April 5, 2014
Darin Harvey issued a statement on the California State Athletic Commission (CSAC) ruling which released his former client, Ronda Rousey from her fight contract. MMA Payout has obtained the decision siding in favor of the UFC women’s bantamweight champion and we take a look at what went wrong.
Via Inside MMA on AXS TV:
“When I first met Ronda Rousey four years ago, she was destitute and UFC President Dana White was quoted as saying a woman would never fight in the UFC. I set out to make Ronda a star and prove Dana wrong. The results speak for themselves. Ronda is now a highly sought-after model, spokesperson and actress, not to mention the first and still reigning female UFC champion. She deserves all the credit in the world for her accomplishments, but she never would have achieved such unprecedented success without the unwavering financial investment, career guidance and professional support Fight Tribe Management and I provided her.
I am not a litigious person, but I never thought for a moment that once she made it to the top, Ronda would turn her back on us and refuse to honor her legal and moral obligations. After months of radio silence and without even giving me the courtesy of an explanation I was forced to go to court to compel Ronda to private arbitration per the terms of our agreement. Before that could be sorted out, Ronda’s legal team ran to the State Athletic Commission, demanded an expedited hearing and tried to get our entire agreement thrown out on a technicality. During our four-hour hearing last week, I finally heard Ronda’s side of the story. Frankly, it’s pathetic and I’m not surprised the Commission chose not to include any of that in their written decision. The Commission did properly reject Ronda’s attempt to invalidate the entirety of our agreement, and I am very pleased with that aspect of their decision. Our case against Ronda will now proceed. I am confident that when all the facts are presented to an impartial private arbitrator, Fight Tribe Management’s contributions to Ronda’s career will be fully recognized and fairly rewarded.”
Harvey also tweeted the following:
ATTYN MMA MANAGERS IN CA IF YOU DONT GET YOUR 1.5 PAGE BOXING CONTRACT RATIFIED YOU HAVE NO CONTRACT AS IT RELATES TO PURSE #WILLGETSCREWED
— Darin Harvey (@darinharvey) April 5, 2014
Roy Englebrecht, a fight promoter in California, empathized with Harvey’s plight but also advised the following:
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 Rhonda 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 comments are based on the ruling issued by Andy Foster of the CSAC in which it determined that the evidence and testimony at the March 28th Arbitration showed that the “Service Agreement” (as identified in the CSAC Arbitration Decision) was void as to the professional fighting services only.
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.
However, the Commission ruled that Harvey was not entitled to quantum meruit since “such a finding would be inconsistent with the provisions of California law requiring proper fighter-manager contracts…” The Commission reasoned in its decition, “[i]f Harvey, or other managers, were allowed to recover by means of quantum meruiti, it would undermine the statutory authority purposes of the Boxing Act.” Thus, the Commission ruled against Harvey based on the overarching policy that it must protect the fighters from manager graft. As stated in the decision, “[t]he Boxing Act is a regulatory statute, and recovery on a quantum meruit theory in the absence of compliance with the act would be inconsistent with its regulatory purposes.”
As we indicated in a previous post, expect this case to heat up in the anticipated lawsuit and/or private arbitration. However, this situation may have been avoided if Harvey and Rousey entered into a fight agreement as dictated by the rules of the CSAC. If there would be further representation in other matters outside of fighting, it would seem that a second representation agreement would be necessary. Based upon the facts, it looks as though the fighter-manager relationship was informal at the beginning with no need for things such as a signed contract. This may explain the long lag between the date of the Representation Agreement (May 15, 2012) and the date Rousey actually signed it (January 29, 2013). The harshness here is that for not following the rules of the CSAC, Harvey lost over $85,000 spent on her client that he will not be able to recoup. The moral here is to follow the rules.
April 4, 2014
Sherdog’s Mike Whitman first reported that the California State Athletic Commission issued its ruling in the arbitration of Ronda Rousey and Fight Tribe Management. The commission ruled that Rousey is released from her fight contract but left the commercial aspect of the contract to the court.
