Thursday, December 30, 2010

Former TapouT Employee's Wrongful Termination Lawsuit Set for Trial in January - Claims Against Kreiner Dismissed

On September 4, 2009, Michelle Thomas (a former employee of TapouT, LLC) filed her third amended complaint against TapouT, LLC, Erika Helton, Mark Kreiner, and Does 1-100 in the Superior Court of California, County of Los Angeles.

In her complaint, Thomas asserted claims for:  (1) "Wrongful Termination of Employment in Violation of Public Policy" (against TapouT based upon alleged failure to pay overtime); (2) Wrongful Termination of Employment in Violation of Public Policy (against TapouT for alleged "disclosure of illegal actions"); (3) Defamation (against TapouT); (4) "Compelled Self-Defamation" (against all defendants); (5) "Intentional Infliction of Emotional Distress" (against all defendants); (6) "Breach of Implied Contract Not to Terminate Employment Without Good Cause" (against TapouT); and (7) "Breach of Express Contract Not to Terminate Employment Without Good Cause" (against TapouT).

According to the allegations in the complaint, "Thomas worked for defendant Tapout as a sales representative from October 5, 2007 through June 30, 2008" and [d]uring that time, she performed her duties in an exemplary manner and received a raise from $30,000.00 to $35,000.00 per year for doing a 'great job.'"

Plaintiff alleges that while employed with TapouT:
sales representatives were routinely required to work overtime.  During plaintiff’s nine months on the job, Tapout performed inventory three times:  during the week between Christmas of 2007 and New Year’s Day, 2008; from March 28 through April 5, 2008; and from June 26 through 28, 2008.  Employees who could not work all of the hours demanded of them had their employment threatened and/or terminated.  It was not uncommon for plaintiff to put in a full nine-hour day on data entry, then be ordered to work in the warehouse in order to avoid working on weekends. . . . Defendants classified plaintiff as a salaried employee, although she spent the bulk of her time at work in non-managerial tasks, such as data entry and inventory.  Because she was considered on salary, plaintiff was not paid for the overtime hours she worked.
Plaintiff also alleges that Kreiner was "verbally abusive" to TapouT employees.  Specifically, plaintiff alleges as follows:
Defendant Kreiner, Tapout’s president, was verbally abusive to the employees and would often go onto the sales floor and scream at people.  Workers were frightened of and intimidated by Kreiner.  In addition, Tapout’s employees were required to watch “ultimate fighting” television shows on their own time and were quizzed at work on the programs.  On one occasion, plaintiff Thomas was scolded for not having watched a fight.
According to the Court's Tentative Ruling (discussed below), plaintiff's declaration submitted in connection with the summary judgment motions provided that she failed to watch a "TV broadcast on her birthday and Kreiner 'scolds' her (in front of others) and tells her not to miss another 'or else'; 'and slammed something on my desk.'"  Tentative Ruling at 2 citing (Thomas decl. 6.).

In her specific count for intentional infliction of emotional distress, Thomas alleges the following:
Kreiner yelled and screamed at plaintiff, hurling insults and false accusations at her, in order to humiliate and frighten her into quitting to avoid paying her wages owed and to stop her from complaining about unpaid wages.

Kreiner frequently came onto the sales floor, where plaintiff was working, and went on unprovoked rampages, in which he would act violently and belligerently. He did so in the presence of the entire sales staff and directed such conduct at Thomas and, on occasion, other employees.
Kreiner singled out Thomas several times, more than defendants’ other salespersons.
Kreiner called Thomas an 'idiot' and accused her of being 'unqualified' for her job, 'incompetent' as a salesperson, and 'ignorant' because she complained about defendants’ illegal activities.
Kreiner frequently became physically violent at work, throwing objects across the office and gesturing violently, in an effort to intimate and scare plaintiff Thomas.
On several occasions, Kreiner grew physically upset as a result of his intense and directed berating and implied threats of physical violence.
Kreiner, frequently and in an extremely hostile and confrontational manner, accused plaintiff and other salespersons of not selling enough product or not watching enough 'ultimate fighting' on their own time, regardless of, and without any knowledge of, how much a given employee was selling and regardless of how much ultimate fighting a salesperson watched during his or her free time.
Defendants TapouT, Kreiner, and Helton filed motions for summary judgment or, in the alternative, for summary adjudication of the issues.   On November 4, 2010 Judge Richard Fruin issued a Tentative Ruling followed by a Minute Order resolving the motions.

In his Order, Judge Fruin granted Helton's and Kreiner's motions for summary judgment.  Specifically, he held that "plaintiff does not provide admissible evidence to raise a triable issue as to her" 4th and 5th causes of action for "compelled self-defamation" and intentional infliction of emotional distress.

