It took four weeks, but a federal judge finally handed down his ruling on the UFC’s motion to change the location of its ongoing class-action, antitrust lawsuit from Northern California to Las Vegas, Nevada. The verdict: Vegas, baby.
This was the first major ruling in the case filed last December by current and former fighters alleging monopolistic practices by the UFC in the MMA industry. The next major ruling – on the UFC’s pending motion to dismiss the case outright – now also moves to and will be argued in Nevada.
The UFC presented two main arguments for transferring the case: (1) Seven of 11 plaintiffs signed contracts (with forum selection clauses) requiring that the case be heard in Nevada and (2) Nevada is more convenient. The plaintiffs disputed each position but Judge Edward Davila was unpersuaded, finding for the UFC in both situations.
I was in attendance at the May 7th hearing where UFC and plaintiff attorneys were questioned on their positions regarding the motion to transfer. It quickly became abundantly clear that the judge’s primary focus was on the forum selection clause signed by seven plaintiffs:
ZUFFA and Fighter hereby (a) expressly consent to the exclusive personal jurisdiction and venue of the state and federal courts located in Clark County, Nevada for any action brought by either party to interpret or enforce any provision of this Agreement. (emphasis added)
The UFC argued that the contract terms alleged to be anticompetitive would need to be interpreted, so the case therefore belongs in Nevada. The plaintiffs took the position that contract terms would not need to be interpreted; only their effect in the market is relevant. Plaintiff attorney, Joseph Saveri, noticeably struggled to make this argument in the May hearing and the judge repeatedly questioned him about it, “Don’t we have to interpret the contracts to determine their anticompetitive effect?”
The key question was: Is the lawsuit an action “to interpret or enforce” any provision of the seven fighter contracts? The judge’s final answer yesterday was “yes.”
The plaintiffs may have been hurt by their lack of specificity of actual contract terms in the complaint. In his ruling, the judge found:
“Plaintiffs identify in the Complaints seven specific provisions of the UFC’s standard contracts which they deem ‘restrictive’ or anticompetitive. For each provision, rather than repeating the language verbatim or attaching the contracts and then pleading by reference, they provide their own description of the provisions’ terms as well as their own understanding of what those provisions mean. For example, Plaintiffs interpret the ‘Exclusivity Clause’ as ‘block[ing] actual or potential rival promotions from having access to Elite Professional MMA fighters under contract with the UFC for protracted periods of time’ with ‘various termination and extension clauses that can be triggered at the UFC’s sole discretion, thereby effectively extending the exclusivity provisions indefinitely.’ Similarly, Plaintiffs describe the ‘Ancillary Rights Clause’ as ‘grant[ing] the UFC exclusive and perpetual worldwide personality and Identity rights not only of the UFC fighter, but of ‘all persons associated with’ the athlete, in any medium…'”
The UFC disputed the fighters’ claims regarding exclusivity and ancillary rights, leading the judge to find that since both sides have differing opinions, “the court that ultimately adjudicates this case will need to define the accused provisions according to Nevada law so that the finder of fact can consider whether or not they actually constitute evidence of Defendant’s ‘willful’ acquisition or maintenance of monopoly power…These cases, therefore, are actions ‘to interpret’ contracts…”
In other words, since contract interpretation will be required, the forum selection clauses apply and the case heads to Vegas.
Yesterday’s ruling wasn’t a shock to me, having left the May hearing with this tweet. Perhaps more surprising, the judge also ruled that convenience factors dictate the case be moved. But he didn’t find overwhelming support to move the case to Nevada as much as he found strong support that witnesses and non-party witnesses will be “equally inconvenienced” in Nevada and Northern California, and Nevada is “especially suited to Plaintiffs’ claims.”
This is not the death knell to the fighters’ case that it may seem to some. The federal antitrust laws are the same in Nevada as they are in California. Expert witnesses will eventually produce the same reports they would’ve produced, supporting their side and attacking the other. The main differences are the judge, location and jury pool – in the unlikely event of a trial. This is not to suggest that location doesn’t matter, but a strong antitrust case is strong anywhere and a weak case is weak anywhere.
The ruling could affect the upcoming motion to dismiss but more likely may play a role in driving leverage points that lead to a (probable) settlement down the line. Bloody Elbow has led the coverage of this case from the beginning and will keep readers updated with all future developments.
Paul is Bloody Elbow’s analytics writer and former provider of expert witness support in antitrust cases. Follow him @MMAanalytics.
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