Executive Director of the CSAC, Andy Foster heard the arbitration between the parties last week over the dispute between the UFC women’s bantamweight champion and her manager Darin Harvey. Originally, Harvey had petitioned the Los Angeles Superior Court for the issue regarding the representation agreement between the parties to be decided via arbitration. However Rousey’s legal representatives claimed that the contract should be determined by the CSAC. The arbitration was held on March 28 with Foster serving as the arbitrator with the assistance of two attorneys from the AGs office.
Harvey claimed that the representation agreement was drafted as a talent contract and not a fighter-manager contract. Regardless, Rousey’s attorneys argued that the representation agreement was void under California law.
The facts stated that Rousey and Harvey entered into a 3 year agreement starting on May 15, 2012 and signed on January 29, 2013. Harvey would receive 10% of Rousey’s income generated from professional fighting, modeling, acting and other commercial activities. However, the CSAC determined that the agreement “was not prepared on the required, pre-approved forms, nor did both parties appear before the commission at the same time in order to receive the commission’s approval, thereby invalidating the agreement as a fighter-manager contract in California.” (quote via Sherdog) The CSAC ruled that Harvey was not a “manager” as defined under Business and Professions Code section 18628
The CSAC left open the issue as to the “commercial activities” that were incidental to “fighting activities” to the court. So, it’s likely that we have not heard the last of this dispute.
MMA Payout will have more on this decision as it becomes available. The initial read from Sherdog’s report reflects the fact that this contract dispute is not over. It’s interesting to note that based on the information available, Harvey sought his manager fee from “commercial activities” which may have been a conflict with Rousey’s agents at William Morris. We note that Rousey signed Fight Tribe’s agreement on January 29, 2013 and then signed on with William Morris in late February 2013. Whether this was coordinated by Harvey and/or the relationship between Fight Tribe and William Morris became strained over time is an issue that may play out in court proceedings.
March 28, 2014
MMA Junkie reports that Ronda Rousey and her estranged management group, Fight Tribe Management, are in an arbitration hearing today (Friday) before the California State Athletic Commission to determine the validity of Fight Tribe’s representation agreement with the UFC bantamweight champion.
Two weeks ago, Fight Tribe Management filed a petition for arbitration in Los Angeles Superior Court to determine the validity of the representation agreement. Under California Business and Professions Code §18640 CSAC has the “sole direction, management, control of and jurisdiction” of mixed martial arts and can hear disputes such as these.
According to the Junkie article, Foster, along with assistance from the California attorney general, will review the briefing submitted by both parties, hear testimony from witnesses at the arbitration hearing and render a decision.
There appears to be a dispute on the validity of the contract and it’s not clear whether the CSAC ruling will end this dispute.
In its filing with the Court on March 7th, Fight Tribe indicated that it wanted the issues concerning the dispute confidential based on the terms of the contract entered into by Rousey and Fight Tribe.
From its initial filing on March 7th, the disputed contract issue has not been made public although the commission’s decision will be public record. So, it may be that we will not hear about the contractual issues in dispute until the CSAC renders its opinion sometime next week. Even with the CSAC decision, the legal wrangling behind this dispute may not be over. MMA Payout will keep you posted.
December 17, 2013
With the announcement of Vitaly Klitschko vacating the World Boxing Council’s heavyweight championship belt to focus on his homeland, it leaves open the issue of another boxer’s future Bermane Stiverne.
Stiverne, a heavyweight contender, has sued Don King and his promotional company under the Muhammad Ali Act contending violations of the Act by Don King Productions (“DKP”) and other associated entities. Specifically, Stiverne contends that he was forced to sign an exclusive promotional agreement with DKP in order to receive fights.
