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UFC sets precedent with win over Ken Shamrock in court; UFC fighters legally find themselves substantially weakened

By Zach Arnold | April 8, 2010

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We have discussed the Zuffa vs. Ken Shamrock court case repeatedly on this web site. (You can view all the court records related to this case in the 8th District in Las Vegas right here.) In short, Shamrock sued UFC over having one fight left on his contract and getting cut. UFC not only defeated Shamrock in civil court, but the judge in the case (Susan H. Johnson) awarded Zuffa’s motion to get all their court costs covered. That means Ken Shamrock is stuck with a $175,000 legal bill. For Shamrock, it’s a disastrous ruling given his reportedly perilous financial situation.

The lawsuit raises several issues. Attached to this article is a legal interpretation by Rob Maysey of the judge’s ruling in this case and what it means for anyone who signs a UFC contract. Below his summary is the full text from the judge’s initial decision to award the decision to the defendants (Zuffa) in the civil suit (around Valentine’s Day 2010).

UFC’s advantage of doing business in Las Vegas makes it incredibly hard for any fighter to try to sue them in court. Financially, it can be crippling. Legally-speaking, it’s more or less a loser. They know how to drop the legal hammer.

UFC’s Promotional Agreement Adjudicated for First Time in Ken Shamrock, Inc. vs. Zuffa, LLC

Court concludes Shamrock Bound to UFC, but UFC Has No Obligation to Promote.

By Rob Maysey

At UFC 61 in a show titled “Bitter Rivals,” Tito Ortiz defeated Ken Shamrock for a second time. The findings of fact contained in the court’s judgment demonstrate that this event was an enormous commercial success, generating over 775,000 pay per view purchases and a sellout gate. After this show, Ken Shamrock and the UFC entered into negotiations for a third bout against Tito Ortiz. Dana White, the Shamrocks and Shamrock’s representative met in Anaheim on or around July 31, 2006 to discuss terms of a third bout. At this meeting, Dana White gave a check in the amount of $1,000,000 to Ken Shamrock, though the purpose of this payment was disputed. In August of 2006, Shamrock and the UFC entered into an “Exclusive Promotional and Ancillary Rights Agreement,” the terms of which were breached by the UFC, according to Shamrock’s complaint.

Shamrock’s agreement contained the following “Recital G”:

“Fighter has determined the first Bout will be his final, after which he will retire, but has agreed to one additional Bout with Zuffa in the event Fighter should elect not to retire, or to come out of retirement to fight again.”

Thus, in the event that Shamrock did not retire or came out of retirement, he was obligated to provide one additional fight to the UFC under the terms of his promotional agreement. Following the rematch with Tito Ortiz in October of 2006, Shamrock retired. In June of 2007, Shamrock informed the UFC that he desired to fight again, and requested the second fight.

Shamrock alleged that the retirement clause contained in his promotional agreement required the UFC to make an election in the event he retired from mixed martial arts competition. The UFC could (i) suspend the term of the contract for the time period in which Ken Shamrock remained retired; (ii) declare that it had satisfied its obligation to promote all future bouts; or (iii) elect to provide a notice of Acceleration. “Acceleration” serves to expire the term of the contract, but leaves in place all ancillary rights and all other general and specific terms contained in the promotional agreement. Also of note, this clause is identical to the provision contained in Randy Couture’s promotional agreement that was also the subject of dispute in 2007. The exact language of the clause can be viewed here. (http://www.sherdog.com/news/articles/Inside-the-Standard-Zuffa-Contract-9734).

Apparently, after Shamrock’s request for the second fight, counsel for the UFC sent a letter to Shamrock’s attorney indicating that the UFC elected to suspend the term, option (ii) above. A second bout with the UFC failed to materialize, and the UFC later informed Shamrock that it had decided to terminate the promotional agreement. Shamrock alleged that the promotional agreement required the UFC to make an election in the event of retirement, and that it could not change its election at a later date. Shamrock asserted that the UFC breached the promotional agreement by failing and refusing to promote the second bout as contemplated by his promotional agreement.

The court ruled that the UFC did not breach the terms of the promotional agreement, and that even had such breach occurred, it was waived by Shamrock. The court pointed to Recital G, and noted that while it obligated Shamrock to provide an additional bout to the UFC, the promise was not mutual and imposed no corresponding obligation on the UFC. The court, in its findings of fact, also noted that “apparently, Mr. Shamrock desired a one-fight deal as he wanted to retire after the third or trilogy bout with Mr. Ortiz.” The basis for this finding appears to be statements made by Dana White.

