Povetkin-Wilder lawsuit finally over

September 24, 2019

The long, winding and bitter lawsuit between Deontay Wilder and Alexander Povetkin and his promoter World of Boxing has come to an end with the parties stipulating an end to their lawsuit via a filing last week.

The two boxers were scheduled to fight in May 2016 in Russia but due to a failed drug test for Meldonium by Povetkin, the fight was called off. Semantics may have come in to play as Wilder claimed that Povetkin’s drug test cancelled the fight while Povetkin and his promoter claimed that Wilder’s refusal to come to Russia for the event forced the hand of the WBC to continue the fight.

Dueling lawsuits occurred with a contentious battle between the parties.  Despite a trial which saw a jury determine that Povetkin ingested Meldonium, siding with Wilder’s side, the case did not end there.  Yet, after trial, the Court sided with Povetkin and World of Boxing in its Summary Judgment motion deferring to the WBC’s Bout Agreement which was subject to the World Boxing Council’s Rules and Regulations.

The District Court’s Summary Judgment decision was appealed to the Second Circuit Court of Appeals where the court affirmed the lower court’s decision.  After the ruling there were threats to appeal the ruling to a full court of appellate judges or even the U.S. Supreme Court.  However, those threats went by the wayside as the parties agreed to the dismissal of the lawsuit.  Despite still having a defamation claim against Wilder, Povetkin and World of Boxing agreed to drop the claim.  The parties agreed not to pursue any costs it may have been entitled to.

The END by Jason Cruz on Scribd

Payout Perspective:

It’s likely that the parties wanted to put an end to this lawsuit and agreed to dismiss Povetkin’s alleged defamation claim against Wilder.  Notably, the escrow money in the amount of over $4.36 million that was left by the parties will go back to World of Boxing.  This is likely one of the reasons that Povetkin and World of Boxing was willing to concede on its defamation claim and costs it was entitled to as part of being the prevailing party.

Wilder-Povetkin/World of Boxing legal drama continues

August 5, 2019

The Deontay Wilder-Alexander Povetkin case may not be over despite an 2nd Circuit Appellate Court ruling which affirmed the trial court’s decision that Wilder’s claims for breach of contract should be dismissed.

However, the deposit World of Boxing put in escrow for the fight remains up in the air.  A letter filed with the Court last month indicates that Wilder is not giving up the fight as it contemplates an appeal to the full panel of Appellate Court judges on the 2nd Circuit (known as “en banc”) or even filing a request for the U.S. Supreme Court to hear the appeal.

In a letter to the Escrow Agent on June 18th, they informed escrow, “…to make clear that the referenced decision [the Appellate Court opinion] is not a ‘final non-appealable order’ what would entitle a party to distribution of the funds held in escrow…” As a result, on June 19th the Escrow Agent informed World of Boxing that it would not release the funds due to Wilder’s objection.

Letter From WOB to Court Ad… by Jason Cruz on Scribd

World of Boxing now argues that this delay has triggered a ‘liquidated damages provision’ in the escrow agreement which states that any objection by a party ‘not made in good faith’ is subject to a $2.5 million disbursement to the other party.  World of Boxing and Povetkin’s lawyers argued that Wilder’s request that it may seek another review would be ‘frivolous.’

Payout Perspective:

So here we are again with Wilder, Povetkin and World of Boxing still in a heated legal battle despite a jury trial, a summary judgment motion, a motion for reconsideration of the summary judgment and an appeal to the Second Circuit Court of Appeals.  As stated by Wilder’s attorneys, the last two efforts on this issue lie with having the 2nd Circuit judges hear the appeal (only one of the judges participated previously) or a request for the U.S. Supreme Court to hear the case.  Both of these options are very remote.  In most cases, those requests only occur where there are issues of unsettled federal law.  Arguably, that is not the case here.  But, what this could spawn is another lawsuit for the breach of the Escrow Agreement and its $2.5 million damage clause.  This would be almost 1/3 of the amount that is still being held in escrow.  MMA Payout will continue to monitor.

Appellate Court issues opinion in Wilder-Povetkin case, escrow money goes back to promoter

June 19, 2019

The Second Circuit Court of Appeals issued a decision last week in the Deontay Wilder-Alexander Povetkin/World of Boxing appeal filed by the parties.  It appears that the long, winding lawsuit may have finally ended.  Maybe.

While the appellate court filed an order last week, World of Boxing still holds a defamation claim against Wilder.  This was the related to Wilder’s allegations that Povetkin was essentially a cheater for using a banned substance.

2nd Circuit Court of Appeal… by on Scribd

The original lawsuit and summary of the jury trial can be found here.

In the appeal, both parties claimed a breach of an agreement for a fight that was to take place in Russia in May 2016.  Povetkin tested positive for a banned substance, Meldonium, prior to the fight.  Povetkin and his promoter World of Boxing claim that Wilder’s failure to go to Russia for the fight was grounds for a breach of the Bout Agreement.  Wilder argues that Povetkin’s failed test was a breach of the Bout Agreement.