With respect to TapouT, the Court granted the motion for summary adjudication as to the counts for defamation, compelled self-defamation, intentional infliction of emotional distress, and the breach of express contract claims.  However, the court denied TapouT's motion as to the wrongful termination claims as well as the breach of implied contract claim.

Trial is currently set for January 18, 2011.

Fight Lawyer

Tuesday, December 28, 2010

Mikey Burnett Responds to Zuffa's Request for Attorney's Fees

Following up on my post, Zuffa Seeks $52,996.00 In Attorney's Fees From Mikey Burnett, on December 23, 2010 Mikey Burnett filed his response to Tufguy Productions, Inc., Ultimate Fighting Productions, LLC, and Zuffa, LLC d.b.a. Ultimate Fighting Productions' ("collectively, "defendants") motion for attorney's fees.

As you may recall, defendants are seeking attorney's fees pursuant to contractual provisions contained in three separate agreements they claim Burnett signed in connection with his participation on the Ultimate Fighter 4.

The response did not say much at all--it provided in relevant part as follows:
"Plaintiff believes that the lawsuit" against defendants "was filed in good faith. Tufguy, et al. was in privity of contract with National Union Fire Insurance Company and were a necessary party to reach the underlying health insurance contract. As to the negligence claim against Tuguy [Sic], et al. we believe that Plaintiff had exhausted all his administrative remedies per the contract and that litigation was the only means available to him to seek redress for his injuries."
Thus, Burnett's opposition does not address the reasonableness of defendants' attorney's fees allegedly incurred and it does not dispute the quoted contractual language set forth in defendants' motion.

Not surprisingly, defendants picked up on these points in their reply in support of their motion for attorney's fees filed on December 27, 2010.

Specifically, defendants' reply provided in relevant part as follows:
It is notable that none of the fees incurred by Defendants are being disputed by Plaintiff as unnecessary or excessive. . . . He [Burnett] argues that he was 'in privity' with another defendant, National Union Fire Insurance Company ("NUFIC"), and that suing moving Defendants was 'necessary' to 'reach the underlying health insurance contract' [].  This is a puzzling statement and there is no explanation as to what it means in the context of the instant motion. Plaintiff asserted claims for breach of contract and breach of the covenant of good faith and fair dealing against NUFIC. Plaintiff did not sue these Defendants for breach of contract, or breach of the implied covenant of good faith. Those claims had nothing to do with Plaintiff's single claim against these Defendants for simple negligence.  
Plaintiff states that he sued Defendants 'in good faith' [].  Defendants do not question Plaintiff's good faith but they do, however, question the legal rationale, and wisdom, of asserting a negligence claim in light of the fact that Plaintiff unequivocally agreed, in three separate written instruments, not to do so.  Curiously, Plaintiff argues that he 'exhausted all his administrative remedies per the contract and that litigation was the only means to seek redress for his injuries' [].  Unfortunately, Plaintiff does not inform the Court what 'administrative remedies' were exhausted. There is nothing in the court record indicating that any administrative remedy was ever sought from these Defendants. 
 
Given the weakness of the opposition, i.e. the fact that the fees were not challenged as unreasonable and/or unnecessary and the fact that plaintiff did not even address the merits of the contractual arguments, I think the motion for attorney's fees will be granted.
 
Fight Lawyer

Wednesday, December 15, 2010

Quick Update On Pacquiao Mayweather Defamation Action

Not much has happened since my last update on the Pacquiao Mayweather litigation in August 2010.  In fact, until today, there had been no new activity in the case as reflected on the docket since September 1, 2010. 

As you may recall from my last update on August 10, 2010, Pacquiao's legal team filed a motion to strike portions of Mayweather Promotions' Reply addressing the alleged Mayweather Jr. statements or, in the alternative, requested leave to file a sur-reply to address the new arguments.


In August I predicted that the "Court w[ould] grant Pacquiao's motion to the extent he seeks leave to file a sur-reply, Pacquiao w[ould] file the sur-reply, and the Court w[ould] deny Mayweather Promotion's motion to dismiss."

On December 15, 2010, the Court entered an Order "that plaintiff shall file a brief sur-reply to defendant’s motion to dismiss (Doc. #49) of no more than five (5) pages, within ten (10) days of entry of this order."

Interestingly, the Court also granted Pacquiao's motion to strike at the end of the Order despite holding as follows:
Here, Mayweather Promotions argues that its reply only responds to new allegations against it raised in Pacquiao’s opposition, and as such, these arguments should not be stricken from the reply. The court agrees. However, the court finds that based on the breadth of arguments raised in the reply, Pacquiao should be granted an opportunity to provide a brief response. See Cedars-Sinai Medical Center v. Shalala, 177 F.3d 1126, 1129 (9th Cir. 1999) (a court has the inherent authority to grant leave to a party to file a sur-reply when the information would be germane to the court’s evaluation of a pending matter). Therefore, the court shall grant Pacquiao’s motion with respect to filing a sur-reply.
Given that the Court granted the request to file a sur-reply, I am not really clear how the Court could have also granted the motion to strike, i.e. with the portions of the reply stricken there is nothing left to address in the sur-reply.  My guess is that there is a typo in the Order, but that's just a guess with the caveat that I didn't read the motion papers very closely.