Next, the court interpreted the retirement clause and whether the UFC was required to make an election as asserted in Shamrock’s complaint. Shamrock argued that the use of the word “or” in this clause clearly demonstrated that only one election could be made. The court rejected Shamrock’s argument that the UFC could not change its election under the retirement clause. The court determined that the UFC could make one or more elections under this clause, at any time. To arrive at this result, the court concluded that the words “or” and “and” can be used interchangeably “when necessary to effect the parties intention.”

In support of this interpretation, the court noted that “dubious results” could result under the terms of the promotional agreement with a contrary ruling. In particular, the court determined that Shamrock could come out of retirement 30 years later, “when he no longer may be marketable and his skills are diminished.” The court noted that the converse was also true and that the UFC could require the fighter to provide a second fight. The court, however, dismissed this concern by stating that the UFC “is regulated by state athletic commissions.”

Fighters, however, are regulated by the very same athletic commissions, and must obtain a license to compete in any event. Curiously, the court did not make this connection, noting that “the only limitation would be if the fighter did not meet the medical conditions required by the contract.”

The scope of this opinion can not be understated. A review of the UFC’s promotional agreement reveals virtually no obligations whatsoever, aside from payments for completed bouts. One hopes that this case hinged on case specific facts that were not discernible to this author after review of the complaint and decision. Despite opinions I have received to the contrary, it is difficult to believe the promoter under the terms of a promotional agreement is under no obligation to actually provide promotional services, while the fighter is strictly obligated.

Full text of judge’s decision in favor of Zuffa LLC in the Ken Shamrock lawsuit

DISTRICT COURT

CLARK COUNTY, NEVADA

Case No. A561085
Dept. No. XIII

KEN SHAMROCK, INCORPORATED, a California Corporation,
Plaintiffs,

Vs.

ZUFFA, LLC, a Nevada Limited Liability Company; and DOES I through 50, inclusive,
Defendants.

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT

This matter came on for trial on the 8th and 9th days of February 2010 before Department XXII of the Eighth Judicial District Court, in and for Clark County, Nevada, with JUDGE SUSAN H. JOHNSON, presiding, Plaintiff KEN SHAMROCK, INCORPORATED’ appeared by and through its attorney, GREGORY M. GARRISON, ESQ. of the law firm, TEEPLE HALL, LLP; and Defendant ZUFFA, LLC appeared by and through its attorneys, DONALD I. CAMPBELL, ESQ. and J. COLBY WILLIAMS, ESQ. of the law firm, CAMPBELL & WILLIAMS. Having reviewed the file, including the papers and pleadings filed in this matter, heard the testimonies of the witnesses presented, i.e. RODNEY L. DONOHOO, KIRK D. HENDRICK, DANA WHITE and KEN SHAMROCK, heard the statements and arguments of counsel, and taken this matter under advisement, this Court makes the following Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

1. At all times relevant herein, KEN SHAMROCK is or was a mixed martial arts (MMA) fighter, an inaugural member of the Ultimate Championship (UFC) Hall of Fame, and a professional wrestler, promoter and coach for the “Lion’s Den,” a fight camp and MMA team. According to testimony of witnesses and the parties’ Joint Pre-Trial Memorandum, MR. SHAMROCK, who is now 46 years old, was a major draw for the UFC Pay-Per-View events during his career, and MMA fans continue to recognize him as “The World’s Most Dangerous Man ” MR. SHAMROCK is an employee of Plaintiff KEN SHAMROCK, INCORPORATED. RODNEY L. DONOHOO is and was the attorney, sports agent and business partner of MR. SHAMROCK with respect to his (SHAMROCK’S) ventures and dealings.

2. Defendant ZUFFA, LLC is in the business of promoting professional mixed martial arts (MMA) fights or bouts through the Ultimate Fighting Championship (UFC). DANA WHITE is and was the President of ZUFFA, LLC, and KIRK D. HENDRICK is and/or was the company’s Chief Operating Officer (COO) and General Counsel.

3. At about the time the UFC was acquired or purchased by ZUFFA, LLC in 2001, there already existed “bad blood” or a rivalry between MR. SHAMROCK and TITO ORTIZ, another well known MMA and UFC fighter. While the trial presentation varied regarding how the SHAMROCK/ORTIZ rivalry came to fruition,2 there is no question such “bad blood” between the two fighters was appealing to MMA fans, and marketed by ZUFFA, LLC and the UFC.

4. In early to mid-2000, Defendant ZUFFA, LLC promoted a bout or fight between KEN SHAMROCK and TITO ORTIZ in what was the UFC Light Heavy Weight Championship of the World. The event, which lasted three (3) rounds,’ was extremely successful from a marketing and monetary perspective. In the end, MR. ORTIZ won the bout, and thus, then became the UFC Light Heavy Weight Champion of the World.

