Last Friday, attorneys for DAZN filed a Notice of Removal to federal court of Canelo Alvarez’s lawsuit against the digital platform and Golden Boy Boxing. The lawsuit now returns to federal court after it was filed in Los Angeles Superior Court.
Notice of Removal by MMA Payout
The lawsuit was removed to federal court based on two reasons. The first being that there was a “diversity” of parties which means that the parties to the lawsuit are from different states. Although it is legally possible to sue an entity that does business within a state where its headquarters are not located, the federal statute that DAZN uses to remove this case is that the party’s locations vary. First, they point out that Canelo is a citizen of Mexican although he resides part-time in San Diego. They also note that SA Holiday, Inc. another entity in this lawsuit in which Alvarez is an owner is registered in the state of Nevada. Further, DAZN identifies that its U.S. headquarters are located in New York and its corporate entity was filed in Delaware. Similarly, Golden Boy was registered as a company in Delaware. The northeastern state is known for corporate filings due to its gracious tax rules for corporations.
Secondly, DAZN argues that there is a “federal question” at issue. This pertains to the argument that there is a dispute related to a federal statute. Here, DAZN states that this action relates to the Federal Arbitration Act. The Canelo contract with Golden Boy and the DAZN-Golden Boy both refer to an arbitration clause.
Another compulsory requirement is that the lawsuit must be over $75,000 for it to be in federal court. Obviously, with Canelo wanting a bulk of his $365 million contract from Golden Boy, this threshold has been satisfied.
As I’ve highlighted in the past, the removal is an affirmative act, hence the “Notice” whereas if Canelo wants it back in state court, it would be a “Motion” to remand the case back to state court.
Payout Perspective:
The question as to why Canelo’s lawyers filed a lawsuit in state court when they should have known it would be removed is an interesting question that may be fleshed out as this case continues. Notably, even when the lawsuit was filed in state court, there was no attachment of the contracts from Canelo which is a pre-requisite if they are claiming a breach of contract. DAZN’s lawyers are located in New York which make the jurisdiction issue seem plausible. The lawsuit will likely stay in federal court where the rules are uniform and much stricter than state courts which vary from courtroom to courtroom.
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