Fight Lawyer

Tuesday, December 14, 2010

Some Good News

Found out today that I made partner here at Satterlee Stephens Burke & Burke LLP!  Extremely excited that all of the hard work paid off. 

One note, nothing re the blog will change, i.e. I will still be blogging here.

Thanks for the support.

Fight Lawyer

Monday, December 13, 2010

Lawsuit Against TapouT, Authentic Brands Group, et al. by Two Individuals with TapouT Membership Interests

On December 8, 2010, Bert Bedrosian and Kenneth Stickney filed a complaint against Tapout, LLC, Authentic Brands Group, LLC, Leonard Green & Partners L.P., ABG Tapout, LLC, Marc Kreiner, Daniel Caldwell, and Does 1-100 the Superior Court of California, County of Los Angeles.  (hat tip Sherdog).


In the complaint, plaintiffs assert claims "against certain board managers ("Board Managers" or "Managers") of TapouT, LLC ("TapouT"), and other persons and entities (collectively, the "Defendants") involved in a transaction through which TapouT's assets were purchased by Authentic Brands Group, LLC ("ABG") and Leonard Green & Partners, L.P. ("Leonard Green"), as detailed herein (the "Transaction")."


I have previously covered some what I thought were interesting aspects of the Transaction in my post, Update: TapouT, PEM Group, the SEC, Danny Pang and the Authentic Brands Acquisition.  As you may recall, in my earlier post I wondered "whether the acquisition has any connection to the SEC action against Danny Pang and PEMGroup, an Irvine, California based private equity firm that TapouT "secured a multimillion-dollar line of credit from."


In this action, plaintiffs, two individuals who allegedly "owned Membership Interests ("Interests") in TapouT throughout the entire relevant period," asserted claims for breach of fiduciary duty and aiding and abetting breach of fiduciary duty.


In summarizing the claims, plaintiffs allege that the Transaction "is, in many ways, a textbook example of how a select few managers/officers, conspiring together, can effectively scheme to strip the assets of a company from its investors for pennies on the dollar." 


Specifically, plaintiffs allege that the "Transaction is littered with improprieties and rife with conflicts" [] [a]nd it illustrates a clear abdication in the exercise of fiduciary duties by Daniel 'Punkass' Caldwell and Marc Kreiner the Board Managers of TapouT (TapouT's two rogue Board Managers at the time of the Transaction)." 


Note:  the complaint I have seen is redacted and so I am unable to see the alleged "disabling conflicts" or the monetary figures at issue. 


Nonetheless, plaintiffs allege that "[i]n pursuing the unlawful plan to facilitate the acquisition of TapouT by ABG and Leonard Green for grossly inadequate consideration, through a flawed process, each of the Defendants violated applicable law by directly breaching and/or aiding the other Defendants' breaches of their fiduciary duties of loyalty, due care, independence, good faith and fair dealing."


Plaintiffs "seek to enjoin Defendants from taking any further steps to complete the Transaction (certain monies have yet to be distributed) or, in the event the buyout is fully consummated, recover damages resulting from Defendants (as defined herein) for their respective violations of law, including but not limited to, violations of their fiduciary duties of loyalty, good faith, and due care."


As you may have guessed, the crux of the complaint is plaintiffs' allegations that the company was worth far more than what was paid in the Transaction. 


Specifically, plaintiffs allege as follows:
Instead, the Board of Managers agreed to a Transaction that defies all logic and reason.  Despite management repeatedly (including just weeks before the announcement of the Transaction) voicing their opinion that the equity value of TapouT exceeded [redacted] million, the Board of Managers unconscionably agreed to sell the Company for [redacted].
To demonstrate the value of the company, plaintiffs allege that TapouT's growth rate was so impressive that in 2008 it received three competitive offers:
In July 2008, TapouT's growth rate and realized earnings were so impressive that TapouT received three competitive offers from third party suitors [redacted].  All of these offers were rejected by TapouT's Board Managers (at the time the Board of Managers consisted of Lewis, Caldwell, and Kreiner)."
Further, plaintiffs rely largely on alleged statements by Kreiner that gross revenues of TapouT in 2010 would exceed $200 million and recent alleged statements by ABG's CEO:
TapouT's management previously has recognized the tremendous value of the Company's brand. During a 2009 interview Defendant Kreiner stated that the Company was going to do $200 million in revenues in 2010. Further, Kreiner predicted that the Company had the capacity to do over $1 billion in sales by 2013.  In a recent interview aired on CNBC James Salter, ABGs' CEO, confirmed that he expects TapouT's profit margins to be in excess of 50% in 2011. Therefore, TapouT will likely generate $50 milIion or more in profits in 2011 alone.
As an aside, recall that in my earlier post I noted that some of the PEMGroup loans to TapouT were paid off as recently as April 2010 and recognized that this could be attributed to the significant alleged $200 million revenue figure. 