5. Given viewer and fan demand after the initial SHAMROCK/ORTIZ fight, ZUFFA, LLC promoted a rematch between MR. SHAMROCK and MR. ORTIZ in 2006. This time, the promotion for the event was overwhelmingly successful from a monetary perspective, generating over 775,000 Pay-Per-View purchases, and a ticket sell-out at the gate. On July 8, 2006, the event took place, but had a controversial ending. The fight was ended or called by the referee within the initial two minutes of the first round, with MR. ORTIZ allegedly getting the best of MR. SHAMROCK, and winning the fight by technical knock-out. MR. DONOHOO testified the fans were very upset, booing and throwing things, and ultimately, MR. SHAMROCK, MR. SHAMROCK’S wife, TONYA, and he had to be escorted from the facility for safety reasons.

6. Within days of the July 8, 2006 bout, MR. SHAMROCK and MR. WHITE spoke regarding scheduling a third confrontation between MR. ORTIZ and MR. SHAMROCK, essentially to appease unhappy fans who had paid for the disappointing rematch performance. MR. DONOHOO followed up regarding that conversation, and sent MR. WHITE an electronic letter (referred to as “e-mail” herein). MR. WHITE thereafter agreed to meet the SHAMROCKS and MR. DONOHOO in Anaheim, California on or about July 31, 2006.

7. At the Anaheim, California meeting, MR. WHITE, MR. DONOHOO and the SHAMROCKS discussed prospects of a “Trilogy” or third bout between MR. SHAMROCK and MR. ORTIZ to take place on television, free to charge, to UFC and MMA fans. Those discussions involved negotiations for both a one- and two-fight deals and ended with MR. WHITE agreeing to see what could be done. At that meeting, MR. WHITE slid a $1,000,000 check across the table to MR. SHAMROCK.

8. By e-mail on August 7, 2006 to JAMIE POLLACK, counsel for Defendant ZUFFA, LLC, MR. DONOHOO memorialized the parties’ preliminary agreement MR. SHAMROCK would contract with ZUFFA, LLC for a two-fight deal,? Specifically, MR. DONOHOO stated, “…Dana [White] requested a two fight deal in order to ensure that IF Ken [Shamrock] fights again, it will be for the UFC. Ken understands and agrees.” (Emphasis in original) .

9. Thereafter, the parties (meaning Plaintiff KEN SHAMROCK, INC. and Defendant ZUFFA, LLC) memorialized their agreement via an “Exclusive Promotional and Ancillary Rights Agreement” crafted by their lawyers, which was signed by MR. SHAMROCK and MR. WHITE on or about August 8, 2006.

10. Within the “Exclusive Promotional and Ancillary Rights Agreement” (referred to as the “Agreement” herein), the parties expressed their desires within the “Recitals” listed on pages 1 and 2, and incorporated within the entire agreement by reference. Notably, the parties desired Defendant ZUFFA, LLC would be the fighter’s (MR. SHAMROCK’S) exclusive promoter for his future bouts for a period of time, and MR. SHAMROCK granted certain ancillary rights to ZUFFA, LLC in perpetuity as set forth therein. The Agreement was also to supersede the previous Exclusive Promotional and Ancillary rights Agreement dated November 18, 2005. The parties acknowledged the controversy surrounding the stoppage of the SHAMROCKIORTIZ event, and MR.SHAMROCK had expressed displeasure over his recent portrayal and image. The parties articulated their desire to provide viewers and fans a final KEN SHAMROCK/TITO ORTIZ fight (defined in the Agreement as the “first Bout”) which was to occur on October 10, 2006 and aired live on Spike Television as a non Pay-Per-View event. The promotion of such event was designed to provide MR. SHAMROCK a means to demonstrate his character to the public, as well as provide positive media exposure to both parties. MR. SHAMROCK was to be paid a significant set sum for the first Bout, and if a second fight took place, his remuneration was a much lesser finite amount and a percentage of the Pay-Per-View draw.

11. Of significance, the Agreement’s Recitals included “G,” which stated:

Fighter has determined the first Bout will be his final, after which he will retire, but has agreed to one additional Bout with ZUFFA in the event Fighter should elect not to retire, or to come out of retirement to fight again.

12. The Agreement also provided, inter alia:

4.5 During the Terms ZUFFA shall have the exclusive right to promote all of Fighter’s bouts and Fighter shall not participate in or render his services as a professional righter or in any other capacity to any other mixed martial art, martial art, boxing, professional wrestling, or any other fighting competition or exhibition, excluding participating as a corner, manager and coach to other fighters except as otherwise expressly permitted by this Agreement.

13. The Agreement also provided, inter alia:

10.3 If at any time during the Term, Fighter decides to retire from mixed martial arts or other professional fighting competition, then ZUFFA may, at its election, (i) suspend the Term for the period of such retirement; (ii) declare that ZUFFA has satisfied its obligation to promote all future Bouts to be promoted by ZUFFA hereunder, without any compensation due to Fighter therefore, or (iii) elect to provide Fighter with notice of an Acceleration.

