More on Plaintiffs Opposition to Zuffa’s Motion to Transfer Venue in antitrust lawsuit

April 11, 2015

MMA Payout reported earlier in the day of Plaintiffs’ Opposition to Zuffa’s Motion to Transfer Venue in its antitrust lawsuit filed in the U.S. District Court of Northern California in the San Jose Division.  We provide a little more insight into the filing by Plaintiffs on Friday.

In its opposition briefing arguing that the lawsuit should remain venued in San Jose, the Plaintiffs (i.e., Cung Le, Nate Quarry, Jon Fitch and the other fighters that filed in San Jose) argue that the forum selection clause in the UFC fighter contracts and/or bout agreements are inapplicable when it comes to this antitrust claim. Essentially, the Plaintiffs argue that the clause in the fighter contracts which Zuffa pointed to in its motion as binding the Plaintiffs to bring any legal action in Nevada does not apply when it comes to a claim violating antitrust laws. Essentially, the Court need not interpret the terms or enforce the contracts, but the contracts are evidence of Zuffa’s anticompetitive means.

Plaintiffs also argue that Zuffa fails to show that the present Court is an “inconvenient forum.” Plaintiffs argue that there are “significant ties” to the District in which they filed the lawsuit. They cite the fact that three fighters reside in the San Jose area and others train (notably, Jon Fitch) in the area. They also cite to the fact that Plaintiffs Le and Hallman fought for Strikeforce based in San Jose. Also, five of the Plaintiffs fought in San Jose while with the UFC. The Plaintiffs also cite to events that occurred in the area that are relevant to the lawsuit. The Plaintiffs bring up that EA Sports UFC, an issue raised in the lawsuit, was developed in Northern California.

In rebuttal to the Zuffa argument that the UFC’s documents and witnesses are located in Vegas and thus convenience would dictate that a transfer is warranted, Plaintiffs argue that UFC document production would not be inhibited. Essentially, with the technological advances of document discovery, the fact that Zuffa is in Vegas and the Plaintiffs are in Northern California is of no significance. The Plaintiffs argue that the depositions of UFC employees can be taken in Vegas without the need to transfer the whole case and if a trial were to take place, the relevant employees to testify at trial could be compelled to the forum at time of trial.

An interesting argument pointed out by Plaintiffs is that they cite the fact that the Court is experienced in antitrust law. The Northern District of California had 96 cases involving federal antitrust claims in 2014 whereas the District of Nevada only had 4. Plaintiffs state that from 2010-2014, the Court had “25 times the number of antitrust actions” than the District of Nevada.

Plaintiffs also point to “strong local interest in the underlying litigation” arguing that it should provide a forum to the Plaintiffs that reside and train in San Jose and the issue that UFC allegedly enforced its illegal monopoly and monopsony with Northern California-based Strikeforce is of interest to keeping the case in San Jose.

Finally, Plaintiffs argue that San Jose is relatively faster in terms of the time taken to file a lawsuit to the time a case goes to trial.  Cung Le and Jon Fitch also signed declarations to support this opposition although each did not have any significant information.

Payout Perspective:

After reviewing the opposition brief of the Plaintiffs, it is clear that the key argument here is whether the forum selection clause will be enforced by the San Jose court. Zuffa argues that the Plaintiffs signed the contract and thus it should be enforced and binds them to a venue in Las Vegas. However, Plaintiffs contend that the actual terms and/or interpretation of the contract are not an issue and thus the forum selection clause is not relevant. The other arguments are of lesser strength. Notably, the “significant ties” argument posed by Plaintiffs is hard to accept.

MMA Payout will keep you posted once Zuffa files its

Plaintiffs in Zuffa antitrust case file opposition to motion to transfer venue

April 11, 2015

The Plaintiffs in the Le v. Zuffa, LLC (and related) antitrust case(s) have filed its opposition to Zuffa’s Motion to Transfer Venue to Las Vegas.  Its main argument is that the forum selection clauses in the plaintiffs fight contracts are inapplicable in this antitrust action.