I also noted that there were a number of articles from July 2010 discussing an "expanded licensing agreement with sportswear marketer TapouT" and Li & Fung Ltd., which is reportedly "the biggest supplier to retailers including Wal-Mart Stores Inc. and Target Corp."   I also pointed out that according to an August 12, 2010 Li & Fung Ltd. Press Conference presentation it appeared that the TapouT "expanded" licensing deal took place in April 2010, i.e. around the time that the $7.5M revolver and Term A Loan were paid off according to the Court filings.

According to the allegations of the Complaint, "Kreiner stated that he believes that, 'the sky is the limit for TapouT,' and that he believes, TapouT is likely to be the, ''Nike of MMA.'  Kreiner also routinely described TapouT's growth as, 'non-stop,' adding that TapouT, 'has chosen not to participate' in the recession. He routinely boasts, 'Everybody's cutting and we're spending.'"


Despite these alleged predictions, plaintiffs claim that the sale price to ABG was "paltry."  Specifically, plaintiffs allege:
Despite these predictions of higher revenues and increased earnings, and despite repeatedly rejecting buyout offers of [redacted] on August 9, 2010, TapouT's Managers agreed to be acquired by ABG for a paltry [redacted], subject to certain other conditions. Thus, for purposes of the Transaction, TapouT is valued at a approximately [redacted] stated revenues. Such a valuation is unheard of.  Prior to the ABG [sic] numerous other suitors attempted to purchase TapouT at much greater levels, Caldwell has repeatedly stated that he 'can't count how many suitors he turned away' before selling to ABG. He openly admits that he agreed to the ABG deal in part because ABG agreed to allow the him to continue working at the company. Indeed less than 6 months prior to the transaction two separate suitors offered in excess [redacted] to purchase the assets of TapouT, TapouT's Board Managers refused to respond to these offers.
Plaintiffs allege that the "Transaction is an enormous fraud on Plaintiffs who ended up receiving far less than market value for their investment and also importantly far less than was contemplated by the Written Consent which Plaintiffs signed."  Moreover, plaintiffs allege that "the conduct of both TapouT and ABG, through its top management, was motivated by self-interest, greed, hubris, and a palpable sense that the normal rules of fair play do not apply to them."
Clearly TapouT and ABO's management thought of itself as too 'bad ass' to play by the rules. Plaintiffs as investors in TapouT are receiving an indefensibly inadequate consideration in connection with the sale. Plaintiffs are losing the opportunity to enjoy the benefit of unlocking the value TapouT management touted TapouT to have. In exchange, Plaintiffs will receive a token cash payment which is far less than they ever agreed to.
Unlike them, plaintiffs allege that "TapouT's Board of Managers is highly incentivized to support the Transaction. Indeed at this point disbursements to TapouT's Managers have likely exceeded disbursements to TapouT's investors.  In short, the proposed acquisition is designed to unlawfully divest Plaintiffs of the future growth potential of the company by engaging in an unfair process riddled with self-dealing."
 
Fight Lawyer

Zuffa's Trademark Infringement Claims Against Video Game Company

A summary I wrote up of the lawsuit Zuffa, LLC filed against Ubisoft, Inc. with some analysis is over at MMAPayout.  Check it out.

Fight Lawyer

Wednesday, December 8, 2010

Zuffa Seeks $52,996.00 In Attorney's Fees From Mikey Burnett

Following up on my post, Zuffa's Motion For Summary Judgment In Burnett Case Granted -- Burnett's Only Claim Dismissed, on December 6, 2010 Tufguy Productions, Inc., Ultimate Fighting Productions, LLC, and Zuffa, LLC d.b.a. Ultimate Fighting Productions ("collectively, "defendants") filed a motion for attorney's fees seeking $52,996.00 from Mikey Burnett.  Specifically, defendants seek contractual indemnity for legal fees incurred defending against Burnett's claims in connection with his participation on the Ultimate Fighter 4.

As you may recall, on October 20, 2010 Judge Gloria M. Navarro of the United States District Court for the District of Nevada granted defendants Motion for Summary Judgment dismissing Burnett's negligence claim because she held that the waivers in the various agreements Burnett signed in order to participate on the Ultimate Fighter 4 were perfectly valid and enforceable against the negligence claim.  Judgment was entered by the Court on November 22, 2010.

