February 17, 2015
Although the UFC and Draft Kings have yet to formally announce an exclusive sponsorship deal in which the fantasy sports operator will become the company’s official sponsor, the two organizations have something in common: people filing class action lawsuits against them.
As The Legal Blitz brought to light in his ATL Redline post, the Boston-based DraftKings is being sued in federal court in Florida claiming that DraftKings violated the Florida Deceptive and Unfair Trade Practices Act.
Essentially, the lawsuit claims that Draft Kings misrepresented the term “free” in its advertisements in order to induce consumers to deposit money to the website. Commercials and ads which indicate “free sign-up bonuses” that match up to 100 percent of deposits for the site are untrue according to the complaint. As described in the complaint, customers must enter fantasy contests and receive bonuses “in incredibly small increments” and rather than the 100 percent deposit match, they receive just 4 percent of every dollar they play.
In this case, the named plaintiff deposited $25 and only received $1 in return when he played in the fantasy contests. It’s likely that if this case gains momentum, there will be lawsuits all over the country simulating this according to The Legal Blitz.
But, as he points out fantasy sports players registering with DraftKings probably did not know that they agreed to mandatory arbitration. He points out a 2013 U.S. Supreme Court case which dictates that arbitration provisions are binding and enforceable.
While this may not be the ultimate result in litigation, it’s probably a likely outcome.
It’s always advisable to have arbitration agreements in contracts to reduce the potential of litigation as well as control the potential legal costs. Many things that people sign have these types of clauses. The way the clause is drafted is the ultimate issue on whether it may be enforced. The class action lawsuit filed here is an interesting take on the fantasy sports “gaming” industry and how closely it resembles actual gambling. Obviously, the enticements about “free” are stretched and while many consumers were likely duped into thinking that they’d be getting an incentive for playing, they will probably “let it go” in order to play. Unfortunately, Zuffa probably does not have as easy a road to resolving its class action lawsuit.
January 2, 2015
MMA Payout takes a quick review of 2014 in the sport of boxing.
2014 was an interesting year for the sport as boxing began to expand with more PPVs than the standard Pacquiao and Mayweather bi-yearly events.
Canelo Alvarez faced Alfredo Angulo in March (the event drew an impressive 350,000 PPV buys), Sergio Martinez faced Miguel Cotto in New York in June (although projected to score 475,000 PPV buys, it drew just an estimated 350,000) and Alvarez returned in July to headline a PPV with Erislandly Lara (it drew an estimated 300,000 PPV buys). There were also hints of Gennady Golovkin fighting on PPV although that never came to fruition.
Floyd Mayweather fought Marcos Maidana twice this year. After May’s Mayweather PPV (in which it reportedly drew 900,000 PPV buys), Showtime President Stephen Espinoza informed the media that it would no longer release PPV buy numbers unless the event sets a PPV record. However, after the second fight in September, it was revealed that the rematch drew 925,000 PPV buys.
Manny Pacquiao’s days as a PPV draw seem to be waning. Although his rematch with Tim Bradley drew an estimated 750-800K PPV buys, it was down from the near 900K PPV buys in their first fight. Although nothing official has been released, the Manny Pacquiao-Chris Algieri fight in November drew between 300,000 to 400,000 PPV buys depending on who you asked. If this number is correct, it’s a huge drop off for Pacquiao. This would be a likely reason why the push for the mythical matchup with Floyd Mayweather.
In October, ESPN’s Dan Rafael posted the top events in 2014 thus far. Julio Cesar Chavez vs. Brian Vera 2 drew 1.39 million viewers with a peak of 1.53 million. The ratings were for only that fight and not the entire card airing on HBO. HBO dominated the top rated boxing events on cable (premium and/or regular) and Showtime did not crack the top 10. Still, the competition between the two premium cable channels seemed to heat up in 2014.
With the Kovalev-Hopkins fight, we may see the cold war between Top Rank and Golden Boy softening. Yet, Al Haymon still is one of the unseen, most powerful men in the business.
There were several notable lawsuits in 2014.
