UFC loses motion to dismiss antitrust lawsuit

We're live on the ground in Las Vegas federal court today for a hearing on the UFC's motion to dismiss the antitrust lawsuit filed…

By: Paul Gift | 8 years ago
UFC loses motion to dismiss antitrust lawsuit
Bloody Elbow 2.0 | Anton Tabuena

We’re live on the ground in Las Vegas federal court today for a hearing on the UFC’s motion to dismiss the antitrust lawsuit filed by current and former fighters for monopolization and anti-competitive business practices. For a quick summary of the respective positions of the fighters and the UFC, see yesterday’s piece. Today is about what actually went down in the courtroom.

Court rules prohibited live updates, but I was allowed to take notes of the proceedings. Here’s a play-by-play account of how the hearing went down. Please forgive any typos or grammatical errors as transcription was done live.

3:41pm – The hearing has been delayed from it’s scheduled 3pm start. It feels like every single plaintiff and UFC attorney is here. It’s a freaking army of attorneys. We’ve also got Quarry, Le, and Kingsbury here.

3:44pm – We’re all ready to go. Myself and Brett Okamoto are present from the media. Just waiting for the judge.

3:59pm – The attorney army just grew. I feel like if I fall down and hurt my arm, I’ll be well represented.

4:04pm – Judge is here and we’re ready to go. Everyone’s introducing themselves. Kirk Hendrick is here from the UFC.

4:07pm – UFC’s up first. They start with two issues dispositive of the whole complaint: Has there been foreclosure of a market and has a relevant market been defined. Boom: UFC already mentions The Carlos Newton.

4:09pm – Judge immediately challenges UFC attorney right off the bat. Judge asks why plaintiff allegations aren’t specific for “a motion to dismiss stage.” Attorney answers and judge interrupts again. He’s really challenging UFC attorney hard.

4:13pm – UFC: “They won’t tell us how long the contracts are…Plaintiffs can come in with plainly insufficient contracts and make that claim…if you just allege an exclusive contract, that’s not an antitrust claim…exclusive contracts are procompetitive…the issue is how long are you locking them up and how many are they locking up.”

4:15pm – Judge: “Allegedly your client signs contracts to more fighters than they have bouts for.”

4:16pm – UFC focuses on all the things plaintiffs are “not telling you” about contract details.

4:18pm – They’re going over prior cases now. Focus is on amount of foreclosure and length of exclusive contracts. Judge notes they’re not binding on this court. Asks for 9th circuit case. UFC can’t produce one. Judge keeps asking why he needs to require such specificity “at this stage.”

4:20pm – This time it looks like the UFC attorney is the one struggling. Judge wants plaintiffs to respond.

4:23pm – Plaintiffs are up. Got walked out by security for having an iPad open and missed three minutes even though I got it approved in advance. Argh!

4:25pm – Plaintiffs are arguing long-term nature of contracts…in perpetuity. “Here the contracts we allege in perpetuity are essentially as long as the UFC wants those fighters.”

4:26pm – Plaintiffs are now comparing this case to the old championship boxing case in front of the Supreme Court.

4:27pm – UFC is up to respond. Judge asks why plaintiff allegations aren’t enough. He’s required to draw factual inferences and accept allegations in complaint at this point.

4:28pm – UFC says plaintiffs don’t quote any contractual language that says contracts are in perpetuity.

4:30pm – Judge says that if the UFC has the right to match a contract after one expires, “That’s not a 2 or 3 year contract, that’s forever.” Whoa! He could be probing or that could be a huge statement right there showing his mindset.

4:32pm – Judge: “So your argument is that they have to quote actual contract terms in the complaint if they’re going to use contract claims in the complaint.”

4:33pm – Are they summarizing contract terms or stating a legal conclusion? That seems to be the issue most relevant to the judge.

4:34pm – Now we’re moving on to the definition of the relevant market for “Elite MMA Fighters.” Judge asks why the market should not be accomplished vs. non-accomplished fighters.

4:35pm – UFC is focusing on circular logic in plaintiffs’ relevant market. If Microsoft has the best coders in the world, is the relevant market Microsoft Coders only?