In February 2017, a jury took 32 minutes to determine that Povetkin ingested a banned substance post-January 2016.  However, the trial court ruling did not matter much as s Summary Judgment ruling later that year fell in the favor of Povetkin.

From our post this past fall:

One of the overarching issues in the lawsuit as to who is to blame for the failed fight in Russian in May 2016.  You might infer from the news of a failed drug test from Povetkin that it was the Russian.  However, Povetkin claimed that Wilder’s failure to appear in Russia forced the hand of the regulating body, the WBC, to call off the fight.

The WBC Bout Agreement takes precedent here as the Court examines the contract in applying basic contract principles.  But in its application, there seem to be things that don’t make sense.

“We begin by noting that the Bout Agreement contains no language mandating that each fighter refrain from ingesting banned substances.”

The original Court ruling determined that Wilder did not breach the Bout Agreement when Wilder did not show up to Russia.  But the escrow payment lodged by World of Boxing (who won the purse bid) was still in question.  Wilder argued that language in the contract ensured that a Court had to order funds to be released if a dispute (like here) were to arise.  WOB argued that a contract clause allowing for liquidated damages in the amount of $2.5 million be awarded and paid by Wilder.

Yet, the WBC Contract was the overarching factor here:

The WBC did not issue a ruling on Povetkin’s positive drug test until August 17, 2016.  It noted that it called the bout off and reserved any further ruling.  It then determined that it was not “possible to ascertain that Mr. Povetkin ingested Meldonium after January 1, 2016.  After two additional rulings by the WBC which opposed the August 17, 2016 ruling, it overturned the decision and stuck with its August ruling.  It based this on a study showing Meldonium having the ability to stay in one’s system for more than five months.  It also noted Povetkin had negative drug tests six other times.

The Second Circuit essentially affirmed the District Court decision with respect to both parties’ claims of breach.

“Although a jury found that Povetkin ingested a banned substance, the Bout Agreement did not by its terms require that the fighters refrain from ingesting banned substnces.  And the WBC itself concluded that it could not be determined that Povetkin had violated its anti-doping rules by ingesting meldonium.”

As for the World of Boxing’s claims that Wilder’s failure to travel to Russia forced the WBC to postpone the fight was a breach, the Court was not persuaded.  They asserted that the district court “inappropriately shifted the burden onto them to prove that the WBC would have rescheduled the fight but for the Wilder Parties’ actions, when all they had to show was that they were ready and willing to perform.”  The appeals court did not find this argument viable citing that “the crux of its decision” was premised upon Povetkin’s drug test failure and not Wilder’s actions not to show up in Russia.

According to the appellate court:

They [WOB] might have wanted to perform under the Bout Agreement; however, given that the fight was postponed due to Povetkin’s positive test, that Povetkin was under continued investigation for said positive test, and that he was later suspended further for use of another banned substance, the WOB Parties were not able to perform.

Probably the most important part of the appeals court decision was what to do with the money in the Escrow account and whether a $2.5 million liquidated damages clause could be triggered as well as who was entitled to the $4,369,365 placed into the escrow for the fight.  The appeals court found in favor of WOB:  “[w]e see no reason why WOB should not be entitled to return of the funds held in escrow,” wrote the court. “Absent any viable breach of contract claim against it, we agree that WOB’s funds should be returned to it.”

However, the appeals court sided with Willder in noting that the $2.5 million liquidated damages clause was not triggered by his actions.

Per the Second Circuit opinion:

We agree with the district court that the Wilder Parties did not act objectively unreasonably in objecting to disbursement of the funds. While WOB is correct that the Escrow Agreement clearly contemplates that the money goes to Wilder if the fight takes place and to WOB if it does not, it does not necessarily follow that those provisions “should end the matter.”

Payout Perspective:

There will still be the matter of the prevailing parties’ Bill of Costs which grants the winning side the right for the other side to pay a list of costs expended for the appeal.  As contentious as this litigation has been, there will likely be a fight over that.

As for the Appellate Court opinion, its disappointing in its interpretation of the contract which seemingly allows for the use of performance enhancing drug with maybe the unwritten, unspoken warning that you not test positive for PEDs or get caught using them.  As I asked when the district court issued its decision, what were they thinking? The opinion reflects the strength of the basic legal contract and that promoters wield a massive amount of power.  Note that a jury sided in favor of Wilder, but you can argue that in the end, he lost.

This, and the Austin Trout appeal, which is pending a decision in the First Circuit are under-the-radar big legal issues in the world of boxing with ramifications down the road.

MMA Payout will have more on this soon.

 

 

Update on Wilder-Povetkin appeal

January 16, 2019

When we last wrote about the Deontay Wilder-Alexander Povetkin lawsuit, Wilder had filed its appeal brief in which it sought the 2nd Circuit Court of Appeals to overturn the District Court decision which sided with Povetkin.

