Bellator sues the UFC to prevent access to company documents

February 22, 2017

Bellator has sued Zuffa in federal court in California to prevent the UFC from obtaining key financial and contract information on fighters in its possession.  The Viacom-owned company is seeking to quash the subpoenas served by the UFC to obtain information that is part of the antitrust lawsuit it is involved with former fighters.

The lawsuit was filed on Wednesday in the U.S. District for the Central District of California.  The antitrust lawsuit’s current venue is in Nevada federal court.

Bellator claims that it has already “produced in excess of two thousand pages of responsive documents” related to the lawsuit.  It argues that the UFC’s request for additional information seeks confidential information, seek trade secret and other sensitive information.

Payout Perspective:

This was an obvious result from the discovery in this lawsuit.  It was clear that the UFC or Plaintiffs would request information on contracts and finances from its biggest competitor.  It was also clear that Bellator would not provide this information.  It does appear that Bellator has complied to a certain extent.  The UFC will likely say that some (maybe most) of the information provided by Bellator was irrelevant and a document dump and it has not provided the information provided in its subpoena requests.  With Bellator intervening, the process for the Le plaintiffs to go to trial will take much longer due to the fight over documents.

MMA Payout will have more in the next day.

Zuffa files Partial Motion for Summary Judgment to dismiss Nate Quarry from antitrust lawsuit

February 2, 2017

Zuffa has filed a motion for partial summary judgment to dismiss the claims of antitrust plaintiff Nate Quarry based on statute of limitations.

The motion was filed yesterday and requests an oral argument although that is not guaranteed.

The motion seeks to dismiss Quarry’s claims based on his promotional, bout and merchandise agreements with the company and deposition testimony.  The motion claims that Quarry’s claim is barred by the Four-Year Statute of Limitations.  In the alternative, it states that the “continuing violation exception” does not apply to his untimely claim.

“Distilled to its essence, Mr. Quarry’s claim challenges the scope of the UFC Identity Rights he contractually granted to Zuffa, the duration of those grants, and the payments he received in return—all terms in his 2004, 2005, and 2008 Promotional Agreements; his 2008 Merchandise Rights Agreement; and his January 2010 Bout Agreement.”

Zuffa argues that Quarry’s “last relevant agreement with Zuffa was executed in January 2010, but he chose to file suit in December 2014.”

15 U.S.C. section 15b limits antitrust claims to a four-year statute of limitations.

Zuffa also claims that Quarry’s claim should not be allowed through the “continuing violation exception.” This exception would override a statute of limitations defense.  However, Zuffa argues that relevant case law precludes such an exception since Quarry signed his Identity Rights outside the limitations period.  Even if Quarry argues that he received a benefit after the limitations period (i.e. after January 2010 and within four years from the filing of the lawsuit, thus being within the time to sue), there was not a new “overt act” performed by Zuffa which would restart the statute of limitations.

The motion was filed with Quarry’s promotional, bout and merchandise agreements but they were filed under seal meaning that public does not have access to them.

Payout Perspective:

Quarry was deposed by Zuffa and you can see the strategy was to probe him for information to try to dismiss his claims from the lawsuit.  Similarly, we would probably see this happening with other UFC veterans.  Plaintiffs will have until mid-February to oppose the motion.

UFC files Answer to Plaintiffs’ Complaint, parties fight over discovery process

January 27, 2016

Last week, attorneys for the UFC filed its Answer to Plaintiff’s Amended Complaint in the ongoing Antitrust lawsuit venued in Nevada.  The rather long (27 pages to be exact) goes through each and every paragraph of the Plaintiffs’ Complaint.

After the court denied the UFC’s motion to dismiss, per the rules of federal civil procedure, the company had to file an Answer to the Complaint.  Per rule 8(b) of the Federal Rules of Civil Procedure, the answering party must admit, deny or state that they do not have knowledge to admit or deny the allegation.  However, according the rules stating that you lack knowledge serves as a denial.  It is standard that parties address each and every sentence in a Complaint and even if the statement or allegations may not need an admission or denial, attorneys are ultra-careful and deny most allegations to ensure that there is nothing that might be construed as an admission.

In the Answer the defendant may set forth “Affirmative Defenses” which are facts not within the plaintiffs’ complaint which might defeat the plaintiffs’ allegations.

The Answer filed by the UFC’s attorneys, Boies Schiller and Campbell and Williams does not include many revelations as most Answer’s do not reveal too much.

