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Text of lawsuit filing between Fedor & M-1 versus Affliction
By Zach Arnold | November 4, 2009
Filed 10/28/2009
Marc S. Hines (SBN 140065) – [email protected]
Michelle L. Carder (SBN 174481) – [email protected]
Christine M. Emanuelson (SBN 221269) – [email protected]
Hines Smith Carder Leasure Dincel – 3080 Bristol Street, Suite 540, Costa Mesa, CA. 92626
Tel: (714) 513-1122
FAX: (714) 513-1123
Attorneys for Plantiffs, Fedor Emelianenko and M-1 Nederland b.v.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
FEDOR EMELIANENKO, an individual; M-1 NEDERLAND b.v., a Dutch Limited Liability Company (Plaintiffs) vs. AFFLICTION CLOTHING, a California business entity, form unknown; AFFLICTION ENTERTAINMENT, LLC, a California limited liability company; and DOES 1 through 50, inclusive (defendants)
CASE NO.: CV09-07865 MMM (MLGx)
PLAINTIFFS’ COMPLAINT FOR:
1. Breach of Fight Agreement
2. Breach of Implied Convenant of Good Faith and Fair Dealing – Fight Agreement
3. Breach of Consulting Agreement
4. Breach of Implied Covenant of Good Faith and Fair Dealing – Consulting Agreement
5. Breach of Letter Agreement
6. Declaratory Relief – Fight Agreement
7. Declaratory Relief – Consulting Agreement and Letter Agreement
AND DEMAND FOR JURY TRIAL
Plaintiffs, M-1 Nederland b.v. and Fedor Emelianenko allege the following against Defendants, Affliction Clothing, Affliction Entertainment, LLC, and DOES 1 through 100.
PARTIES, JURISDICTION, AND VENUE
1. Fedor Emelianenko (“Emelianenko”) is an individual who at all relevant times was a citizen and resident of the country of Russia. Emelianenko is widely considered to be the world’s best heavyweight mixed martial arts (“MMA”) fighter and is and at all relevant times was promoted by M-1 Nederland b.v. (“M-1”).
2. M-1 is and, at all relevant times was, a limited liability corporation duly organized and existing under the laws of the Netherlands and with its principal place of business in the Netherlands. M-1, generally known in the United States as M-1 Global, is an MMA bout promoter with a substantial presence in Europe and Asia. M-1 also partners with United States licensed promoters in connection with events taking place in the United States and, in addition, is in the business of promoting and managing top international MMA fighters. At all relevant times, the owners and principals of M-1 have been Vadim Finkelchtein, Apy Echteld, Joost Raimond, and Emelianenko.
3. Affliction Clothing is a business entity, form and place of formation unknown, with its principal place of business in the State of California, city of Seal Beach. At all times mentioned herein, Affliction Clothing has been in the business of promoting and sponsorsing MMA events. At all relevant times, the owners, officers, directors, and principals of Affliction Clothing have been Todd Beard, Thomas Atencio, Courtney Dubar, Eric Foss, and Clifton Chason.
4. Affliction Entertainment, LLC is a limited liability company organized and existing under the laws of the State of California and having its principal place of business in the State of California, City of Seal Beach. Affliction was converted from Affliction Promotions, Inc. and underwent a name change from Affliction Promotions, LLC to Affliction Entertainment, LLC. At all times mentioned herein, Affliction has been in the business of promoting and sponsoring MMA events. At all relevant times, the owners, officers, directors, and principals of Affliction Entertainment, LLC have been Todd Beard, Thomas Atencio, Courtney Dubar, Eric Foss, and Clifton Chason.
5. Because of the multiple name changes, conversions, and various machinations relating to the ownership and names of Affliction Clothing, Affliction Entertainment, LLC, and other Affliction entities, the Affliction entities are referred to herein collectively as “Affliction.”
6. Plaintiffs do not know the true names and capacities of Defendants, Does 1 through 50, and therefore sues these Doe Defendants by such fictitious names. Plaintiffs are informed and believe and based thereon allege each of these Doe Defendants was and is legally responsible for the damages or losses suffered by Plaintiffs. Plaintiffs will seek leave of court to amend this Complaint to allege the true names and capacities of these Doe Defendants when this information has been ascertained.
7. Plaintiffs are informed and believe and based thereon allege Defendants, and each of them are, and at all times mentioned herein were, the alter ego/sister corporation of the other such that to allow these Defendants to maintain a separateness would be to allow Defendants, and each of them, to prepetrate a fraud on Plaintiffs and the community at large.
8. Plaintiffs are informed and believe and based thereon allege, at all times mentioned herein, Defendants, and each of them, were acting on their own behalf and also as the agent, employee, representative, and/or joint venturer of each other, and at all times, except as stated herein and subject to amendment of the Complaint upon discovery of additional facts, were acting within the purpose, scope and authority of said agency, employment, representation or joint venture, and with the advance knowledge, consent, approval, and ratification of the remaining Defendants, and each of them.
9. The amount in controversy exceeeds $75,000.00 and this Court has jurisdiction pursuant to 28 U.S.C. S1332(a)(2).
GENERAL ALLEGATIONS
Affliction is Banned from the UFC and Decides to Become an MMA Event Promoter in Competition with the UFC
10. Affliction is a popular clothing brand which has attained international recognition and prominence through various celebrity and MMA fighter endorsements. Prior to January of 2008, Affliction sponsored Ultimate Fighting Championship (“UFC”) events and gained most of its notoriety as a result of UFC fighters — especially UFC World Heavyweight Champion Randy Couture — wearing and endorsing Affliction branded clothing on televised and/or pay-per-view (“PPV”) events.
11. However, in October of 2007, Randy Couture resigned from the UFC, citing as his reason renumeration discontent. The UFC responded in early January, 2008 by suing its heavyweight champion in a Las Vegas court. When the UFC learned Affliction was positioning itself in favor of Couture in this widely-publicized MMA imbroglio, the UFC terminated its relationship with Affliction as a UFC sponsor. The UFC then banned all fighters from wearing or endorsing any Affliction gear at any UFC event or at any time during the terms of their contracts. Not to be deterred, and with the avowed objective of “crushing” the UFC, Affliction decided to enter the MMA event promotion business.
Affliction Signs Emelianenko to a Fight Agreement and Enters into a Consulting Agreement with M-1
12. In its quest to be the world’s premier MMA event promoter, Affliction naturally sought Emelianenko, the best and most renowned non-UFC heavyweight fighter with whom Affliction already had a clothing sponsorship deal. The parties commenced negotiations in early 2008 and, on April 14, 2008, Affliction Promotions, Inc., which Plaintiffs are informed, believe, and based thereon allege now is known as Affliction Entertainment, LLC, signed Emelianenko to a three-bout Fight Agreement. On or about October 20, 2009, Plaintiffs, in writing, sought Affliction’s stipulation to disclose the terms of the Fight Agreement in the context of litigation between the parties due to confidentiality restrictions contained in the Fight Agreement. Affliction did not respond. As a result, Plaintiffs plead only those terms essential to put Affliction on notice of the claims against it and those terms already a matter of public knowledge.
