The class-action antitrust lawsuit brought against the UFC by former fighters Cung Le, Nate Quarry, Jon Fitch, Brandon Vera, Javier Vazquez, and Kyle Kingsbury has been in a bit of a slow period. It’s currently in the middle of the discovery phase, but the UFC feels it has enough undisputed facts on its side to get rid of Nate Quarry’s claims.
The UFC filed a motion for partial summary judgment against Quarry on Wednesday in Nevada federal court. It essentially argued there are no genuine issues of material fact in dispute in Quarry’s claim that his identity was “expropriated” and his merchandise and promotional material payments “artificially suppressed.”
The other five plaintiffs – Le, Fitch, Vera, Vazquez, and Kingsbury – are all in the lawsuit for Bout Class and Identity Class purposes (i.e., they are claiming suppressed compensation for their fights as well as identity expropriation), but Quarry is only part of the Identity class since his last Zuffa bout took place on Mar. 31, 2010, past the four-year statute of limitations from the Dec. 16, 2014 filing of the original complaint.
The fighters have said Quarry is in the Identity Class since his identity “was indeed exploited during the Class Period” when he received $0 instead of the larger amounts that would’ve existed absent the UFC’s conduct. But the UFC says otherwise.
According to the UFC, there are three types of agreements governing fighter identity rights: promotional agreements, merchandise rights agreements, and bout agreements. In its Statement of Undisputed Material Facts, the UFC walked through specific terms of Quarry’s 2004, 2005, and 2008 promotional agreements, his 2008 merchandise rights agreement, and his final bout agreement in January 2010. Much is redacted, but it appears as if the UFC emphasized the contractual compensation Quarry received and the duration of Quarry’s grant of identity rights, setting up its counter to the fighters’ claim that rights clauses remain in effect “in perpetuity.”
The UFC excerpted from Quarry’s September 2016 deposition to argue that he was aware of the effect of these agreements before his final UFC bout in March 2010.
Q: And when I say that, at the time you would begin to speak out about your concern that your likeness rights were being used by the UFC, that's something you might say to other fighters or if asked by the MMA media?
. . .
THE WITNESS: Well, specifically speaking about the UFC video game and talking to Joe Silva was that my likeness is being used in this video game. I am not being compensated whatsoever. So that is definitely a pinpoint in time where I was very unhappy about my likeness and other fighters' likenesses being used without any payments or the ability to negotiate for payments.
Since it’s the UFC’s filing, it also used the opportunity to set up the judge for what’s coming later in its side of the case (the fighters have already done so in their complaint).
Since antitrust laws aren’t meant to punish a company’s growth if it’s due to a superior product or business acumen, the UFC described Zuffa’s early struggles and how it “lost millions” from 2001 to 2004. “Yet, in less than a decade,” the UFC explained, “Zuffa transformed the UFC from a struggling business to a successful MMA promoter through its investments in the UFC and in growing the sport of MMA as a whole. Many of Zuffa’s business decisions enabled this transformation to occur – Zuffa had to invest in lobbying for rules and regulations at the state level for fair and safe bouts; Zuffa had to attract top athletes by paying them as much or more than other promoters were willing to pay; and Zuffa had to create a better experience for the athletes to compete and the fans to enjoy the competition. Ultimately, these business decisions allowed Zuffa to offer athletes the best promotional opportunities and, as a result, athletes stayed with Zuffa.”
It’s not hard to see where the UFC will try to go with this in the future. It made better business decisions. It didn’t suppress fighter pay, it paid more. The better experience for athletes and fans could describe business decisions or the sports league network effect.
The UFC also said it identified “a number of issues” with the fighters’ market definition and “the implausible basis” for claiming it kept necessary inputs from competitors. Market definition will be absolutely critical and is something that haunted Golden Boy just last week in its failed antitrust lawsuit against boxing manager Al Haymon. Golden Boy also had two failed input foreclosure claims about TV networks and venues that were similar to two of the fighters’ current claims against the UFC.
But this summary judgment motion is only the UFC’s side at the moment. The fighters will surely counter. Either way, we’ve finally got a little action after a long lull. And Nate Quarry’s plaintiff life is on the line.
While removing Quarry may seem relatively minor, the facts and concepts involved could possibly have a large impact on the fighters’ case down the line. I’ve previously mentioned that the fighters may have a problem showing the UFC’s exclusive contracts are long term. But if they can successfully show that identity rights are granted in perpetuity, it could help them argue that fighters effectively get taxed if they leave the UFC, no matter how long the promotion’s contracts are.
The remaining schedule is currently set as follows, but is subject to change. Fact discovery will run through May 1. Expert discovery will take center-stage through the end of September. A class certification hearing should be held in January or February 2018. A summary judgment hearing will likely take place in June 2018. If necessary, trial could be a few months later.
As it has throughout, Bloody Elbow will keep readers updated with any new developments.
Paul is Bloody Elbow’s analytics writer and former provider of expert witness support in antitrust cases. Follow him @MMAanalytics.