4:38pm – Judge asks what distinguishes this market definition from championship boxing case. What would complaint need to say to satisfy pleading requirement? UFC: Something with a metric that can distinguish between who fights for Bellator…got interrupted. Judge: It sounds like you’re saying they’d have to say something like certification, number of fights, something that UFC could test. UFC says that’s basically it.

4:41pm – Judge: “What you’re saying is you can’t just say they’re good fighters.” UFC agrees.

4:42pm – Plaintiffs are up to respond. What are elite fighters? They focus on products or services that are reasonably interchangeable with each other. Plaintiffs cite NCAA case about quality distinction for relevant markets. Plaintiffs now cite Ed O’Bannon case that UFC attorney was successful on. Interesting. Judge says plaintiffs don’t need to spend time on circular nature of relevant market. He’s not persuaded so we’re not wasting time on it.

4:47pm – Plaintiffs say it’s not necessary to show monopoly or monopsony power because the UFC earns 90% of MMA revenue!

4:48pm – UFC comes up and focuses on how all these other examples may be good quality but are not one company, NFL, NCAA, and championship boxing.

4:49pm – UFC moving on to segments of case which they say are “absurd,” locking up venues, sponsor, and TV networks with exclusive contracts. Discovery is expensive and these claims are “so wildly implausible.”

4:50pm – They move on to UFC restraints when fighters are fighting, but no restraints when they’re not fighting. “Doing whatever they want to do with their own rights” when they “don’t have a UFC logo on.” UFC argues this is not antitrust. There is no anti-competitive injury.

4:54pm – Judge asks UFC to remind him of which part we’re talking about, monopoly or monopsony. Writer’s note: It can get confusing. Judge: “I’m learning as I go.”

4:55pm – UFC: Plaintiffs own complaint lists five competitors to the UFC. “One of the reasons you know they don’t have contracts in perpetuity is because the plaintiffs have fought” in the other promotions.

4:56pm – Judge: “I think the issue really is whether or not the combined effect of exclusive contracts has an impact.” The Carlos Newton! Asks at what point the collective effect matters.

4:57pm – UFC is arguing exclusive contracts with beer companies and others are pro-competitive. Should not mix allegedly legal and illegal things.

4:58pm – UFC says only piece which is potentially difficult is fighter contracts. Other areas are clearly pro-competitive. Should not lump them together. Antitrust law should enable these, not dissuade these. Judge seems to be struggling at times with antitrust lingo. Have to wonder if it’s his first antitrust case. That’s probably not a good sign for the UFC.

5:01pm – Plaintiffs come up and argue that we aren’t at the stage where pro-competitive issues matter. Judge asks why not. Plaintiffs: “The way the UFC operates is not pro-competitive.” They quote Dana fighting words!

5:04pm – Plaintiffs argue fighters get less revenue percent in UFC than any other major sport. “Why is that? Because they’re a monopolist.”

5:06pm – Plaintiffs now discuss exclusive deals with sponsors and venues. Argue judge is correct and Carlos Newton holds. Imagine Miami Heat had exclusive with all LeBron’s sponsors and now he wants to go to the Cavs and loses all sponsors. He lost me a bit here, and the plaintiff attorney speaks much faster than the UFC attorney.

5:08pm – Judge remembers the pictures in the complaint. Plaintiffs argue venue and sponsor exclusives contribute to the foreclosure, not cause the whole thing. After purchase of Strikeforce, there are no other major MMA promotions. Only minor leagues.

5:11pm – UFC is up for final words. “They allege we have an exclusive deal with Bud Light, which leaves a lot of other beer companies…if we have one exclusive deal with one apparel company, that’s pro-competitive.” They (rivals) can go to the others. Same with the venues. UFC has listed all other venues plaintiff fighters have been in.

5:14pm – Wild west is mentioned. Judge: “Some of that is in the complaint. There are some very colorful statements.”

5:15pm – UFC: “I’m sure if anyone wants to look at our internal documents someday, there’s going to be colorful rhetoric. That’s the nature of the business.”

5:16pm – Judge asks what weight he should give Dana White’s colorful, brash statements now at the motion to dismiss stage. Should he consider DW’s eliminating competitor statements (e.g., RIP) for their implications for competition, absent his colorful language? Should he give weight to statements “that smack of monopolistic, monopsonistic conduct?” UFC attorney says those statements were about one competitor, not competition as a whole. Those are pro-competitive statements “that competitors can and should say.”