14. The Agreement also provided, inter alia:

11.5 If fighter believes in good faith that ZUFFA has materially breached any material provision of this Agreement, or has unreasonably failed or refused to perform its obligations hereunder, Fighter shall provide ZUFFA with written notice of such alleged breach and shall provide ZUFFA with at least ten (10) business days to cure such alleged breach. If ZUFFA fails to cure the alleged material breach within ten (10) business days of receipt of Fighter’s written notice, then and only then may Fighter seek to terminate this Agreement and seek redress for any outstanding compensation owed to Fighter hereunder. KS Inc. and Fighter expressly understand and agree that their sole remedy for any alleged breach by ZUFFA shall be to seek payment for any remaining compensation due to Fighter under Article VII, exclusive of any potentially applicable pay-per-view bonus, and in no event shall Fighter be entitled to any consequential,. incidental, or punitive damages of any sort.

15. The third fight or bout between KEN SHAMROCK and TITO ORTIZ took place on October 10, 2006, and was aired on Spike Television free of charge to viewers and fans. Unfortunately, the fight ended in the first round with MR. ORTIZ again prevailing. At the end of the event, MR. SHAMROCK announced in the Octagon on public television he was retiring from the sport.°

16. Given MR. SHAMROCK’S retirement announcement, Defendant ZUFFA, LLC considered the Agreement and MR. SHAMROCK’S obligations there under suspended, although it did not formally notice Plaintiff of such suspension after the fight.

17. About nine (9) months later, in or about early June 2007, MR.DONOHOO sent MR. HENDRICK an e-mail regarding MR. SHAMROCK’S desire to compete again. On June 8, 2007, MR. HENDRICK responded to the e-mail, noting MR. SHAMROCK considered the October 10, 2006 to be his final bout, after which he would retire; such retirement plans were publicly confirmed following the fight. MR. HENDRICK also stated that “[ijf Ken has decided to come out of retirement, please send written notice of that desire to my attention.... Upon receipt of such written notification, I will write to you regarding Ken's status with the UFC. My presumption is that Zuffa would be willing to terminate the Agreement.""

18. On June 11, 2007, MR. DONOHOO wrote to MR. HENDRICK. Of significance, he stated:

Concerning the content of your letter, please be advised we never received notice of suspension of contract from the UFC. Accordingly, the agreement between Mr. Shamrock and the UFC has never been suspended. Additionally, we have in the past forwarded communications to Mr. White confirming exactly the opposite: that Mr. Shamrock has not retired for purposes of his agreement with the UFC. In any event, this again confirms Mr. Shamrock is not retired, and once again we are requesting a second bout under the terms of the Agreement.

19. As evidenced by MR. DONOHOO'S June 25, 2007 e-mail to MR. HENDRICK, MR. WHITE telephoned MR. DONOHOO the previous Friday [June 22, 2007],13 confirming the UFC had terminated the Agreement. MR. DONOHOO expressed his disagreement, noting “but frankly there is not much I can do about it. I will send a letter confirming the termination….”

20. On or about June 26, 2007, MR. DONOHOO sent MR. WHITE and MR. HENDRICK a letter, memorializing the UFC had terminated its agreement with MR. SHAMROCK.14 On July 5, 2007, MR. HENDRICK acknowledged receipt of the letter, confirming ZUFFA, LLC’S termination of the Agreement, and that “we consider this matter closed. ”

21. The parties did not communicate again until four months later, October 26, 2007. On that date, MR. DONOHOO wrote MR. HENDRICK a letter, noting, inter alia, “ZUFFA has clearly breached it (sic) agreement with Mr. Shamrock,” and he demanded the liquidated damages provided in Section 11.5 of the Agreement.16 On November 2, 2007, MR. HENDRICK responded, rejecting
MR. DONOHOO’S request for damages.

22. On November 5, 2007, MR. DONOHOO sent an e-mail to MR. HENDRICK, inter alia, inquiring whether he (HENDRICK) would accept service of the Complaint. MR. HENDRICK responded that day, noting the Complaint could be sent to him.

23. On or about April 15, 2007, Plaintiff KEN SHAMROCK, INC. filed its Complaint against Defendant ZUFFA, LLC, claiming breach of contract and seeking declaratory relief.

24. Notably, on or about August 24, 2009, the parties entered into a Stipulation regard the contract and related issues. Of significance, the parties agreed “that ZUFFA terminated the Agreement under paragraph 10.3 and not based upon any other provision of the Agreement or other alleged breach by Ken Shamrock or Ken Shamrock, Inc.”

