Harvey responds to Rousey ruling

Darin Harvey issued a statement on the California State Athletic Commission (CSAC) ruling which released his former client, Ronda Rousey from her fight contract.   MMA Payout has obtained the decision siding in favor of the UFC women’s bantamweight champion and we take a look at what went wrong.

Via Inside MMA on AXS TV:

“When I first met Ronda Rousey four years ago, she was destitute and UFC President Dana White was quoted as saying a woman would never fight in the UFC. I set out to make Ronda a star and prove Dana wrong. The results speak for themselves. Ronda is now a highly sought-after model, spokesperson and actress, not to mention the first and still reigning female UFC champion. She deserves all the credit in the world for her accomplishments, but she never would have achieved such unprecedented success without the unwavering financial investment, career guidance and professional support Fight Tribe Management and I provided her.

I am not a litigious person, but I never thought for a moment that once she made it to the top, Ronda would turn her back on us and refuse to honor her legal and moral obligations. After months of radio silence and without even giving me the courtesy of an explanation I was forced to go to court to compel Ronda to private arbitration per the terms of our agreement. Before that could be sorted out, Ronda’s legal team ran to the State Athletic Commission, demanded an expedited hearing and tried to get our entire agreement thrown out on a technicality. During our four-hour hearing last week, I finally heard Ronda’s side of the story. Frankly, it’s pathetic and I’m not surprised the Commission chose not to include any of that in their written decision. The Commission did properly reject Ronda’s attempt to invalidate the entirety of our agreement, and I am very pleased with that aspect of their decision. Our case against Ronda will now proceed. I am confident that when all the facts are presented to an impartial private arbitrator, Fight Tribe Management’s contributions to Ronda’s career will be fully recognized and fairly rewarded.”

Harvey also tweeted the following:

ATTYN MMA MANAGERS IN CA IF YOU DONT GET YOUR 1.5 PAGE BOXING CONTRACT RATIFIED YOU HAVE NO CONTRACT AS IT RELATES TO PURSE #WILLGETSCREWED

— Darin Harvey (@darinharvey) April 5, 2014

 

Roy Englebrecht, a fight promoter in California, empathized with Harvey’s plight but also advised the following:

I have seen this happen a number of times over the years, where well intentioned people want to get involved in the fight business, but never take the time to learn about the business and some of the rules that govern it. This situation with Rhonda and Darin could have been avoided if Darin knew the CSAC rules and followed them. This manager/fighter agreement or promoter/fighter agreement in California is unique to the sport, and if not followed you will lose, as this ruling showed.

The comments are based on the ruling issued by Andy Foster of the CSAC in which it determined that the evidence and testimony at the March 28^th Arbitration showed that the “Service Agreement” (as identified in the CSAC Arbitration Decision) was void as to the professional fighting services only.

The ruling, in favor of Rousey, is premised on Harvey not properly executing the fight contract on “printed forms approved by the commission.”  The Commission ruled that, “[t]he controlling contract was the subject “Representation Agreement”, which was entered into in California and specifically binds the parties to be governed by California law.” Hence, the rationale by the Commission would lead it to conclude that since the contract was not on its printed forms, the contract was void as to the fighting portion of the contract.  In addition, the Commission ruled that “a fighter-contract” is not valid unless both parties appear at the same time before the Commission, and the contract receives the Commission’s written approval.”  This did not happen as the contract, which was originally drafted in May 2012, was not executed until January 2013.  Regardless, it was not done before the Commission.

Even though Harvey’s “Representation Agreement” did not comply with the Commission rules, he still argued that he was entitled to “quantum meruit” (latin for “what one has earned”).  This is a theory in contract law allowing a party to be compensated for actual work/services performed.

Under this theory, Harvey was seeking to recoup losses incurred from representing Rousey.  Harvey indicated in an exhibit at arbitration that from January 1, 2010 to January 31, 2014, he collected $25,608 in income from Rousey fights, $23,180 from PPV fights and $20,830 from income of sponsorships.  This is offset by Harvey’s claim that he paid $170,376 in expenses related to Rousey’s fighting career which makes Harvey at a loss of $85,818 from representing Rousey.  The paid expenses included paying for training including strength and conditioning, sparring partners and living expenses.

However, the Commission ruled that Harvey was not entitled to quantum meruit since “such a finding would be inconsistent with the provisions of California law requiring proper fighter-manager contracts…”   The Commission reasoned in its decition, “[i]f Harvey, or other managers, were allowed to recover by means of quantum meruiti, it would undermine the statutory authority purposes of the Boxing Act.”  Thus, the Commission ruled against Harvey based on the overarching policy that it must protect the fighters from manager graft.  As stated in the decision, “[t]he Boxing Act is a regulatory statute, and recovery on a quantum meruit theory in the absence of compliance with the act would be inconsistent with its regulatory purposes.”

Payout Perspective:

As we indicated in a previous post, expect this case to heat up in the anticipated lawsuit and/or private arbitration.  However, this situation may have been avoided if Harvey and Rousey entered into a fight agreement as dictated by the rules of the CSAC.  If there would be further representation in other matters outside of fighting, it would seem that a second representation agreement would be necessary.  Based upon the facts, it looks as though the fighter-manager relationship was informal at the beginning with no need for things such as a signed contract.  This may explain the long lag between the date of the Representation Agreement (May 15, 2012) and the date Rousey actually signed it (January 29, 2013).  The harshness here is that for not following the rules of the CSAC, Harvey lost over $85,000 spent on her client that he will not be able to recoup.  The moral here is to follow the rules.