Earlier this year, Zuffa filed a motion to transfer venue from the federal court in San Jose to the federal court in Las Vegas citing, among the issues, the contractual agreements signed by the fighters.  Also, it argued that many of the witnesses are residing in Vegas thus it would be more convenient for this litigation to occur in Las Vegas.

On Friday, Plaintiffs filed opposition to the motion which states that the forum selection clauses (the contractual language in the fight contracts binding fighters to bring legal action in Vegas) are not applicable in this antitrust matter.  It argues that the contractual language only related to issues “to interpret or enforce” the contracts and Plaintiffs argue that the contracts are only relevant to the effect that the UFC used them as part of its anticompetitive scheme.  The Plaintiffs go on to state in its pleadings that the UFC “torture the text of the Agreements and ignore the weight of authority that defeats its Motion.”  Essentially, the UFC misinterprets its own contracts in this matter.

UFC has issued its own statement in relation to the opposition filed Friday:

“As expected, the plaintiffs have filed their opposition to our motion to dismiss. Nothing in their opposition changes our view that their complaints are filled with conclusory allegations that are not adequate to support their antitrust claim. As we laid out in our motion to dismiss, UFC has competed in a lawful manner that has benefited fighters and built UFC into a premier organization in the sport of Mixed Martial Arts.

Indeed, UFC properly competes with other MMA promoters, fairly compensates its athletes and has created a product that is enjoyed by millions of fans around the world. Our legal position is solid and we intend to prevail in this lawsuit.”

The hearing date on the motion to transfer venue is set for May 7th.

In addition to this motion, Zuffa has filed a motion to dismiss with the opposition brief pending.

Payout Perspective:

MMA Payout will keep you posted on this motion.  Plaintiffs argue several other points in its opposition which will cover in the coming days.  Essentially, the Plaintiffs argue that despite the fighters signing their fight contracts which subject them to jurisdiction in Las Vegas, the headquarters of the UFC, the claims that they bring do not relate to the enforcement of the contract.  The contract is only evidence of the anticompetitive nature of the organization.  In addition, Plaintiffs argue that key individuals do reside in San Jose and thus it should stay in the district.  Also, they claim that based on median time of filing to trial, it is faster (25%) to trial in San Jose than Las Vegas.

Court opinion in Bellator-Rampage lawsuit made available

April 9, 2015

A copy of the court opinion by Judge Karen Suter which granted Bellator MMA’s injunction in its lawsuit against Rampage Jackson was made public.

After oral argument on April 2nd, the Court issued its opinion on April 7th.  MMA Fighting provides a copy of the lawsuit here.

The court made it abundantly clear that it was not deciding the merits of the case and specifically that it was not deciding whether the contract between Bellator and Rampage was breached.  However, it made clear that Bellator had proved its case

Although the Court referred to several cases involving boxers that sign promotional agreements and then seek additional help from other promoters, the Court distinguished this case based on the exclusivity of Bellator’s agreement with Rampage.  It sided with Bellator in its argument that it was likely that Rampage breached its contract despite the arguments raised.

As previously stated, the Court found “clear and convincing” of the following on behalf of Bellator.  The four factors in determining a preliminary injunction are as follows:

  1. A substantial likelihood of success on the merits of the case;
  2. There is a substantial threat of irreparable damage or injury if the injunction is not granted;
  3. The “balance of harms” (threatened injury) weighs in favor of the party seeking the preliminary injunction;
  4. Granting an injunction would serve the public interest.

Some interesting points from the 25 page ruling.