First, Main Events Promotions, the promoter for Sergey Kovalev sued Al Haymon, Golden Boy, boxer Adonis Stevenson and others for backing out of a potential fight between Kovalev and Stevenson. The lawsuit was dismissed as the parties settled when Kovalev got his big fight against Bernard Hopkins.
Next, Andre Ward lost a California State Athletic Commission arbitration hearing this past spring against his promoter Goosen Tutor Promotions. Ward then turned around and sued him in Federal Court alleging violations of the Muhammad Ali Boxing Reform Act.
Mikey Garcia sued Top Rank alleging issues with his contract including violations of the Muhammad Ali Boxing Reform Act. The lawsuit was transferred to Nevada as Garcia originally filed in California.
Don King was found in breach of contract when his fighter failed a drug test for an event in Russia in 2014.
In addition to these lawsuits, there were major shakeups at Golden Boy with former CEO Richard Schaefer leaving Golden Boy. But, it appears to be a messy divorce with Golden Boy seeking $50 million in private arbitration.
Just like MMA, 2015 should be an interesting year for boxing.
December 29, 2014
The manager for Rampage Jackson issued a statement regarding the reasons it left Bellator and signed with the UFC per a report with MMA Fighting. Jackson’s management cites Bjorn Rebney as the source of the contractual irregularity with Bellator and its subsequent reasons it left the company.
Per Lee Gwynn, Jackson’s manager, Jackson was disenchanted with Bellator and decided to leave. According to Gwynn, in addition to a Bellator contract, Bjorn Rebney offered a Paramount movie deal, a Spike TV reality show and a TNA pro wrestling contract. Gwynn interpreted these additional incentives as creating an entertainment contract rather than a normal fight contract. He also included a PPV payment model for Jackson.
It appears from the statement that the PPV buys did not meet Jackson’s incentives in his contract and they looked to renegotiate the structure at that point. However, Rebney was replaced by Scott Coker.
As Gwynn interprets the contract with Bellator as an entertainment contract, they claim that there was a 45 day notice to list the grievances it had with the company and the company had time to rectify the issues. Obviously, with Jackson signing with the UFC, Coker was not able to satisfy Jackson’s concerns. Per Gwynn’s statement it gave Bellator 70 days instead of the requisite 45 days.
Gwynn indicated that his lawyers, UFC lawyers and “an outside law firm” agreed with Jackson’s position that terminating the Bellator contract was “legitimate.”
This is obviously one side of the story. But, Jackson’s reps paint the picture that Rebney is to blame for the contract and the subsequent breach. The question of whether Jackson could renegotiate the contract when the PPV did not fulfill his contract is an issue. Also, another issue is whether the additional “entertainment” sweeteners made the entire contract an entertainment contract. Rampage did have a “reality series” on SpikeTV entitled “#Rampage4Real.” He also participated in TNA. As we recently revisited the Ronda Rousey split with Fight Tribe, at least in California (we assume the Rampage contract was signed in California since Bellator’s office is in Newport Beach) the fight contract and entertainment portion of the contract can be parsed out to be litigated and/or arbitrated. This will not be the end of this contractual drama.
December 26, 2014
Earlier this year, Ronda Rousey split with longtime manager Darin Harvey and his management company Fight Tribe Management. After an arbitration hearing in which both sides participated, it was determined that Rousey could be released from her fight contract and was not responsible for payments claimed by Harvey due to him.
Harvey filed a “Petition to Compel Arbitration” in LA Superior Court and requested that the briefing be sealed which precludes the public from reviewing the documents filed. After the hearing held this past March, the CSAC determined that Rousey’s “Service Agreement” with Fight Tribe was void as to the “professional fighting services only.” The arbitrator determined that Harvey had not followed the rules promulgated by the California State Athletic Commission with respect to fight contracts.
The ruling, in favor of Rousey, is premised on Harvey not properly executing the fight contract on “printed forms approved by the commission.” The Commission ruled that, “[t]he controlling contract was the subject “Representation Agreement”, which was entered into in California and specifically binds the parties to be governed by California law.” Hence, the rationale by the Commission would lead it to conclude that since the contract was not on its printed forms, the contract was void as to the fighting portion of the contract. In addition, the Commission ruled that “a fighter-contract” is not valid unless both parties appear at the same time before the Commission, and the contract receives the Commission’s written approval.” This did not happen as the contract, which was originally drafted in May 2012, was not executed until January 2013. Regardless, it was not done before the Commission.