CONCLUSIONS OF LAW

1. Basic contract principles require, for an enforceable contract, an offer and acceptance, meeting of the minds, and consideration. May v. Anderson, 121 Nev. 668, 672, 119 P.3d 1254 (2005), citing Keddie v. Beneficial Insurance, 94 Nev. 418, 421, 580 P.2d 955 (1978)(Badjer, C.J., concurring). A valid contract cannot exist when material terms are lacking or are insufficiently certain and definite. Id.

2. Generally speaking, when a contract is clear on its face, it “will be construed from the written language and enforced as written.” Canfora v, Coast Hotels & Casinos, Inc., 121 Nev. 771, 776, 121 P.3d 599, 603 (2005). The Court has no authority to alter the terms of an unambiguous contract. Id., citing Renshaw v. Renshaw. 96 Nev. 541, 543, 611 P.2d 1070, 1071 (1980).

3. While parol or extrinsic evidence is not admissible to add to, subtract from, vary, or contradict written instruments,20 it is allowable for ascertaining the true intentions and agreement of the parties when the written instrument is ambiguous. M.C. Multi-Family Development, LLC v. Crestdale Associates. Ltd., 124 Nev. ,193 P.3d 536, 544-545 (2008), citing State ex rel. List v. Courtesy Motors, 95 Nev. 103, 106-107, 590 P.2d 163,165 (1979).

4. A breach of contract occurs where a party does not perform a duty arising under the agreement, and such failure is material. See Calloway v. City of Reno, 116 Nev. 250, 256, 993 P.2d 1259, 1263 (2000), reversed on other grounds, Olson v. Richard, 120 Nev. 240, 89 P.3d 31 (2004).

5. In this case, the parties entered into an “Exclusive Promotional and Ancillary Rights Agreement” to provide UFC and MMA viewers and fans, free of charge, a final KEN SHAMROCKJTITO ORTIZ event to be aired live on Spike Television. It is undisputed the parties desired to enter the agreement to provide both MR. SHAMROCK and ZUFFA, LLC with positive media exposure to diminish the bad press both had received due to the controversial end of the SHAMROCK/ORTIZ Pay-Per-View event on July 8, 2006. Both parties acknowledged the bout would be MR. SHAMROCK’S last as he intended to retire shortly thereafter. In fact, the second fight or bout was contemplated in the Agreement “in case something crazy happens,” as what occurred in the July 8, 2006 event performance.

6. The first issue is whether Defendant ZUFFA, LLC breached the parties’ Agreement by “failing] and refusing] to provide [MR. SHAMROCK] with a second fight… after he came out of retirement.” In this Court’s view, the Recitals listed on the first two pages of “Exclusive Promotional and Ancillary Rights Agreement” unambiguously set forth the parties’ intentions and general agreements. Although Plaintiff KEN SHAMROCK, INCORPORATED and MR. DONOHOO construe “Recital G” as Defendant ZUFFA, LLC promising MR. SHAMROCK a second bout, the Court does not interpret it in that fashion. As noted above, “Recital G” reads: “Fighter has determined the first Bout will be his final, after which he will retire, but has agreed to one additional Bout with ZUFFA in the event Fighter should elect not to retire, or to come out of retirement to fight again. “(Emphasis added). These terms specifically state MR. SHAMROCK agreed to an additional bout if he either did not retire or he later came out of retirement. However, there is nothing within this recital to indicate the promise was mutual, or in other words, that ZUFFA, LLC was obligated to provide or promote a second fight for MR. SHAMROCK if he elected not to retire after the October 10, 2006 bout or he later came out of retirement. To wit, on this ground alone, this Court concludes Defendant ZUFFA, LLC did not breach the Agreement by refusing to promote or provide a second bout to Plaintiff KEN SHAMROCK INCORPORATED upon MR. SHAMROCK’S leaving retirement in or about June 2007. In the Court’s view, Defendant ZUFFA, LLC was not required pursuant to the Agreement to promote or provide Plaintiff KEN SHAMROCK INCORPORATED a second bout; MR. SHAMROCK, however, was obligated to an additional fight promoted by ZUFFA and the UFC if he did not retire, or later came out of retirement for the term of the contract.

7. Notwithstanding the aforementioned, the next issue as sought in Plaintiff’s Second Cause of Action for declaratory relief is whether Defendant ZUFFA, LLC’S election of remedies under Section 10.3 of the Agreement are limited. That is, this Court must determine whether ZUFFA, LLC was precluded from terminating the Agreement when it previously suspended Plaintiff’s performance there under. Section 10.3 provides that “[i]f at any time during the Term, Fighter decides to retire from mixed martial arts or other professional fighting competition, then ZUFFA may, at its election, (i) suspend the Term for the period of such retirement; (ii) declare that ZUFFA has satisfied its obligation to promote all future Bouts to be promoted by ZUFFA hereunder, without any compensation due to Fighter therefore; or (iii) elect to provide Fighter with notice of Acceleration,” or termination. (Emphasis added) In Plaintiff’s view, by use of the conjunctive “or,” Section 10.3 provides for an election of only one among three remedies in the event of MR. SHAMROCK’S retirement, and further, ZUFFA, LLC never provided notice of suspension during the retirement. Defendant ZUFFA, INC’ S positions are it could exercise any of the elections at any time after MR. SHAMROCK. decided to retire, and further, this contractual provision allows an election of one or more remedies.