Zuffa's motion includes the relevant language from the purported agreements at issue. 

First, Zuffa relies on language from the "Exclusive Promotional and Ancillary Rights Agreement," which, as set forth in the motion, provides in relevant part as follows:
17. Fighter shall indemnify, defend and hold harmless ZUFFA, its subsidiaries and affiliates, and each of their members, managers, directors, officers, employees, representatives, agents and contractors from and against any claims, actions, proceedings, expenses (including attorneys' fees of counsel of indemnified party's choice, as and when incurred) and damages arising from or relating to any negligent or intentional acts or omissions by Fighter or any of Fighter's Affiliates or by the actual or claimed breach of this Agreement or any Bout Agreement by Fighter or any of Fighter's Affiliates or the inaccuracy of any of Fighter's representations, warranties or covenants contained herein or within any Bout Agreement.
28.4 In the event either party engages counsel in connection with the enforcement or interpretation of this Agreement or any provision hereof or the resolution of any dispute arising from or related to this Agreement, the prevailing party shall be entitled to recover from the other party its attorneys' fees and costs, regardless of whether or not an action is filed.
Next, defendants rely on language from the "Ultimate Fighter Applicant Agreement:"
26. As used in this Agreement, the term "Releasing Parties" means and refers to each of me, my heirs, next of kin, spouse, guardians, legal representatives, executors, administrators, successors and assigns.
27. As used in this Agreement, the term "Released Parties" means and refers to each of Producers, Spike TV, Full Circle Entertainment, LLC, and each of their respective parents, subsidiary entities, affiliates, successors and assigns, and the respective directors, officers, members, managers, employees, agents, contractors, partners, shareholders and representatives of each of the foregoing entities.
          . . .
31. I and other Releasing Parties irrevocably agree to defend, indemnify and hold harmless each of the Released Parties from and against any and all claims by whomever asserted arising out of or in connection with (a) any breach or alleged breach of any agreement, covenant, representation, warranty made by me in this Agreement or (b) my preparation for, participation and appearance in or elimination form the Series or the activities associated with the Series, including without limitation any injury, illness, damage, loss harm or death I may suffer from and any statement, action or omission of mine during or in connection with the Series.

Finally, defendants rely on language from the "Ultimate Fighter Waiver and Release, Assumption of The Risk, and Indemnity Agreement:"
7. RELEASING PARTY HEREBY AGREES TO INDEMNIFY AND SAVE AND HOLD HARMLESS THE RELEASEES and each of them FROM ALL OF THE LIABILITY AND LOSSES, DAMAGES, INJURIES, DEBTS, LIABILITIES, EXPENSES (including court costs and attorneys fees), JUDGMENTS, OR COSTS they may incur due to claims, demands, damages or causes of action of any kind brought by RELEASING PARTY, or anyone on behalf of the RELEASING PARTY, against the RELEASEES on account of any injury, including but not limited to, death or damage to property, caused or alleged to be caused in whole or in part by the NEGLIGENCE of the RELEASEES or otherwise arising from or related in any way to the EVENTS and/or his presence in or upon the premises or facilities where the EVENTS are or will be taking place.
8. RELEASING PARTY also HEREBY AGREES TO INDEMNIFY AND SAVE AND HOLD HARMLESS THE RELEASEES and each of them FROM ALL OF THE LIABILITY AND ANY LOSSES, DAMAGES, INJURIES, DEBTS, LIABILITIES, EXPENSES (including court costs and attorneys fees), JUDGMENT, OR COSTS they may incur due to RELEASING PARTY's participation in the EVENTS, RELEASING PARTY's breach of any term, condition, representation or agreement contained herein, and/or RELEASING PARTY's tortious or criminal conduct.
Fight Lawyer

Saturday, December 4, 2010

Tapology--Cool New Website That Tracks Your Fight Picks And More

I just set up my account and picked some of the UFC and Strikeforce fights tonight.

I am not a betting man (wisely) as most of my picks are usually wrong.  This site is a good way to keep track of how wrong I am.  Enjoy and here is the press release:

FOR IMMEDIATE RELEASE


Tapology.com Launches New Social Network for Mixed Martial Arts

December 03, 2010

BOSTON, MA – Tapology.com today announced the official launch of a new social network devoted to the sport of mixed martial arts.

Tapology.com fills a gap in MMA’s web presence by providing its fan base with state-of-the-art interactive capabilities and social networking features specific to the sport of MMA.

Available online at http://www.tapology.com, Tapology allows site members to generate, track and compare personalized fight predictions for major MMA events, including those held by the UFC Ultimate Fighting Championship, Strikeforce and other promotions. A simple and intuitive user interface allows fans to store and analyze their fight predictions and results and share them across the web.

