Le, Quarry and Fitch file lawsuit against Zuffa

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)

Cung Le, et al. v. Zuffa, LLC

Payout Perspective:

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.

XFC announces legal action against WSOF regarding Faria fight

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.

The above release appears on the XFC web page and was previously given to John Pollock of The Fight Network and MMA Junkie.

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.

Payout Perspective:

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.

Boxer Garcia agrees to dismiss 3 of his claims against Top Rank

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.

Order on Stip to Dismiss Judgment on Pleadings

Payout Perspective:

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.

Top Rank seeks to dismiss claims in Garcia’s 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.

Payout Perspective:

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.

Le expected to appeal suspension

October 9, 2014

ESPN reports that Cung Le is expected to appeal his one-year UFC suspension for testing positive for elevated levels of human grown hormone (hGH).  The appeal provides a unique scenario in which a UFC fighter will appeal a drug suspension to the UFC acting in the capacity of regulatory authority.

Dana White confirmed that Le has a right to file an appeal which will be overseen by a third-party arbitrator.  The arbitration will be through the American Arbitration Association which is standard for many contracts where there are arbitration clauses.

White states in the article that a WADA-certified lab was not used to collect the blood samples for the August 23rd fight card in Macau because the drug testing was decided upon that week.  Le’s manager notes that there was a WADA-approved lab in Beijing, China but was not used.  A Hong Kong contracted lab was utilized instead.

No date has been set for the arbitration.

Payout Perspective:

A look at a standard UFC contract indicates that a fighter may appeal to a regulatory body and/or commission that oversee drug testing.  However, we presume that the UFC was not named as an entity a fighter could appeal to as the ESPN piece initially indicated that Le’s appeal was “breaking news.”  If Le’s contract with the UFC had language that he could appeal his drug suspension to whatever entity was regulating the drug tests, it would not really be breaking news.  This poses the question of what the UFC should do in the future with more international cards on the horizon yet know concrete policy in place on how to address testing and the potential for appeals of the process.

Le’s appeal will be an interesting case considering the points raised by Le’s manager in response to the positive drug test.  Initially thought as damage control, it appears that Le might have raised viable case against the test results. In the end, it points to a problem for the UFC.

Don King found liable for breach of fight agreement

October 3, 2014

Earlier this week, a Federal District Court in New York ruled that boxing promoter Don King liable was in breach of contract when his fighter failed a drug test for a boxing event to be held in Russia earlier this year. The parties will now argue about how much in monetary damages that the boxing promoters World of Boxing is entitled to as a result of the breach.

King’s Don King Promotions entered into an agreement which pitted King’s Guillermo Jones for a bout against Denis Lebedev on April 25, 2014. However, the day of the bout Jones tested positive for furosemide, an illegal performance-enhancing diuretic. The drug test disqualified Jones from competing and the fight was called off.

A month later, World of Boxing filed a lawsuit citing a breach of the fight agreement which articulated that Jones was “subjected to drug testing before and after the fight.” King denied the allegations of a breach of contract citing the fact he was only required to “do everything within his control…to cause Jones’s participation.” King argued that he could not prevent Jones from taken an illegal substance. However, while the court acknowledged the fact that King might have to personally supervise Jones to prevent his use of an illegal substance, the issue is whether King failed to perform under the contract (i.e., produce Jones for the contracted event), not whether he could be excused for nonperformance.

He also argued the legal defense of “impossibility.” Essentially, King argued that even if there was a breach, his performance should be excused due to a “supervening event” that was an “unanticipated” event. Here, King argues that he could not have known that his fighter would have used an illegal substance. However, the opinion notes that Jones had a history of using furosemide and the fact that the contract specifically required pre-bout drug testing.

King also filed two counterclaims which were summarily dismissed by the court.

Opinion – World of Boxing v. Don King

The case was heard in the Southern District of New York which is the same venue in which the Zuffa-New York lawsuit is filed.

Payout Perspective:

For you law school students that are heading back to school this year, this case is a very good one on the basics of a breach of contract and the legal defense of impossibility. The court clearly spells out that in its opinion, there was a clear breach of contract due to the fact that King’s boxer could not fight. Even though King argued that a breach should be excused, he did not satisfy the legal requirements (i.e., the breach was foreseeable due to Jones’ past use and the contract specified a drug test pre-fight). It will be interesting to see what damaged are assessed to King and whether there will be an appeal of the ruling.