Zuffa Answer to Plaintiffs' Consolidated Amended Complaint

Here are some of the more interesting parts of the Answer:

  • Probably not too interesting, but Zuffa denies it violated the Sherman Act or engaged in any anticompetitive activity, or that it has injured the Plaintiffs in any way.
  • Zuffa’s annual gross revenues for 2015 exceeded $500 million dollars (page 3, paragraph 7). Although Zuffa remains vague on its revenues, the statement is a conservative estimate from Lorenzo Fertitta’s assertion it made $600 million in 2015.
  • When plaintiffs cited an article or photo included in its Amended Complaint (see paragraph 8 and 12, page 4) and, the UFC did not admit to the veracity of the article or photo. Instead, it indicated the source of the article would be the place to determine the truth of the statement.
  • Zuffa objects to the definition of “Elite Professional MMA Fighter” for being “vague, unclear, confusing, misleading and without any objective or quantifiable basis or any standard usage in any industry.”
  • It notes that the video games UFC Undisputed 2015 sold over 2 million units while UFC Undisputed 2009 sold over 3.5 million units.
  • It notes that Fedor Emelianenko turned down offers to fight in the UFC.

In addition, Paul Gift of Bloody Elbow took at look at the discovery efforts ongoing in the lawsuit.  So far, according to the report 17,909 documents totaling 239,923 pages have been provided from Zuffa’s electronic fighter files.  It is in addition to 108,000 documents provided late last year.  The parties are still haggling over details in the discovery process including custodians (individuals who might have discoverable documents), search terms (the words/phrases used to identify potential relevant documents), relevant time frame among others.

The discovery phase continues as the parties indicate that they have served discovery requests on third parties which should add another level of complexity to this process as the third party lawyers will get into this situation.  Certainly, the attorneys for these third parties will want to ensure that its clients are protected.

Payout Perspective:

Nothing terribly earth-shattering from the Answer.  As in most lawsuits, you want to be as vanilla as possible when providing an Answer.  The Affirmative Defenses do not reveal too much about litigation strategy as well as many are very much form defenses to the lawsuit.  Watch for the discovery fight to continue as third parties were served discovery requests.  Do not be surprise if we see attorneys for the third parties file motions to narrow the scope of discoverable information.

Zuffa denied motion to stay discovery in antitrust lawsuit

July 30, 2015

A Nevada judge has denied Zuffa’s motion to stay discovery in the antitrust lawsuit filed by former fighters.  In addition, it appears that the court will want the parties to come up with a plan to allow the plaintiffs some of its discovery requests.

A Motion to Dismiss the lawsuit brought by Zuffa has yet to be heard by the court after the case was transferred from San Jose to Las Vegas but the court’s allowance of some of the discovery might infer that this case will not.

U.S. Magistrate Judge Peggy A. Leen denied Zuffa’s Motion to Stay Discovery.  The order indicates that “[t]he parties are directed to meet and confer and submit a proposed form of Confidentiality and Protective Order, as well as ES1 Protocols, within 30 days from today’s date [July 28th].”

In addition, the order stated that the Court “is going to impose restrictions on discovery while the District Judge considers the pending Motion to Dismiss…” it goes on to state, “Plaintiffs’ Counsel are encourage to reconsider their broad discovery requests.”

In federal court, there is a discovery “master” or judge that determines discovery disputes as was done here.  Judge Richard Boulware will preside over the actual court case.  This differs from state court where the trial court judge typically decides discovery motions too.

H/t:  Bloody Elbow

Payout Perspective:

The ruling appears to be a “cookie-cutter” of sorts as you might infer that the encouragement by the Court for Plaintiffs to reconsider its “broad” requests suggests that the Court does not want to grant Zuffa’s motion to halt discovery.  But, it acknowledges that the requests for a broad swath of financial statements, balance sheets and other receipts going back years and years is too cumbersome and unwieldly.  Thus, Plaintiffs will get a chance to obtain some documents but perhaps not everything it is seeking.  Despite not getting everything it asks for, Plaintiffs might get enough information to amend its complaint and survive a motion to dismiss.  In the alternative, you might think of this as the Court allowing Plaintiffs the opportunity to obtain some documents prior to the Court dismissing its case.  Hence, it was given a chance to prove its case.

The parties are to “meet and confer” to come up with a plan for discovery.  This happens a lot in discovery disputes where the Court forces the sides to work together.  Even with the hope of compromise, we still may see issues sprout up and fights over certain requests/documents.  Clearly, Zuffa will want to protect certain information while Plaintiffs will deem it discoverable.  We shall see how expansive this discovery fight continues and whether it plays into the inevitable Motion to Dismiss.

Plaintiffs file opposition to Zuffa’s Motion to Stay Discovery

July 4, 2015

Attorneys on behalf of the plaintiffs in the UFC Antitrust Lawsuit have filed an opposition to UFC’s Motion to Stay Discovery in the lawsuit that is now in the U.S. District Court of Nevada.

