By Zach Arnold | February 11, 2013
A Los Angeles Superior Court trial ruling by judge Conrad Aragon against California-based boxing promoter Danny Goossen last week could set the stage for all major California-based fight promoters to no longer sign or solidify contracts with fighters & associates while being located in California.
Judge Conrad Aragon, who was supposed to retire in February 2011, issued a rather … unique ruling against Dan Goossen in regards to Goossen’s lawsuit against boxer Tony Thomspon. For a full background on the lawsuit, click here to read Dan Rafael’s article on the matter.
A quick summary of facts regarding the lawsuit: Goossen (of Goossen-Tutor Promotions) is based in California. Tony Thompson is a DC-based fighter with Maryland jurisdiction. Goossen claims that he and Thompson made an oral agreement over the phone in which Thompson allegedly agreed to give Goossen a % of money in exchange for Goossen being his promoter in setting up a fight with Wladimir Klitschko (K2 Promotions). Goossen claims that after he negotiated the fee to set up the fight, Thompson breached the oral agreement and committed fraud by stiffing him on the deal while receiving the benefits of his work.
A California attorney representing Thompson responded to the lawsuit. No denial was made by the Thompson camp that there was an oral agreement. There was no denial that Danny Goossen’s efforts produced the fight for Thompson. What Thompson’s California lawyer argued is that the agreement wasn’t in writing… and that California regulations requires a deal be in writing.
That’s right, Thompson’s attorney claimed that Danny Goossen needed a written contract and that California has jurisdiction over worldwide business dealings.
Goossen’s side fired back and said that the jurisdiction for the oral contract is in Maryland. Furthermore, the state regulations for California applies to fights only in California. The California State Athletic Commission has regulatory power over what happens in California and nowhere else. Plus, the agreement between Goossen and Thompson isn’t a California contract.
We have a California promoter entered into an oral agreement (contract) with a Maryland fighter in Washington D.C. against a Ukranian fighter… for a fight that took place in Switzerland… and it was claimed that the bout contract itself ended up under the auspices of German law.
Goossen’s side argued that California cannot regulate interstate commerce because the Commerce Clause in the United States constitution establishes that only the Federal government can regulate interstate commerce. California has jurisdiction over what happens in California and the Ali Act has jurisdiction in all 50 US states. The Ali Act doesn’t extend outside the boundaries of America.
Judge Conrad Aragon ruled against Goossen and sided with Thompson.
One source, on background, claims that Goossen’s side will not go to the Court of Appeals to dispute the ruling because if the CoA upholds Aragon’s ruling, then such a ruling would be binding on other trial courts.
The net impact of Judge Aragon’s ruling? The major fight promoters who are based in California are going to be compelled to no longer sign deals in California with fighters who are licensed in other states like Nevada or Texas. If a promoter is licensed in Nevada and a fighter is licensed in Nevada, then the promoter will damn make sure that the deal is consummated in Nevada (where there is a hands-off approach) instead of California. You can bet that Goossen-Tutor Promotions and Golden Boy are going to make sure to conduct their contract dealings outside of California.
The text of Judge Conrad Aragon’s trial ruling
This document is a public record. Los Angeles Superior Court, case number BC487179.
In the ruling, you’ll notice a claim that argues that Washington D.C. also requires written contracts. That doesn’t pass the smell test. D.C.’s regulations apply to fights that happen in Washington D.C., not in a country like Switzerland.
Furthermore, take note that the ruling uses the word “manager” for Goossen when his side claims he entered into a deal with Thompson to be his promoter. This is critical to focus on. Why? Judge Aragon seizes upon this to claim that Goossen is a manager, not a promoter, and that California law takes precedent on the business dealings involving a non-California fighter for a fight taking place in a foreign country. In addition to arguing that Goossen was a manager and not a promoter, Judge Aragon claims that Goossen needs to be licensed as a manager by the California State Athletic Commission in order to file the lawsuit in LA Superior Court.
RULING ON THOMPSON DEMURRER
Defendant Anthony Thompson demurs to the first (breach of contract), second (false promise) and eighth (declaratory relief) causes of action in the first amended complaint.