Even though Harvey’s “Representation Agreement” did not comply with the Commission rules, he still argued that he was entitled to “quantum meruit” (latin for “what one has earned”). This is a theory in contract law allowing a party to be compensated for actual work/services performed.
Under this theory, Harvey was seeking to recoup losses incurred from representing Rousey. Harvey indicated in an exhibit at arbitration that from January 1, 2010 to January 31, 2014, he collected $25,608 in income from Rousey fights, $23,180 from PPV fights and $20,830 from income of sponsorships. This is offset by Harvey’s claim that he paid $170,376 in expenses related to Rousey’s fighting career which makes Harvey at a loss of $85,818 from representing Rousey. The paid expenses included paying for training including strength and conditioning, sparring partners and living expenses.
Longtime California promoter, Roy Englebrecht empathized with Harvey’s situation but also advised:
I have seen this happen a number of times over the years, where well intentioned people want to get involved in the fight business, but never take the time to learn about the business and some of the rules that govern it. This situation with Ronda and Darin could have been avoided if Darin knew the CSAC rules and followed them. This manager/fighter agreement or promoter/fighter agreement in California is unique to the sport, and if not followed you will lose, as this ruling showed.
The issue of the contract between Rousey and Fight Tribe with respect to representation outside of “professional fight services” still remains in state court in California.
This is a textbook example of the ills of manager representation in sports. Certainly, Harvey and Fight Tribe should have followed the rules of the CSAC. While the representation of Rousey probably was a “handshake agreement” at first (note that there was an 8 month lag between Rousey actually signing contract and the date of Representation Agreement), it was not until Rousey started to become popular that issues began to occur. Rousey signed on with William Morris Endeavor and Fight Tribe likely felt like it was being boxed out of its representation. We shall see if 2015 brings a resolution to the issue.
December 23, 2014
MMA Fighting reports that Scott Coker has turned over the Rampage Jackson issue to Bellator attorneys. The UFC announced the signing of Jackson on Saturday night.
Jackson provided an official statement on his departure from Bellator on his web site.
A portion of the statement reads:
After five months of grueling negotiations and gray-area contract talks with Bellator MMA and parent-company Viacom, Quinton “Rampage” Jackson officially terminates his contract with the up-and-coming promotion citing multiple breaches since the removal of President and Founder Bjorn Rebney. Jackson exercises a clause in the agreement that allows for a 45-day window to satisfy any contract dispute. Bellator MMA, failing to fulfill the requests of Jackson, was put on notice, failed to respond and eventually notified that negotiations were officially terminated.
Ariel Helwani of MMA Fighting reported that the point of contention for Jackson was that “Bellator refused to provide the pay-per-view numbers for Bellator 120 when he fought against Muhammaed Lawal as contracted.”
It appears that what Helwani is reporting is Jackson’s request for an audit of the Bellator 120 PPV numbers which one may conclude the buy rate is related to Jackson’s compensation. One might assume that the contract allowed a 45 day window where the parties would work to fix any issue with the contract. We can deduce that whatever problem that arose in the contract between Jackson and Bellator was not fixed. Or, it was not fixed to the satisfaction of Jackson. Jackson argues that since Bellator could not “cure” the problem with the contract within 45 days, he has a right to cancel the contract and thereby making the contract “void.” Certainly, Bellator is taking a different position on this. With Bellator attorneys involved, we may see another lawsuit in MMA coming soon.
December 21, 2014
On Saturday night’s UFC Fight Night 58 broadcast, Jon Anik announced that the UFC had re-signed Quinton “Rampage” Jackson. The news comes with controversy as Bellator President Scott Coker stated that Jackson is under exclusive contract with the Viacom-owned company.
The signing of Jackson will likely be the start of a legal battle between the UFC and Bellator.