You might recall that Zuffa filed a Motion to Stay Discovery pending the court decision in its Motion to Dismiss.  The Motion to Stay Discovery was to be heard September 10, 2015 when the lawsuits were in San Jose.  Since the filing, the court determined that based on the forum selection clause found in fight contracts signed by many of the plaintiffs, the venue should be transferred to the federal district court in Las Vegas, Nevada.  Zuffa argued that since there was a likelihood that the curt would grant its Motion to Dismiss and would resolve all issues, discovery would be a moot point.  It also stressed the fact that the discovery process is “extensive, burdensome and costly.”  Zuffa cited the discovery requests which seek a voluminous amount of financial information from Zuffa.   In addition, Zuffa suggested that federal courts in California evaluated a request for stay during the pendency of a dispositive motion based on whether: 1) the pending motion must dismiss the entire case (or the issue in which discovery is aimed), and; 2) whether the court may determine the motion without the discovery.  Zuffa argues that the court can dismiss the case without the need for conducting discovery.

In its opposition, plaintiffs claim that the UFC’s motion to dismiss is “highly unlikely to succeed” and due to the fact that there are factual issues to resolve, discovery is required.  It also argues that a stay of discovery would hurt the plaintiffs’ case.

Plaintiffs state that the UFC’s Motion to Dismiss raises “at least four contentions” requiring discovery.

  1. Discovery related to UFC’s assertions that its exclusive contracts with fighters, sponsors, venues and others do not substantially foreclose competition or impair rival promoters.
  2. Discovery seeking to determine whether “minor league” promoters do not compete with the UFC.
  3. Discovery related to the argument that “Plaintiffs do not show how excluding would-be rivals from access to some venues, sponsors and TV networks amounts to substantial foreclosure.”
  4. Discovery regarding the UFC challenge of the term “elite MMA fighter” used in the industry creates a factual dispute.

Perhaps a dig at the UFC, the plaintiffs’ brief (on page 4) cites Bob Arum (a noted Dana White foe) stating that the boxing promoter “pays his boxers approximately 80% of the proceeds of events.”  The brief quotes Arum: “[b]ecause of the monopoly that the UFC has, [the UFC] pay]s][its] fighters maybe 20% of the proceeds that come in on a UFC fight.”

Response to Motion to Stay Discovery


Payout Perspective:

Its the standard litigation story that one side is stalling discovery, while the other side wants to facilitate discovery.

The opposition sets forth certain discovery requests it believes necessary for its case.  Essentially, it is laying the groundwork to broker a compromise with Zuffa to allow limited discovery.  The strategy here is for the court to determine what is fair and the fact that the plaintiffs outline a proposed plan may have the court allow the discovery to “see how it goes.”  Probably not what Zuffa wants, but one could see this happening.

If Zuffa wins its motion to stay discovery, it will save a lot of time and money and the litigation will hinge on the Motion to Dismiss.  If the court sides with plaintiffs and/or grants limited discovery, the plaintiffs may have a greater opportunity to withstand a dismissal.

We will see what the court decides.

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.

Potential issues looming in UFC lawsuit

December 22, 2014

Last week’s lawsuit filed by Nate Quarry, John Fitch and Cung Le could bring change to the UFC.  Or, it could be a legal challenge that will fall by the wayside.  Here are some potential issues to look forward to in the days and months to come.

Officially, the UFC has been quiet with respect to the lawsuit with only a short statement stating that it would “vigorously defend itself and its business practices.”  With that being said, the UFC will file an answer to the complaint.  If it is served the complaint, it must file an answer within 21 days after receiving service of the lawsuit.  Or, if it has “waived” service under Federal Rule of Civil Procedure 4(d), it would be able to file an answer within 60 days of the waiver.   The official statement provided Tuesday by the UFC indicated it had not received the lawsuit but it’s not known at this point whether official service was provided and/or the UFC agreed to waive to allow for more time to analyze the Complaint.

Paul Gift over at Bloody Elbow gave a very good two-part textbook edition of antitrust law.  If you have time and are willing, you should carve out some time to read.

Sports professor Mike McCann gave an overview of the lawsuit in an SI piece which includes potential defenses that the UFC may utilize in its legal strategy.

McCann points out a key piece that this lawsuit differs from other antitrust challenges in other sports leagues like the NFL or NBA.  The UFC is a “single-entity” and unlike other pro leagues which have teams owned by different individuals/entities, the UFC is one company.  The key aspect of this as McCann points out is that the UFC avoids any scrutiny from its employment rules with fighters since it is solely owned.  Section 1 of the Sherman Antitrust Act regulates competitors.  The lawsuit filed Tuesday is predicated on section 2 of the Sherman Antitrust Act and not section 1.

