UFC files motion to dismiss fighter antitrust lawsuit

Zuffa has filed for dismissal of the antitrust charges against them. Bloody Elbow’s antitrust experts tell you what you need to know about the UFC's filing.

Written by John S. Nash

Antitrust cases move at a snail's pace but today we've got some action, fight fans! Zuffa has officially filed a motion to dismiss the antitrust charges levied against them by fighters in four separate but related lawsuits. For detailed information on the specific allegations from the fighters, see here and here.

At the most basic level, Zuffa "moves to dismiss the Complaints in the above-entitled actions for failure to state a claim on which relief may be granted ... The Complaints' vague and conclusory allegations fall far short of the Supreme Court's requirements in Bell Atlantic Corp. v. Twombly, for pleading specific facts showing a plausible antitrust claim."

Twombly was a Supreme Court case that, while not directly applicable to the law the plaintiffs wish to enforce (Sherman Act, Section II), tightened the pleading standards for antitrust cases requiring "plausibility" as opposed to being merely possible or conceivable. The takeaway for fight fans is that it is harder for plaintiffs to survive a motion to dismiss. Here's a write-up from 2007 by current FTC commissioner Josh Wright on the Twombly ruling.

The heart of Zuffa's motion to dismiss is:

“Plaintiffs fail to allege facts that plausibly show that Zuffa’s alleged exclusive dealing arrangements are anticompetitive. Exclusive deals are common and procompetitive, including in sports, because they encourage interbrand competition, encourage promoters to invest in marketing both the athlete and the sport, and prevent competitors from freeriding on those investments. Plaintiffs’ conclusory accusation that Zuffa’s contracts “indefinitely” lock up “all or virtually all” of the Professional MMA fighters necessary to compete in the promotion of MMA bouts is unsupported by specific factual allegations and implausible on its face.

Plaintiffs’ conclusory allegation that Zuffa has locked up all the venues, television outlets and sponsors necessary to compete is similarly implausible and without factual foundation. Plaintiffs’ Complaints do not show that Zuffa has foreclosed any competition in the alleged markets, much less foreclosed a substantial share of the alleged markets. Absent plausible allegations that the UFC’s exclusive deals have foreclosed competitors from obtaining the necessary inputs to compete, Plaintiffs cannot show that Zuffa’s contracts are anticompetitive or justify the enormous expense of a large antitrust case.”

We still don't know which side's going to win or how any settlement will go, but for those who have been with Bloody Elbow from the beginning on this story, some of those arguments should sound familiar.

Next, Zuffa claims that the fighters "have failed to allege plausible, properly defined relevant product markets." The heart of this claim is that the fighters "invented the term ‘Elite Professional MMA Fighter' and did not consider substitutability which is a key consideration for a relevant market. On top of that, they claim the relevant market defined by the fighters (Plaintiffs) is "artificially narrow," as pretty much all antitrust defendants do. Remember, Zuffa wants a large relevant market so the percentage of their business activity in said market will be smaller.

Zuffa's third claim is that they have no antitrust "duty to deal with competitors" and their refusal to co-promote events with competitors (old Strikeforce, Bellator, WSOF, etc.) is not a "cognizable antitrust claim."

The fourth claim is that "Grants of exclusive name and likeness rights, including rights in perpetuity, are common in the sports and entertainment industries and have been consistently upheld by the courts." They claim the fighters haven't alleged any facts showing the granting of their rights have impacted competition.

“Although Plaintiffs might have preferred to license fewer rights to the UFC or to receive more money for their rights, those desires do not give rise to an antitrust claim.”

Zuffa's final claim is that the fighters haven't shown that the acquisition of other MMA promotions has had an anticompetitive effect.

“Plaintiffs have not pled specific facts showing that the UFC’s acquisition of other MMA promoters has resulted in any anticompetitive effect. The Complaints make clear that even after these acquisitions, the UFC continues to face robust competition from multiple, well-funded competitors able to stage bouts with prominent fighters and television distribution.”

Those are the general claims. Here are some specifics outlined in the motion.

Zuffa argues against "all or virtually all" its fighters being locked up "indefinitely" by showing that "Plaintiffs themselves actually fought for competitors after fighting for the UFC." This makes for an engaging example, but Zuffa's probably weak here. They'll need to demonstrate that more than just the plaintiff fighters have moved to other promotions or been competed for and that this competition took place prior to being cut.

Zuffa then moves to a broader description of the output market.

“Plaintiffs do not allege how many sponsors or potential sponsors exist or what percentage of those sponsors the UFC has under contract. In regards to venues, Plaintiffs do not describe the universe of “key” venues or explain why other venues would be not reasonable substitutes. As for television distribution, Plaintiffs do not allege which or how many networks are restricted, nor why any other of the hundreds of television networks that do not carry UFC bouts are not adequate alternatives for competitors.”

Zuffa's trying to show implausibility through Plaintiffs' lack of detail. If the Plaintiffs don't meet the plausibility standard, we could very well see this complaint get dismissed without prejudice and the fighters file an amended complaint with more specifics. Zuffa's also trying to get Plaintiffs to more properly define the universe of elements being foreclosed from rival promotions such as sponsors, venues and television networks.

Zuffa notes that five competitors named in the fighters' complaint have emerged since 2006 (RFA, Titan, Legacy, Invicta and Bellator; plus two others, WSOF and BAMMA, that used Plaintiffs after their time in the UFC) and only one (Strikeforce) was acquired during the Class Period. This is an effort to show a competitive input market for fighter services in the sense that there are other bidders competing for contracts.

*This post was originally written by John S. Nash on Feb. 28, 2015 for Bloody Elbow

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