13. Pursuant to the Fight Agreement, the parties agreed, inter alia, Emelianenko would fight a minimum of three (3) bouts. The partial purse for each fight — which was in addition to the substantial payment Emelianenko receives from M-1 pursuant to the terms of a separate agreement — was to be $300,000 plus travel and accommodation expenses. The total amount Emelianenko was to receive per fight as a result of the Fight Agreement, i.e. the amount he receives from M-1 plus the $300,000.00 per bout amount owed by affliction, will be disclosed, subject to protective orders, at the time of trial.
14. Affliction and Emelianenko also agreed, during the term of the Fight Agreement, which would not terminate or expire until completion of the third bout, Affliction would be the sole and exclusive co-promoter of all MMA contests involving Emelianenko in the United States. Emelianenko also agreed Affliction would have exclusive world-wide promotional rights to the three bouts covered by the Fight Agreement, except for Russia and Asia, for which Emelianenko reserved all broadcast and promotion rights. The Fight Agreement also provides Emelianenko shall not engage in or conduct negotiations to engage in any MMA match in the United States other than the bouts covered by the Fight Agreement during the term of the agreement, which ended no earlier than completion of a third bout. Affliction, on the other hand, agreed to use commercially reasonable best efforts to arrange for each bout and to use good faith efforts to find a fighter for each bout.
15. Pursuant to Paragraphs 6 and 11 of the Fight Agreement, Affliction and Emelianenko agreed Affliction would have all exclusive worldwide promotion rights in and to the bouts covered by the Fight Agreement with the exception of certain reserved promotion rights giving Emelianenko the exclusive right to distribute and exploit the bouts subject to the Fight Agreement in certain venues.
16. At the time it entered into the Fight Agreement with Emelianenko, Affliction knew Emelianenko would rely upon Affliction’s promise to co-promote three bouts and would therefore forgo other opportunities in order to compete in the all three bouts required by the Fight Agreement and to abide the restrictions of the Fight Agreement. As a result of Affliction’s promises, Emelianenko did forgo other opportunities to compete in bouts both in and outside of the United States during the time of the fight agreement.
17. On the same date Affliction signed Emelianenko, Affliction also entered into a Consulting Agreement with M-1. On or about October 20, 2009, Plaintiffs, in writing, sought Affliction’s stipulation to disclose the terms of the Consulting Agreement in the context of litigation between the parties due to confidentiality restrictions contained in the Consulting Agreement. Affliction did not respond. As a result, Plaintiffs plead only those terms essentially to put Affliction on notice of the claims against it and those terms already a matter of public knowledge.
18. Pursuant to the Consulting Agreement, M-1 agreed to provide general consulting services to Affliction in connection with certain endeavors expressly stated in the Consulting Agreement. In exchange for these services, Afflitction agreed to pay M-1 a substantial consulting fee. According to the payment schedule set forth in the Consulting Agreement, Affliction with required to make its first payment to M-1 on execution of the Consulting Agreement. The Consulting Agreement further required Affliction to make a second payment to M-1 no latter than forty-eight (48) hours prior to the initial Emelianenko bout and the final payment no latter than forty-eight (48) hours prior to each of the second and third Emelianenko bouts, contingent upon Emelianenko’s arrival in the city of the scheduled bouts. Affliction also agreed to arrange, pay for, and provide M-1 with any and all expenses incurred in performing its duties under the Consulting Agreement and further agreed to provide M-1 with certain promotional values.
19. On May 20, 2008, Affliction and M-1 co-hosted a Los Angeles press conference with Emelianenko to announce the first MMA event held in connection with the foregoing contracts. This event, which was Affliction’s response to the UFC banning its fighters from wearing and promoting Affliction gear, took place on July 19, 2008, and was titled, “Affliction: Banned.” Affliction: Banned was a U.S. PPV-televised event hosted at the Honda Center in Anaheim in connection with a California State Athletic Commission licensed promoter. Emelianenko and former UFC Heavyweight Champion Tim Sylvia were on the main card. Emelianenko, who submitted Sylvia thirty-six seconds into the first round, convincingly won the fight. The main card was televised live on PPV and the undercards were televised live on Fox Sports. Affliction paid Emelianenko as required under the Fight Agreement for this first bout, and it also paid M-1 the consulting fees required under the Consulting Agreement.
Emelianenko Assigns Promotional Rights to M-1 and Affliction and Emelianenko Modify Provisions of the Fight Agreement Pertaining to Promotional Rights
20. Shortly after executing the Fight Agreement, for valuable consideration, Emelianenko and M-1 entered into an agreement by which Emelianenko partially assigned to M-1 all promotional rights reserved to Emelianenko by way of the Fight Agreement, including but not limited to those promotional rights set forth or reference in Paragraphs 6, 7, and 11. The rights assigned by Emelianenko to M-1 include those reserved under the modified Fight Agreement as set forth hereinbelow.
21. Prior to co-hosting the Affliction: Banned event, Affliction’s CEO, Todd Beard, admitted to M-1, and specifically Joost Raimond, Affliction did not have the intent, capability, or desire to exploit promotional opportunities outside of the United States. As a result, prior to Affliction: Banned, M-1 and Affliction orally agreed to modify Paragraphs 6, 7, and 11 of the Fight Agreement, and modified these provisions by conduct and course of performance, to reserve for Emelianenko and ultimately M-1 as the assignee all international (outside the United States) promotional rights.
22. Affliction, both expressly by oral agreement and by its conduct and course of performance of the Fight Agreement, waived, ignored, and abandoned the provisions of Paragraph 20 of the Fight Agreement requiring modification by written agreement.
23. Affliction is estopped from asserting the provisions of Paragraph 20 of the Fight Agreement requiring modification by written agreement and further is estopped from denying modification of the Fight Agreement. At the time it represented it would waive international promotional rights and allow M-1 to exploit these opportunities, Affliction intended and knew M-1 would act on Affliction’s representations and conduct by entering into agreements with third-party PPV and television providers to televise or broadcast the bouts and therefore would incur obligations and expenses under these agreements. Moreover, during the course of performance of the Fight Agreement, Affliction knew M-1 actually was entering into such agreements with third-parties and further knew M-1 was expending substantial time and funds in connection with obtaining such agreements. Despite this, Affliction never once objected or raised any dispute pertaining to the rights of M-1, as Emelianenko’s assignee, to exploit international promotional rights and opportunities.
