Friday, the plaintiffs in multiple class action suits filed their opposition to Zuffa's motions of dismissal and transfer of venue. There were two separate oppositions, four declarations and numerous exhibits filed, some 100 pages in total. We will surely have further analysis in the future but for now here are some of the more interesting excerpts.
First, some quick background. On December 16, 2014 Cung Le, Nathan Quarry, and Jon Fitch filed a complaint that the UFC had engaged in illegal antitrust activity. Since then four additional - and nearly identical - complaints have been filed, adding Luis Javier Vazquez, Dennis Hallman, Brandon Vera, Pablo Garza, Gabe Ruediger, Mac Danzig, Kyle Kingsbury, and Darren Uyenoyama to the list of named plaintiffs.
On January 30, 2015, the UFC filed a motion to transfer the venue from San Jose to Las Vegas, arguing that it was a more "convenient venue" for the parties and witnesses involved, that there were "few meaningful connections between these actions and the Northern District of California" and, perhaps most notably, they cited provisions within many of the fighters agreements that stipulated that courts in Clark County would be the venue for any action "to interpret or enforce any provision of this Agreement."
On February 28th of this year the UFC filed a motion to dismiss the complaints, arguing that "The Complaints' vague and conclusory allegations fall far short of the Supreme Court's requirements in Bell Atlantic Corp. v. Twombly, for pleading specific facts showing a plausible antitrust claim."
In yesterday's opposition to the UFC's motion to transfer venue the plaintiffs argue the forum selection clause, which was cited by the UFC, is inapplicable. "This is an antitrust case. It is not a contractual dispute, or otherwise an action ‘to interpret enforce' any contract."
"The UFC asserts that it will "contest vigorously" the Complaints' allegations that relate to "interpretation of the contracts," and that interpretation is necessary because Plaintiffs do not "specify exactly how the agreements unreasonably restrain competition." Mot. at 11-12. The UFC is wrong. As the Complaints set forth, the UFC's anticompetitive scheme involves the use of contracts to unreasonably restrain competition, aggregately, by preventing competition in the marketplace, giving the UFC the ability to diminish wages. Specifically, the Complaints allege that "all of the UFC's contracts with Fighters—and the exclusionary provisions therein—taken together form part of the UFC's anticompetitive scheme to impair actual or potential rivals and enhance its monopoly power in the Relevant Output Market and monopsony power in the Relevant Input Market." Le Compl. ¶ 115 (emphasis added); see also id. ¶¶ 91-92, 102, 107, 115, 151, 153, 159-61 (detailing how the UFC's overarching anticompetitive scheme, including but not limited to the collective effect of the Agreements, reduces market competition and artificially suppresses compensation below competitive levels). This practical effect is what matters, not how the Agreements should be interpreted or enforced in a breach of contract case.
UFC Lawsuit: Two more fighters are suing Zuffa
Two more former UFC fighters were named on the 5th complaint filed against Zuffa.
In opposing the UFC's argument that San Jose wouldn't be convenient, they cite the fact that not only do several of the plaintiffs have strong ties to the area but that many other potential Class Members and future witnesses, including major MMA training camps and EA Sports, also reside in the area. The Bay Area based promotion Strikeforce, referred to as a rival and "threat to the UFC's market power" receives numerous mentions as well.
They also point out that "the UFC has frequently selected this District and other courts in California for its litigation activities.
Rather than move to transfer for lack of convenience, the UFC asserted counterclaims under federal and California law, demonstrating its willingness to litigate in this District when doing so served its purposes. See id. at ECF No. 8.16 In fact, the UFC has a history of litigating in this District without complaint as to its convenience. This adds further weight to the conclusion that transfer is unwarranted.
In making the argument that the Northern District of California would be more suited to handle the case than the District of Nevada, they point out the difference in experience between the two courts. They cited the fact that from 2010-2014 the Northern District has presided over 476 civil antitrust cases in comparison to the 19 that had been filed in Nevada. They also noted that the current district was "more than 25% faster than Nevada" in getting cases from filing to trial.
Along with the opposition there were signed declarations by Cung Le, Kyle Kingsbury, and Jon Fitch, attesting that each was
- "an Elite Professional MMA Fighter and proposed representative of the Identity Classes"
- Currently reside in the San Jose area or, in the case of Fitch, train at American Kickboxing Academy "along with several other members of the Bout and Identity Classes."
