UFC Lawsuit: Zuffa files official Answer denying fighters’ antitrust claims

http://www.bloodyelbow.com/2016/1/20/10796946/antitrust-lawsuit-ufc-files-answer-denying-fighter-claims-mma-news

When businesses get sued, they often "have a standing policy to not comment on pending litigation." It's the standard line we hear time and time again.

But when they respond in court filings, we sometimes get a taste of the thought processes and strategies of their defense. We've already seen one such instance as the class-action, antitrust lawsuit against the UFC progresses with the promotion's motion to dismiss, which it lost in September.

Yesterday, the UFC defense team added one more taste to the mix by filing its Answer to the plaintiff fighters' Amended Complaint. The legal and economic substance of the new complaint is identical to the version Bloody Elbow painstakingly dissected in December 2014. The only thing that's substantively different is the number of plaintiff fighters has declined from 11 to six.

Pablo Garza, Gabe Ruediger, Darren Uyenoyama, Dennis Hallman, and Mac Danzig all dropped out of the lawsuit while the original three plaintiffs, Cung Le, Nate Quarry, and Jon Fitch remain along with Brandon Vera, Javier Vazquez, and Kyle Kingsbury.

Zuffa already tried to have the lawsuit thrown out once and it didn't work. Now the discovery process has begun and the UFC had to officially respond to the fighters' allegations, paragraph-by-paragraph. Here are some of the key parts of the UFC's filing.
Protecting the UFC Brand

The first paragraph of the UFC's preliminary statement mostly summarizes its overall position.

Since Zuffa purchased the Ultimate Fighting Championship ("UFC") brand in 2001, the sport of Mixed Martial Arts ("MMA") has grown from a largely unregulated fringe sport to one of the most popular and fastest growing sports in the world. Opportunities for promoters to put on events, for athletes to compete, and for fans to enjoy the sport have all markedly increased. Zuffa's investments in advancing and promoting the sport and its athletes have contributed enormously to the success of the sport and to the financial gains of athletes. The UFC organization faces intense competition both from other MMA promoters and other sports and entertainment competitors. The Complaint attempts to penalize Zuffa for protecting and promoting the UFC product and brand and for competing aggressively for top talent. Zuffa denies that it has violated the Sherman Act or engaged in any anticompetitive activity, or that it has injured the Plaintiffs in any way.

The UFC claims there's intense competition from other MMA promoters, as would be expected. But it also includes a line about "investments in advancing and promoting the sport...to the financial gain of the athletes." It's setting up future arguments for the legitimate business justifications of exclusive contracts and the network effect at play in the sport which will both attempt to explain how fighters could be better off as a result of the UFC's behavior.

It also mentions intense competition from "other sports and entertainment competitors." This will come into play in the fighters' monopoly claim, which some (myself included) feel is the weakest part of the case (monopsony seems to be stronger). As the case progresses, expect the UFC to make arguments and put forth materials attempting to show that other entertainment activities are strong competitors for customers' time and money.

It will be sad if poor Demetrious Johnson and his low pay-per-view numbers become a pawn in this battle.

Paragraph 1

The UFC objects to the term "Elite Professional MMA Fighter" as "vague, confusing, misleading, and without any objective or quantifiable basis or any standard usage in any industry." This relates to the relevant market, which is a critical element of this case.

During the motion to dismiss hearing last September, the UFC argued that the phrase was made up, used circular logic, and that relevant markets aren't composed of just one company. Plaintiffs responded that the relevant markets are about reasonable interchangeability, and they won at the motion to dismiss stage. But this wasn't a full-fledged victory just yet. The UFC is continuing to set up its relevant market position for the future when standards toughen up.

Paragraph 7

The UFC admits its annual gross revenues for 2015 exceeded $500 million dollars. While pretty obvious, Bloody Elbow's John Nash is probably smiling about having some type of confirmation on another revenue data point.

Paragraph 8

The UFC addresses the Forbes and MMA Junkie articles containing Lorenzo Fertitta's quote, "We are like football and the NFL. The sport of mixed martial arts is known by one name: UFC," and Dana White's quote, "There is no competition. We're the NFL. You don't see people looking at the NFL and going, ‘Yeah, but he's not the best player in the world because there's a guy playing for the Canadian Football League or the Arena League over here.' We're the NFL. There is no other guy."

Zuffa avers that those articles themselves are the best source of the full content and context of the statements. To the extent Paragraph 8 does not contain the full content and context of the statements, Zuffa denies the averments.

Lawyers... If you're wondering about "aver," wonder no more.

Paragraph 12

Regarding the famous RIP tombstone picture of Dana White and the quote, "I'm the grim reaper, motherf***ers," the UFC answers:

Zuffa admits that a video clip containing the image of Mr. White holding the mock tombstone was uploaded to YouTube and avers that the image pictured in Paragraph 12 of the Complaint speaks for itself. Zuffa otherwise denies that the averments of Paragraph 12.