24. Assuming Affliction required written modification or had a different understanding of the rights granted pursuant to the modification of Paragraphs 6, 7, and 11 of the Fight Agreement, Affliction had a duty to so inform M-1. At no time was M-1, or Emelianenko, aware of Affliction’s objection, assuming there was one, to M-1 exploiting international promotional rights under the modified Fight Agreement or doing so without written modification of the Fight Agreement. M-1 relied on Affliction’s representations, conduct, and silence by incurring obligations in connection with third-party agreements and by expending substantial resources to procure such agreements.
25. No additional consideration was needed for modification of the Fight Agreement. In addition to the foregoing facts establishing equitable and promissory estoppel precluding Affliction from denying modification or asserting the Fight Agreement may be modified only by written agreement, Affliction executed the oral modification agreement by accepting less than due under the unmodified Fight Agreement. At no time did Affliction exploit, pursue, or obtain benefits from the international promotional opportunities. On the contrary, Affliction intentionally relinquished such rights and sat idly by while watching M-1 pursue and enter into contracts with international third-party PPV and television providers outside of Russia and Asia. The parties therefore mutually dispensed with contractual rights and requirements by quid pro quo conduct antithetical to the written terms of the unmodified Fight Agreement.
M-1 and Affliction Execute the Letter Agreement and the Parties Perform Their Obligations in Connection with the Second Affliction Event, Affliction: Day of Reckoning
26. Following Affliction: Banned, the parties discussed and negotiated a separate, unrelated written contract by which Affliction agreed to sponsor a series of MMA events known as the “M-1 Challenge,” an international MMA team competition referred to as the World Cup of Mixed Martial Arts which was developed in connection with the parties’ effort to cultivate or “farm” new MMA fighter talent.
27. As such, effective September 27, 2008, Affliction Clothing and M-1 signed a Letter of Agreement (“Letter Agreement”). On or about October 20, 2009, Plaintiffs, in writing, sought Affliction’s stipulation to disclose the terms of the Letter Agreement in the context of litigation between the parties due to confidentiality restrictions contained in the Letter Agreement. Affliction did not respond. As a result, Plaintiffs plead only those terms essential to put Affliction on notice of the claims against it and those terms already a matter of public knowledge.
28. By way of the Letter Agreement, M-1 promised to produce a certain number of live M-1 Challenge events which would result in a minimum number of one-hour television shows for the 2008 and 2009 seasons. M-1 also agreed to provide Affliction specific promotional advantages relating to the M-1 Challenge event titles, use of the Affliction logo in marketing and advertising for the M-1 Challenge events, and use of Affliction’s name and logo in print collateral materials.
29. In consideration for the foregoing, Affliction agreed to pay to M-1 a substantial fee. Pursuant to Section 4 of the Letter Agreement, Affliction agreed to pay the first installment by January 31, 2009, and the second installment by July 31, 2009.
30. In the meantime, in connection with its obligations under the Fight Agrement and the Consulting Agreement, Affliction co-promotion a second MMA event. The event, titled Affliction: Day of Reckoning, was held on January 24, 2009, at the Honda Center in Anaheim in front of a capacity crowd. Emelianenko again fought on the main card and successfully defended his title against former UFC Heavyweight champion, Andrei Arlovski. The event main card was televised on Showtime PPV with the undercard on HDNet.
31. Affliction performed its obligations under the Fight Agreement and the Consulting Agreement in connection with respect to Affliction: Day of Reckoning. Affliction also performed its obligations with respect to the first installment due under the Letter Agreement.
M-1 and Affliction Plan the Third Event Required Under Their Contracts While M-1 Works to Establish PPV and Television Deals Throughout the World
32. Following the Affliction: Day of Reckoning event, the parties began planning Affliction: Trilogy, the third event required under the Fight Agreement and the Consulting Agreement scheduled to take place on August 1, 2009, at the Honda Center in Anaheim. The main card for Affliction: Trilogy would feature Emelianenko against former UFC Heavyweight Champion Josh Barnett.
33. However, at the same time it was assisting Affliction with preparations for Affliction: Trilogy, M-1 began working with its international contacts to facilitate broadcasts of Affliction: Trilogy on PPV and television channels in numerous locations, including but not limited to Mexico, Central America, the Caribbean basin, South America, Eastern Europe, the United Kingdom, Australia, New Zealand, Japan, and Korea.
34. At all relevant times, including the time at which Affliction entered into the subject agreements and up to the present, Affliction has known of Emelianenko’s and M-1’s business relationships and presence outside the United States as well as their ability to exploit broadcast opportunities and Russia and Asia and the fact they would do so in connection with performing under the Fight Agreement. Affliction also knew, at the time it entered into the modified Fight Agreement, M-1 as Emelianenko’s partial assignee retained the right to license television and PPV providers the right to broadcast Affliction events in territories outside the United States.
35. As such, at the time it enterted into the Fight Agreement and modified Fight Agreement, Affliction knew Emelianenko or M-1 as the partial assignee would profit from PPV and television broadcast deals pertaining to each of three Affliction events required under the Fighter Agreement and the Consulting Agreement. Affliction therefore could and did foresee its failure to complete any of the three events would cause M-1 to breach agreements with PPV and television providers, to lose revenue it otherwise would have earned under agreements with these providers, and to incur expenses procuring and performing under these third party agreements.
36. As alluded to above, even prior to entering into the agreements which are the subject of this action, M-1 had been working diligently for two years to establish relationships and PPV/television presence in these locations, most significantly, Japan and Russia. MMA is a dominant sport in Japan and is a country in which Emelianenko frequently bouts and is wildly popular. In Russia, which is Emelianenko’s homeland, Emelianenko is considered a national hero. Any MMA event featuring Emelianenko on its main card and broadcast in either of these countries would draw a substantial viewing audience, and M-1 knew the Affliction: Trilogy event was going to be a blockbuster in these countries.
37. With this backdrop, on June 11, 2009, M-1 entered into a Deal Memo with Real Entertainment Inc. (“Real”) by which M-1 agreed to appoint Real as its exclusive agent for distribution of, inter alia, the Affliction: Trilogy event in various territories, including Japan, and to pay Real $20,000 per month in exchange for its service. Thereafter, Real obtained an agreement from Sky Perfect, Japan’s main provider of satellite television access, to televise Affliction: Trilogy on its PPV channel. This deal was the culmination of M-1’s painstaking two-year effort to build relationships with the Japanese, to increase Emelianenko’s popularity and following in Japan, and to bring Emelianenko to Japanese television audiences.
38. Prior to entering into the Sky Perfect agreement, on May 19, 2009, and on behalf of M-1, Blue Entertainment Sports Television, Inc. (“Best”) entered into a Programme Acquisition Deal Memo with Virgin media Television Limited (“Virgin”) by which M-1 licensed Virgin the right to televise the Affliction events (including Affliction: Trilogy) in the United Kingdom in exchange for per event licensing fees payable to M-1.