The substantive legal defenses include the practical idea that the fighters voluntarily signed contracts to fight in the UFC.  This is the likely reason why the plaintiffs’ tailored its Complaint to read that the injured class is “Elite Professional MMA Fighters.”

There is also the argument that the UFC just did better in business than everyone else in the marketplace.  Despite the tombstone picture of “dead” organizations presented by plaintiffs in its Complaint, the UFC will argue that its superior business acumen allowed it to thrive while those other companies did not.

There is also the issue of the Federal Trade Commission investigation from 2011 to 2012when the UFC purchased Strikeforce, World Fighting Alliance and other MMA organizations.  The FTC decided not to pursue the matter.  MMA Payout’s FOIA request led to nothing of substance from the investigation.  While some may carve out a distinction between the FTC’s decision not to investigate further and whether there was actual wrongdoing, the fact remains that an investigation into the company led to nothing.  However, if the UFC intends to utilize this issue in some way, I would not look to the FTC as willful helpers.

As for procedural hurdles, the plaintiffs are in need of fighters to join the class.  Tito Ortiz identified that he was contacted about the lawsuit but chose not to participate.  There are only names being floated around but no other fighters have officially stepped up.  At a certain point, the plaintiffs will need to go to the court to certify the class which the UFC lawyers will likely oppose.  If the court denies the class, the likely result would have the three named fighters bring these claims on their own.  With 5 reputable firms involved in this lawsuit on behalf of plaintiffs, one would assume they have a notion of fighters that are willing tot join the lawsuit.

The UFC has stated it would “vigorously defend” its business practices.  This will likely take the shape of a motion to dismiss the lawsuit from the outset.  Essentially, the UFC will deny the claims made in the lawsuit offering its own perspective on plaintiffs’ claims.  If nothing else, the motion to dismiss is the first strategy in avoiding any type of substantive discovery.  What the UFC does not want to happen is a discovery process (which we anticipate would be long and drawn out) which might reveal documents that could be damaging for the case and from a PR perspective.

The UFC might also seek to transfer the venue to the district court in Nevada.  While Le lives in San Jose.  Quarry and Fitch live in Oregon and Nevada respectively.  Although the UFC has held events in the San Jose area, the standard form contracts the fighters signed probably indicate that the jurisdiction for any dispute is in Nevada, where the UFC offices are located.  The UFC might argue that plaintiffs are “forum shopping,” essentially finding a location with a sympathetic jury.  California, especially Northern California, is more open to plaintiffs’ cases.  Although I do not know the landscape of Nevada juries, it’s likely they are more conservative.  With one of the plaintiffs a Nevada resident, the UFC might argue that the venue of the case be transferred to Nevada.

Payout Perspective:

Entering the first quarter of 2015, one might think there is looming pressure for the business to turn around.  With three big PPV shows (notice the $5 increase for UFC 182?) in the first quarter, the announcement of the Reebok deal, the CM Punk signing and now the Rampage Jackson deal one would think that the company is hoping S&P will raise its financial outlook and steady its credit rating.  It would not be out of the realm of possibility for S&P to downgrade its status if Zuffa business does not get better.

The news of the lawsuit will not help Zuffa’s financial outlook since you can expect its legal budget to increase due to this.  A potential Bellator battle could be on the horizon as well since the UFC signed Rampage Jackson despite Scott Coker’s claim he is still under contract.  With a newsworthy December, we can expect more happenings in the first part of 2015.

Ortiz declined to participate in Zuffa lawsuit

December 19, 2014

MMA Junkie reports that Tito Ortiz was asked, but declined to participate in the current UFC lawsuit filed by three fighters alleging violations of antitrust law.

Ortiz’s attorney, George Prajin, informed Junkie that the current Bellator fighter would not participate in the lawsuit which seeks class action status.  According to the Junkie article, Prajin and Ortiz met with Rob Maysey, one of the attorneys leading the charge for this lawsuit a year and a half ago.  Although intrigued by the proposed litigation at the time, Ortiz declined to be involved. Ortiz’s attorney indicated that he was contacted recently about the lawsuit but maintained to stay out.  However, Ortiz indicated that he may change his mind if the class is certified by the court.

Payout Perspective:

The Ortiz information is interesting and may be one of the hurdles the plaintiffs will have in getting fighters to join the lawsuit.  It appears that Ortiz would most likely not want to actively participate for several reasons.  He indicated in the article that he doesn’t want his name used just for publicity.  Also, there is a storied past with Ortiz and White and perhaps he is looking down the road at does not want to get caught up in messy litigation.  Regardless of being a named plaintiff, if this lawsuit enters the discovery stage we will see if one of the sides attempts to depose Ortiz about his past with Zuffa.

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.