  • The Court emphasized the exclusivity of the contract between Bellator and Jackson. It also stressed the fame and notoriety of Jackson as evidence that Bellator would suffer injury if Jackson were allowed to participate at UFC 186.
  • The Court did not buy the argument that Bellator breached its contract since it did not provide Rampage or his management with PPV summary report. The Court indicated Bellator had substantially complied with the information and that not providing the PPV summary was not a material breach of the contract.
  • Rampage’s claim that his fights were not adequately promoted by Bellator and the need to obtain the PPV summary was necessary fell flat. The Court ruled that there was no marketing provision setting a certain amount of money that was required to promote his fights.  Even without producing the summary report for PPV, there would be no breach since the actual compensation Rampage received was not in dispute.  Furthermore, the Court opined that Rampage offered no rationale for why Bellator would not want to market and promote one of the company’s top stars.
  • The Court sided with Bellator with its argument that if Rampage were allowed to fight at UFC 186, it would harm Bellator more than just monetarily, but from a reputation and brand standpoint. Bellator argued that the “MMA community” would denigrate Bellator if Rampage were allowed to leave for the UFC.  Moreover, Bellator argued that denying the injunction would be a sign to other fighters and their managers that they could just “ignore their contracts” and leave for perceived better opportunities.  Bellator also argued that if Rampage were to leave, Bellator would have lost out on the time and money it had invested in promoting him.
  • The opinion also notes that on December 4, 2014 Scott Coker claims to have notified the UFC that Rampage was still under contract while negotiations by Rampage to the UFC were ongoing. This seems to call into question how much the UFC knew about the Bellator-Rampage contract dispute.  It also calls into question the UFC’s decision to sign him and then put him on a card prior to a legal determination.

Payout Perspective:

In the end, Rampage and his legal team may win this court battle, but the first big decision out of this case falls in Bellator’s favor.  The Court opinion preventing him to fight at UFC 186 is not a good indicator of things to come.  Certainly, the Court made it clear it was not ruling on whether a breach occurred, but the threshold for proving a preliminary injunction is warranted is high (“clear and convincing” as opposed to “more likely than not”).  We will see what Rampage’s legal team decides on whether it will appeal the decision.

Another issue that was raised in passing was the knowledge that the UFC may have known about the contract issues with Bellator.  There could have been potential legal action between Bellator and UFC regarding interference with a contract but it seems as though Bellator did not want to pick that fight just yet.

MMA Payout will keep you posted on this.

UFC distances itself from Jackson injunction

April 8, 2015

The UFC has issued its own statement on the injunction granted against Rampage Jackson on Tuesday which forces him out of his fight at UFC 186 later this month.  In the statement, the UFC indicates that Jackson may consider an “emergency appeal.”

Via UFC.com:

UFC has been advised of the New Jersey state court’s ruling in the matter between Quinton “Rampage” Jackson and Bellator MMA. The UFC organization was surprised about the ruling because Mr. Jackson represented to UFC on multiple occasions that he was free to negotiate and contract with UFC. The UFC organization is also surprised that Bellator sat on its alleged rights for months before taking action.

In addition, the UFC indicated that it is “also considering action to protect its rights and minimize damages regarding this matter.”

The UFC added that UFC 186 in Montreal, Canada will “proceed as planned.”  There are rumors that the Bell Centre is offering refunds for UFC 186 up until April 10th.  However, others are indicating that the Bell Centre is enforcing the “card subject to change” language in the tickets.

Payout Perspective:

The UFC statement distances itself from Jackson although it does advance the story a bit when it indicates Jackson may consider an “emergency appeal.”  Then again, an appeal is always an option when you lose in court.  Realistically, the UFC should not have been “surprised” about Bellator’s legal maneuvers as this is straight textbook litigation strategy.  What is interesting is how the UFC now takes a “plausible deniability” stance whereas the UFC should have taken into consideration Jackson’s contract status when they decided to re-sign him.  Essentially, it should not have just taken Jackson’s word that he was free to sign with the UFC.  Now, the UFC is in a predicament with its PPV later this month.

NJ court grants Bellator MMA’s injunction; Rampage off of UFC 186

April 7, 2015

A New Jersey court has granted the injunction request of Bellator MMA in its request to prevent Rampage Jackson from fighting at UFC 186 later this month.