39. On June 19, 2009, in exchange for a flat fee, M-1 directly entered into a Program License Agreement with HBO Ole Acquisitions, LLC (“Ole”) by which M-1 granted Ole the exclusive right to televise Trilogy in Mexico, Central America (including without limitation Belize, Costa Rica, El Salvador, Guatemala, Hondruas, Nicaragua, and Panama), South America (including without limitation Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, French Guyana, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela), and the Caribbean basin (excluding Puerto Rico and the U.S. Virgin Islands but including without limitation Anguila, Antigua and Barbuda, Aruba, the Bahamas, Barbados, Bermuda, the British Virgin Islands, the Cayman Islands, Cuba, Dominica, Dominician Republic, Grenada, Guadeloupe, Haiti, Jamaica, Martinique, Montserrat, the Netherlands Antilles, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad, Tobaso and the Turks and Caicos Islands.)
40. On June 22, 2009, on behalf of M-1, Best entered into a Memorandum of Agreement with Sky Network Television Limited (“Sky”) by which M-1 licensed Sky the right to broadcast Affliction: Trilogy on its PPV and Near Video Demand channels in New Zealand in exchange for 50% of the gross revenues from the production.
41. Similarly, M-1 entered into an agreement with Best to obtain licensing agreements in various territories. On June 30, 2009, and on M-1’s behalf, Best entered into a Term Sheet with Main Event Television to broadcast Affliction: Trilogy on its PPV channel throughout Australia in exchange for paying M-1 10% of the gross income from the production.
42. In Russia, however, in addition to obtaining agreements to televise Affliction: Trilogy on premium channels, M-1 achieved an unprecedented agreement with “Channel One” — which had never before broadcast any MMA event — to televise Affliction: Trilogy throughout Russia. The channel, which is majority owned and controlled by the Russian government, has a 35% rating is the most prosperous Russian mainstream television channel. The Channel One agreement opened to M-1 the ability to attract major sponsors and the opportunity to bring Emelianenko prime-time and mainstream to every television in every home in Russia. The Channel One Affliction: Trilogy deal was the culmination of many years of hard work by both M-1 and Emelianenko to bring MMA into the Russian mainstream and resulted from M-1’s careful cultivation of significant business relationships.
43. M-1 entered into additional PPV/broadcast agreements to be disclosed and proven at trial.
44. In the meantime and concurrently, as stated above, M-1 performed its obligations under the Consulting Agreement and worked with Affliction to plan Affliction: Trilogy. The parties established and approved a show budget and marketing and advertising budgets, signed the Honda Center lease, developed the look and feel of the show, established ticket prices and venue scaling, executed agreements with broadcast partners, identified and assigned video pieces, scheduled and wrote press releases, built poster art and a web site for the show, obtained bill board space in prominent locations including Times Square, developed the advanced pre-sale strategy, executed the hotel contract, obtained featured fighters and, through Golden Boy Promotions, entered into Bout Agreements, established sponsorship prices and selling strategies, and coordinated fighter travel, medicals, licensing, and housing.
Affliction Cancels Trilogy and Breaches the Fight Agreement and Consulting Agreement
45. Affliction: Trilogy was, no doubt, a highly anticipated event. The event and identity of the fighters officially was announced on May 29, 2009, with the main card bouts to be broadcast live on Showtime and undercards live on HDNet. National promotion of the event began shortly thereafter on June 3, 2009, when Emelianenko and Vadim Finkelchtein appeared in New York along with Mark Cuban, Donald Trump, Josh Barnett, and Thomas Atencio at a press conference promoting Affliction: Trilogy. On June 5, 2009, at the request of Thomas Atencio, Emelianenko traveled to Kansas City to allow photographs and provide autographs at Buckle, the nation’s largest retailer of Affliction clothing.
46. On June 6, 2009, Emelianenko appeared with Josh Barnett on Showtime to promote the event. M-1, Affliction, Golden Boy Promotions, and Roy Engelbrecht conducted the production meeting on June 16, 2009, and, as of July 22, 2009, the planning and production of Affliction: Trilogy appeared to M-1 and Emelianenko to be on track.
47. However, on July 22, 2009, M-1 and Affliction learned Josh Barnett tested positive for steroids and was denied his California State Athletic Association license. M-1 and Emelianenko immediately began discussions with Affliction about signing a suitable replacement fighter. The parties identified Vitor Belfort, a former UFC Light Heavyweight Champion, and Brett Rogers, a talented fighter who competes under the Strikeforce banner and who had just defeated former UFC Heavyweight Champion Andrei Arlovski during the prior month.
48. Initially, Strikeforce and Showtime, which broadcasts Strikeforce events, were unwilling to release Brett Rogers to fight Emelianenko in an Affliction event. However, after negotiations, Affliction stated it was willing to sponsor Strikeforce/Showtime shows in the future and M-1 agreed to grant Strikeforce the right to co-promote a rematch with Brett Rogers, as well as providing other options pertaining to Emelianenko. As a result, Strikeforce agreed to release Brett Rogers to fight Emelianenko in the Affliction: Trilogy event. In addition, Emelianenko informed Affliction he was willing to fight several others, including the undefeated Bobby Lashley.
49. Yet, unbeknownst to M-1 and Emelianenko, Affliction was, at this very same time, also pursuing a contrary purpose by diligently working to repair its relationship with the UFC. Affliction — speaking out both sides of its mouth — was actively involved in discussions with the UFC regarding a renewed sponsorship deal between Affliction and the UFC at the same time Affliction purportedly was negotiating to obtain a replacement fighter for Affliction: Trilogy. Of course, the resurrection of a sponsorship agreement between the UFC and Affliction would require Affliction to depart the MMA event promoting business and therefore breach its agreements with M-1 and Emelianenko.
50. And this is exactly what Affliction did. On July 24, 2009, M-1’s corporate legal counsel, Steven Bash, sat inside Affliction’s offices awaiting completion of the meeting at which he believed Affliction was making a final decision regarding who would fight Emelianenko in the Affliction: Trilogy event. Much to Mr. Bash’s surprise, Affliction’s principals were not meeting in regard to finding a replacement Affliction: Trilogy fighter. They were meeting with the UFC to finalize their own sponsorship deal.
51. Emelianenko and M-1, at all relevant times, believed Affliction was acting in good faith and working to sign either Vitor Belfort or Brett Rogers. Yet, as of at least July 22, 2009, Affliction was conducting negotiations with the UFC which, as a practical matter, would preclude Affliction: Trilogy from materializing. Rather than informing M-1 and Emelianenko it intended to cancel Affliction: Trilogy and breach the Fight Agreement and Consulting Agreement if it could repair its relationship with the UFC, Affliction withheld this information and continued its self-serving negotiations with the UFC until July 24, 2009, at which time Emelianenko and a party of thirty (30) already had boarded a flight from Russia to Los Angeles.
52. Affliction announced the cancellation of Affliction: Trilogy on July 24, 2009, while Emelianenko was in flight to the United States. Emelianenko did not learn of the cancellation until Mr. Bash providied this information upon Emelianenko’s arrival in Los Angeles. Shortly thereafter, Affliction announced its reunion with the UFC and its departure from MMA event promotions.