5:18pm – Plaintiffs quoting all of Dana White’s statements now. Relating it to a political gaffe, where a politician “accidentally tells the truth.” Judge says yeah but there’s no context at the moment. “From my perspective, I just don’t know that I can really consider them anything other than an officer bragging about the company.”

5:21pm – Plaintiffs: “Hopefully from our perspective we get to take the depositions of Mr. White and consider them in their full context.”

5:23pm – Whoa! In a shocker, the judge says he’s going to rule from the bench in 10 minutes. Brett and I think there’s no way the UFC’s winning today. My guess is 2/3 odds of a partial denial and partial granting of the motion to dismiss (with leave to refile) and 1/3 odds of a full denial.

5:39pm – And we’re back. And the full motion to dismiss is denied. The entire case progresses.

The judge came out aggressive and challenging towards the UFC from the get go. He seemed to back off mid-way through but maybe that’s because he pretty much made up his mind.

Bloody Elbow has received statements from fighters and plaintiff attorney Rob Maysey. No official statement has been received from the UFC as of yet.

Nate Quarry:

“This is a huge victory for us. Zuffa had filed to dismiss the case, they had filed on where the case was going to be tried. They won where the battle would be fought but we still get our day in court. We won today. We are fighting for every fighter to follow what is essentially the right of every American, the right to work hard and to follow your dreams and that’s why we’re here. We’re representing every fighter that can’t speak right now because they’re under what we feel are illegal contracts. We’re here to represent them and change the sport. And I’m just honored to have such a great legal team such as Rob Maysey and his whole crew as well as Kyle Kingsbury and Cung Le being here today. It’s such a great honor to be here and to be representing such an incredible class of fighters that otherwise would have no voice.”

Cung Le:

“There’s absolute power and there’s absolute corruption. I’m just very pleased that our case is going to move forward. I’m proud to be part of this and representing all of the fighters, especially the fighters that haven’t become fighters yet. We’re starting it now for all the fighters that are present but there are a lot more fighters coming. I just feel honored to be a part of this.”

Kyle Kingsbury:

“Today’s just the first day of a long process. But with a victory today, now we get a chance. Now we get a chance to fight for everybody that’s still under contract that doesn’t have a voice. Now we get a chance to fight for all the guys who had to retire early like myself. We can win this thing. It’s going to be good.”

Rob Maysey:

“I’m very pleased, pleasantly surprised at how prepared the judge was. He knew the complaint as well or better than even the attorneys arguing it which was quite refreshing to us. We are very pleased that the fighters’ case is going to move forward and their case is going to be heard.”

Update – The UFC has posted an official statement:

“The United States District Court in Las Vegas, Nevada held a hearing on UFC’s motion to dismiss today.  The Court correctly explained that on a motion to dismiss it must consider all the factual allegations in the complaint as true, and the complaint must be liberally construed in favor of the plaintiffs.  Using that standard, the Court denied the motion to dismiss.  As we have consistently stated, UFC competes in a lawful manner that benefits athletes around the world and has created a premier organization in the sport of mixed martial arts (MMA).  We look forward to proving that the allegations in the complaint are meritless.”

Paul is Bloody Elbow’s analytics writer and former provider of expert witness support in antitrust cases. Follow him @MMAanalytics.

Share this story

About the author
Paul Gift
Paul Gift

Dr. Paul Gift is a sports economist with a research focus on mixed martial arts. A licensed MMA referee and judge himself, Dr. Gift’s interests pertain to many facets of the MMA industry including behavioral biases and judging, the role of financial and environmental factors on fighter performance, determination of fighter marginal products, and predictive analytics.

A regular MMA business contributor for Forbes, Dr. Gift also writes about MMA analytics and officiating in popular press for SB Nation and co-hosts the MMA business podcast Show Money. His sports research has been cited in the Wall Street Journal, ESPN’s Grantland, and popular media including Around the Horn, Olbermann, and various MMA and boxing podcasts.

More from the author

Bloody Elbow Podcast
Related Stories