The legal drama has been long and winding and despite a jury trial that determined that the Russian boxer had taken Meldonium after January 1, 2016, the trial court sided with Povetkin’s attorneys after the WBC, the boxing governing body, had reversed course on its belief that Povetkin had taken Meldonium.

You had to wonder what was the court thinking?

The issue of money deposited in a trust account still remained a question.  Upon the court siding with Povetkin and his promoter, they demanded the $4.3 million held in escrow.

The Court opinion sided with Povetkin on the basis of the Bout Agreement entered into was the deciding factor.  It cited language in the World Boxing Council’s Rules and Regulations which stated that “any dispute or controversy” would be bound by the WBC.

Another layer of this dispute revolves around purse money placed in escrow for the fight.  Wilder had written the escrow company to hold the money until a court decided the outcome.  Povetkin and World of Boxing objected to this and sued claiming a violation of the duty of good faith and fair dealing.  In addition, they claimed that Wilder had violated the terms of the Bout Agreement and should be subject to a liquidated damages clause of $2.5 million.  Wilder was due $4.5 million to fight Povetkin while Povetkin was due $1.9 million.  In addition, there was a $715,000 bonus for the winner.

While Povetkin and his promoter claimed that they were the winners and should be entitled to the money sitting in escrow, Wilder appealed the ruling citing issues with the trial court ruling.

Our rundown on Wilder’s appeal brief from this past October is here.

In November, Povetkin/WOB’s attorneys filed its answering brief to essentially agree with the trial court’s ruling which negated the jury trial’s ruling and request that the appeals court vacate the jury verdict.

The attorneys argue that there was no breach of the Bout Agreement by the Russian as the contract vests discretion in the WBC to make all the decisions relating to the bout.

The focus of Povetkin’s brief cites that the WBC issued a supplemental ruling in November 2017 which stated that “it is not possible to ascertain that Mr. Povetkin ingested Meldonium after January 1, 2016.”  The basis was in line with the trial court when it sided with Povetkin in stating that the contract for the fight with Wilder contained no language “mandating that each fighter refrain from ingesting banned substances.” It would defer to the WBC on these matters on whether or not an athlete breached the contract.  This ruling set aside the authority of the trial court and deferred it to the WBC.

The power quote utilized by Povetkin in its response to Wilder’s appeal brief was that “the parties specifically agreed that the WBC’s decision on this question [anti-doping] would be conclusive.”  Povetkin’s attorney cite a NASCAR case which ruled that it should follow NASCAR’s rules.”  It also cited the Tom Brady Deflategate case as the District Court “improperly invaded the contractual authority of the NFL Commissioner.

The basis of Povetkin’s argument that the appeals court should uphold the trial court’s decision is based on its interpretation of the contract which indicates that the WBC is the arbiter of all claims under the Bout Agreement.  As a result, since it determined that it could not conclude that Povetkin ingested Meldonium post-January 1, 2016, he did not breach the contract.

This conclusion seems sound in a vacuum.  The court should defer to the contract.  But it doesn’t seem to harmonize with the factors in this case.  Namely, Povetkin’s failed drug test in April 2016 and the subsequent cancellation (or postponement) of the Wilder fight.  Perhaps the key issue here is whether the bout was cancelled or postponed as Wilder believed it to be cancelled while Povetkin argues it was postponed.

Povetkin argues that the bout was a postponement and it was not a breach.  It cites the Bout Agreement with the WBC rules which states that a scheduled fight may be “rescheduled…or postponed by the WBC.”

In addition, Povetkin’s attorneys argue that the trial jury decided an immaterial fact indicating that the question presented to the jury was whether Meldonium was ingested by Povetking post-January 1, 2016, but the Bout Agreement was not signed until April 11, 2016 and “there is no contractual provision covering the parties conduct prior to execution.”

Povetkin also stakes his claim to the money in the Escrow Account which was to award the purse amounts to each fighter as well as the commission fees.

Finally, Povetkin argues that it should be awarded fees for the anticipatory breach of Wilder.  The claim is that Wilder wrongfully repudiated the Bout Agreement by not showing up in Russia prior to the fight in May 2016.  Instead, Wilder flew home from his training camp in England once he learned that Povetkin had failed a drug test.  Povetkin claims that the bout was to be postponed but Wilder breached the Bout Agreement by treating it as if the bout was cancelled.

Wilder will have a chance to respond to Povetkin’s appeal brief once more prior to oral arguments which should happen later this year.  MMA Payout will keep you posted.

Deontay Wilder files appeal brief in Povetkin Meldonium case

October 22, 2018

Deontay Wilder filed its appeal brief in requesting that the court overturn the trial court’s ruling in favor of World of Boxing and Alexander Povetkin.  The appeal highlights an incongruent ruling by the court which appeared to defer to the World Boxing Council in its determination of Povetkin’s drug test failure.

