Top Rank Files Motion to Compel Arbitration In Litigation With Golden Boy

Following up on my post, Quick Thoughts on the Golden Boy Top Rank Lawsuit, and consistent with Bob Arum's (and his lawyer's) reported statements in an ESPN article, Top Rank, Bob Arum, and David Lopez have filed a motion to compel arbitration in the United States District Court for the District of Nevada.

As set forth in the ESPN article breaking the news of the lawsuit, Arum and his attorney reportedly had this to say when the complaint was filed:

'As far as I'm concerned, this is a matter for the mediator,' Arum said of Weinstein, who tried unsuccessfully to mediate a deal between Top Rank and Golden Boy in January that would have resulted in a Pacquiao-Floyd Mayweather bout.
'This is frivolous,' Arum said. "We signed an agreement four years ago agreeing to binding arbitration on issues like this. They're going to end up paying us substantial legal fees. You can't bring an action like this if you've agreed to binding arbitration. They could have filed the complaint with Daniel Weinstein. They can't do this in a federal court. It will be thrown out. They filed this complaint because if they had done it in arbitration, it would have been confidential. So this is the way they think they can go around the confidentially provision in the agreement. They know it will be dismissed and they will pay a big price for that.[']
'Their motivation is to spread this filth in public instead of going to the arbitrator.'
Said Petrocelli [Top Rank's lawyer], 'There is no legal basis to avoid the requirement to arbitrate all disputes between the parties related to Manny Pacquiao. This they have conceded in many letters and emails leading up to this. They know this is all subject to the [arbitration] term sheet. This case will not and cannot be litigated in federal court because it's subject to binding, mandatory arbitration and, unless they withdraw it, we will ask for it to be ordered into arbitration pursuant to the parties' written agreement.'

Consistent with these statements, on October 8, 2010 defendants filed their motion to compel arbitration.  In the motion, defendants state as follows:

Defendants bring this Motion pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 2, 6 3 & 4, on the grounds that (a) in June 2007, Top Rank and plaintiff Golden Boy Promotions entered into a term sheet agreement ("the Term Sheet"); (b) the Term Sheet is a valid agreement that involves and affects interstate commerce; (c) the Term Sheet contains several arbitration provisions, including one that says, '[t]he parties agree that Judge Weinstein shall have binding jurisdiction over any and all disputes arising out of this agreement'; (d) the Complaint in this matter alleges controversies arising out the Term Sheet; and, therefore, (e) the issues raised in the Complaint are 'referable to arbitration.'

Interestingly, in their memorandum of law in support of the motion, defendants state that Golden Boy has already "presented these claims to Judge Weinstein."  Specifically, the memorandum states as follows:

For the next three years [after the Term Sheet], neither Top Rank nor Golden Boy filed any lawsuits against the other. Rather, as was bargained for and agreed to, each promoter submitted disagreements regarding the interpretation of and parties' obligations under the Term Sheet to Judge Weinstein for confidential adjudication. Earlier this year, Golden Boy raised in a proceeding before Judge Weinstein the issue of whether Top Rank properly accounted to Golden Boy for two of Pacquiao's bouts-the same subject matter alleged in Golden Boy's lawsuit. . . . Unhappy with Judge Weinstein's ruling and seeking tactical advantage, Golden Boy filed this lawsuit in federal court. Golden Boy alleges that Top Rank, its Chairman, and its CFO breached the Tenn Sheet by failing to report revenue and inflating expenses related to three Pacquiao bouts-including two of the bouts Golden Boy already submitted to Judge Weinstein.  By virtue of the agreement between Top Rank and Golden Boy, this dispute must be litigated in arbitration before Judge Weinstein

Notably, the Term Sheet is redacted and references to the Term Sheet in the memorandum are redacted as well.

According to the memorandum, "[t]he day after Golden Boy filed the complaint, Defendants notified Golden Boy that the allegations of the complaint 'all arise out of the 2007 Term Sheet' and ''under Paragraph 12 of the Term Sheet, the [parties agree[d] that Judge Weinstein shall have binding jurisdiction over any and all disputes arising out of this agreement,] [] Defendants asked Golden Boy to 'immediately withdraw the complaint' [] and Golden Boy responded that Top Rank's 'claim that this case must be arbitrated is frivolous' and '[i]f you want to file a motion to compel arbitration, be my guest.'"

Defendants attempt to preempt Golden Boy's argument in response to the motion by noting that in a letter "Golden Boy takes the position that, pursuant to paragraph 12, it has complete discretion to submit disputes arising under the Term Sheet to Judge Weinstein or to a court."

I have not seen the Term Sheet and a lot of language from the Term Sheet is redacted, but it appears that Golden Boy might be claiming that the language, "the parties agree that Judge Weinstein shall have binding jurisdiction over any and all disputes arising out of this agreement," does not provide that Judge Weinstein has exclusive jurisdiction -- only that this is one option for dispute resolution.

Defendants correctly, I think, note that the use of the word "shall" is clear.  They also argue that "five other provisions require the submission of disputes to Judge Weinstein for private adjudication. None contemplates litigation in court."

Defendants also argue that by first submitting this very dispute to Judge Weinstein, plaintiff has waived objection to the arbitrator's jurisdiction.

I will continue to monitor.

Fight Lawyer