Last week, the Court in the Southern District of New York denied Stiverne’s request for a Preliminary Injunction and Temporary Restraining Order. The requested relief asked that the Court enter an Order to request DKP among other defendants “not to interfere in any way, directly or indirectly, with the ability of plaintiff…to enter into any bout agreement with any other boxer, including for a heavyweight championship bout.” Stiverne is considered the number one contender for the WBC’s heavyweight championship belt. According to Court documents, Stiverne’s manager was working with the Klitschko management team to negotiate and sign a bout agreement. Stiverne’s concern was that King will intercede.
The Preliminary Injunction came as a result of alleged threats made by King that “he would do everything in his power to prevent Stiverne from getting any more boxing bouts whatsoever.”
In addition to Stiverne’s Motion for Preliminary Injunction and Temporary Restraining Order, the Court further ordered that the parties are instructed to submit letters by Friday, December 20, 2013 updating the Court on the status after a mediation session before the WBC. The mediation session was to negotiate a fight contract between Stiverne and Klitschko. Since Klitschko has given up his title, there will be no meeting and the Court must now address what to do next in Stiverne’s lawsuit.
DKP has filed its Answer and Counterclaims to Stiverne’s lawsuit requesting declaratory relief from the Court to invoke the purported promotional contract between Stiverne and DKP. In addition, DKP claims Stiverne has breached its contract and tortuously interfered with DKP’s rights under the 2011 Promotional Agreement.
Reviewing Stiverne’s request for the Preliminary Injunction and Temporary Restraining Order, it seemed like a longshot that the Court would grant his motion. With the announcement that Klitschko has given up his belt, it puts Stiverne’s career options up in the air. But, the lawsuit brings up the question of the bite of the Ali Act.
Stiverne must now address Counterclaims for breach of contract and tortious interference with a contract. These claims coincide with the promotional contract that Stiverne signed but the fighter claims was done under pressure. There are few lawsuits that have been brought under the Ali Act and even fewer where a fighter prevails (I actually count none) under the Act. So, while there are portions of the Act which allow for private rights of action, from a practical standpoint, most boxers are not in the position to pay lawyers to litigate these claims. Even then, in situations like this where a promotional contract is disputed, there is the threat of a countersuit from the promoter for breach of contract. Thus, the fighter is put in a situation where he could find himself defending a lawsuit.
While the purpose of the Ali Act has good intentions, one must wonder if it should be amended to allow for better ways to resolve disputes short of costly litigation.
June 26, 2013
The “Joint Proposed Discovery Plan” filed with the Court in the Eddie Alvarez-Bellator case reveals the sobering reality of the judicial system. Among the dates set by the Court, a pretrial conference will occur sometime after September 15, 2014 which would mean an actual trial in the case would not occur until late fall 2014 or even early 2015.
The Court held an initial status conference this week which included the rendering of a “Joint Proposed Discovery Plan” which essentially lays out the plan on litigating the case. This includes the written discovery and a plan on how many people will be deposed by each party (each side will have a maximum of 10 depositions). It also includes a time for expert reports and expert depositions.
A pretrial conference may take place “any time after September 15, 2014 and after resolution of any dispositive motions (motions to dismiss claims)” according to the Order.
At that pretrial conference, the Court will likely appoint a Court date. Thus, it’s most likely a trial would not commence until late 2014 or even 2015.
Another interesting note that has come out of the case is that the parties have agreed to a Discovery Confidentiality Order which may prevent the public from seeing documents deemed confidential by the parties.
Another interesting point was the status of the settlement talks which occurred prior to the filing of the discovery plan. Bellator had offered Alvarez two PPV level fights with the first being a shot at the lightweight title currently held by Michael Chandler. Alvarez declined the offer and countered with just one fight for Bellator. This stalled the negotiations.
And this is why Alvarez should not have stated that he was not going to settle with Bellator. A trial date at best would not happen until the fall of 2014 (Alvarez will be out of action for 2 full years if this happens) but this does not even include any scheduling delays or motions to continue a trial date which are norms in litigation. The parties have already noted that there may be scheduling issues with third parties (UFC?) and “disputes regarding designation of documents as confidential.” Thus, there are already logistical obstacles and it’s still June 2013. We shall see how this progresses and if the parties will look to settlement discussions. But, in my opinion, the parties will want to conduct some discovery and depositions before any further discussions on settling occur.