Tapology also lets site users build, modify and share personalized MMA rankings in more than two dozen categories. Fans can quickly create their own Top Ten Pound-for-Pound and weight class-based fighter rankings, All-Time Greatest Knockouts and Submissions rankings, All-Time Greatest MMA Strikers and Grapplers rankings, All-Time Greatest MMA Fighters and Favorite Fighters rankings, and many more. Tapology’s simple user interface for creating and storing rankings improves the experience of typing and sharing such lists informally through forum posts and on blogs.

Tapology.com hosts a complete next-generation fight finder database featuring thousands of fighters, bouts and events, including every event ever held by the Ultimate Fighting Championship and Pride Fighting Championships, as well as events held by WEC World Extreme Cagefighting, Strikeforce, Dream, Affliction, EliteXC, Sengoku and other major MMA promotions. In addition to extensive fighter statistics and biographical information, “tale of the tape” matchup information, and salary, audience, billing and attendance information, Tapology also integrates advanced live social networking features into its fight database, including up-to-the minute displays of fighter tweets via Twitter.com, current oddsmaker betting lines, and fully integrated live prediction and ranking statistics from its online community.

Tapology.com also hosts an advanced online discussion forum which integrates information from its other site features into forum topics, including personal fight prediction tracking and individual user rankings tracking in forum posts.

Prior to launching its MMA networking features, Tapology.com featured MMA industry analysis and exclusive interviews with major MMA fighters, including UFC Welterweight Champion Georges St. Pierre, UFC Lightweight Champion Frankie Edgar and others. These and other regularly updated features continue to remain available online on the Tapology Blog, located at http://blog.tapology.com.

Tapology.com is free to use and join. E-mail registration is required.

# # #

ABOUT TAPOLOGY.COM – Tapology.com is a web-based entertainment company specializing in the sport of mixed martial arts. Tapology is not affiliated with the Ultimate Fighting Championship, Zuffa, LLC, or any other fight promotion or fight sanctioning body. Tapology can be reached via the world wide web at www.tapology.com, via Twitter at www.twitter.com/tapology, via Facebook at www.facebook.com/pages/tapologycom/224305674489, and via e-mail at support@tapology.com.

# # #

http://www.youtube.com/watch?v=Bt4TZDglnXE

Sonnen's Interview on Inside MMA. Not Focused on Hearing-Instead, Focused on Dealing with the Federal Government's Alleged "Interference" With His Campaign for Public Office

Embedded below is the Inside MMA interview with Chael Sonnen after the CSAC hearing.  Fightopinion transcribed the interview as well.

No questions were asked about Sonnen's testimony under oath concerning the Nevada State Athletic Commission and Keith Kizer.

Sonnen claims that he is still "confused" about what the CSAC expected him to do re disclosure and states that he had not really focused on the hearing and had, instead, been focusing on "dealing" with the "federal government all the way dating back almost five (5) years ago interfered with a campaign [he] had for public office."





Fight Lawyer

Friday, December 3, 2010

Sonnen's Suspension with the CSAC Cut to 6 Months--Some Dialogue From the Deliberations

As many of you probably know, "Chael Sonnen managed to get his one year suspension cut in half yesterday on a 3-1 vote of the California State Athletic Commission. He'll be eligible to fight again as soon as March 2.

I watched (or listened) to most of the testimony and evidence offered and then followed the deliberations of the CSAC leading to its ultimate vote.  As you can read in this article over at Bloody Elbow, there were plenty of reactions to the hearing.  Negative reactions towards the CSAC, Sonnen, his witness and defense, or negative as to all of the above.

I will not go into the testimony here, but will provide a link to the video below if you are interested:



I do want to focus on parts of the deliberations by the CSAC because I think it is clearly confused and disorganized and is worth taking a closer look.

I will start with some testimony from a commisioner who I believe was the Chair [note we did our best with transcribing, but it may not be perfect--emphasis in transcription is mine]:

I have just a few things here, commissioner you stole my thunder, you talked about it already but I want to say this, I want to go over it again and that is disclosure, and we have no record of disclosure period. And I want to make this body understand and one of the problems that our executive officer had and you can always say in hindsight that you should've said that well there's no bout or whatever have you but I'm going to tell you how sticky that can be. I was there the night of Margarito with the Mosley fight and [I think he said or meant Nazim Richardson] who are Mosley's people found the problem, now I was the only commissioner there and the TV people who tries to run things, it would've been almost a catastrophe if I had to make the decision not to have the fight period. Thousands of people, lots of money there. So looking back at it the executive officer said 'ok we'll go on with it.' It was his call but really not his call and so these are the kinds of things we run into. This is the first case I've seen in many years and I'll put it this way, the way we decide today is going to set a precedent down the line so I just want to let the other commissioners know that, we really have to be careful with this.
Here the Chair appears to be defending the Executive Director, George Dodd's, decision not to call off the fight "despite an admission from the fighter that he injected the steroid two days prior to challenging Anderson Silva for a UFC championship belt in August."