8. There is no question the conjunctions “or” and “and” may be construed interchangeably when necessary to effect the parties’ intention. Dumont v. United States, 98 U.S. 142, 143, 25 L.Ed. 65 (1878), cited by Noell v. American Design. Inc., Profit Sharing Plan 764 F.2d 827, 833 (11th Cir. 1985). Indeed, the majority of courts have recognized there has been a great laxity in the use of “or ” and “and” in both statutes and contracts, such that the terms are interchangeable and one may be substituted for the other. Desert Irrigation, Ltd.v. State of Nevada, 113 Nev. 1049, 1056, 944 P.2d 835, 840 (1997). A strict interpretation of “or” should be avoided if it leads to potentially dubious results. Id , citing Wisconsin v. Ducchak 133 Wis.2d 307, 395 N.W.2d 795, 800 (1986).

9. In this case, the Court first notes there is nothing within Section 10.3 which provides ZUFFA, LLC must provide notice of its election to suspend. If anything, the use of the term “notice” under (iii), and not within (1) and (ii) implies such is not required when exercising either of the first two elections. In addition, there is nothing within Section 10.3 which provides the election to suspend must be during the fighter’s retirement only. The provision specifically states: “[i]f at any time during the Term, Fighter decides to retire from mixed martial arts or other professional fighting competition, then ZUFFA may, at its election, …suspend the Term for the period of such retirement” (Emphasis added) That is, ZUFFA, LLC can exercise its right to suspend at any time during the term, for the period of such retirement. In short, Defendant ZUFFA, LLC did not waive its election to suspend the Agreement for the retirement period when it did so after MR. SHAMROCK announced he was coming out of retirement.

10. Secondly, strictly construing “or” in Section 10.3 as disjunctive, as Plaintiff KEN SHAMROCK INCORPORATED proposes, could lead to potentially dubious results. Following Plaintiffs view, if ZUFFA, LLC elected to suspend the fighter’s performance for the period of retirement under the Agreement, it could never terminate it. Such is true even if the fighter came out of retirement ten, twenty or thirty years later24 when he no longer may be marketable and his skills are diminished Likewise, if ZUFFA, LLC elected not to suspend, the term of the Agreement could expire without the promoter realizing any of the benefits of the fighter’s services, such as marketing and/or advertising, upon his leaving retirement To wit, this Court concludes the term “or” should be used interchangeably with “and, ” whereby Defendant ZUFFA, LLC could make more than one election. under Section 10.3. Thai is, it could suspend Plaintiff KEN SHAMROCK, INCORPORATED’S performance under the contract during the period of the fighter’s retirement, and thereafter, provide notice of acceleration or termination.

11. Even if this Court were to conclude a breach of contract occurred, the next issue is whether Plaintiff KEN SHAMROCK INCORPORATED waived the breach by failing to provide notice and an opportunity to cure to Defendant ZUFFA, LLC as provided under Section 11.5 of the Agreement. Generally speaking, a “waiver” is defined as the “intentional relinquishment of a known right.” Carr-Gottstein Foods Co. v. Wasilla, LLC, 182 P.3d 1331, 1336 (Alaska 2008); also see Udevco. Inc. v. Wagner, 100 Nev. 185, 189, 678 P.2d 679, 682 (1984). A waiver may be accomplished either expressly or implicitly. An implied waiver arises where the course of conduct pursued evidences an intention to waive a right, is inconsistent with any other intention than a waiver, or where neglect to insist upon the right, results in prejudice to another party. Id , 182 P.3d at 1336. In this case, upon being informed MR. SHAMROCK desired to compete again in June 2007, Defendant ZUFFA, LLC exercised its right to accelerate or terminate the Agreement. Plaintiff, through its counsel and sports agent, MR. DONOHOO, acknowledged his disagreement, but noted “there is not much I can do about it. MR. DONOHOO then agreed to pen the termination letter, which, according to MR. HENDRICK, was extremely unusual. Upon receiving the termination letter, MR. HENDRICK responded on July 5, 2007, noting ZUFFA, LLC “considers] the matter closed. Nothing more was discussed between the parties until October 26, 2007, some sixteen (16) days after the Agreement’s Term ended, when MR. DONOHOO declared a breach and demanded liquidated damages. In this Court’s view Plaintiff’s conduct in begrudgingly accepting the termination and not declaring a breach or insisting upon a cure for four months when it was too late for Defendant ZUFFA, LLC to act, constitutes a waiver of breach. Accordingly, notwithstanding the 14′ aforementioned, this Court concludes Plaintiff KEN SHAMROCK INCORPORATED waived its right to breach of contract.

