UFC engages firm to defend against suit
Bill Isaacson: “The antitrust laws have long favored companies that create new products and services that consumers want. That is exactly what the UFC has done here.”
The UFC considered several firms to fight the class-action lawsuits that were filed recently, and has made the choice. Via UFC.com
We have built a popular business from modest beginnings by meeting the needs of fans and fighters. Millions of people have watched our bouts, we have instituted leading health and safety measures for our athletes, and fighters are free to negotiate contract terms.
We will stand up against the plaintiffs in this litigation every step of the way, and have engaged attorneys from Boies, Schiller & Flexner LLP with a depth of experience in antitrust issues.
Bill Isaacson, our lead litigator, says, “The antitrust laws have long favored companies that create new products and services that consumers want. That is exactly what the UFC has done here through its long and substantial investment in building a popular sport.”
We are proud of the company we have built, confident in our legal position, and intend to prevail in this lawsuit.
The UFC made this decision despite the overwhelming choice of the UG:
Instead, the UFC went with William Isaacson from Boies, Schiller & Flexner.
The UFC did this despite UG insistence that Isaacson bears a damn close resemblance to Michael Bolton, from Office Space.
Isaacson has served both plaintiffs and defendants in class action suits. He teamed up with Hausfeld LLP’s Michael Hausfeld and secured a key victory for former college athletes in an antitrust case filed against the NCAA. Bills for legal fees and costs in that case exceeded $50,000,000.
Isaacson also recently helped Apple computer defeat a $1,000,000,000 antitrust case in the Bay Area this week. Both victories, like the UFC suit, tool place in federal court in the Northern District of California.
Expect a motion to change the venue to Federal court in Nevada to be among the earlier steps taken. It is widely believed that beating the UFC in Nevada will be far more problematic than doing so in Northern California.
Bloody Elbow has been at the lead in covering the case, and their resident expert, Paul Gift weighs in on the case. Gift is an economics professor, and has testified as an expert witness in support of antitrust cases.
Two weeks ago, I dissected the details of the lawsuit filed against the UFC (here and here) from the perspective of someone who used to provide expert witness support in these exact types of antitrust cases.
As it stands, the plaintiffs’ lawsuit isn’t frivolous but it isn’t strong either. Their biggest problem is they’re fighting against conduct (exclusive contracts) that’s legitimately used every single day in business and therefore has a much higher legal standard to clear (rule of reason), opening up a wide range of defenses to the UFC.
The plaintiffs’ relevant output market will be attacked vigorously (and is extremely shaky in my opinion) and their relevant input market is arguably expansive and the UFC will fight like hell to expand it even more. They also have a real problem with contract length and from the wording of the complaint it’s clear the plaintiffs’ legal team knows this and has undertaken a strategy to counter by arguing the 10 champions can be extended indefinitely and the remaining 490 fighters are prohibitively costly to rival MMA promotions due to the UFC’s likeness rights clauses. This strategy isn’t meritless but will be a tough sell. The UFC will attack every little detail while arguing their legitimate business justifications, superior product and superior business acumen.
At the end of the day, the plaintiffs seem to have a very settle-able case. But antitrust settlements can often be disappointing, so be ready. Electronic Arts (EA) was sued in 2008 for allegedly using exclusive licenses to foreclose rival football video game producers resulting in a Madden 2006 price increase from $29.95 to $49.95. The case settled in 2013 and consumers got some money while EA agreed not to use exclusives for arena and collegiate football for a whopping five years. Meanwhile, EA’s exclusive NFL license for Madden was completely unaffected.
If a settlement occurs, the lawyers will get paid. The fighters may get some money but probably not “many, many thousands of green people from history times.” At the moment, the most realistic hope is for reasonable contractual changes going forward, kind of like what happened when poker players settled their lawsuit with the World Poker Tour.
There has been dark speculation that the suit is a shakedown, with the theory being that the UFC has proprietary information like fighter salaries that they will pay to keep private. This theory is implausible.
First, the plaintiff’s attorneys are some of the most effective class-action litigators in the United States; they are not shakedown artists.
Further, the UFC is a privately-held company, and as such is under no legal responsibility to disclose salaries and other proprietary information. In fact, you can determine from the fact that they do not make salaries public that is in valuable information. While in discovery the plaintiff’s attorneys will undoubtedly get access to figures like salaries, they will be under court order, on pain of losing their license to practice law, to keep that information private, and they will.
So regardless of the merits of the UFC class-action lawsuit, it is not a shakdown.