Let us be clear that Quinton “Rampage” Jackson is under an exclusive contract with #BellatorMMA. We will protect our contractual rights
— Scott Coker (@ScottCoker) December 21, 2014
In a Fox Sports interview, Jackson indicated that he had terminated his contract with Bellator because they did not meet their contractual commitments.
The signing comes as a surprise considering the mutual distaste Rampage and Dana White had for each other when he last fought in the UFC in January 2013. It’s clear that based on Coker’s tweet, Jackson’s departure was not granted by Bellator. And, the UFC did not clear with Bellator Jackson’s representation that he terminated his contract due to Bellator’s alleged breach. It appears that the UFC is going with the strategy of plausible deniability. It signed Jackson based on the representation that his contract was void due to the alleged breach by Bellator. This can only lead to a lawsuit for breach of contract (filed by Bellator against Jackson) and tortious interference with a contract (against the UFC).
Jackson was mentioned in the plaintiffs’ antitrust lawsuit against the UFC in regard to the UFC’s desire to obtain exclusive sponsorships with companies. The lawsuit mentioned the UFC blocked Rampage’s exclusive deals with Round 5 and Reebok. Yet, the UFC forged its own exclusive deals with each.
December 16, 2014
Attorneys for plaintiffs on behalf of Cung Le, Nate Quarry and Jon Fitch have filed a lawsuit in U.S. District Court in Northern California in San Jose, California on their behalf. A press conference held Tuesday afternoon announced the lawsuit which was filed earlier in the day which may add more plaintiffs to the lawsuit.
Three plaintiffs’ firms with significant experience in antitrust and class action litigation are the attorneys of record with two others assisting as well. At this point, the UFC has issued a brief statement indicating its aware of the lawsuit but has not been served with it or had a chance to review it.
Cung Le, et al. v. Zuffa, LLC is the 63 page Complaint that maps out the claims of a UFC monopoly and monopsony which is in violation of Section 2 of the Sherman Antitrust Act according to the Plaintiffs.
Below is a portion of the press release from the announcement today:
The lawsuit filed by fighters Cung Le, Nathan Quarry and Jon Fitch, who seek to represent a class of similarly situated current and former UFC professional combatants, alleges that the plaintiffs are victims of the UFC’s illegal scheme to eliminate its competition in the sport of MMA and suppress compensation for UFC Fighters from bouts and fighter identities and likenesses.
According to plaintiffs’ counsel Benjamin Brown, of Cohen Milstein Sellers & Toll PLLC, “The UFC was built on the battered bodies of MMA fighters who have left their blood and sweat in the Octagon. Those fighters are entitled to the benefits of a competitive market for their talents.”
The lawsuit targets defendants Zuffa LLC, the Las Vegas-based company that conducts business as the UFC. Zuffa is primarily owned by billionaires Lorenzo and Frank Fertitta, along with the UFC’s front-man, President Dana White. White has publicly boasted about the success of the UFC’s alleged illegal scheme, allegedly claiming that “there is no competition” because “I am the grim reaper[.]”
The lawsuit claims that the UFC’s alleged anti-competitive acts, in particular its actions over a period of years,have made and maintainedthe UFC asthe onlyoption for MMA fighters who want to earn a viable living in the profession.
“All UFC Fighters are paid a mere fraction of what they would make in a competitive market,” said Brown.“Rather than earning paydays comparable to boxers – a sport with many natural parallels –MMA fighters go substantially under-compensated despite the punishing nature of their profession.”
Above all, the lawsuit alleges thatthe UFC prevents fighters from working with other MMA promoters, mounting self-promotional efforts of their own or signing with outside sponsors – monopolistic practices that suppress fighters’ incomes.
According to named plaintiff Cung Le, of San Jose, Calif., an internationally acclaimed MMA combatant, “Because of the UFC’s coercive practices, competitive market forces have been strangled, future earnings power of the athletes is stripped away, and purses to the fighters are artificially depressed.”
The lawsuit alleges that the UFC has pursued an aggressive strategy of depriving key inputs to potential rival promoters or merging with them to maintain its monopoly position. The complaint alleges “exclusionary scheme” to impair and foreclose competition, whereby the UFC deprives potential competitors in the fight promotion market access to elite MMA fighters, premium live event venues and sponsors.