53. The reasons Affliction asserted for cancelling Affliction: Trilogy — ranging from not having time to find a suitable fighter to not having sufficient time to promote the event — were pretext. Affliction and M-1 negotiated the release of Brett Rogers just one day before Affliction announced the cancellation of Affliction: Trilogy and at the same time it made a decision to align itself with the UFC. Plaintiffs therefore allege on the basis of currently known information and belief Affliction was simultaneously pursuing two manifestly incompatible options, a sponsorship deal with the UFC and a suitable fighter to allow Affliction: Trilogy to go forward, because it wanted to keep all options open to Affliction. Plaintiff is informed, believes, and based thereon alleges Affliction intended to sign Brett Rogers to fight in Affliction: Trilogy and intended to go forward with the event if the UFC deal failed, but intended to cancel Affliction: Trilogy if the UFC deal closed.
54. Brett Rogers was ready, willing, and able to fight Emelianenko in Affliction: Trilogy, but instead of honoring its promises to Emelianenko and M-1 by signing Rogers, Affliction elected to serve its own financial interests at the expense of its partners. After conducting discovery regarding the events leading to the Affliction: Trilogy cancellation and determining what discussions and agreements took place between Affliction and the UFC, and when these discussions took place, Plaintiffs will amend this Complaint to add additional allegations, causes of action, and parties as supported by the facts discovered.
FIRST CAUSE OF ACTION
Breach of Fight Agreement
By Emelianenko and M-1 against Affliction Entertainment, LLC and Does 1-15
55. Plaintiffs refer to and incorporate herein by reference the allegations of each and every paragraph herein.
56. For valuable consideration, Defendants entered into a Fight Agreement with Emelianenko by which Defendants agreed, inter alia, to co-promote a minimum of three (3) bouts; to use commercially reasonable best efforts to arrange three (3) bouts and to provide Emelianenko with an opponent for the bouts; to pay Emelianenko the specified amount per bout; and to pay certain travel accomodation expenses.
57. As stated above, Emelianenko assigned all international promotional rights provided under the Fight Agreement and the modified Fight Agreement to M-1 and Affliction was at all times aware of the assignment and the fact M-1 was exploiting international promotional rights.
58. Defendants further entered into an agreement with Plaintiffs to modify Paragraphs 6, 7, and 11 of the Fight Agreement in order to release all international promotional rights (outside the United States) reserved under the Fight Agreement and to grant these rights to Plaintiffs. Defendants waived any right to require written modification and are estopped from requiring same or disputing modification, and no additional consideration for the modification is required, for the reasons stated within the General Allegations.
59. Plaintiffs performed all conditions and requirements under the Fight Agreement, except those excused as a matter of law.
60. Defendants breached the Fight Agreement by failing to complete the third bout under the Fight Agreement and by failing to pay bout fees and travel and accomodation expenses required under the Fight Agreement.
61. At the time the parties entered into the Fight Agreement, Defendants knew and could foresee their failure to complete three (3) bouts as required by the agreement would cause Emelianenko damages including but not limited to the direct loss of benefits providied under the Fight Agreement.
62. Defendants further knew and could foresee at the time they enterted into the Fight Agreement, and at the time they agreed to the modification of same, their failure to complete bouts required by the Fight Agreement would cause Plaintiffs the loss of endorsements and other revenue they expected to receive in connection with the international broadcast of each bout, particularly the third bout.
63. As a result of the Defendants’ breaches, Plaintiffs have been damaged in an amount, to be proven according to proof at the time of trial, and no less than $10 million.
SECOND CAUSE OF ACTION
Breach of the Implied Covenant of Good Faith and Fair Dealing Fight Agreement
By Emelianenko and M-1 against Affliction Entertainment, LLC and Does 1-15
64. Plaintiffs refer to and incorporate herein by reference the allegations of each and every paragraph herein.
65. For valuable consideration, Defendants entered into the Fight Agreement with Emelianenko by which Defendants agreed, inter alia, to co-promote a minimum of three (3) bouts; to use commercially reasonable best efforts to arrange Bouts and provide Fighter with an opponent for the Bouts; to pay Emelianenko a certain fee per bout; and to pay certain travel and accomodation expenses.
66. As stated above, Emelianenko assigned all international promotional rights provided under the Fight Agreement and the modified Fight Agreement to M-1 and Affliction was at all times aware of the assignment and the fact M-1 was exploiting international promotional rights.
67. Defendants further entered into an agreement with Plaintiffs to modify Paragraphs 6, 7, and 11 of the Fight Agreement in order to release all international promotional rights (outside the United States) reserved under the Fight Agreement and to grant these rights to Plaintiffs. Defendants waived any right to require written modification and are estopped from requiring same or disputing modification, and no additional consideration for the modification is required, for the reasons stated within the General Allegations.
68. Plaintiffs performed all conditions and requirements under the Services Agreement, except those excused as a matter of law.
69. Defendants had a duty imposed by law not to act in a manner precluding Plaintiffs from obtaining the benefits or objectives of the Fight Agreement. Defendants’ duty requires Defendants to not unjustifiably hinder Plaintiffs’ ability to perform under the contract and to not take advantage of the failure of a condition precedent when Defendants have themselves frustrated performance or occurrence of that condition.
70. Defendants have breached the duty of good faith and fair dealing owed by frustrating and precluding the occurrence of the third bout and specifically by: (a) failing to sign Brett Rogers or to use commercially reasonable best efforts to procure one of several other fighters Emelianenko identified as suitable to fight in the Trilogy event; (b) canceling Trilogy despite suitable fighters being ready, willing, and able to fight Emelianenko in the Trilogy event; and (c) failing to complete a third event pursuant to the Fight Agreement, either by postponing and completing Trilogy or by promoting a third event.
71. At the time the parties entered into the Fight Agreement, Defendants knew and could foresee their failure to complete three (3) bouts as required by the agreement would cause Emelianenko damages including but not limited to the direct loss of benefits provided under the Fight Agreement.
72. Defendants further knew and could foresee at the time they entered into the Fight Agreement, and at the time they agreed to the modification of same, their failure to complete bouts required by the Fight Agreement would cause Plaintiffs the loss of endorsements and other revenue they expected to receive in connection with the international broadcast of each bout, particularly the third bout, and also expenses they would incur in connection with international broadcasts and promotion.
73. As a result of these breaches, Plaintiffs have been damaged in an amount, to be proven according to proof at the time of trial, and no less than $10 million.