I have previously questioned Dodd's decision and his interpretation of (and reliance on) a rule that I believe has no application to an admission of prohibited substance use.  Worth noting also that unlike the hand wrap incident, according to Josh Gross' article above the alleged admission occurred two days before the Silva fight, i.e. not the night of and right before the event, and, importantly, the hand wrap was corrected before the fight began (and so Mosley was not at risk) whereas there is no way to "correct" a substance in the body -- at least as far as I know.

Either way, the Chair was looking out for his own and was concerned about setting a precedent that an Executive Director may be put in the position of having to make a decision based on facts presented and that the decision might include calling off the fight -- a "catastrophe" in his words.  With all the money on the line, the Chair seems to think this should not be an option, but and assuming I am properly interpreting what the Chair said, this was not the precedent he should have been concerned with setting and/or the "catastrophe" he should be trying to avoid.  But I digress. 

Another commissioner (I do not know his name), but he voted "nay" on both motions stated as follows:
Speaker 1: Number 1 by independent testing determined by the commission at the cost borne by the licensee we would obtain current levels and determine that the levels are within range, the testosterone levels, that all future levels would have to be within range and that we would have an opinion from a physician [], that as determined by a third party, a physician that's chosen by us, by the commission that the licensee's condition and the treatment for this condition are within the standards of care in the community and that whatever the ranges come back and the testing that we need to get because technically we're not operating as doctors and not even commissioner Lemon, we're here operating as commissioners so we need to get a physician's opinion that the levels are of the type that you were alluding to that they are not just testing for one thing but everything that you believe would be an appropriate battery of tests to determine that this treatment is within appropriate ranges and that based upon that being the case and this testing will go on during the course of the year alluding back I think to what you said that the testing can't be done just the day before the fight that there has to be a regular series of testing ongoing over the course of the next year that should all those results prove negative, that the suspension would be lifted and the suspension would be lifted as soon as we're able to obtain that the ranges are right now, and that the treatment modality is within the standards of care and of course that would have to be maintained during the course of the license and that the fine, the $2500 fine would be suspended in lieu of the licensee bearing the costs for the testing and the statement from the physician. So, I don't know if that gets at the kind of thing that you were talking about in terms of the comprehensiveness of the testing as well as determining that this condition is being treated properly.

Dr. Lemons: I think that it would be difficult to retroactively try and assure that this patient's medical condition was properly diagnosed and managed.
Speaker 1: All I'm talking about is moving forward.
Dr. Lemons: Moving forward we need to have a rule of how to handle this banned substance and every banned substance, that if someone says they need it for a medical condition we have a protocol that we use.
Speaker 1: I understand that except that that's policy making and we can't do that in a hearing it has to come up as an agenda item, I'm talking about this particular licensee I'm trying to get at how do we do that in the instant circumstance.
Dr. Lemons: In this case we are not going to be able to tell what his testosterone level was the moment he stepped in that cage with Anderson Silva. We can't know that.
Speaker 1: I know that, but we can moving forward.
Dr. Lemons: The lab that we sent was of, was two days before or a day before and we didn't get a quantitative value we just got a value that it was not his testosterone.
Speaker 1: I understand that and this is what I'm getting at, is in order to move forward with how we deal with this license which is currently suspended and subject to a fine is how do we act upon this license today, so what I'm looking at is because going back to what you offered I would say this as a statement that notwithstanding what I would consider the specious nature of the record and the testimony and the inconsistency with respect to the disclosure and non disclosure issue as to who and when and how and what was disclosed and testimony today that was woefully lacking and otherwise clarifying all of that, not withstanding all of that, that's I believe how porous the record was in establishing credibility I'm just looking for a course to move forward with this particular licensee. With his condition.

Commissioner Zinkin:  You know I have a suggestion.  I think we have two separate issues here, my feeling is we have to come to a conclusion based upon what we believe the issues are in this matter and I believe one of them is disclosure.  Ok that's one, I do believe that we that we need to be in a position where if any information is determined prior to a fight that is suspect, this testosterone use or any other kind of violation I think then we have to be prepared to have a policy immediately to implement and deal with it but I think that should be brought up in different forum at a different time.  That's my feeling. 