According to plaintiffs’ co-counsel Michael Dell’Angelo, of Berger & Montague, P.C., “the lawsuit alleges that the UFC has engaged in an illegal scheme to eliminate competition from rival MMA promoters by systematically preventing rivals from gaining access to ingredients critical to successful MMA promotions, including by imposing extreme restrictions on UFC Fighters’ ability to fight for rivals during and after their tenure with the UFC. The UFC also takes the rights to fighters’ names and likenesses in perpetuity. As a result of the UFC’sscheme, we allege that UFC Fighters are paid fraction of what they would earn in a competitive marketplace.”
The lawsuit alleges that as a result of these and other anti-competitive acts, including the UFC’s acquisition of rival Strikeforce, the UFC has maintained control of more than 90 percent of the revenue derived from live MMA bouts nationwide.
The lawsuit also alleges that the UFC has retaliated against fighters who have worked with or who have announced intentions to work with rival promoters or sponsors by refusing to book their bouts and/or eliminating them from key UFC promotional activities such as advertising campaigns and video games.
“UFC’s threats are taken seriously by fighters because they know that a UFC ban will substantially diminish, if not end, their ability to earn a living at their chosen profession,” said plaintiffs’ co-counsel Joseph Saveri of Saveri Law Firm, Inc.“These MMA professionals deserve the right to take back their careers.”
In their complaint, the Plaintiffs claim that the UFC has been able to suppress compensation “to a very low percentage of the revenues generated from bouts.” The Complaint claims that UFC fighters are paid “approximately 10-17% of total UFC revenues generated from bouts. They claim that all fighters “have had their compensation artificially reduced due to the anticompetitive scheme challenged in this Complaint.
In addition, the Complaint challenges several clauses that Plaintiffs’ claim exist in standard UFC contracts including the “Exclusivity Clause,” the “Champions Clause,” (allowing UFC to extend a champion’s contract for as long as they are champion), the “Right to Match Clause” (recall Eddie Alvarez lawsuit), “Ancillary Rights Clause” (granting UFC exclusive and perpetual worldwide identity rights of contracted athlete) and the “Sponsorship and Endorsement Clause” (allows UFC sole discretion on approving sponsors and endorsements of fighters).
The attorneys declined comment on how much they would be asking (likely due to the fact that the actual amount of damages has yet to be quantified by an expert) in terms of monetary relief although the statute in which they are suing under allows for treble damages (three times the actual amount of proven damages)
The press conference did not provide a lot of granular information but one must assume that was done on purpose. Since the Complaint was filed today, the lawsuit and everything that comes with it begins. The process for a lawsuit, especially one that will be detailed, complex and may involve more plaintiffs will take years and lots of money to litigate. Cohen Milstein, one of the law firms representing the plaintiffs, was selected as one of the “most feared plaintiffs’ firms for 2013 and 2014 by Law360. Suffice it to say, the attorneys filing this Complaint and litigating this matter are very good at what they do. The UFC will have good lawyers as well.
It will be interesting to see how many other fighters decide to join the class. We assume that there are more that will join based on the amount of law firms that are joining together on this matter. We will see what happens if there is a groundswell of fighters that will join the lawsuit.
MMA Payout will have more info on the lawsuit in the coming days.
November 14, 2014
Xtreme Fighting Championships (XFC) announced that it intends to file a lawsuit against the World Series of Fighting (WSOF) as a result of Kalindra Faria’s scheduled fight on Saturday’s WSOF card. The XFC stated in a press release that it intends to file the suit in the U.S. District Court in Tampa, Florida.
Via XFC press release:
XFC has an exclusive contract with Ms. Faria which XFC provided to WSOF.
Notwithstanding the clear terms of Ms. Faria’s exclusive contract with XFC, WSOF has made it clear it intends to proceed with Ms. Faria’s bout planned for this weekend.
There is no question that XFC has a valid contract with Ms. Faria and that her fighting in a WSOF match this weekend violates XFC’s rights under that contract.
As a consequence of WSOF’s actions, XFC is filing suit against WSOF today in the United States District Court in Tamoa (sic). XFC is seeking to enforce its rights to the fullest extent of the law.