Expect the UFC to try to flip these statements on their head down the line. During the motion to dismiss hearing, Judge Boulware stated that White's "colorful, brash statements...smack of monopolistic, monopsonistic conduct." The UFC attorney's response was that these are pro-competitive statements "that competitors can and should say."

There's a key premise in U.S. antitrust law and economics; that aggressive, competitive conduct should not be punished, even if it's severe. What should be punished is conduct that destroys competition itself. In the future, the UFC will try to place White and Fertitta's statements in the former category while the fighters will vehemently push for the latter.

Paragraph 18

The UFC admits that Dana White and Lorenzo Fertitta are in the "World F**king Domination" photo.

Paragraph 27

The UFC objects to the definition of "Class Period" (which is defined as going from Dec. 16, 2010 "until the illicit scheme alleged herein ceases"). It doesn't object to the actual time period, but is setting up the next major battle: Class Certification.

The fighters have cleared the motion to dismiss hurdle. The next big hurdle is getting the class action officially certified. The UFC objects to the definition of Class Period "because class treatment would not be proper for this action." If class certification is denied, the lawsuit will likely be DOA.

Paragraph 29

The UFC objects to the allegation that it is currently valued in excess of $2 billion, "for lack of knowledge."

Paragraph 56

The UFC points out an error in the fighters' Amended Complaint.

Assuming that the Complaint's reference to "one-one-one fights" was intended to be "one-on-one fights," Zuffa admits the averments in Paragraph 56 of the Complaint.

Even small errors can be signals about the quality of the work being done behind-the-scenes. Back in my expert witness support days, we had a long form that had to be filled out by three different people, triple-checking our work product before it was submitted. The process started over if a single error was found. So far, most of the errors in this lawsuit have come from the fighters' side, which is potentially concerning for those pulling for the plaintiffs.

[Writer's note: If this leads to people pointing out each of my errors, remember I'm not filing an important legal document with 15 or 30 days lead time.]

Paragraph 105

The fighters' make a statement ("Prior to 2011, the existence of such competition allowed UFC Fighters - such as Mark Kerr, BJ Penn, Mark Coleman, and Carlos Newton - to receive higher purses with UFC competitors.") that the UFC latches onto and takes a step further in order to eventually advance the position that it doesn't have any monopoly or monopsony power to abuse.

Zuffa denies the averments in Paragraph 105, except to state that (1) MMA gained some popularity in the 1990s; (2) the UFC was founded in 1993; (3) Dana White was appointed President of the UFC in 2001; and (4) there have been a number of MMA promoters competing vigorously from the 1990s to the present day.

Paragraph 112

Plaintiffs claim fighters "have little choice but to accept the UFC's exclusionary terms if they want to try to earn a living as Elite Professional MMA Fighters." The UFC answers by asserting that fighters are independent contractors and are compensated.

To the extent a response is required, Zuffa denies the averments in Paragraph 112 of the Complaint, except to state that all athletes participating in UFC bouts are independent contractors who are compensated for participating in bouts.

Paragraph 119

In response to the claim that the UFC punishes fighters who refuse its contractual terms, with an example of Randy Couture being airbrushed out of a photoshoot, the UFC states:

Zuffa denies the averments in Paragraph 119 of the Complaint, except to state that the UFC did not use Randy Couture's name and likeness in the materials referred to in the Complaint because, as Paragraph 119 alleges, Mr. Couture refused to grant the UFC the right to use his name and likeness in such materials.

Paragraphs 141-144

The UFC denies, among other things, that RFA, Titan FC, and Legacy FC are "minor league" promotions and that Invicta FC does not aim to compete directly with the UFC. It notes that RFA and Invicta both have licenses to use the UFC's Octagon-shaped cage.

In the final part of its Answer, the UFC puts forth have 21 affirmative defenses. Among the defenses we may see more of later are claims that the complaint is not appropriate for class action, the applicable statute of limitations has passed, some of the promotions the UFC acquired were failing so the acquisitions "promoted market efficiency," the UFC had legitimate business justifications for its conduct, and there is no antitrust injury.

To close out, "Zuffa demands a trial by jury."

Answers to complaints don't typically reveal a flood of information. Usually there are just peeks and tastes here and there.

Throughout the filing, the UFC denies allegations and argues that the Complaint "contains mere characterizations, legal contentions, and conclusions to which no response is required."

Many paragraphs are virtually identical: "Zuffa avers that the allegations in Paragraph __ of the Complaint contain legal contentions to which no response is required. To the extent a response is required, Zuffa denies the averments in Paragraph __ of the Complaint, and denies that class adjudication is appropriate for this action, denies that the purported class is proper, and denies that the Plaintiffs are the proper class representatives."

The UFC's job is to deny everything it needs to deny, continue setting the judge up for its future arguments and positions, and not let anything slip out that could possibly be used against it at a later date.

For those wondering, the UFC used some form of the words "deny" or "aver" 492 times over 24 pages.

Cant see the fighters winning this one
who knows

Interesting read, someone need to do a tl;dr.