The match between the two heavyweights was set by the World Boxing Council to take place in May 2016 in Moscow, Russia.  Wilder was training in England when he learned that Povetkin and tested positive for a banned substance.  Wilder decided to return to the United States instead of going to Russia believing that the fight was cancelled due to the failed drug test.  Povetkin and his promotion, World of Boxing claims that Wilder breached the contract when he failed to go to Russia for the match which prompted the WBC to cancel the fight.

In limbo is a purse of $7.15 million still in escrow.  The trial court granted World of Boxing’s request for the escrow money to be return.  Of course, Wilder believed that he should be granted his share of the money since Povetkin failed the drug test.  A lawsuit filed by the heavyweight champion ensued in which WOB and Povetkin filed counterclaims against Wilder.

From our post this past April:

In February 2017, a jury just took 32 minutes to determine that Povetkin took the banned substance Meldonium post-January 1, 2016, however that did not mean much in the outcome of this Summary Judgment motion.

One of the overarching issues in the lawsuit as to who is to blame for the failed fight in Russian in May 2016.  You might infer from the news of a failed drug test from Povetkin that it was the Russian.  However, Povetkin claimed that Wilder’s failure to appear in Russia forced the hand of the regulating body, the WBC, to call off the fight.

The WBC Bout Agreement takes precedent here as the Court examines the contract in applying basic contract principles.  But in its application, there seem to be things that don’t make sense.

“We begin by noting that the Bout Agreement contains no language mandating that each fighter refrain from ingesting banned substances.”

The inference one might yield from this sentence of the Court opinion is that tis ok to used banned substances.  Based on this, the Court held that Povetkin did not breach the Bout Agreement because it cannot conclude when/if he ingested the banned substance Meldonium. Obviously, this is opposite the jury finding.

The good news for Wilder is that there was no finding of a breach of the Bout Agreement when Wilder did not go to Russia for the fight with Povetkin.  The Court notes, “[t]here is simply no evidence that the WBC’s postponement decision was a “normal or foreseeable consequence” of Wilder’s actions, or that Wilder’s acts otherwise caused the WBC’s decision.”  Povetkin and World of Boxing sought $2.5 million in liquidated damages that was part of the Escrow Agreement.  “While the WOB Parties argue that it was Wilder’s failure to appear in Moscow, rather than Povetkin’s positive test result, that caused the WBC to postpone the Bout…no reasonable jury could indulge in the speculation that would be required to conclude that this was so,” stated the Court opinion.  It went on to state, “[B]ecause a reasonable jury could not find that any breach by the Wilder Parties proximately caused the WOB Parties’ damages, the Wilder Parties’ motion for summary judgment dismissing the WOB Parties’ claim for breach of the Bout Agreement is granted.”

As for the escrow funds, World of Boxing is entitled to its release held in escrow but no interest because no judgment was entered against Wilder.

The claims for defamation filed by Povetkin remain although they may be dismissed pending further movement in this case.

The Court opinion seems to fly in the face of the original jury finding that Povetkin took Meldonium post-January 2016.  The opinion seems to lean entirely on the WBC Agreement for its determination on its procedure in determining the status of Povetkin based upon his drug tests.  The Court quotes WBC Rules and Regulations when it notes, “the WBC may in its discretion consider all factors in making a determination regarding responsibility, relative fault, and penalties, if any.”

The WBC did not issue a ruling on Povetkin’s positive drug test until August 17, 2016.  It noted that it called the bout off and reserved any further ruling.  It then determined that it was not “possible to ascertain that Mr. Povetkin ingested Meldonium after January 1, 2016.  After two additional rulings by the WBC which opposed the August 17, 2016 ruling, it overturned the decision and stuck with its August ruling.  It based this on a study showing Meldonium having the ability to stay in one’s system for more than five months.  It also noted Povetkin had negative drug tests six other times.

The WBC seemed to be dragging its feet in this case as it put off the ruling on Povetkin despite the litigation moving ahead.  There’s also the issue of Povetkin’s positive test for ostarine which happened after the lawsuit began.  Yet, the WBC did not penalize him for this and even stressed negative drug tests notwithstanding the two positive tests for Meldonium and ostarine.

The appeal brief, which was filed in August 31, 2018, brought up the glaring disparity in issues regarding the WBC ruling and that of the jury trial.

Wilder notes that the WBC confirmed in its August 2016 ruling that the bout was called off due to Povetkin’s positive test.  In December 2016, Povetkin tested positive for another banned substance.  It issued a March 2017 ruling which doled out an indefinite suspension and a $250,000 fine.  But, in November 2017, it issued another ruling which amended the indefinite suspension to a fixed one-year fine and reaffirmed its ruling that it could not be found whether Povetkin ingested meldonium post-January 1, 2017.

