Boxers scored a big win over promoters on Friday when the First Circuit Court of Appeals ruled in favor of Austin Trout in his longtime legal battle with the World Boxing Organization. The appellate court remanded (sent back) to the trial court the case overruling its prior ruling dismissing Trout’s case.
In addition to sending back the case, the appeals court vacated Trout’s Motion for Reconsideration of the trial court ruling denying his request for review of the court’s dismissal. Obviously, there was no need to consider since the appellate court ruled in his favor on Friday.
The Court held that the WBO’s appeals process was invalid regarding its arbitrator-selection mechanism.
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Trout filed the lawsuit back in 2015 claiming that in July and August of 2015 the WBO breached its Regulations when he was dropped from the WBO’s top four junior-middleweight rankings. Trout’s essential claim was that he was a highly ranked boxer that should have received a title shot but he was dropped in the rankings for what appears to be no apparent reason. A boxer that was previously ranked below him was given a title shot. According to Trout, it was because that boxer’s promoter gave financial incentives to the WBO. He also claims that the WBO “solicited and accepted financial remuneration from promoters and/or managers to fix ratings.” Upon request of the reason why Trout fell in the rankings, he was not provided a response. He filed a lawsuit alleging this to be a violation of the Ali Act, the contract with the WBO as well as other legal issues. The crux of the lawsuit was that by being taken out of the rankings, it foreclosed him from competing for the WBO title which would equate to bigger money and more opportunities.
The lawsuit winded through the court system starting in New Mexico where Trout resides and then moving to Puerto Rico where the WBO is stationed. The lawsuit was dismissed by the Federal District Court and moved to arbitration as the WBO cited its arbitration clause in Trout’s contract. However, Trout claimed that that section of his contract was invalid.
The clause in the contract, identified as the WBO Appeal Regulations was outlined in the appellate court opinion:
It then adds Section 35(e):
If the dispute could not be resolved informally, it would be submitted to the “WBO Grievance Committee.” The committee is comprised of three persons designated by the WBO President. While the rules stated that these people may not be a part of the WBO “Executive Committee” that committed must confirm the nominations of those candidates whom the President of the WBO must put forward to serve on the Grievance Committee.
Trout argued that the appeal process included in the WBO contract allowed for the WBO to choose its own appeals process which it claimed was unfair. He relied on Section 35(d) in that the the plain terms required that the case be heard in local or federal court and not via arbitration.
The WBO argued that Section 35(d) and (e) when read together means that the claims would be subject to arbitration rather than lawsuit. Trout claimed that the Muhammad Ali Act was not subject to arbitration.
As Trout pointed out in his legal filings:
In a claim in which, apart from the obvious fact that it is a defendant, it is alleged that Defendant WBO engaged in a pattern of corruption by illegally manipulating its ranking system, allegations that could carry criminal charges under the Muhammad Ali Act, defendant WBO pretends to be party and judge.
There is simply no way the arbitration forum would provide a fair opportunity to plaintiff to pursue his claim. There can be no presumption of fairness, to the contrary. This is not a claim between to [sic] boxers or between a boxer and a manager. This is a claim between a boxer and the WBO.
The overarching issue regarding the Ali Act as it relates to the appeal is whether the federal statute may be arbitrated if an individual contractually signs away their right to litigate in a contract. The appeals court indicated that the regulations of Section 35(d) and (e) should be read in a complimentary fashion rather than contrary terms. It indicated that the jurisdiction choice in Section d indicates where any potential dispute should be venued and that it would be governed in the federal court of Puerto Rico. However, the appeals court notes, it does not negate the right to arbitrate a claim under the contract. Thus, Trout’s claim that the Ali Act is precluded from arbitration falls flat but the question of whether a promoter can contract out of it and use it as a waiver was not ruled upon although one might suspect this clause to be scrutinized more by boxers and their management.
Trout’s attorney. Miguel J. Ortega-Nuñez, issued the following statement on Friday:
“Today, the Honorable United States Court of Appeals for the First Circuit has afforded boxers the opportunity to be heard by a fair finder of fact and law. This decision should send a message everywhere in the boxing industry: the Muhammad Ali Act will not bend to particular interests. Any and all boxers having a claim under the Muhammad Ali Act shall be heard by an impartial forum. This is, indeed, a great victory for Mr. Trout and boxing in general. However, there is still a very long road ahead in order to bring the Muhammad Ali Act to its full potential. We will make our part of the job, by prosecuting this case until justice is done to Mr. Trout, who’s claim exemplifies exactly why the Muhammad Ali Act was created in the first place. We are ready for the next round.”
Austin Trout made mention of his court victory on twitter.
This is a big win for all fighters!! #AptTMH #nodoubttrout #nodoubt #buildyourself #TeamTrout #troutnation #AsidePromotions https://t.co/cyul8xwCGG
— Austin Trout (@NoDoubtTrout) July 10, 2020
WBO representatives could not be reached prior to the posting of this article.
Next, the trial court will have another shot at this case in line with the appeal court ruling. We still may see a final ruling in favor of the WBO although Trout will have his chance in court.
Payout Perspective:
I would argue that the opinion by the appellate court still does not provide proper guidance on the issue of whether a promotion can use an arbitration agreement as a “prospective waiver” to negate a lawsuit under the Ali Act. The opposing theories here is the right to a contract and the right to arbitrate a case versus the federal statutory underpinnings of the Ali Act. In his arguments on the appeal, Trout argued that the Ali Act prevented it from being arbitrated. However, this argument contradicted his signed contract and the language which allowed any disputes to be sent to an arbitration panel dictated by the WBO. The Appeals Court denied this argument stating that there was nothing within the Ali Act text that precluded it from arbitration. Only such language would have prevented it from being arbitrated. But, the question is still out there as to whether a contract may have an arbitration agreement to include the Ali Act. Thus, boxers should be wary of these contracts and include reassurances that they retain their right to litigate Ali Act claims.
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