Boxer Ward loses again to promoter

August 21, 2014

A Los Angeles Superior Court judge has dismissed a lawsuit filed by boxer Andre Ward which attempted to terminate his promotional contract with promoter Dan Goossen.  Although the case was dismissed, there are other pending lawsuits between the boxer and promoter.

Ward had filed a lawsuit in Los Angeles Superior Court seeking declaratory relief which would invalidate the promotional contract with Goossen.  Ward argued that the promotional contact he signed with Goossen exceeded the seven year maximum which would be in violation of California Labor Code Section 2855.  Ward and his counsel had argued that the Court ruling should have preceded the CSAC Arbitration hearing this past spring.  As you may recall, the CSAC ruled in favor of Goossen in determining the validity of the promotional contact.  Adding insult to injury, the court used the CSAC ruling as guidance for its own ruling that the promotional contract was valid.

Although Ward lost here, he has filed a lawsuit in federal court in the Bay Area citing violation of the Muhammad Ali Act.  As a result, Goossen has filed his own lawsuit for defamation which relates to statements made alleging Goossen’s promotional activities should be investigated for criminal activities.

Payout Perspective:

Realistically, the loss here may not be as big as one might think.  Essentially, the CSAC had ruled on the promotional agreement and the court appears to have just followed suit.  Ward’s legal team is likely focusing on the Ali Act violations as well as defending the Goossen defamation lawsuit.  Ward’s team might try to remove the Goossen lawsuit from LA Superior Court and “consolidate” it with its claim in federal court.  This may be a strategic maneuver by Ward’s legal team and also a practical matter as there would be two different lawsuits in different courts (one federal, one state) with different court deadlines.

Promoter sues boxer Ward for defamation

August 20, 2014

Boxing promoter Dan Goossen has filed a lawsuit against boxer Andre Ward and his attorneys as a result of Ward’s lawsuit claiming that the promoter violated the Ali Act when promoting the super middleweight.

The lawsuit filed in Los Angeles Superior Court accuses Ward, his attorney James McCarroll and McCarroll’s law firm Reed Smith of “character assassination.”  Ward had filed a lawsuit claiming that Dan Goossen of not providing financial disclosure information pursuant to the Muhammad Ali Boxing Reform Act.  Prior to that, the two sides battled over the length of Ward’s promotional contract with Goossen.  In that round this past spring, in an arbitration hearing, the California State Athletic Commission ruled in favor of Goossen,

Goossen now is claiming $10 million dollars in damages plus attorney fees as a result of what the promoter claims is a “vicious campaign to smear” him.  The lawsuit appears to be due in part to public comments made by Andre Ward to BoxingScene.com that Goossen violated the Ali Act and that the U.S. Attorney’s Office launch a criminal investigation.

(H/t:  Boxing Scene)

Payout Perspective:

Boxing lawsuits never disappoint.  From Goossen’s perspective, the inference that he is doing something criminal without factual evidence (not yet presented) feasibly hurts his business and you may see why he is filing the lawsuit.  But can he prove a claim of defamation?  The key issue in a defamation claim is that the individual making the defamatory statement must know that the statement is false.  This may be a tough hurdle to surpass but we recently saw this occur with the Jesse Ventura defamation lawsuit.

Obviously, a lawyer accusing another lawyer of misrepresenting the truth is (believe it or not) frowned upon and is the proverbial “white glove slap across the face.”  Look for this lawsuit, and the Andre Ward lawsuit, to heat up in the future.  MMA Payout will keep you posted.

Andre Ward sues promoter for Ali Act violations

August 11, 2014

Andre Ward has filed a lawsuit in U.S. District Court of the Northern District of California against his promoter, Goossen Tutor Promotions and Dan Goosen.  The lawsuit is premised upon the Muhammad Ali Act.

The lawsuit, filed on August 4th cites violations made by Dan Goossen which violate the federal law which was put in place to protect boxers from exploitation inside and outside of the ring.  Namely, Ward accuses Goossen of not providing him with the proper payout information prior to an event which is required pursuant to the Ali Act.

