breached the contract between the parties. Should Wilder have a claim due to the positive drug test from Povetkin? Or, does Povetkin side have an argument against Wilder for not following the WBC procedures? One has to think that Povetkin has a right to appeal the VADA ruling especially with the uncertainty of Meldonium. But, we see that the contentious negotiations between the parties have now spilled over into the courts. Wilder has found another fight in lieu of Povetkin. But, does Povetkin have a claim against Wilder for blocking funds to be returned to them in Escrow? It’s clear there is a liquidated damages provision in the Escrow Agreement of $2.5 million as both sides seek that it damages.
MMA Payout will keep you posted.
May 29, 2016
Showtime Networks, Inc. has filed a lawsuit in the U.S. District Court of New York against Top Rank, Inc. citing indemnification and breach of contract related to lawsuits filed by third parties against Showtime and Top Rank stemming from Manny Pacquiao’s claim that he fought with an injury against Floyd Mayweather, Jr.
The lawsuits, filed by individuals who purchased the PPV claimed that Pacquiao was not ready to participate in the fight because of an injury in early April 2015 and it was not disclosed. Most of the lawsuits point to the Pre-Fight Medical Questionnaire provided by Pacquiao which seemingly misrepresented the injury by not disclosing it.
Under the terms of an agreement between Showtime and Top Rank, Top Rank was to defend and indemnify Showtime from any liability (i.e., lawsuits) and supply Showtime with its own legal counsel. Showtime’s attorneys point out that a potential conflict occurred when Pacquiao did not notify officials of a shoulder injury prior to the Mayweather fight. According to the lawsuit, Showtime demanded that Top Rank pay for Showtime’s legal representations once these lawsuits were filed due to the potential conflict. Top Rank claimed that the terms of the agreement which would trigger Top Rank to defend and indemnify Showtime would be an instance of actual conflict between the parties. Per the lawsuit, Showtime claims that Top Rank did not believe that there was a conflict.
The relevant indemnification language of the Showtime/Top Rank contract is below:
— Jason Cruz (@dilletaunt) May 26, 2016
Showtime also claims that Top Rank threatened to assert its own indemnity claims against Showtime. Top Rank claimed that Showtime promotional materials for the fight were relevant in relation to claims of breach of contract filed by plaintiffs. Thus, Top Rank requested the same defend and indemnification that Showtime had been of Top Rank.
Despite the refusal to pay for its attorneys, Showtime defended the lawsuits it was named in. The legal fees through May 12, per the lawsuit is $682,754.06 plus interest. Showtime seeks to recoup this plus fees and costs of the lawsuit in this action.
It’s clear that this was bound to happen. Once Pacquiao claimed the injury post-fight, the lawsuits started to pour in from plaintiffs’ attorneys and they were going to name any and all entities in its complaints. The lawsuit presents the question of what is a conflict and what is not and when the right to indemnify and defend took place. Showtime claims that the unreported injury should have triggered the indemnification in the contract while Top Rank will likely deny this citing no conflict at the time.
We will keep you updated.
May 25, 2016
Zachery Light has filed a lawsuit in Los Angeles Superior Court against Bellator MMA and Viacom citing wrongful termination based on public policy. Light, a former MMA fighter and employee of Bellator, claims various wrongdoings while working under Scott Coker.
The lawsuit was filed on Tuesday by Light’s attorney, William Crosby.
Light, a former amateur wrestler and MMA fighter, was hired by Bellator and worked under Bjorn Rebney. He became Bellator’s Talent Development Manager. The lawsuit states he was soon promoted to Talent Development Director. He was praised for his work and “received the highest ranking on his annual reviews.”
The Complaint notes a shift of business culture when Viacom acquired Bellator and Scott Coker took over.
Light alleges that in September 2015, he became aware of a number of instances in which Bellator “failed to observe and knowingly disobeyed laws enacted to protect the health and safety” of MMA fighters. Notably, the California law requiring a medical clearance examination by a licensed physician for participants in a MMA fight. Light claimed that “a reliable source” at Bellator 126 noted that Ryan Martinez’ blood and eye medicals that were submitted to the state of Arizona “were admittedly forged.” Martinez lost his fight to Nick Rossborough.
At Bellator 131 in San Diego, Light learned from “reliable sources” that “a number of fighters on the card had submitted California state-required medicals” by Adam Rendon. Rendon, the lawsuit claims, was not a licensed physician and this was in violation of California law. Bellator 131 was the first “tentpole” event of the Coker-era which featured Stephan Bonnar fighting Tito Ortiz.