Accordingly, based upon the foregoing Findings of Fact and Conclusions of Law,

IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Plaintiff KEN SHAMROCK, INCORPORATED take nothing by way of its Complaint filed April 15, 2008, and judgment is rendered in favor of Defendant ZUFFA, LLC.

DATED this 12th day of February 2010.

SUSAN H. JOHNSON
DISTRICT COURT JUDGE

CERTIFICATE

I hereby certify that, on the date filed, I electronically served (E-served), placed within the attorneys’ folders with the Court Clerk’s Office, or mailed a true and correct copy of the foregoing FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT to the following counsel of record, and that first-class postage was fully prepaid thereon:

GREGORY M. GARRISON, ESQ.
TEEPLE HALL, LLP
9255 Town Centre Drive, Suite 500
San Diego, California 92121
greg@teeplehall.com

JANET S. MARKLEY, ESQ.
428 South Fourth Street
Las Vegas, Nevada 89101

DONALD J. CAMPELL, ESQ.
J. COLBY WILLIAMS, ESQ.
CAMPBELL & WILLIAMS
700 South Seventh Street
Las Vegas, Nevada 89101

Laura Banks, Judicial Executive Assistant

Topics: All Topics, MMA, Media, UFC, Zach Arnold | 22 Comments » | Permalink | Trackback |

22 Responses to “UFC sets precedent with win over Ken Shamrock in court; UFC fighters legally find themselves substantially weakened”

  1. Mike Rome says:

    I don’t think they are going to enter the judgment. Ken would just declare bankruptcy at this point. More likely they are going to use it to renegotiate existing licensing deals in their favor. Zuffa’s contract grants attorney’s fees to the winner in contract disputes.

    The implication in the post that this is somehow some buy off of the courts in Nevada reeks of tinfoil hat status without any proof. It’s more likely that we got a decision like this because Nevada is a notoriously pro management state and Shamrock’s case was not particularly strong.

    It’s a bad decision for fighters, and raises some doubts about whether Nevada courts would actually throw out the championship clause. My view is they would just modify it to mean a year (plus the current matching period extension), which does the trick on its own anyway.

  2. 45 Huddle says:

    The UFC even posted this news on their website. It’s a warning shot to all fighters not to mess with them. And it’s a smart tactic on their part.

    This is also why a UFC Fighters union is needed. No way should a clause be in the contract that the winner gets their legal fees paid for. That will always benefit the big business and not the fighter.

  3. Jonathan Snowden says:

    You don’t really need a union to remove an onerous clause from a contract. You just need a lawyer. I would recommend one that doesn’t post on MMA message boards. :)

    • Steve4192 says:

      There is nothing particularly onerous in that clause though. It is pretty standard contract language and is used to discourage frivolous lawsuits.

  4. Rohan says:

    Jonathan – But if a company, or companies effectively have a monopoly on demand for a type of labour then it becomes impossible for any one fighter to refuse to sign the standard contract. A lawyer doesn’t help you in the situation faced here unless you’re a top PPV draw.

    This is yet another example where the UFC and WWE work in the same way. Ironically the WWE attempted to enforce a long (10 year?) non-compete clause in Lesner’s contract that would have stopped him ever appearing in the UFC.

    In WWF history Hogan ratted on a proposal for a union in the 80s (proposed by Ventura). UFC have such divide and rule power I’m sure they’d crush the concept right out of the gate.

  5. Chuck says:

    Rohan;

    I thought it was allegedly Hogan himself who ratted out Ventura for wanting a wrestlers’ union.

    That ruling is total bullshit. And Shamrock has to pay Zuffa’s entire court fees? Shit! Ah well, he can always appeal.

    • Zack says:

      I’m no attorney and only have experience in small claims, but I’m pretty sure if you’re the plaintiff and you lose, you cannot appeal.

    • Steve4192 says:

      “That ruling is total bullshit. And Shamrock has to pay Zuffa’s entire court fees? ”

      Of course he has to pay their court fees.

      You can argue all you want about the merits of the original case, but the court fees are pretty cut and dried. Shamrock signed a contract that clearly stated he has to pay Zuffa’s court fees if he sues them and loses. That is pretty standard language in many contracts.

  6. Mr. Roadblock says:

    How is the ruling bad? It’s perfectly fair.