Wilder points out that WOB’s attorney argued to the Court that “only the WBC, and not a jury, was competent to decide the issue, and that a jury verdict would merely be an advisory opinion.” Despite the trial judge’s disagreement, WOB attorney believed that the contractual agreement of the WBC would be the controlling factor in determining whether Povetkin took Meldonium.

However, Wilder believes that the District Court’s interpretation of the Bout Agreement was wrong.  Wilder argues that the “WBC does not have the discretion to resolve private disputes between parties to a contract.”  The Bout Agreement includes a clause which states that the parties “irrevocably accept and consent to the jurisdiction of” the District Court to “resolve any disputes arising out of” the Bout Agreement.” Wilder claims that whether or not Povetkin ingested Meldonium constituting a breach of the Bout Agreement is clearly a dispute arising out of the agreement, over which the District Court has exclusive jurisdiction.  Essentially, while the Bout Agreement gives discretion to the WBC, it does not supersede the authority of the courts to interpret the contract.  And Wilder argues, “[b]y cedeing the decision regarding whether Povetkin breached the Bout Agreement to the WBC,” it committed reversible error.  Additionally, the counterclaims filed by WOB and Povetkin reflect the authority of the courts over the WBC Bout Agreement.

Wilder also argued that even if the appellate court holds that the trial court was correct in holding that the WBC and not the trial court could determine whether the Bout Agreement was breached, it caused error in its application of the facts of the case.

Wilder cites the following press release from the WBC:

They also argue that the date of the bout is a material term in the contract.  Thus, whether or not the date of the bout was postponed is not relevant.  WOB asserts that Wilder breached the agreement due to his failure to fly to Russia for the intended fight.  Wilder cites several cases in which the exact date of the events is deemed essential to the terms of the contracts.

Following along the line of logic that the WBC had some authority in its contract, Wilder argues that the WBC delegated its duty to the trial court:

As a result, Wilder argues that the WBC applied a “strict liability” standard wherein if a jury found that Povetkin ingested Meldonium after January 1, 2017, he would be stripped of his mandatory challenger status which meant that his fight with Wilder would be off the table.

Wilder also indicates something amiss with what may be infers as a “quid pro quo” with Povetkin and the WBC. Pointing out the press release by the WBC, it seems as though if Povetkin paid his fine, he would be reinstated.

In a footnote of its brief, Wilder states that the trial court denied a request to reopen discovery on this limited issue but Wilder request this court again.

Finally, Wilder argues that he is entitled to the escrow property in the amount of $4,369,365 as a result of WOB’s breach of the Bout Agreement.

Payout Perspective:

This is a fascinating legal case premised on the basic tenets of a contract. The trial court’s decision to side with Povetkin and WOB in determining that the WBC would be the only entity capable of deciding whether Povetkin ingested Meldonium seems out of line with the job of the court to interpret the contract when a dispute comes before it. We have seen with the Austin Trout case that the Court has deferred to the drafter of the private contract despite the aggrieved party bringing a lawsuit. MMA Payout will continue to follow once WOB files its appellate brief.

Deontay Wilder and Alexander Povetkin head to appeal

May 25, 2018

The Deontay Wilder-Alexander Povetkin legal drama will not end.  The parties have given notice that they are appeal the federal district court’s decision.

Letter From Wilder 05.25.18 Appeal by JASONCRUZ206 on Scribd

The Southern District Court of New York has had a trial and summary judgment motions in this contentious lawsuit over whether Povetkin’s failed drug test for Meldonium was a breach of the fight contract between the parties or whether Wilder not heading to Russia, where the fight took place, was a breach of the contract.

Thus far, a jury found that Povetkin ingested Meldonium post-January 1, 2016.  The Court affirmed the jury decision after a Motion for Reconsideration and/or New Trial  by Povetkin (and his promoters at World of Boxing)was denied.  Yet, in litigating the other causes of action, the court determined on Summary Judgment that Povetkin did not breach the Bout Agreement although a jury trial determined that Povetkin ingested Meldonium and concluded that a VADA test on April 27, 2016 showed Meldonium in his system.  The court deferred to the WBC’s discretion to rule on culpability for its anti-doping program.  As such, the court concluded that since the WBC believed that Povetkin did not violate the Bout Agreement.

From our previous post on this issue:

In this case, after issuing several conflicting and indecisive rulings, the WBC finally decided on November 7, 2017 that notwithstanding the jury’s verdict in this case, it would adhere to its earlier decision that it was not possible to determine whether Povetkin ingested Meldonium after January 1, 2016.  In other words, the WBC exercised its discretion to determine that Povetkin did not violate the CBP [Clean Boxing Program, the drug testing entered into by the boxers].”