Faria is scheduled to face Jessica Aguilar on Saturday’s WSOF card. Ray Sefo told MMA Junkie that Faria would fight. Faria’s management claims that the women’s strawweight does not have a current contract with the XFC.
A quick search of Pacer does not reveal the lawsuit although that does not mean it has not been filed and served on the WSOF. Realistically, it appears that it is too late for the XFC to seek a temporary injunction which would prevent Faria from fighting at WSOF 15 tomorrow. Thus, if Faria goes through with the fight, we will see how XFC proceeds with the litigation and what types of damages that it might claim. MMA Payout will keep you posted.
November 7, 2014
Boxer Mikey Garcia has agreed to dismiss three of his causes of action against promoter Top Rank. The stipulation to dismiss his claims avoids a summary judgment motion brought by his promoter in a dispute over his fight contract.
Garcia’s attorneys and Top Rank attorneys stipulated to dismissal of 3 claims that were at issue in Top Rank’s motion filed last month. The dismissed claims related to issues that Garcia alleged were in violation of California law. The case of removed (i.e., transferred) out of state court and sent to federal court in Nevada.
Garcia still has a claim under the Muhammad Ali Act pending.
We shall see if this concession on the part of Garcia’s lawyers leads to an eventual settlement between the parties. Certainly, the stipulation prevents a loss by Garcia’s counsel and the possibility of Garcia having to pay for Top Rank’s lawyer fees for the motion if it prevails in the case. Not a lot of boxers succeed when suing under the Ali Act and we will see if Garcia intends to follow through with this lawsuit.
October 20, 2014
This past Friday, attorneys for Top Rank Boxing filed a Motion for Judgment on the Pleadings in U.S. District Court in Nevada seeking to dismiss a bulk of boxer Mikey Garcia’s lawsuit.
Garcia’s lawsuit was originally filed in Riverside County (CA) Superior Court. Top Rank lawyer’s removed the case to Federal Court in Nevada via a procedural rule allowing such transfers based on the lawsuit dealing with federal legal issues (i.e., Muhammad Ali Act). Garcia alleged that his promotional contract with Top Rank violated California law and the state’s strong public policy to protect California-based boxers from being taken advantage of by promoters and managers. In the lawsuit, 3 of California’s claims relate to violations of California law. Garcia claims that the promotional contract with Top Rank violated California’s Boxing Act and Professional Boxing Rules and California Labor Code section 2855. He also claimed it was a violation of California’s restraint on competition.
Top Rank has moved for the court to make a judgment to dismiss Garcia’s claims based on the boxer’s claims under state law in California. Essentially, Top Rank argues that Garcia entered into contracts with the promotion that state that the contract was governed by the state of Nevada. Thus, any claims Garcia makes that violate California law should be dismissed since the contract is based on Nevada law.
Basically, Top Rank argues that despite the fact that Garcia is a resident of California and has had events where he fought in California; the contract dispute should be governed by the state of Nevada. As such, Garcia’s legal claims related to violations of California law should be dismissed.
Top Rank argues several reasons why Nevada law should prevail under the terms of the contract. Namely, the terms of the contract dictate it, Garcia fought in Nevada and his manager does business in Nevada. Also, Nevada law would not contradict California law. It also cited the fact that prior boxing contracts with choice of law provisions are typically enforced by boxing commissions and courts. Notably, it cited Robert Guerrero’s lawsuit against Golden Boy Promotions in which Guerrero lost his legal battle allowing the parties to settle their case in New York per the terms of the contract. Guerrero argued that Top Rank did not use the appropriate CSAC forms and the case should be heard in California.
The motion to dismiss a portion of Garcia’s lawsuit was not surprising. The legal strategy here was that Top Rank transferred the lawsuit to federal court and out of California where the state laws would seemingly favor the boxer. Once the case was in Nevada, it sought to dismiss the California-specific claims. Certainly, prior cases reflect the fact that Top Rank had the right, based on the contract, to seek out the appropriate governing law. Whether or not the Court will grant the motion this time is another issue.
MMA Payout will keep you posted.