THIRD CAUSE OF ACTION
Breach of Consulting Agreement
By M-1 against Affliction Entertainment, LLC and Does 1-15
74. Plaintiffs refer to and incorporate herein by reference the allegations of each and every paragrpah herein.
75. For valuable consideration, Defendants entered into a Consulting Agreement with M-1 by which Defendants agreed, inter alia: (a) to pay M-1 a specified fee in an amount to be proven at trial no latter than forty-eight (48) hours prior to the third bout to be completed under the Consulting Agreement; (b)to provide M-1 promotional value, including articles in event programs, incorporation of the M-1 logo in Afflicton advertising, logo recognition with advertising in connection with each of the three (3) bouts, to promote M-1 events through video announcements at the bouts, and to create and sell posters co-branded with the M-1 logo; and (c) to pay all of M-1’s costs and expenses in connection with the Consulting Agreement and incurred in the performance of the Consulting Agreement.
76. The Consulting Agreement incorporates and refers to the Fight Agreement requiring Emelianenko’s participation in a minimum of three (3) bouts.
77. M-1 performed all conditions and requirements under the Consulting Agreement, except those excused as a matter of law.
78. Defendants had a duty imposed by law not to act in a manner precluding M-1 from obtaining the benefits or objectives of the Consulting Agreement. Defendants’ duty requires Defendants to not unjustifiably hinder M-1 ability to perform under the contract and to not take advantage of the failure of a condition precedent when Defendants have themselves frustrated performance or occurrence of that condition.
79. Defendants breached the Consulting Agreement by failing to pay M-1 the specified fee forty-eight (48) hours prior to the third bout required under the Consulting Agreement and by failing to pay M-1’s expenses incurred in its performance of the Consulting Agreement.
80. As a result of the Defendants’ breaches, M-1 has been damaged in an amount, to be proven according to proof at the time of trial, and no less than $2 million.
FOURTH CAUSE OF ACTION
Breach of the Implied Covenant of Good Faith and Fair Dealing — Consulting Agreement
By M-1 against Affliction Entertainment, LLC and Does 1-15
81. Plaintiffs refer to and incorporate herein by reference the allegations of each and every paragraph herein.
82. For valuable consideration, Defendants entered into a Consulting Agreement with M-1 by which Defendants agreed, inter alia: (a) to pay M-1 a specified fee no later than forty-eight (48) hours prior to the third bout to be completed under the Consulting Agreement; (b) to provide M-1 promotional value, including articles in event programs, incorporation of the M-1 logo in Affliction advertising, logo recognition with advertising in connection with each of the three (3) bouts, to promote M-1 events through video announcements at the bouts, and to create and sell posters co-branded with the M-1 logo; and (c) to pay all of M-1’s costs and expenses in connection with the Consulting Agreement and incurred in the performance of the Consulting Agreement.
83. M-1 performed all conditions and requirements under the Consulting Agreement, except those excused as a matter of law.
84. Defendants have breached the duty of good faith and fair dealing owed to M-1 by frustrating and precluding the occurrence of the third bout and specifically by: (a) failing to sign Brett Rogers or to use commercially reasonable best efforts to procure one of several other fighters Emelianenko identified as suitable to fight in the Trilogy event; (b) canceling Trilogy despite suitable fighters being ready, willing, and able to fight Emelianenko in the Trilogy event; and (c) failing to complete a third event pursuant to the Fight Agreement, either by postponing and completing Trilogy or by promoting a third event.
85. As a result of the Defendants’ breaches, M-1 has been damaged in an amount, to be proven according to proof at the time of trial, and no less than $2 million.
FIFTH CAUSE OF ACTION
Breach of Letter Agreement
By M-1 against Affliction Clothing and Does 1-15
86. Plaintiffs refer to and incorporate herin by reference the allegations of each and every paragraph herein.
87. For valuable consideration, Defendants entered into a Consulting Agreement with M-1 by which Defendants agreed, inter alia, to pay M-1 a specified fee. Per Section 4 of the Letter of Agreement, Defendants agreed to pay the first installment by January 31, 2009, and the second installment by July 31, 2009.
88. M-1 has performed all conditions and requirements under the Consulting Agreement, except those excused as a matter of law.
89. Defendants breached the Letter Agreement by failing to pay M-1 the second installment, subject to confidentiality restrictions, in an amount to be proven at trial.
90. As a result of Defendants’ breach, M-1 has been damaged in an amount to be established according to proof at the time of trial and no less than $500,000.
SIXTH CAUSE OF ACTION
Declaratory Relief
By Emelianenko against Affliction and Does 1-10
91. Plaintiffs refer to and incorporate herein by reference the allegations of each and every paragraph herein.
92. An actual controversy has arisen and now exists between Emelianenko and Defendants concerning their respective rights and duties under the Fight Agreement and as to legal consequences resulting from facts alleged in preceding paragraphs. Emelianenko contends Defendants breached the Fight Agreement, and are liable thereunder, but nonetheless that Emelianenko is released from any further obligations under the Fight Agreement in light of Defendants’ breach. Emelianenko is informed, believes, and based thereon alleges Defendants dispute this contention.
93. Emelianenko desires a judicial determination of his rights and duties, and a declaration as to the rights and duties arising out of the Fight Agreement, including interpreting the validity of the agreements and the obligations contained therein.
94. A judicial declaration is necessary and appropriate at this time under the circumstances so Emelianenko may ascertain his rights and duties as stated above.
SIXTH CAUSE OF ACTION
Declaratory Relief
By M-1 against Affliction, Affliction Clothing, and Does 1-10
95. Plaintiffs refer to and incorporate herein by reference the allegations of each and every paragraph herein.
96. An actual controversy has arisen and now exists between M-1 and Defendants concerning their respective rights and duties under the Consulting Agreement and Letter Agreements and as to legal consequences resulting from facts alleged in preceding paragraphs. M-1 contends Defendants breached the Consulting Agreement and Letter Agreement, and are liable thereunder, but nonetheless that M-1 is released from any further obligations under the Consulting Agreement and Letter Agreement in light of Defendants’ breach. M-1 is informed, believes, and based thereon alleges Defendants dispute this contention.
97. M-1 desires a judicial determination of his rights and duties, and a declaration as to the rights and duties arising out of the Consulting Agreement and Letter Agreement, including interpreting the validity of the agreements and the obligations contained therein.
98. A judicial declaration is necessary and appropriate at this time under the circumstances so M-1 may ascertain its rights and duties as stated above.
PRAYER
based on the foregoing, Plaintiffs pray for the following judgment and relief:
a) Compensatory damages;
b) Costs of suit herein incurred on all causes of action;
c) Attorneys’ fees where and as allowed by law;
g) Interest at the highest legal rate where and as allowed by law; and
h) Such other and further relief as the Court may deem proper on all causes of action.
DATED: October 28, 2009
HINES SMITH CARDER LEASURE DINCEL
By: Marc S. Hines, Michelle L. Carder, Christine M. Emanuelson, Attorneys for Plaintiffs Fedor Emelianenko and M-1 Nederland b.v.
DEMAND FOR A JURY TRIAL
Plaintiffs demand a trial by jury.