The lawsuit claims that Light talked to Rich Chou, Bellator’s Vice President of Talent, prior to Bellator 126. Chou indicated to Light that he would follow up but when he did not here from Chou he approached Scott Coker. According to the Complaint, “Coker told plaintiff (Light) “to do what Chou told you to do,” without addressing these issues.” Light went back to Chou who, according to the lawsuit, stated he would be terminated if he (Light) “kept pushing the issue.”
Light went back to Coker to question about Rendon. According to the Complaint, Coker told plaintiff, “a lot of people at Bellator are going to lose their jobs next week. Do you want to keep yours?”
In addition, the Complaint claims that Coker pressured Light into promoting collusive fights in violation of the Sarbanes-Oxley Act. The lawsuit alleges that Coker disliked manager Anthony McGann. Rampage Jackson and Cheick Kongo were managed by McGann at the time and the Complaint claims that Light was instructed to “convince Kongo to fire McGann as his manager.” Light was influenced by Coker to have Kongo fire McGann and have him sign a new promotion agreement or he (Light) would be fired.
Light was instructed to arrange fights for McGann-managed fighters under contract in Bellator with opponents “who would convincingly defeat them.” This would apparently allow Coker the pretext to cut ties with McGann and his fighters. The lawsuit makes a point of indicating that “[s]uch collusive matches were tantamount to fight fixing…”
Under the Sarbanes-Oxley Act whistleblower provisions, employees in privately held subsidiaries of publicly traded companies who assist in an investigation into an employer’s violation are protected from employer retaliation. Under the California Business and Professions Code, there is a similar provision claimed by Light.
Light also indicates that in “late 2014 and early 2015,” Mike Kogan was hired by Bellator in an executive capacity. Kogan, who Light alleges is a “close friend” of Coker claims that Kogan was “paid management commissions for fighters he represented in bouts that occurred with defendant Bellator.” This would be a “serious conflict of interest” and violation of California law.
The lawsuit states that due to stress-related to Coker and Chou refusing to follow laws and regulations and “requiring plaintiff to engage in illegal practices as a condition of keeping his job,” Light suffered an anxiety attack. The health scare occurred on April 10, 2015 after Bellator 136 on the campus of UC Irvine. He was taken to the emergency room and diagnosed with severe depression and anxiety. Light had to take an extended medical leave. He was cleared to return to work without restrictions on March 10, 2016 but was terminated on March 17, 2017 via a letter. He was advised that “his job was no longer available.”
This will be an interesting case as it goes forward. Since it was filed just yesterday, there’s still a lot to digest about the claims. As with many wrongful termination lawsuits, the allegations are salacious and may or may not be true. One would expect Bellator to deny the claims and file a motion to dismiss – none of which is earth-shattering. Obviously, the claims present a public relations issue as the company in support of amending the Ali Act to include MMA fighters are accused of doing things that oppose the protections claimed in the Ali Act. Also, the conflict between promoter and manager rears its head in another MMA promotion. We shall see about the veracity of the claims and how will Bellator address them.
MMA Payout will continue to follow.
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.
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.
November 24, 2015
The Las Vegas Review Journal reports that the Federal Trade Commission has ended its second investigation of Zuffa without any findings of wrongdoing of the company’s business practices. Although the investigation has ended, the FTC indicated that it reserved the right to investigate the company again if it saw a need.
In a letter to Zuffa from the FTC, it indicated that the closing of the investigation should not be construed that a violation may not have occurred, just as the opening of the investigation should not be construed that a violation had occurred.
UFC’s Chief Legal Officer Kirk Hendrick issued a statement on the FTC’s decision:
“Earlier this year the FTC informed us that it was conducting a non-public investigation, which we believe was instigated by former fighters or their attorneys to bolster a civil action against UFC,” Hendrick added, “After meeting with the FTC, we are pleased that they have sent us a letter stating that no further action is warranted and the investigation is now closed. We maintain full confidence in our business practices and continue to believe that the plaintiffs’ allegations are meritless.”
The letter from the FTC, obtained by the Las Vegas Review Journal is below:
The FTC investigated Zuffa after it had acquired Strikeforce in 2011. The investigation came to close with no findings in early 2012. A Freedom of Information Act request for documents from that first investigation revealed little as to their investigation.
Although the reason for the second investigation was not made public one might conclude it was due in part to the antitrust lawsuit filed by former UFC fighters.