Judge Karen L. Suter granted Bellator’s request for relief on Tuesday morning.  Jackson was scheduled to fight Fabio Maldanado on April 25th as the co-main event of the PPV.  Jackson appeared on FS1 during UFC Fight Night 63 to promote the fight.  In fact, the UFC had promoted Jackson’s fight despite the possibility he could be off the show.

Bellator MMA sued Jackson for breach of contract in New Jersey.  This was based on Jackson’s decision to “terminate” his contract citing Bellator’s lack to cure what Jackson perceived as Bellator’s breach of contract.

Interesting enough, Jackson and/or his management indicated that they had sought the advice of UFC’s lawyers in determining that his leaving Bellator for UFC was legal.

The lawsuit is not over as the two sides will continue to litigate this matter.  However, it’s a big blow for Rampage and the UFC.

Bellator issued a statement regarding the ruling.  “We are pleased by the judge’s ruling and look forward to having Rampage fighting for Bellator again soon.”  Rampage Jackson issued his own statement via Instagram.

(h/t:  MMA Fighting)

Payout Perspective:

 Jackson essentially cites the old attorney excuse of being “hometowned” as the reason for losing on Tuesday.  Regardless, the ruling is a blow to the UFC as it decimates its PPV later this month.  One has to wonder why it decided to promote Jackson’s appearance prior to the ruling.  Moreover, the fact that the UFC may have provided its legal opinion on the contract is another blow for the organization.  With that being said, the lawsuit is not over and Jackson’s legal team may still have a chance in proving that Bellator did not hold up to its end of the contract.  Or, in the alternative, Scott Coker may have to work his personal skills in having Rampage rejoin Bellator.

Featherweight boxer Gonzalez sued by Golden Boy

March 31, 2015

ESPN reports that Golden Boy Promotions filed a lawsuit against boxer Jhonny Gonzalez on Friday prior to his fight on Saturday.  The complaint filed in Los Angeles Superior Court claims that Gonzalez’s Mexican promoter violated Golden Boy’s exclusive rights to promote his bouts.

Despite the lawsuit, it did not attempt to file an injunction from stopping Gonzalez from fighting Gary Rusell, Jr. Saturday night.  It is requesting $1 million and for equitable relief which asks the court to enforce Golden Boy’s promotional agreement which Gonzalez entered into in 2013.

The lawsuit implicates Al Haymon as conspiring with Gonzalez’s promoter, Osvaldo Kuchle’s Promociones del Pueblo, in delaying a bout with Russell (who Haymon manages) until Golden Boy was not in the picture.

Gonzalez was stopped by Russell, Jr. on Saturday.

Payout Perspective:

Although the story does not indicate a cause of action, one might expect it to be a breach of contract claim.  This is at least the second boxing lawsuit which names Al Haymon as a contributing issue in a promotional dispute.  Last year, you might recall that Sergey Kovalev’s promoter, Main Events, sued Adonis Stevenson’s management group as well as the boxer.  That lawsuit was settled essentially with Bernard Hopkins stepping up to fight Kovalev.  Here, we may have a similar (not the same) situation.  Obviously, the timing of the lawsuit probably precluded an injunction, although it would have been interesting.  But we will see what happens next.

Details disclosed in Bellator-Rampage lawsuit

March 5, 2015

Newsday reports the details filed within the complaint by Bellator MMA against Quinton “Rampage” Jackson. The complaint filed in New Jersey provides some interesting financial tidbits on Jackson’s contract.

A hearing will be held on April 2nd to determine whether Jackson will be able to fight in the UFC 186 in April.

Jackson received a $200,000 bonus for Bellator’s May 2014 PPV despite not meeting the PPV threshold bonuses indicated in his contract.

Jackson’s contract also included a 2013 Tesla Sport worth $129,603, a $100,000 signing bonuses and guaranteed fight purses between $200,000 and $300,000 for non-PPV fights. He would receive between $200,000 and $450,000 for a PPV fight. Jackson also received a $50,000 guarantee if the event did not receive a certain revenue from sponsors. The contract was negotiated between Jackson’s representatives and then-Bellator CEO Bjorn Rebney.