DATED: October 28, 2009
HINES SMITH CARDER LEASURE DINCEL
By: Marc S. Hines, Michelle L. Carder, Christine M. Emanuelson, Attorneys for Plaintiffs Fedor Emelianenko and M-1 Nederland b.v.
Topics: Affliction, All Topics, M-1, Media, MMA, UFC, Zach Arnold | 51 Comments » | Permalink | Trackback |
Thanks for this Zach. What’s really interesting is not only did Affliction pay Fedor $300k / fight + expenses, M-1 got even more money from them every fight, including expenses for travel (and that’s like 30 people). So, while the common thought is Affliction paid Fedor the $300k, and M-1 paid Fedor $X00k, in reality M-1 was just using their “consulting” fees from Affliction to pay Fedor his full purse.
Well, here’s a lesson in some of the dangers of co-promotion. Strikeforce had better watch it’s Ps and Qs. I still think it could be done and done well, and probably will be with the CBS deal.
But even some of what this suit alleges is accurate, Affliction is going down in flames. The kind of malfeasance being described is actually fairly believable these days.
I feel bad for the jury and judge. Think of all the time in their lives they have to spend on this they aren’t going to get back.
I spent 3 1/2 hours typing up this 25-page legal document. And I type 120 words a minute. Typing legal filings is significantly more time-consuming than transcribing audio interviews.
And I was in court last week as well in the jury box. Ay ay ay.
Any competant lawyer would have set up Affliction’s clothing business seperate from teir MMA business…. Basically eliminating any risk of the MMA portion effecting the clothing portion. I don’t know how the company was structured so it is Impossible for me to say.
Also, M-1 has to be careful if they pick a legal fight with Zuffa. All of the cards are stacked in Zuffa’s favor in court. All it would do is deplete Vadim’s stash of money.
Lastly, M-1 is crooked. And Strikeforce is
learning this fact. From M-1 not holding their weight in co-promotion to having basically
frivolous lawsuits against Affliction.
I do think that when Fedor eentually loses, crap will hit the fan….
Zach, we do thank you for your effort. Your fingers…they gotta hurt after that.
A fight with Zuffa here isn’t in the cards. If anything, they were unknowing partners legally, and nothing in the suit actually names Zuffa as an actual defendant.
Nice try though, 45. 😉
A fight with Zuffa here isn’t in the cards. If anything, they were unknowing partners legally, and nothing in the suit actually names Zuffa as an actual defendant.
Depends what appears when they get the information they want from Affliction.
All that I’ve learned from this thus far is that internet people don’t care if the UFC is actually guilty or not. Even if they are, there’s a few 45 Huddle types out there cheering them on hoping they try and force M-1 out of business through legal fees. I guess its some sort of “ends justifying the means” for those people. Maybe its another reminder I should spend more time on less socially abhorrent hobbies? Not sure.
Thanks for taking the time, Zach.
I will be watching this space for developments…
UFC is mentioned in the lawsuit only as a way to point to why Affliction folded so fast (allegations of making a deal to close in exchange for lifting the fighter sponsorship ban UFC put on Affliction in 2007.) They’re not an actual defendant therefore will not send their SUPER POWER LAWYERS~! to argue the case. At the most a UFC representative may be called to testify, where they’ll deny they were in cahoots to shut Affliction down in a conspiracy and that will be that for their involvement in the trial.
@Alan – Yeah, you have a point. I’m just going from a reading of the filing. As for the Schill types, they’re always around…I just love how this all of a sudden became about Zuffa.
The only way the Zuffa legal destruction with SUPER POWER LAWYERS MOVE OVER OJ’S DREAM TEAM~! theory makes sense is if you believe UFC would sue M-1 for slander for claiming they acted in a conspiracy to close Affliction in exchange for advertising space on their fighter’s bodies.
Although I’m sure it’s more knee-jerk reactions from the Danaites skimming over this long document and seeing UFC mentioned and giving the knee jerk ZUFFA WILL DESTROY YOU DIRTY RUSSIANS~! reaction.
Reading comprehension people. I said IF they pick a fight. Never said they would.
I don’t see the benefit of M-1 going after Affliction if the assets are protected. It will just waste M-1’s money.
It seems from this that all the rumor about M-1 being a bunch of people that control Fedor are true. They’re just trying to squeeze every last dime out of this guy before he gets old.
I’m sure Affliction will hit back with allegations about what types of people are involved in M-1. I wonder if that will affect CBSs involvement with and promotion of Fedor. Also after Strikeforce shuts down next year who is going to want to deal with M-1.
Speaking of lawsuits, anyone know how the Sakakibara lawsuit against Zuffa is progressing?
The best part of all this is getting to see the ludicrous structure of the Affliction/M-1 deal. Side “consulting deals” which everyone with an IQ above 10 should see for what they are.
Donald Trump not listed as an asset holder at all in Affliction. Remember when he was the deep pockets the UFC couldn’t deal with?
I did see you said if. But even saying if is still far fetched as no maliciousness on UFC’s part is claimed.
To sum up the UFC involvement in the suit:
-They draw a parallel with Randy Couture being Affliction’s #1 sponsored fighter and the sponsorship being banned immediately after Couture’s contract dispute got nasty. This is only to illustrate the tension that may have caused Affliction to pull the trigger on opening a rival company.
-Affliction was secretly meeting with UFC to work out a deal to get sponsorships allowed again on July 22nd, 2009, which was around the same time of the turmoil with Barnett’s steroid test. Allegations of a backdoor agreement to cease MMA operations in exchange for renewed sponsorship is brought up, but it does not implicate anyone in Zuffa as defendants. It only claims Affliction claiming they would allow Fedor to find a replacement while seeing if UFC would let them back in if they shut down the MMA promotion was not acting in good faith to Fedor/M-1.
But the red meat, as Zach says, of the suit is that they claim Brett Rogers agreed to fight Fedor on short notice to allow the fight to happen as it was originally scheduled and then they turn around and claimed it was impossible to run the event and later ceased operations. So in that regard it is hardly a frivolous suit: you promised Fedor 3 PPVs, you make plans to deliver on the third, his opponent is removed, you claim you’ll continue to run the event if a replacement can be found, a replacement is found, but you close anyway. That UFC removed sponsorship restrictions immediately afterwards is just a sidestory.
The UFC involvement is more substantial than you say. The holy grail for them, which is highly unlikely, is they find evidence supporting a tortious interference with contract claim against the UFC.
There’s an explicit threat of this in the lawsuit when they speak about joining further parties and adding claims after discovery shows conversations between UFC and Affliction.
I don’t know what the evidence will show, but a claim against the UFC isn’t an impossibility at all.
Any attorney with a brain would want substantial evidence of that beyond just the fact that they had a meeting on July 22nd. Because conspiracy theory lawsuits almost never win and are usually only tried by activist lawyers which this firm is not. You would need a jury pool made of a bunch on hardcore MMA fans who dislike Zuffa for a “we don’t have any proof, but put 2 and 2 together” case against UFC to succeed.