Good news for the UFC as it is clear of the investigation. Moreover, it need not dedicate legal resources for this. The FTC indicated that it may revisit the issue but one would think it is unlikely to occur unless something comes out of the antitrust case.
October 18, 2015
Al Haymon won a round in federal court in Los Angeles on Friday as he was successful in dismissing an antitrust lawsuit filed by Top Rank Boxing. The court gave Top Rank the ability to amend their complaint by October 30, 2015.
The motion to dismiss Top Rank’s First Amended Complaint by Al Haymon, et al. was heard without oral argument by the court.
The court dismissed all of three antitrust claims brought by Top Rank against Al Haymon citing that it failed to allege “antitrust injury.” The order states that it specifically failed to allege injury “to itself or to competition.”
Top Rank accused Al Haymon of 3 primary issues in its antitrust claim:
-Tie Out Contracts and “Sham Promoters”
-Predatory “Payola” Practices
Per the Court order:
…as the Haymon Defendants point out, Top Rank has failed to allege how it has been injured by the alleged conduct. Indeed, it has not identified a single bout that it has attempted to promote but was precluded from promoting by the Haymon Defendants, a single venue from which it has been blocked, or a single network that has refused to broadcast a fight promoted by Top Rank. Top Rank correctly argues that competitors who are “frozen out” of a market by an antitrust violation have suffered antitrust injury and possess antitrust standing. However, Top Rank has failed to allege any facts demonstrating that it has actually been “frozen out” by any of the Haymon Defendants’ conduct.
Notably, the court dismissed defendant Waddell & Reed Financial, Inc., Waddell & Reed Investment Management Company, Ivy Investment Management Company and Media Group Holdings (“Waddell Defendants”) without the ability for Top Rank to amend their complaint as the Court deemed it would be “futile.” Waddell was the alleged financial investor and adviser for Haymon et al. as they provided the money for PBC. Despite its liberal policy favoring amendments, the Court noted that Top Rank has had the opportunity to amend its pleading and finds no amendment would persuade the Court that it has a claim against Waddell.
To survive a motion to dismiss, Top Rank had to allege market power or economic power in the relevant markets by Haymon, et al. Top Rank identified the relevant markets as 1) the market for managing Championship-Caliber Boxers in the U.S. and 2) the market for the promotion of Championship-Caliber Boxers in the U.S. Although the Court noted that these market definitions may not defeat a summary judgment motion, it may surpass a motion to dismiss.
The Court indicated that while Top Rank may define the relevant markets, it failed to adequately allege market power or economic power within those markets. Specifically, the court notes that Top Rank does not provide “facts or figures” concerning Championship-Caliber Boxers (i.e, how many there are, how many promoters, promote them, how many managers manage them, etc.). The court also takes issue with Top Rank’s allegation that Haymon’s market share is greater than 50%. Here, the court finds no factual evidence of how Top Rank arrived at the figure and whether it is limited to the management of “Championship-Caliber Boxers.”
As a result of its inability to show that Haymon, et al. possessed market or economic power in the management market, it could not show that it tied together the sale of two distinct services of managing and promoting Championship-Caliber boxers. Although Top Rank argued that the illegal tying arrangements may be in “consent” clauses in the Haymon contracts, Top Rank did not provide any factual allegations showing such clauses in fighter contracts which purported that a fighter was bound by the same manager and promoter.
In addition to the antitrust claims under the Sherman Act, the court dismissed a claim under the Clayton Act for injunctive relief due to the fact there was no showing of claims under the Sherman Act. In addition, state law claims under the California law were deferred if and when Top Rank amends its complaint. If it does not, the court will not rule on the state law claims.
It’s interesting to note that Top Rank had sought the deposition of an officer from the Waddell Defendants prior to the ruling. A deposition was noted for October 7th according to the court record but we assume that did not happen pending the ruling. It was likely the hope that Top Rank could establish a link between the Waddell Defendants and its case. However, with the court ruling, Top Rank would have to appeal the order for them to bring back Waddell into the case. Look for Top Rank to file an Amended Complaint with specific allegations. Despite the court dismissal, it invites Top Rank another shot at filing a complaint. This might be interesting foreshadowing for some of the issues in the Golden Boy-Al Haymon antitrust case ongoing in Los Angeles. Essentially, the court did not find Top Rank established sufficient facts that Al Haymon, et al. had market power/control over the relevant markets. One of the arguments here is that this information might be obtained through discovery (i.e., contracts, venue contracts, etc.). The court seemed definite that there must be some concrete factual allegations for Top Rank antitrust claims to go forward. MMA Payout will keep you posted.