May 13, 2013
Eddie Alvarez produced via twitter a document he claims Bellator altered after he had agreed to the terms of the renegotiation period. Alvarez stated that Bellator changed the matching issue from “all terms” to “material terms.”
— Edward Alvarez (@Ealvarezfight) May 12, 2013
In the October 30, 2012 letter from Bellator to Alvarez sent via email and Certified Mail, the letter states in reference to matching terms with Zuffa: “Upon receipt of such an offer, you are thereafter obliged to produce to Bellator a true copy of the proposed agreement with Zuffa, LLC at which time Bellator shall have fourteen (14) business days from receipt of the full agreement to consider whether it will match the material terms of the offer.” (our emphasis in bold and italics). In a subsequent letter, the sentenced was changed from material to all.
Alvarez had noted this change during his interview with Ariel Helwani on The MMA Hour and on MMA Junkie Radio. He essentially cited this as an unethical business practice.
Bjorn Rebney responded to Alvarez’s claims in an article on MMA Fighting. The November 1, 2012 letter was produced which stated “all terms” instead of material terms was produced in the article. Rebney refuted Alvarez’s accusations stating that he was aware of the language and that Alvarez’s attorneys were aware as well. Rebney also responded to several issues regarding pay concerning Zach Makovsky, Cosmo Alexandre and whether or not Bellator attempted to sign Leonard Garcia.
The letter produced by Alvarez attempts to show that Bellator amended terms without his knowledge. Rebney indicated that this is not true and that Alvarez’s attorneys had the chance to review the letters. Did Alvarez’s lawyers not see the November 1st letter? Based on what the Court has opined in the Preliminary Injunction, will the “material” vs. “all” terms matter? If you recall, the Court indicated that it would apply a common sense approach to matching terms. Regardless of one might think, this lawsuit is going to start to heat up. Moreover, arising out of the lawsuit are PR issues which Rebney, Bellator and Viacom must address and determine how to put out the fires. By implicating other issues with fighters, we might see Makovsky, Alexandre and Garcia get pulled into this lawsuit as witnesses.
May 9, 2013
After tweeting his displeasure for his legal troubles, Eddie Alvarez made his appearance on The MMA Hour on Monday to give his side of the story in the Bellator battle. He also made an appearance on MMA Junkie radio Tuesday pleading his case.
Although he said he didn’t know too much about law when talking to Ariel Helwani on The MMA Hour, Alvarez gave a legal update on his case. To be fair, Alvarez correctly stated that the case was in the discovery phase.
The MMA Hour interview came after tweeting about Bellator and how Bjorn Rebney was a “grunt” and that Viacom and Spike are “idiots.”
But the bulk of the interview on The MMA Hour dealt with the legal case and a rehashing of the contract matching issue which the Court denied in Alvarez’s motion for a preliminary injunction in January. A favorable ruling would have allowed Alvarez to negotiate a contract with the UFC and leave Bellator behind. However, the Court decided that the factual issue of whether or not Bellator matched the terms of the UFC contract would be determined at a later date. Alvarez stated on MMA Junkie radio that he didn’t expect the Court to grant the Preliminary Injunction.
On MMA Junkie Radio, Alvarez indicated that he talked with Bellator in New Mexico in an effort to settle the case but stated that he could not reveal the substance of the communications. Legally speaking, the settlement discussions are confidential and governed by certain evidentiary rules.
Alvarez claimed that Bellator changed words in his original contract which included an addendum which waived a renegotiation period and allowed an exclusive negotiating period with Zuffa. However, Alvarez claims that a term in the addendum was changed from “all terms” in to “material terms.” The documents do not appear to be in the legal filings in the case. Alvarez indicated he would post the documents on twitter which shows the different terms. However, as of the time of this writing, the documents have not been posted.
