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.
April 10, 2013
First, a comment on Mitrione. UFC CEO Lorenzo Fertitta told Yahoo! Sports:
It doesn’t mean he’ll [Mitrione] be cut, or suspended long-term, or even fined… But the UFC will review the incident and, at the very least, try to educate Mitrione about why his comments were harmful.
The UFC sought assistance from the Washington D.C. firm of Covington Burling to draft its Code of Conduct Policy. The written policy was patterned after those drafted by the NHL, MLB and the NFL.
The policy’s intent is not to punish, but to educate and prevent flippant, ignorant comments that mainly occur via social media.
The Code of Conduct which you can see here has a provision to appeal (page 4). If a fighter does not agree with the UFC determination, it may appeal via binding arbitration. The determination of the binding arbitration as well as the proceedings will be confidential and “subject only to such disclosures as required by law.”
The other interesting note is that the fighter who engages in misconduct “may be required to undergo clinical evaluation.” If the fighter does not agree to do this, there may be a separate basis for discipline. Thus, it sounds like fighters are bound to do this “or else.”
This Code of Conduct is likely a part of the contract the fighters sign with the UFC. Obviously, if there was a negotiating unit for the fighters (the “u” word), it might be able to bargain with the UFC for some of these requirements.
The Iole article itself, is a partial editorial about the aftermath of Mitrione’s comments on Fallon Fox.
April 2, 2013
Bellator has filed a Motion to Dismiss Eddie Alvarez’s Counterclaims against the organization. The motion will be decided by the Judge without oral argument sometime this month.
As you may recall, the parties had agreed to a couple delays in filing Bellator’s answer in hopes of a possible settlement. Instead, Bellator filed a Motion to Dismiss the substantive legal claims in Alvarez’s countersuit.
The motion seeks to dismiss counts 3 and 4 of Alvarez’s Counterclaims. Those are Tortious Interference with Prospect of Economic Advantage and Breach of Contract.
Bellator’s argues that the matching agreement was confidential and pre-litigation correspondence holds a privilege and is not actionable. It further claims that Bellator had a right to match Zuffa’s offer and Alvarez’s breach of contract claim lacks a factual basis.
Tortious Interference with a Contract must show the following:
1) Plaintiff was in pursuit of business;
2) Interference was done intentionally and with “malice”;
3) Interference caused the loss of prospective gain; and
4) The injury caused damage.
Bellator suggests that Alvarez did not prove this because it had a contractual right to match. Bellator stresses the fact that for Alvarez to prove his claim, there must be a showing that Bellator submitted its matching contract with intentionally doing this without justification or excuse (i.e., the “malice” component). It also cites case law which states that “legitimate business reasons” was “justification” significant to deny a successful tortious interference claim. Here, Bellator’s right to match Zuffa’s offer is its argument that Alvarez’s claim for tortious interference would fail.
Bellator also claims that the correspondence between itself and Alvarez’s representation constitute a privileged “pre-litigation correspondence” which New Jersey law recognizes.
As for the Breach of Contract claim, Bellator argues that it cannot discern which “contract” Alvarez claims to have been breached. It labels Alvarez breach of contract claim as devoid of a factual premise. It also adopts the “pre-litigation correspondence privilege” to this claim.
Eddie Alvarez’s attorneys have filed its opposition brief arguing that Bellator submitted its offer to Alvarez in bad faith. In its brief, it argues that Bellator knew that it had no intention or ability to perform the terms of the contract and it was done with the intent to prevent or obstruct Alvarez from signing with Zuffa.
Alvarez’s brief argues that much of the legal cases that Bellator cites in its Motion to Dismiss came at Summary Judgment rather than at a Motion to Dismiss. For those nonlawyers, Summary Judgment usually occurs after discovery (depositions, answering of written interrogatories, etc.) while a Motion to Dismiss occurs around the beginning of the lawsuit. At most times, a Motion to Dismiss happens before a party must file a response to allegations in a lawsuit.