Additional incentives included:

-30% of Bellator’s net gate receipts over $400,000 at events where he fought

-$35,000 per episode for the SpikeTV Reality Series “Rampage 4 Real”

-A screenwriter for a feature film project and access to Paramount Pictures to develop film projects

-A red carpet appearance at the 2013 MTV Video Music Awards

-$4 for every Bellator 120 PPV buy over 190,000

-Bellator spent $250,000 to advertise Bellator 120 during the NBA Playoffs

-Bellator spent $200,000 to secure rights to a Rolling Stones song for an advertisement featuring Rampage

Bellator filed a lawsuit and injunction this past Monday as a result of Jackson’s purported breach of contract.

Payout Perspective:

Some of the demands seem unattainable and perhaps that’s the reason why Bellator agreed to them (i.e. $4 PPV buys over 190K, 30% of Bellator’s net gate over $400K). Other inclusions in the contract seem very good for Jackson (i.e., $35K per ep for that show, $200K bonus for Bellator 120). Jackson’s management team cited Jackson’s right to breach based on the contract being an “entertainment” contract. Looking at the details, the overall pay guarantees and sweeteners (red carpet appearance and car) is favorable for Jackson.

Bellator MMA files lawsuit against Rampage

March 2, 2015

Bellator MMA has filed a lawsuit today in New Jersey against Quentin “Rampage” Jackson for breach of contract. The organization is also seeking an injunction to prevent Jackson from appearing in the UFC.

Jackson is scheduled to fight at UFC 186 against Fabio Maldonado on April 24th. It appears that today’s lawsuit and request for an injunction will seek to preclude Jackson from appearing on that card unless something can be worked out between Bellator, Jackson and likely the UFC.

Bellator issued the following release:

Today, Bellator MMA was compelled to go to court to stop Quinton “Rampage” Jackson from fighting in an April 25th bout promoted by Bellator’s competitor, Ultimate Fighting Championship (UFC).  Jackson, who has completed only three fights of his exclusive six-fight contract with Bellator, is barred by contract from fighting for any promoter other than Bellator. Our lawsuit for an injunction and related relief – filed in the Chancery Division of the Superior Court in Burlington County, New Jersey – will compel Jackson to honor his contractual agreement.   We look forward to having one of our MMA stars fighting for Bellator again.

This lawsuit had been brewing for a while after Jackson left the Viacom-owned company late last year and indicated that he had conferred with UFC lawyers and “an outside law firm” to determine if he could legitimately leave Bellator. Jackson’s story is that Bellator did not live up to his Bellator contract, Jackson gave Bellator time to cure the issues he had, but the company did not satisfy Jackson’s concerns so he decided to leave.  What may be an interesting detail here is that Jackson’s management views the contract he signed with Bellator (under Bjorn Rebney) as an entertainment contract rather than a pure sports contract.  This may come into play, as well as the fact that the contract was signed in California.  But that is speculation at this point.

Although Bellator MMA is headquartered in Irvine, California and Jackson lives in Irvine, the lawsuit is filed in New Jersey.

As you recall, Bellator prevailed against Eddie Alvarez when Alvarez sought an injunction against the organization in their contractual dispute. The lawsuit was venued in the U.S. District Court of New Jersey.

Payout Perspective:

Timing is everything when filing lawsuits as we recently wrote about. It was clear that there was going to be a legal issue when Jackson left Bellator to sign with the UFC. The timing of the filing and injunction comes close to UFC 186 and might mean that Jackson will be pulled from the card. The interesting issue here is that the UFC will be implicated here and its clear based on its actions that it thinks it had solid legal grounds to sign Rampage and actively promote him for his fight.

MMA Payout will keep you posted.

Draft Kings dealing with potential class action lawsuit

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.

Payout Perspective:

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.

2014: a look at some of the business issues in boxing

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.

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