    I think people that get up in arms about this have no experience in the business world. If you hire a guy to remodel your kitchen and bathroom and he screws up the kitchen should you have to pay him to go screw up the bathroom too? Or can you fire him and bring in a new contractor?

    • Jonathan Snowden says:

      I agree with your premise, but that isn’t really what this ruling was about. Even remotely.

    • Chuck says:

      I agree with your example, but that is completely irrelevant. Why bring up an example such as that? This has nothing to do with Shamrock fucking something up.

      • Mr. Roadblock says:

        Wait, the lawsuit is about Ken wanting to fight the last fight on his deal after losin to Tito, right? The UFC 3 fight deals are contingent on fighters winning fights 1 and 2 to get to fight 3 for the money offered in the contract. If you lose fight 1 or 2 it may affect your drawin power with the audience. After Ken laid down and did nothing in the 2nd and 3rd Tito fights who wanted to see him anymore?

  7. David says:

    Hmm.. Who does Ken deflect the blame on now, Dana White, or his lawyer for saying “yeah, yeah, sure.. we can TOTALLY win this case!!” lol.

    And about a union, unfortunately with the uneven pay scale, the Couture’s and Lidell’s don’t want to partake in a curve.. For example, it’s like the really smart kids in the class who study hard, the few kids who get the really high scores on a difficult test, and all the other kids are partying and being lazy.

    Why would someone sacrifice their well-being for the greater good? It’s a very simple moral question that doesn’t result well when mixed with capitalism.

    • Rob Maysey says:

      Questions about “union” or something else aside, in response to David–the answer is simple. The stars would want to get involved, because despite popular public perception, the associations and guilds help the stars the most.

      Don’t look at Detroit for your example, look at SAG and the other sports leagues.

  8. Mike Rome says:

    Huddle,

    Employment contracts where the loser pays fees are not exactly uncommon. That clause is hardly the most offensive thing in the standard Zuffa contract.

  9. spacedog says:

    “As noted above, “Recital G” reads: “Fighter has determined the first Bout will be his final, after which he will retire, but has agreed to one additional Bout with ZUFFA in the event Fighter should elect not to retire, or to come out of retirement to fight again. “(Emphasis added). These terms specifically state MR. SHAMROCK agreed to an additional bout if he either did not retire or he later came out of retirement. ]However, there is nothing within this recital to indicate the promise was mutual, or in other words, that ZUFFA, LLC was obligated to provide or promote a second fight for MR. SHAMROCK if he elected not to retire after the October 10, 2006 bout or he later came out of retirement.”

    This would seem to be the crux of the issue. In the future a fighter needs to insure his contract states in no uncertain terms that Zuffa has an obligation to pay him for – and allow him to compete in- x amount of fights over y amount of time. A good lawyer could go even further and perhaps even specify placement on the card, money spent on promoting said fighter, camera time, inside the UFC episodes, countdown episodes and so on.

  10. Michael Rome says:

    Part of it is having a good lawyer, part of it is leverage. Terry Etim can have the best lawyer in the world and the UFC isn’t going to give him anything but the schmuck contract.

    The UFC has tremendous leverage in these negotiations, only a very limited number of fighters have any ability to get them to change the language at all.

    • Rob Maysey says:

      Rome is correct.

      Leverage is crucial, and there is little to none for the vast majority of fighters.

  11. Fluyid says:

    I used to represent a UFC fighter, and I have been on the receiving end of one of their “take it or leave it” offers. Not much you can do if you’re a fighter on the fringe trying to get in, and you want in badly enough.

  12. Black Dog says:

    To me, the boilerplate is pretty standard and straight-forward. The question that sticks in my mind is: did UFC, or did they not formally inform Shamrock (in writing) that the agreement was abrogated?

    There’s wiggle room, but still not enough in my view to get the win in court for Shamrock.

    I’m not exactly sure what Shamrock hoped to gain; if he did fight again, the wording states UFC really didn’t have to pour a ton of money into promoting him.

    But would they have had to? For every Shamrock fan who wanted to see him one more time, there would have to be at least two who would want to see him get his brains beaten in (not something I’d pay to see).

    The case could set a future precedent, and might deter some fighters with legal savvy (or at least, topnotch lawyers) from entering into agreements with UFC.

    I don’t think there will be much in the way of blowback against UFC or White; but a few of the more cagey (no pun intended) fighters may look elsewhere for better fight deals.

  13. klown says:

    A union is possible. It requires some big name fighters to side with less powerful fighters. People like Couture and Ortiz have the potential to make it happen, if they believe in it. I hoped they both would at one point, but that moment has passed. Alternatively, it can be organized by individual camps. When White threatened AKA they backed down, but what if AKA AND Xtreme Couture both threatened to stop fighting or began to test the limits of the contract? What if Black House joined in? Etc.

    It’s hard, but it’s never easy to organize.

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