Alvarez argues a similar premise to what went against him at the Preliminary Injunction hearing in January. Essentially, Alvarez argues that Bellator cannot have the Court assume that it would be able to perform the matching terms in the Offer to Alvarez until further discovery is performed in this case. At the Preliminary Injunction hearing, the Court deferred on ruling whether or not Bellator offer matched the Zuffa contract offer to Alvarez. Notably, whether Bellator would have a PPV with Alvarez as the headliner. Here, Alvarez argues that his Counterclaims cannot be dismissed because as the Court determined it cannot decide on whether Bellator could rightfully match Zuffa. Thus, in this Motion to Dismiss, the Court cannot decide on whether Bellator’s offer was not done in bad faith.
Alvarez also requests that the Court allow him to Amend his Counterclaims if the Court finds in favor of Bellator. Something like this is normal and the Court would likely allow him to at least bring a Motion to Amend his Counterclaims.
Both sides make plausible arguments for and against Alvarez’s claims. Alvarez’s logic that the Court cannot determine whether or not Bellator submitted the matching offer in bad faith and thus his claim should not be dismissed is a nice bit of irony considering Alvarez’s legal team wanted the Court to determine that Bellator’s offer was not on par with Zuffa’s in their Preliminary Injunction hearing. Long story short, it’s likely that the litigation in this dispute will continue past Bellator’s Motion to Dismiss.
February 6, 2013
Welcome to another edition of The Pro Wrestling Post. In this edition, we take a look at the dismissal of a lawsuit, what’s next for the future of WWE video games and its YouTube channel tops 1 million subscribers.
TNA dismisses lawsuit against WWE
In mid-January, TNA dismissed its lawsuit against the WWE as the parties settled the case out of court. The case was based on claims that a former TNA employer that was hired by the WWE provided the WWE with confidential information he obtained while a TNA employee. Despite WWE turning over the documents, TNA claims it took the WWE three weeks to provide them with the documents and used them in attempting to acquire TNA talent, notably Ric Flair.
The parties quietly agreed to dismiss the lawsuit without further fanfare. TNA had requested to depose the likes of Triple H and Ric Flair to determine the extent the WWE knew of the documents provided by the former TNA employee.
Payout Take: It appears that cooler heads have prevailed in this standoff without any heated depositions. TNA believed that the WWE would use the documents as leverage, but as it stands now, Ric Flair is the only notable TNA contracted performer (at the time of the allegations) to have made an appearance with the WWE. Flair had been on the outs with TNA and is only making occasional cameos with the WWE.
Take Two to buy WWE video game franchise
Kotaku reports that video game maker Take Two, owned by 2K Sports, will purchase the WWE license to make its video games As you recall, THQ holder of the WWE’s rights to make its video games filed for bankruptcy late last year. The WWE is an unsecured creditor, owed an estimated $45 million by THQ.
Payout Take: It will be interesting to see what video titles the WWE will release (if any) this year. There is debate as to whether Take Two will produce an arcade style game or a simulation game. It will be interesting to see how this acquisition will affect the WWE’s business in this sector.
WWE tops 1 million subscribers
The WWE announced that it hit 1 million subscribers on its YouTube channel this past week. A press release by the WWE marked the accomplishment. It is one of the top 15 most influential brands in social media.
Payout Take: While the UFC is one of the pioneers of social media to promote its sport, the WWE has invested in it and developed new ways in reaching its audience. Its partnership with YouTube and producing original content on its channel has been a success. I think one of the markets it may have tapped into is the cord-cutters and the youth that feel as comfortable in front of a computer screen (or tablet) to watch “television.” The 1 million subscribers also speaks to its global reach, something the UFC is still in the infancy stages of developing.
January 25, 2013
The U.S. District Court for the District of New Jersey denied Eddie Alvarez’s request for a preliminary injunction so that he might be able to appear at UFC 159. The court held that Alvarez could not satisfy his burden of proof for a preliminary injunction.
The Court heard oral arguments this morning and rendered its decision this afternoon. The Court held that Alvarez could not satisfy the first 2 elements for issuance of a preliminary injunction. First, the Court held that Alvarez could not show a reasonable probability of success on the merits. Second, he could not show irreparable harm.
The Court held that Bellator had satisfied its matching rights of Zuffa’s contract. It would not look into the word for word matching of terms but determined that it would apply a “common-sense interpretation to the word “match.””
Notably, the Court would not examine the issues regarding weighing Fox versus Spike TV or the issue of Zuffa’s PPV offer. Rather, it stated that while Alvarez may prevail at a later date, it would not today.