In addition, the Court has released the escrow funds held up by Deontay Wilder after the fight did not go forward.  However, the Court did not grant WOB the $2.5 million in liquidated damages that was included in the escrow agreement which would have been triggered if it was found that there was a breach.  The Court noted that there was not a judgment filed against Wilder and that his representatives made the objection for disbursement in accordance with the agreement.  The Court did not find a breach of implied covenant of good faith and fair dealing. It also did not find Wilder guilty of breaching the Bout Agreement for not showing up in Russia for the fight as the Court opines that there was no evidence of his absence for the fight in Russia caused the cancellation.

The District Court ordered the release of the money held in escrow of over $7.1 million dollars.

A cause of action by Povetkin for defamation against Wilder was not litigated, but its likely that this will be determined after the appeal.

Payout Perspective:

It only makes sense that this case was going to be appealed.  Both sides are appealing ruling from the court.  Wilder is appealing the Summary Judgment ruling which essentially overturned a trial court decision that Povetkin took Meldonium.  Povetkin might be seeking to go after Wilder for breach of the Bout Agreement and obtain a $2.5 million liquidated damages award that is a part of the escrow agreement.  The legal drama shall continue and MMA Payout will follow.

Court issues final order in Wilder-Povetkin but appeal likely

May 10, 2018

The Deontay Wilder-Alexander Povetkin case may be heading to an appeal if you believe the parties.  The Court has issued a final judgment and order in the case and indicated that money held in escrow be sent to World of Boxing.

Order May 10th by JASONCRUZ206 on Scribd

Final Judgment by JASONCRUZ206 on Scribd

The legal saga that has seemingly dragged on for years looks to be heading to the Second Circuit Court of Appeals.  With the exception of Povetkin’s legal cause of action for Defamation against In a letter from Povetkin/World of Boxing’s attorney’s, they advise the Court that Wilder intends to appeal the Court’s summary judgment ruling.  Povetkin/World of Boxing proposed to the Court that the remaining claim for Defamation is stayed until the resolution of the appeal.

The Court issued an order which ends the case (for now) and allows for World of Boxing to regain over $6 million held in escrow since April 2016.

Despite the ruling, the parties fought over whether the escrow funds could be disbursed or whether the Defamation claim must be litigated.  This contentious litigation will likely continue into the appeal.

Payout Perspective:

The parties of 30 days from the date of the Order to appeal the court ruling.  It looks like that Deontay Wilder’s legal team will do so and its hard not to blame them based on the ruling from the Court which appears to contradict a February 2017 trial that found Povetkin ingested Meldonium post-January 2016.  However, the Court adhered to the WBC’s ruling that it could not determine when Povetkin ingested Meldonium.  MMA Payout will keep you posted.

Wilder and Povetkin/World of Boxing legal drama not over yet

May 2, 2018

The Deontay Wilder-Alexander Povetkin legal drama continues despite a Motion for Summary Judgment motion that seemingly answered all the questions left in the lawsuit.  All, except for when World of Boxing (“WOB”), Povetkin’s promoters might recoup the money that has remained in escrow since the start of this dispute.

We’ve covered the exhaustive background of this case since the lawsuit was filed.  For background from beginning, check this post and for the most recent filing you can look here.

On April 25th, the court entered an Order which relied on a U.S. Supreme Court case, Hall v. Hall, which determined whether consolidated cases under the Federal Rules of Civil Procedure are “immediately appealable upon an order disposing of that case.”  In this case, the World of Boxing has a claim for defamation which was stayed pending resolution of the rest of the claims.  The Court is concerned that the parties have not litigated this portion in the lawsuit assuming no final judgment would be filed.

Order dated 4.25.18 by JASONCRUZ206 on Scribd

However, the World of Boxing presented a Notice of Presentment of Proposed Final Judgment last week for the Court to sign which would have allowed for WOB to present to the escrow agent and disburse funds back to WOB.

A telephone conference originally set for April 26th has been moved back to May 10th.  The parties are expected to address the situation.

Ahead of their teleconference, the parties were offered to address the issue in letter form to the court.

Wilder sent a letter dated April 24, 2018 to the court:

Letter From Deontay Wilder 4.24.18 by JASONCRUZ206 on Scribd

The biggest argument in the letter was that the Court’s April 19, 2018 Opinion and Order granting in part and denying in part the parties’ motions for summary judgment, had the effect of dismissing “all claims” except the defamation claim.  WOB’s attorneys noted, “Judge Gorenstein concluded that the Bout Agreement granted complete discretion to the WBC to decide any doping question in this case, which had the effect of overruling the jury’s verdict that Povetkin ingested meldonium when it was banned.  It also pointed out that the Opinion and Order did not direct entry of a final judgment.

In its letter, it argues that consolidated cases retain their separate identity “to the extent that final decision in one is immediately appealable by the losing party.”  Here, WOB cites the U.S. Supreme Court in Hall v. Hall.