         *                       *                      *
Commissioner Zinkin:  This issue is one of the single biggest issues we're faced with in this sport and it's a great sport.  I've watched your career most of your life and followed it and I really respect everything that you've done but you know you get this enhancements going it creates this terrible risk, for me it makes me want to be maybe over protective we have to handle this in the right way.  We can't send the wrong message and it's very conflicting in my mind where to go and what to do.  I think it's very important that we send the message though in this commission that California has zero tolerance.  It creates a terrible risk not only to the user but it creates a terrible risk to the opponent.  And it's a breach of trust I believe to the stakeholders, to the participants, to the viewers and to the sport itself so my feeling is, I see this as, one, we have a disclosure issue the arguments of the need and the necessity I think they are just great arguments, do I necessarily buy into them? that's probably, in my mind, a different issue to discuss at a later time I am more concerned with the disclosure or the lack of disclosure in what occurred and what other creative or inventive way another athlete coming in front of this commission in California could come up with a reason for not disclosing now that's my dilemma and I think that's what we need to address and I think we just need to send the right message out.  Doctor what is your feeling?
 Dr. Lemons: I agree with you.   
               *                *                *
Commissioner Zinkin:  My problem is if the disclosure didn't occur and there is a great reason or argument that it didn't occur we're going to be stuck with the same thing.  To me this is, if there is a lack of disclosure I think there's an affirmative obligation for the participant to disclose under any circumstances for any reason and especially if you're using it because it aids you in what you need to do and maybe it is prescribed by a doctor but for me that should be disclosed right away "hey I've got this deficiency, I need it, this is what's happening California, Nevada, Florida this is what I'm doing."   So I just don't want to open a gate in this corral and let all the horses out.
I think Zinkin was spot on.  I also can't quite grasp why the commissioner who came up with the "future testing" concept was so concerned with trying to prove whether Sonnen did something wrong when the issue was non-disclosure and he acknowledged that Sonnen's arguments were "specious."

Nonetheless, initially Dr. Lemons moved to maintain the suspension of one (1) year, commissioner Zinkin seconded the motion, and the Chair and the commissioner who proposed future testing above opposed so the motion failed 2-2.  Final note, the commissioner who proposed the future testing voted "nay" on the motion that ultimately passed as he appeared to be stuck on his own course of future testing of Sonnen.

Fight Lawyer

Wednesday, December 1, 2010

Pacquiao Fires Back In Texas, TRO Expires, and Case Is Transferred

Following up on my post, Lawsuit Filed Against Pacquiao In Texas And Court Enters Temporary Restraining Order Locking Up Part of His Fight Purse, on November 22, 2010, Pacquiao filed a motion to dismiss plaintiff's complaint under rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure.

With respect to plaintiff's claim for fraud and claims "sounding in fraud," plaintiff moved to dismiss under Rule 9(b) "due to the complete failure to state with particularity the alleged circumstances constituting fraud and the other claims related to or sounding in fraud in Plaintiff s Original Complaint as well as the request for injunctive relief."

Pacquiao also, "independently" moved to dismiss plaintiff's claims for "breach of contract, the tortuous [sic]interference with existing contract and prospective contract relationships, the fraud claims and any claim for injunctive relief" under Rule 12(b)(6) for failure to state a claim for which relief can be granted.  The crux of this argument was that "on the face of the Complaint, Plaintiff admits to failing to timely make the second $100,000 payment as required by the contract upon which this suit is based."

As you may recall from my earlier post, plaintiff also sought a temporary restraining order that the Court granted on November 12, 2010.

The TRO provided in relevant part as follows:

That Defendant EMMANUEL PACQUIAO, and Defendant’s officers, agents, servants, employees, and attorneys, and all persons acting in concert with them, are hereby enjoined from transferring, disbursing, distributing, or otherwise secreting funds received by Defendant, or subject to his control, from TOP RANK, INC. ("TOP RANK") and/or any other person or entity, as a result of his contract to fight ANTONIO MARGARITO ("MARGARITO") on November 13, 2010 in Arlington, Texas, in an amount up to $1.5 million, by which accounts for the $1,180,210 sought by Plaintiff as damages by reason of Defendant’s breach of contract, plus attorney fees, costs of suit, and interest, to be held pending further order of this Court;
Thus, the TRO entered by the Court tied up part of Pacquiao's purse from the Margarito fight.

The Court set a scheduling conference on November 22, 2010 at 2 p.m and required that plaintiff post a bond of $10,000.

It is not exactly clear from the record what happened at the hearing on November 22, but it is clear that for some reason the Court saw no need to keep in effect the TRO and the Court also decided to transfer the case to another judicial district in Texas.  Specifically, the Court's Hearing Minutes and Order provided as follows:
The Temporary Restraining Order will expire at the end of the day for the reasons stated on the record.  This action is transferred to the McAllen Division of the Southern District of Texas pursuant to 28 U.S.C. § 1406(a).  Plaintiff's bond is to be released at 5:00 p.m. today 11/22/2010.

For those interested, 28 U.S.C. § 1406(a) provides as follows:
(a) The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.

An interesting note from the Hearing Minutes and Order is that counsel appearing on behalf of the Dallas Cowboys was present at the hearing.


Fight Lawyer