In a footnote, the Court indicated that it would not and could not find Bellator in breach of contract if it doesn’t provide its own PPV. So, despite the fact that Bellator has not put on a PPV and there have been no indications of a PPV outside of these legal negotiations, the Court would not decide on an event that may or may not occur in the future.
Even if the Court ruled in its favor with element 1, it did not determine element 2 to satisfy the burden. The Court held that Alvarez was basing the fact that he would be irreparably harmed on speculation. Specifically, the argument that Alvarez would lose out on “notoriety, endorsements and a wider exposure to viewers” would require the Court to make speculative assumptions on what might or might not happen as a result of his participation on April 27th.
Furthermore, Alvarez’s brief cited two cases in which preliminary injunctions were granted on behalf of professional athletes based on the fact that they would be irreparably injured if they would not be able to pursue their career in the manner in which they saw fit. However, those cases differed as in each there was an illegal restraint that necessitated the players to be granted an injunction. The Court held that Bellator was not imposing an illegal restraint on Alvarez and he is not precluded from competing professionally if the injunction were not granted. Thus, Alvarez could not prove element 2.
(H/t: Fight Lawyer)
Bad news for Alvarez as Bellator has won a big battle. The Court punted on two of the more interesting issues in the matching rights debate: comparison of networks and PPV. Perhaps punt is not fair considering the limited scope the Court was willing to evaluate on a preliminary injunction. However, the lack of resolution and definition on the issues leaves it primed for further litigation. As the Court indicated, Alvarez may still prevail in his claims, but he could not obtain a preliminary injunction.
More likely, we will see a settlement of some sort between the parties. Perhaps even mediation to resolve the dispute. Its not clear if we will see Alvarez sign with Bellator or if the parties workout a deal where Alvarez will eventually land in Zuffa.
MMA Payout will continue to follow.
January 24, 2013
Bellator has filed its opposition briefing for Eddie Alvarez’s preliminary injunction. It includes two declarations which supports the contention that the organization had matched Zuffa’s offer.
On Friday, January 25th, the Court will hear Alvarez’s Order to Show Cause regarding a preliminary injunction sought by the lightweight so that he may seek a contract with Zuffa.
Bellator’s opposition includes two declarations. The first is from Main Events boxing CEO, Kathy Duva. Duva’s declaration states that matching rights clauses are commonplace in fight contracts and that guaranteed purses are the customary measure to determine whether a third party has matched terms of the contract. Duva also indicated that she is an attorney-at-law with a law degree from Seton Hall.
The next declaration is from former Showtime exec, and current EPIX TV consultant, Ray Langbord. Mr. Langbord addressed two issues in his declaration. First, he addresses the right to match issue. In reviewing the contracts in question, he opines that Bellator matched Zuffa’s offer and actually offered more non-speculative monetary compensation. Langbord also indicated that matching rights measure is guaranteed payouts as Duva addressed in her declaration. He also goes into a discussion about weighing Fox versus SpikeTV and states that Spike TV is more experienced in MMA than Fox.
Langbord, also an attorney, addresses the PPV issue. He states that despite the fact that Bellator has not run a PPV it still is capable of doing so.
As for the legal brief, we addressed the elements needed to prevail here. The most notable argument is whether Alvarez would likely prevail on the merits. Bellator argues that New Jersey does not require “matching of immaterial terms, or what appears to be the same thing, [and] do not let insubstantial variations between the third party offer and the right’s holder offer to defeat the right.”
Bellator also brings up the issue of a “poison pill” clause that has been addressed by courts in New Jersey. Essentially, poison pill clauses violate the duty of good faith and fair dealing in contracts. Bellator attorneys cite a USA Cable vs. World Wrestling Federation case as authority.
It will be interesting to see what happens Friday. Certainly, Bellator attorneys make a good case against the injunctive relief sought by Alvarez. The declarations are helpful for Bellator but necessarily instructive for the court. Yet, it does support Bellator’s belief that it matched the guaranteed money offered by Zuffa.
The poison pill clause is something that has been used in the NFL and NBA. Jeremy Lin’s contract with the Houston Rockets is an example of such a poison pill. Basically, the poison pill is something in the contract that the other side cannot or will not be able to match.