On the same day, WOB responded:

Letter From WOB 4.24.18 by JASONCRUZ206 on Scribd

Wilder argued that the Hall case differed from the instant case.  Wilder’s attorneys argued, “[I]t would make no sense and ill-serve judicial economy to grant Defendants’ request for entry of two separate judgment on the same claims in two different cases.  To the contrary, such a result would sow serious confusion before this Court and on the appellate level, and there is no precedent to support that outcome.”

Payout Perspective:

 From WOB’s perspective, the argument by Wilder is seemingly a way to prolong the litigation to prevent WOB from receiving the millions of dollars kept in escrow.  The fundamental legal argument is whether the defamation claim is separate from the other claims made by the parties.  The U.S. Supreme Court case has varied interpretations by the parties.  Wilder believes that there should be one entry of judgment while WOB believes that there could be two judgments made for the one case.  Once again, it appears that the Court was not clear in its ruling as its Order deciding the Motions for Summary Judgment could have outlined the issue or gave guidance as to whether an entry of judgment should occur or pending the litigation of the defamation claim.  The question one might ask, is whether dismissing the claim would allow for this case to end barring appeal.  We will see May 10th.

What was the court thinking in Povetkin-Wilder?

April 26, 2018

The ruling in the Alexander Povetkin-Deontay Wilder case last week was a surprise for many that have been following the case.

Opinion and Order by JASONCRUZ206 on Scribd


The lawsuit was based upon a drug test which Povetkin failed in lead-up to a fight with Wilder in Russia.  Wilder did not travel to Russia after learning of the failed drug test.  Wilder first sued Povetkin and his promoter World of Boxing as a result of Povetkin’s failed test.  Povetkin filed counterclaims against Wilder for failing to go to Russia 7 days prior to the bout date to which Povetkin claims was a breach of the Bout Agreement.  He also filed defamation claims against Wilder for bad-mouthing the heavyweight after drug test results revealed he took Meldonium.

The Court opinion deciding the Summary Judgment motions relied on the Bout Agreement which was subject to the World Boxing Council’s Rules and Regulations.  It cited language in the Agreement which stated that “any dispute or controversy” would be bound by the Rules and Regulations of the WBC.

Another layer of this dispute revolves around purse money placed in escrow for the fight.  Wilder had written the escrow company to hold the money until a court decided the outcome.  Povetkin and World of Boxing objected to this and sued claiming a violation of the duty of good faith and fair dealing.  In addition, they claimed that Wilder had violated the terms of the Bout Agreement and should be subject to a liquidated damages clause of $2.5 million.  Wilder was due $4.5 million to fight Povetkin while Povetkin was due $1.9 million.  In addition, there was a $715,000 bonus for the winner.

In February 2017, a jury just took 32 minutes to determine that Povetkin took the banned substance Meldonium post-January 1, 2016, however that did not mean much in the outcome of this Summary Judgment motion.

One of the overarching issues in the lawsuit as to who is to blame for the failed fight in Russian in May 2016.  You might infer from the news of a failed drug test from Povetkin that it was the Russian.  However, Povetkin claimed that Wilder’s failure to appear in Russia forced the hand of the regulating body, the WBC, to call off the fight.

The WBC Bout Agreement takes precedent here as the Court examines the contract in applying basic contract principles.  But in its application, there seem to be things that don’t make sense.

“We begin by noting that the Bout Agreement contains no language mandating that each fighter refrain from ingesting banned substances.”

The inference one might yield from this sentence of the Court opinion is that tis ok to used banned substances.  Based on this, the Court held that Povetkin did not breach the Bout Agreement because it cannot conclude when/if he ingested the banned substance Meldonium. Obviously, this is opposite the jury finding.

The good news for Wilder is that there was no finding of a breach of the Bout Agreement when Wilder did not go to Russia for the fight with Povetkin.  The Court notes, “[t]here is simply no evidence that the WBC’s postponement decision was a “normal or foreseeable consequence” of Wilder’s actions, or that Wilder’s acts otherwise caused the WBC’s decision.”  Povetkin and World of Boxing sought $2.5 million in liquidated damages that was part of the Escrow Agreement.  “While the WOB Parties argue that it was Wilder’s failure to appear in Moscow, rather than Povetkin’s positive test result, that caused the WBC to postpone the Bout…no reasonable jury could indulge in the speculation that would be required to conclude that this was so,” stated the Court opinion.  It went on to state, “[B]ecause a reasonable jury could not find that any breach by the Wilder Parties proximately caused the WOB Parties’ damages, the Wilder Parties’ motion for summary judgment dismissing the WOB Parties’ claim for breach of the Bout Agreement is granted.”

As for the escrow funds, World of Boxing is entitled to its release held in escrow but no interest because no judgment was entered against Wilder.

The claims for defamation filed by Povetkin remain although they may be dismissed pending further movement in this case.

The Court opinion seems to fly in the face of the original jury finding that Povetkin took Meldonium post-January 2016.  The opinion seems to lean entirely on the WBC Agreement for its determination on its procedure in determining the status of Povetkin based upon his drug tests.  The Court quotes WBC Rules and Regulations when it notes, “the WBC may in its discretion consider all factors in making a determination regarding responsibility, relative fault, and penalties, if any.”