In response to the sustaining of a prior demurrer (to the breach of contract cause of action), the plaintiff (GTP) amended by alleging that the contract between it and Thompson was entered into in Maryland (because Thompson is a Maryland resident and, as offeree, accepted the contract over the telephone while in Maryland). But that does not end the inquiry, since, even if Maryland law controls the legality of the contract (between Thompson and GTP), plaintiff neglects to defend its legality under Maryland law. For all we know, such contracts — between fight managers and professional boxers in that state, must be in writing. But this conflict of laws issue is entirely beside the point.
There is length, and in the end, fruitless discussion about the impropriety of applying California law regulating managers and boxers. The Commerce Clause is cited, plaintiff declaiming at one point that this state’s law “limiting its role to regulating boxing contests in California” is not so comprehensive in scope as “to regulate an international boxing contest in Bern, Switzerland.”
But what plaintiff misses is the simple fact that California law (Business & Professions Code 18620 et. seq) has no such pretensions. It is true that any contest occuring in California must be under the commission’s auspices (18640). Certainly, no California commission official could control the conduct of a contest outside of California. But that does not mean that a contract between a California manager, such as GTP, and a boxer, such as Thompson, is not subject to regulation. Quite to the contrary.
Under the statutory scheme, GTP is a “manager” as that term is defined under 18628. It is not a “promoter,” despite GTP’s self description. Under 18622, “the words ‘club’ and ‘promoter’ are synonomous [sic]… and mean a corporation [etc.] which conducts, holds, or gives a boxing… contest…” A manager, on the other hand, is “any person who” by contract “undertakes… to represent… the interest of any professional boxer… or with respect to the arrangement… of… any professional contest in which the boxer… is to participate.”
Thus, by its own allegations, GTP is a manager “duly authorized and existing by virtue of the laws of the State of California.” It then goes on incorrectly to allege that it does “business as a boxing promoter.” It may well be a promoter, but the allegations of this complaint as they relate to GTP’s contractual relationship to Thompson, fit the Code’s definition of a manager. As such manager, it is bound by the provisions of 18642: “No person shall… serve in the capacity of a… manager… unless he… has been licensed for that purpose by the commission.”
Either GTP is a licensed manager or it is not. If it is not, then it cannot seek the protections of this state to recover compensation for services as a fight manager. It if it licensed, then it has agreed to be bound by the commission’s rules and regulations relating to contracts between it and any boxer, including the regulations requiring a writing and approval of the contract by the commission, wherever in the world the contest might be venued. This result is consistent with the rationale and the holding in Castillo vs. Barrera (2007) 146 Cal. App 4th 1317 (which, among other points, held that plaintiff could not recover even under a quantum meruit theory, since to allow it would circumvent the protective provisions of the Boxing Act).
Plaintiff apparently hopes to distinguish this case from the Castillo case on the ground that the acceptance of the contract here under review was made in Maryland. This distinction might make a difference if it was the fight manager who accepted the contract in Maryland (assuming Maryland has no comparable Boxing Act). But so long as a manager, whether acting with or without a license, “does business in California” — as plaintiff admits it does, then it must make its contracts according to the dictates of the law of this state.
The “promise” that is the basis of the false promise cause of action is the same “promise” that serves as an element of the breach of contract cause of action. The promise is still the basis of a contract which should have been compliant with the rules and regulations promulgated under the state (B & P Code 18620 et. seq). Therefore, it fails for the same reason that the breach of contract action fails.
The declaratory relief action seeks a declaration of rights. However, since plaintiff does not allege that it is authorized to prosecute its oral contract claim against Thompson, it, too, must fail. Plaintif argues that it is impermissible to “reconsider” a demurrer to this cause of action because a prior demurrer to that cause of action was overruled. But, in the interests of judicial economy, it makes no sense to proceed to trial in order to seek a declaration that GTP has rights that it clearly does not have — namely, the right to enforce an oral fight contract.
The demurrers will be sustained without leave to amend unless plaintiff can make an offer of proof to the effect that it is a licensed manager and that its contract with Thompson was in writing approved by the commission.
Dated February 6, 2013.
Superior Court Judge