- Competed in UFC promoted events, including those in the Bay Area
- that their compensation was "artificially suppressed due to the anticompetitive scheme alleged in the complaint."
- That they appeared in EA Sports UFC video game (in the case of Le and Fitch), Topps Trading Card sets (Le, Kingsbury, Fitch), Round 5 action figures (Le, Fitch) and JAKKS Pacific action figure set (Fitch)
- that they chose to file in the District "because it was by far the most convenient forum to pursue my antitrust claim" and that "It would produce considerable hardship to be called to testify in an alternative out-of-state forum.
In the plaintiffs opposition to the motion they present their allegations once again:
Plaintiffs allege as follows: the UFC used anticompetitive conduct to establish and maintain its dominance in the market for promoting live elite professional MMA events ("Elite MMA Events"). That conduct included, among other things, (a) entering exclusive contracts with Elite MMA Fighters that effectively blocked the vast majority from fighting for rivals, (b) acquiring rival promotion companies, and (c) entering exclusive agreements with key sponsors and venues—together, the "scheme." By depriving rivals of necessary inputs (Elite MMA Fighters, key venues, etc.) and acquiring them, the UFC foreclosed all competition from rival elite MMA promoters. As a result, it became the dominant—really, the only—promoter of Elite MMA Events. It has monopoly power. That monopoly power in turn gave the UFC monopsony power over Elite MMA Fighters because it was the only purchaser of their services. That monopsony power enabled it to impose exclusive contracts on Elite MMA Fighters and to require them to give up their identity rights in perpetuity. The UFC thereby deprived rival promoters of inputs necessary to mount a successful MMA promotion company. Elite Fighters could not fight for rivals without violating the exclusive dealing contracts and, in any case, rivals were impaired in using these Fighters' identity rights to promote bouts. Thus, the UFC's monopoly and monopsony power were mutually reinforcing. The scheme enabled the UFC to injure MMA Fighters by artificially suppressing their compensation for bouts and their identity rights.
In attacking the UFC's argument that "the distinction between "Elite" and non-Elite fighters is "subjective and vague" they cite the Supreme Court decision from The International Boxing Club of New York, Inc, v United States which "affirmed a market limited to "championship" boxing contests rather than all professional boxing contests." They also bring up a case that made a distinction between regular ice cream and "Super Premium Ice Cream." In addition they cite that the UFC, Mooyd's, and other sources have also made very similar distinctions.
In replying to argument that they haven't sufficiently pleaded that the UFC has monopoly and monopsony power, with the UFC's claim that there is robust competition, they again allege that "the UFC promotes 'virtually all' Elite MMA Events, controls 90% of the revenues of those events, and that all the other promotions are basically nothing more than 'minor leagues'."
Further, even if the UFC had one or more real competitors who overcame the barriers to entry—rather than mere "minor leagues" that feed into it, as Plaintiffs allege—that would not defeat Plaintiffs' claims. Minimal competition is insufficient to undermine a monopolization claim: "The fact that entry has occurred does not necessarily preclude the existence of ‘significant' entry barriers. If the output or capacity of the new entrant is insufficient to take significant business away from the [alleged monopolist], they are unlikely to present a challenge [to] the[ir] market power."
They also return to the UFC and specifically, Dana White's many comments that were quoted in the original complaint.
The UFC argues that its "brash, colorful, and sometimes intemperate remarks about rival MMA promoters, fighters and the UFC's own place in the industry" indicate vigorous competition and cannot be deemed anticompetitive. Def. Br. 25. Not true. The Complaints do not allege aggressive competition. They allege boasts about monopoly power and use of strong-arm tactics to enforce exclusive contracts, such as threats and retaliation against Elite MMA Fighters and potential rivals. Id. ¶¶ 8, 116, 145. As a result, UFC Fighters have refused to fight for rival promoters, even for higher compensation, out of fear of retaliation. Id. Exclusionary threats and intimidation by defendants with sufficient market power have long been held to violate antitrust law.
The UFC has since posted a statement in response to the latest filing:
"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."
Stay tuned for more updates and analysis on this massive lawsuit against the UFC.