Alvarez stated his case well but the issues he argues doesn’t do anything other than the possibility of getting him into more legal troubles. The “matching” issue was already decided by the Court at the Preliminary Injunction in that there would be no decision on the matching issue. Its definitely the Court punting on a key issue in the matter but there is a legal basis for waiting to hear the information provided in the discovery process. However, in the Court PI opinion, it did cite that the Court “must apply a common-sense interpretation to the word “match.” This was in reference to the issue of whether Bellator had to match the Zuffa contract verbatim.
But, why go after Viacom? It may not know anything about MMA, but it is investing money into the sport. Without Fox and Viacom investing in MMA, it would not be as popular as it is today. Certainly, I do feel for Alvarez to a certain extent as he’s been put in a tough position. He no longer wants to work for his employer but his employer is pulling him back in. Perhaps he didn’t know that he’d be in this position when he signed his contract with Bellator or didn’t think that Bellator would put up such a fight.
Regardless of whether or not Alvarez is telling the truth, talking (and tweeting) is a risky move especially in contentious litigation. There is the potential for further claims and using tweets and Alvarez’s interviews as evidence in the future.
May 5, 2013
Eddie Alvarez will be appearing on The MMA Hour Monday to presumably talk about his legal fight with Bellator. The appearance comes after a weekend of tweets in which he went after Bellator, Spike and Viacom.
Alvarez’s official twitter handle, @Ealvarezfight, indicated that he was moving to train with the Blackzillians. It also stated he made money after selling real estate as to imply that money is no issue at this point.
Alvarez tweeted that there would be no settlement and “let the truth come out in the end.” (ed. note: famous last words).
He also wrote to his 9,000 plus followers that he placed blame for the lawsuit with Viacom and Spike rather than Bjorn Rebney.
In a civil lawsuit, most parties position their case toward a favorable settlement. Alvarez proclaiming that there would be no settlement is a bad move from a legal and PR standpoint. Regardless of what you think of what has happened to Alvarez, its not a good move to tweet, write or be interviewed about this lawsuit without gaining clearance from legal counsel. Just like cops say on tv shows, “anything that you may say (or write in this instance) can be used against you.” Even if Alvarez believes what he says is true, what he writes on twitter may be construed differently by Bellator attorneys.
Moreover, if the Court forces the parties into mediation or a settlement conference and the case settles, Alvarez did not speak the truth about going to trial. It just makes him look like he had no understanding about the legal process.
From an overarching perspective, the goal of MMA fighters is to make the most money out of your short career. The reason why the UFC likes the FOX relationship is that there is more money involved and the product is exposed to the mainstream. Alvarez has to look at the situation and determine what’s best for his fight career. Sit and fight a battle he may actually lose, or try to find a resolution as soon as possible. Trials are long and drawn out.
Unless Bellator is unwilling to enter into settlement talks, he should try to settle for a shorter fight deal with Bellator in order to be released from his contract. Alvarez is in the prime of his career and he does not want to end up muddied in a contract dispute. Although under separate circumstances, a similar contract issue sidelined Brandon Vera for some time and he has never been the same fighter since.
Hopefully Alvarez will cancel Monday’s appearance and/or give generalities of his legal situation rather than talk himself into more problems.
April 18, 2013
The United States District Court for the District Court of New Jersey has denied Bellator’s Motion to Dismiss the Counterclaims of Eddie Alvarez. The litigation between the two sides will continue.
Bellator had brought a Motion to Dismiss Alvarez’s Counterclaims for Tortious Interference with a Prospective Economic Advantage and Breach of Contract. Judge Jose Linares held that Alvarez’s claims survived the Motion to Dismiss standard in that his factual allegations raised a right to relief. This does not mean that Bellator could not eventually win, it just means it cannot win at this stage of the litigation.