The WBC did not issue a ruling on Povetkin’s positive drug test until August 17, 2016.  It noted that it called the bout off and reserved any further ruling.  It then determined that it was not “possible to ascertain that Mr. Povetkin ingested Meldonium after January 1, 2016.  After two additional rulings by the WBC which opposed the August 17, 2016 ruling, it overturned the decision and stuck with its August ruling.  It based this on a study showing Meldonium having the ability to stay in one’s system for more than five months.  It also noted Povetkin had negative drug tests six other times.

The WBC seemed to be dragging its feet in this case as it put off the ruling on Povetkin despite the litigation moving ahead.  There’s also the issue of Povetkin’s positive test for ostarine which happened after the lawsuit began.  Yet, the WBC did not penalize him for this and even stressed negative drug tests notwithstanding the two positive tests for Meldonium and ostarine.

This ruling seems ripe for an appeal.  The jury verdict seems to fly in the face of the Court’s ruling last week which seemed to defer to the WBC’s handling of the Povetkin matter.  Wilder’s side may just put this case behind them unless Povetkin is allowed to pursue its defamation claim.

Court decides Povetkin-Wilder Summary Judgment motions

April 20, 2018

The Southern District of New York has ruled on dueling Summary Judgment motions from Alexander Povetkin and his promoter of World of Boxing and Deontay Wilder.  In a ruling issued Thursday, the court has granted in part and denied in part both parties’ motions.   However, a closer read reflects that World of Boxing made out better than Wilder.

Opinion and Order by JASONCRUZ206 on Scribd

The Court first notes that despite a jury trial finding that Povetkin ingested Meldonium after January 1, 2016, he did not breach the bout agreement.

From the Court opinion:

It has been conclusively determined as a result of the jury trial in this matter that Povetkin ingested Meldonium after January 1, 2016.  It is undisputed that Povetkin’s urine sample provided to VADA on April 27, 2016 tested positive for Meldonium. Nonetheless, neither of these is a breach of the Bout Agreement.

The opinion relies on the contract terms and the rules agreed to by the parties infers that there it “does not require absolute abstinence from the use of banned substances, but by its terms requires that the boxer abide by “WBC anti-doping requirements.”  In turn, the CBP also provides that “the WBC shall have complete discretion to rule on culpability . . . . [And] may in its discretion consider all factors in making a determination regarding responsibility, relative fault, and penalties, if any.”

One might consider this a broad interpretation of the contractual provision regarding banned substances.   The Court goes on to essentially tell us that the jury trial didn’t matter because the WBC didn’t believe it could determine that Povetkin did not violate the Bout Agreement:

In this case, after issuing several conflicting and indecisive rulings, the WBC finally decided on November 7, 2017 that notwithstanding the jury’s verdict in this case, it would adhere to its earlier decision that it was not possible to determine whether Povetkin ingested Meldonium after January 1, 2016.  In other words, the WBC exercised its discretion to determine that Povetkin did not violate the CBP [Clean Boxing Program, the drug testing entered into by the boxers].”

In addition, the Court has released the escrow funds held up by Deontay Wilder after the fight did not go forward.  However, the Court did not grant WOB the $2.5 million in liquidated damages that was included in the escrow agreement which would have been triggered if it was found that there was a breach.  The Court noted that there was not a judgment filed against Wilder and that his representatives made the objection for disbursement in accordance with the agreement.  The Court did not find a breach of implied covenant of good faith and fair dealing. It also did not find Wilder guilty of breaching the Bout Agreement for not showing up in Russia for the fight as the Court opines that there was no evidence of his absence for the fight in Russia caused the cancellation.

A teleconference on the case will take place on April 26th.  At this point, the only claim that is left is WOB’s defamation claim which was stayed by the Court.

Payout Perspective:

It appears that the long, winding road of this litigation may be over pending an appeal.  And, it would not surprise me if an appeal would be in order.  The opinion essentially mutes any reason for the February 2017 jury trial which found that Povetkin ingested Meldonium post-January 2016.  The Court relies on the WBC’s later ruling on the matter to conclude that there was no actual breach of the Bout Agreement.  Frankly, the claim that “absolute abstinence” from taking banned substance is not a part of the Bout Agreement, rather compliance with the drug regulator is absurd.  Not only does it parse the meaning of the reason behind not taking banned substances, it is a “lawyerly” way around taking a hard-line approach on illegal drugs.

 

The issue of the Escrow Agreement is another interesting ruling but one that seems to have been decided correctly.  Although one might infer that Wilder attempted to hold up payment (or reimbursement) to WOB or Povetkin, it was the correct way to decide the disbursement of funds.  I don’t think that this part of the matter will be over yet.

 

MMA Payout will have more on this in the coming days.

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