The Complaint (found here) states that “Since the inception of Goosen’s tenure as Mr. Ward’s promoter in 2004, and continuing to the present, Goossen has repeatedly and systematically violated all disclosure requirements under the Ali Act by failing to timely provide Mr. Ward with full and complete disclosures.”  The Complaint cites several specific fights where Goossen did not provide Ward the necessary payout information which would have included: 1) the amounts of any compensation or consideration that a promoter has contracted to receive from such match; 2) all fees, charges, and expenses that will be assessed by or through the promoter on the boxer pertaining to the event, including any portion of the boxer’s purse that the promoter will receive, and training expenses; 3) and any reduction in a boxer’s purse contrary to a previous agreement between the promoter and the boxer or a purse bid held for the event.  (per Ali Act 15 U.S.C. sec 6307(c).

It was not until the spring of 2013 that Ward’s manager demanded the information from Goossen. According to the Complaint, Goossen failed to comply and when he did provide information it was “woefully inadequate.”

The Complaint requests that Goossen “provide a full accounting of all revenues and expenses related to any boxing matches in which Mr. Ward participated and Goossen served as promoter including, but not limited to, barter arrangements, multi-bout television and venue agreements, or any other boxing events originating from the relationship with Mr. Ward.”

Notably, the parties have gone to Arbitration in California this past spring with Goossen prevailing.  However, Ward did not even show up to the Arbitration as it was his counsel’s contention that the Arbitration was not valid.  The California State Athletic Commission ruled that the Arbitration this spring was valid since there was no previous objection.  As far as the substantive issue at Arbitration goes, the parties disputed the duration of the promotional agreement.  Due to a shoulder injury which sidelined Ward for a year, the question was whether the promotional agreement should be extended due to the injury to Ward.  CSAC held that Ward was uncooperative when he returned from injury in seeking out a fight and thus the agreement’s original expiration was extended 14 months.

CSAC Arbitration Decision Ward-Goossen

Payout Perspective:

The lawsuit is just the latest in the ongoing saga with Andre Ward and his promoter.  For what it is supposed to be, the Muhammad Ali Act has not had many boxers use it and prevail.  We will see based on the information that will undoubtedly surface in the discovery process.  It will be interesting what explanation is given by Goossen as it relates to the purported failure to provide Ward with payout information.  Then again, the question of why it took so long for Ward to report this violation is something that will likely come up too.

MMA Payout will keep you posted.

Main Events dismisses lawsuit against Golden Boy, et al.

August 4, 2014

The parties in the lawsuit involving promoter Main Events and Adonis Stevenson, Al Haymon, Golden Boy, Showtime and Stevenson’s manager have been dismissed per a letter sent to the Court on Saturday morning.

As we reported, the lawsuit filed this past May was based on alleged agreement for Main Events and their fighter Sergey Kovalev to face Adonis Stevenson what was anticipated as a big money fight on HBO.  However, Stevenson signed on with consultant Al Haymon and took a fight under the Golden Boy banner.  After the schism within Golden Boy, it was believed that the fighter left with Haymon.

A lawsuit was filed by Main Events claiming breach of contract, breach of fiduciary duty, fraud, tortious interference and interference with prospective economic advantage premised upon emails between Main Events and Stevenson’s manager. Main Events claimed that the emails constituted a contract while the defendants claimed that the emails were not a contract as other details needed to be hashed out before a contract could be signed.

As one might expect, the defendants filed a Motion to Dismiss based on their theory that the emails did not constitute a contract.  The court allowed Main Events to Amend its Complaint on August 4th but decided to settle the case.

In a letter which looks to be sent on Saturday morning, August 2nd, counsel for Main Events let the court know of a settlement and sought a cursory request to extend the deadline to file an Amended Complaint in the event the settlement fell through.

Memo Endorsement Re Dismissal

As a result of the settlement, Kovalev faces Bernard Hopkins this fall which will be co-promoted by Golden Boy and Main Events.

Payout Perspective:

It appears that all is well that ends well.  It’s clear that Kovalev’s promoters, Main Events, wanted to be made whole based upon the feeling of being left with nothing after Stevenson signed with Al Haymon.  The Hopkins fight is a good substitute for Stevenson.  Moreover, the legal claims made by Main Events were tenuous especially with the theory of a contract based upon emails. Instead of spending money on legal bills, the parties were able to negotiate an alternative.

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