With respect to the Tortious Interference claim, Bellator had argued that Alvarez could not prove it had done anything with malice. A prerequisite of the claim. It also argued that Alvarez’s claim must fail because the contract match was privileged.
Although Bellator supported its original arguments with case law, the Court noted that those cases occurred after the Motion to Dismiss stage. Thus, seeking support with the cases was of no relevance for this motion.
Bellator also argued that the contract offer should be privileged and cited a case which appeared to be on point. However, that case was a state law case which the federal court did not have to follow. Moreover, the case cited by Bellator related to correspondence in which counsel threatened litigation. The Court here distinguished that case as Alvarez claims Bellator, in bad faith, matched the offer made by Zufa.
The Court noted that it would not make a factual determination whether Bellator had a “legitimate business-justification” for proposing a purported match to Alvarez. Factual determinations such as these are not determined at the Motion to Dismiss stage.
With respect to the Breach of the Court held that despite Bellator’s assertions, Alvarez identified the contract for which it alleges Bellator breached. Furthermore, the Court determined that it “adequately alleged” that Bellator breached the duty of good faith and fair dealing in which it claims to have matched the Zuffa Offer in spite of “neither having the ability or the willingness to actually match the offer.”
The lawsuit continues. The threshold for prevailing on a Motion to Dismiss is tough if the claims made contain a sufficient enough of facts as Courts tend to want the case to prevail on the merits. Its interesting that the Opinion of the Court did not address the “malice” requirement in Alvarez’s Tortious Interference claim. Rather, it focused on the case law Bellator cited to distinguish it from the present case. Its likely that the two sides will exchange discovery and move on to the deposition phase.
April 13, 2013
Bellator has filed its Reply Brief in support of its Motion to Dismiss Eddie Alvarez’s counterclaims. Bellator’s motion should be decided sometime this month.
Bellator’s counsel has requested an oral argument although its not known at this point whether the Court will grant this request.
The Reply Brief attacks Alvarez’s position in bringing its two counterclaims against Bellator for tortious interference and breach of contract. Notably, Bellator frames its argument to the Court by suggesting that there is not a case in the whole United States that allows a tortious interference or breach of contract claim where a party has attempted to match a matching rights clause in a contract. Bellator goes so far as using an exclamation point to highlight the fact that there is not one case in the United States supporting Alvarez’s theory. “To emphasize, we have not found one case in the United States!” states Bellator in its brief. An exclamation is a no-no in legal briefing. Its the equivalent of typing in all caps.
The brief supports the argument that Bellator had a legal, contractual right to proffer a contract to Alvarez to match Zuffa’s offer. Thus, Alvarez’s claims for “interfering” with his opportunity to obtain a contract from Zuffa and breach of the Bellator contract should be dismissed.
Bellator’s argument is that its submission of a matching offer does not give rise to a cause of action for tortious interference since Bellator claims its matching offer was not done with malice, a requirement it argues is needed to prove such a claim.
Moreover, it states that the communications between Bellator and Alvarez’s counsel in regard to Bellator’s efforts to match the contract offered to Alvarez by Zuffa are confidential communications. As a result, the Court should not consider it and therefore the claims must be dismissed.
Also of note in Belltor’s Reply is the argument that Alvarez’s cannot bring his Breach of Contract claim because the purported matching contract offered by Bellator to Alvarez has yet to be breached. The main argument by Alvarez is that Bellator cannot match the PPV terms as well as the platform (Spike vs. Fox).
A very strong Reply Brief that seemed a bit too strong. Its rare to use an exclamation point in legal briefing. Its almost a faux pas to do so. The brief attempted to pick apart Alvarez’s opposition brief to the point of criticizing Alvarez’s attorneys. It appears that the issue will boil down to whether Bellator’s attempt to match Zuffa’s contract was proper. This might not be determined at this stage of the lawsuit. Of course, Alvarez’s attorneys have requested the Court an opportunity to amend its Counterclaims if they are found insufficient. Thus, we may not see the end of this lawsuit anytime soon.