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Lawsuit: Bellator Motion to Quash UFC, fighter subpoenas transferred to Nevada

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Article Source – bloodyelbow.com
Lawsuit: Bellator Motion to Quash UFC, fighter subpoenas transferred to Nevada

Another part of the UFC lawsuit is headed to Las Vegas, and likely future antitrust strategies were also revealed along the way.

The class-action antitrust lawsuit against the UFC by six former fighters is in a news-related lull of fact and expert discovery, with action currently scheduled to pick up in the fall for class certification. During the fact discovery process, both the UFC and Plaintiffs subpoenaed documents from the second-largest MMA promotion, Bellator MMA, which President Scott Coker and company aren’t too keen on turning over “to its largest competitor and to the athletes with whom it negotiates.”

On Feb. 22, Bellator filed a Motion to Quash the subpoenas in the Central District of California claiming the documents demanded by the UFC and Plaintiffs are highly confidential and a presumption of harm exists in disclosing such information to the promotion “allegedly striving to squeeze it out of the market.” While Bellator claimed to have produced thousands of pages of documents in response to the subpoenas — both originally served in September 2015 — the remaining issues under dispute are the UFC’s demands for Bellator’s confidential fighter contracts, negotiation history, and detailed revenue and expense reports, and Plaintiffs demands for event-level profit and loss statements and fighter compensation information. In its Motion to Quash, Bellator alleged that the UFC could use its confidential information to put Bellator at a competitive disadvantage, undercutting deals with venues, sponsors, and distributors, and fighters could use the normally-private information to “eviscerate” Bellator’s negotiating leverage.

On Mar. 8, the UFC moved to transfer Bellator’s motion to Las Vegas where Judge Boulware and Magistrate Judge Leen have been closely involved in the discovery process and both understand the “complex web” of interrelated alleged actions that readers may recall as Plaintiffs’ “monopoly broth” theory, a.k.a. “The Carlos Newton.”

The UFC asked for an expedited hearing on the matter and California Magistrate Judge Rozella Oliver gave them something even better — an order on Mar. 17 immediately transferring the case to Las Vegas without a hearing.

The UFC and Plaintiffs both noted that the protective order in the case allows Bellator to designate sensitive documents as “Highly Confidential,” meaning only attorneys and expert witnesses could review the information, not UFC officials or fighters. Along the way, the various filings have also shed more light on likely future strategies in the UFC’s defense and Plaintiffs’ offense.

According to the UFC, it needs access to Bellator’s contracts and financial statements in order to:

  • Evaluate the success and viability of an MMA competitor [Bellator] in the alleged market;
  • Determine the total duration of the contracts between athletes and Bellator;
  • Show that “elite” athletes are able to earn competitive compensation outside of the UFC;
  • Demonstrate the intense competition for MMA athletes’ services; and
  • Establish that barriers to entry to the alleged market of promoting live “elite” MMA bouts are low and that new market entrants are able to attain success.

The UFC believes it will show that it has actually increased fighter pay and the supply of MMA events. While the latter sometimes leads media and fans to grumble about a watered-down product, both run counter to an effective monopsonization charge.

“…the heart of the Nevada Action is whether other promoters can compete with the UFC to put on live MMA bouts and whether the alleged lack of competition has depressed MMA athletes’ compensation for bouts and for the rights to their names and likenesses,” the UFC stated in its opposition to Bellator’s Motion to Quash. According to the UFC, Bellator’s contracts will confirm that it “aggressively competes” with the UFC for fighters. Expect UFC expert witnesses to make fighter compensation comparisons between the two promotions by weight class and years of experience, described as “apples-to-apples” in a UFC filing.

As previously mentioned by Bloody Elbow, contract duration will be a critical component of the Plaintiffs’ case since UFC exclusive fighter contracts must be long term in order to effectively foreclose a critical resource (fighter services) from rival MMA promotions. Not only will the UFC defend itself by analyzing its own contract duration, but it also wants to analyze the average duration of Bellator’s fighter contracts. The idea is to “analyze the prevalence of contractual provisions in Bellator’s contracts that Plaintiffs claim are anticompetitive when included in [UFC’s] contracts.” This is where Bellator’s contractual terms may help the UFC’s defense, arguing that if Bellator doesn’t have monopoly power but has similar or worse contract duration and fighter restrictions, the clauses must have a competitive rationale, described by the UFC as practices “common in the industry.”

From Bellator’s financial information, the UFC will attempt to show that entry barriers for MMA promoters are low and that Bellator “plans to expand in the future in spite of Plaintiffs’ allegations that MMA promoters are unable to compete in the marketplace.”

Plaintiffs’ opposition to Bellator’s Motion to Quash reveals a need for Bellator’s financial information in order to focus on the UFC’s alleged dominance in the industry. They believe Bellator is a “minor league” whose financials will “demonstrate that [the UFC] dominates the MMA industry, as measured by revenues, such that [the UFC] possesses market power in the relevant markets.” Plaintiffs want to attack the UFC’s claim that Bellator is a “rival” and denial that it controls 90% of the revenue from MMA bouts. According to Plaintiffs, they will document the UFC’s position in the market, how it’s changed over time, and show how the UFC’s actions have foreclosed competition and depressed fighter compensation.

In terms of future strategies, the UFC offered more glimpses than Plaintiffs of what each side may bring to the table over the next year and a half, which roughly how long the case is currently scheduled to last should it make it all the way to trial. If a settlement isn’t reached, fight fans may get a peek into hidden details of the MMA industry — similar to what recently happened with Al Haymon and Golden Boy in boxing — in late 2017 and early 2018 when class certification and summary judgment motions take center stage.

In its Motion to Quash, Bellator cited “aggressive” reporting by the MMA media and listed three example articles, all of which were Bloody Elbow pieces. Stay tuned to Bloody Elbow’s aggressive coverage of this monumental MMA case for further updates.

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


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