In not using UFC as a defendant (and listing unnamed parties in the suit does not automatically mean they have plans to sue UFC, it’s a common lawsuit practice) they can probably win or settle out of court with Affliction.
I know the belief that they’ll sue Zuffa is due to “they’re a bunch of greedy nutty Russians”, but their legal team would strongly advise them against it without a smoking gun (which would be someone from Affliction or UFC admitting it or a document proving it.) And if it means a good chance of getting money from Affliction or losing the case with a longshot suit against UFC I think they’d listen.
Mike Rome hit the nail on the head.
If anybody thinks this isn’t at least 20% about M-1 trying to hurt Zuffa, then they have their blinders on. M-1 wants to control the sport through one fighter. Trying to take down the UFC is not out of the realm o possibilty in their crazy minds.
People can try and justify it all they want…. But anybody who leeches off a fighter like Vadim does, is extremely likely to have crazy schemes running through their head like this one.
And wasn’t it rumored that it was Showtime who basically put the breaks on Fedor/Rogers for that show? And wasn’t it also rumored that Fedor could have fought Vitor but basically said no. And now they have a lawsuit claiming Affliction is at fault? Give me a break.
The other thing to realize is that at the beginning of this document, M-1 tries to lump together all of the affliction companies as one entity. Legally that is nit how it works. They are trying to get money from the clothing line when they had basically no relationship with that entity in terms of putting in fights. That makes it very likely to be frivolous.
Mike, I see your point, but the only thing I actually read that even hinted at that was the mention in the suit of the Doe defendants 1 through 100. It is explained that the identity of these individuals is not known, nor is their capacity. This is a legal CYA attempt so they don’t miss out on anyone that comes up later as having had some involvement that wasn’t names in the original suit. It’s not really that uncommon to my understanding. I’m no lawyer, but I know a few good ones, and they all say that they’ve seen this kind of thing before.
Oh, 45 – I did read your “if.” Apologies “if” I was unclear. I still don’t think this is really in the cards or the main point of the suit.
If all you have is rumors to go off of and “the realm of possibility” to support your side, then you’re the one with blinders on. Especially when you admit this is all because you believe Fedor’s management are evil. I’d call that a tainted view to say the least.
I’m looking at the facts, having read the suit and clearly UFC is only brought up to show that Affliction, not the UFC, was acting in bad faith. They are not arguing UFC was out to crush Affliction to screw Fedor. They are arguing Affliction was stringing Fedor along knowing they were going to agree to scrap the company in exchange for the sponsorship ban being lifted.
Is there a chance they’d sue UFC? A tiny one. If someone cracks on the stand and admits this was a conspiracy to close Affliction so Fedor might be forced to join UFC (which would never happen) then yes they’d add them to the suit. That’s why the future defendants clause is in most lawsuits as a safeguard for “what if”. But it won’t happen.
Scott Coker can look forward to being sued in the future by Fedor and the gravy train
The claim is the clothing side of their business benefited from the MMA side of business closing under the belief that UFC would let them sponsor fighters again if they ceased being their competition. That ties the two.
The other thing to realize is that at the beginning of this document, M-1 tries to lump together all of the affliction companies as one entity. Legally that is nit how it works. They are trying to get money from the clothing line when they had basically no relationship with that entity in terms of putting in fights. That makes it very likely to be frivolous.
It wouldn’t be “frivolous”; the court would end up restricting it to the fight promotion.
Like I said earlier; You make it clear you do not care what the UFC’s role was. Only that you want them to win at all costs.
the laywer for M-1, Marc Hines, is good people. i spoke with him several times back when i did the story on Luke Burrett getting a TRO on Todd Beard. Sharp fella and a decent fella as well, unlike some of the lawyer folk i dealt with (Hi, Sam).
It is a small world sometimes with the lawyers in MMA….. Hines also reps some fighters in contract negotiations. He recently worked with Rashad Evans when he re-upped. Should get interesting for him if the Zuffa folks get roped into this.
45, unlike most on this site I tend to think you make some good points. But you are wrong here.
I am in law school and just studied Federal Civ Pro. “Doe” pleading as its called is legal and common. It is in the FRCP. Naming the various entities as “Affliction” is also legal. The point of the initial complaint is simply to put the defendant on notice and state a cause of action. You are allowed, and it is common, to amend your pleadings as more information comes to light as a result of interrogatories and depositions.
As for the rest of this shit storm, I will be very interested to see how much money M1 payed Fedor for promotional rights and any other considerations. Although I tend to think that M1 is using Fedor, this just goes to show why having a bunch of crazy Russians on your side can be a good thing. None of the other fighters screwed out of a pay check had management with the pocket or the stones to sue.
What they’re hoping for is that in the process of discovery they find real evidence Zuffa did something. Obviously what they have now isn’t enough to name them. That’s the whole point of discovery.
Mark Hines is a good attorney. There’s no reason at all to believe he will be outgunned by UFC if they ever get involved.
For those of you already condemning one party or another based on this filing, keep in mind that we are only seeing the M-1 version of events. Of course it looks like a slam dunk for their case. The other side of the story has not been revealed yet.
Let’s wait and see how Affliction responds before we automatically assume their guilt.
Oh dear oh dear lol not good
1) They do make a clear distinction between the clothing company (Affliction Clothing) and the MMA company (Affliction Promotions Inc. and Affliction Entertainment LLC) They say at the beginning of the suit they will refer to everything as Affliction, but that doesn’t mean they are saying they’re one in the same as they are listed with separate introductions in the suit. Most lawsuits simplify names of parties by abbreviation or a notation like this one used.
2) There are tons of “Doe Defendant” claims in lawsuits. Most are not used, but they are there if a surprise revelation is made so you do not have to file a new suit against that party. Again, this is not a guarantee the UFC will be sued, it is a safeguard so if it were by some small chance to comeout with strong evidence they acted together to screw over M-1 they could be sued. That has a 1% chance of happening in my opinion.
3) The allegation is Affliction Clothing was angered that the UFC banned its sponsorship, which they believed was due to their top sponsored fighter Randy Couture getting in a contract dispute with UFC, so they plotted opening Affliction Entertainment LLC to compete against them in the MMA field. They signed Fedor to a contract for 3 fights to be their headliner with it in his contract that they guarantee they will not fold until his 3rd fight takes place but they did anyway, which is a clear contractual violation in which they made no compensation for. They violated their good faith agreement with M-1 by making them believe the 3rd show would happen until the day they announced they were closing. M-1 is arguing they may have been able to help work something out if they had known the company was on the verge of collapse.
4) The suit is claiming Fedor was promised, even though Josh Barnett was suspended from fighting, that they would still hold the event if a replacement was found. They claim Brett Rogers agreed to fight in Barnett’s place but was prevented from signing the deal because Affliction was having secret discussions to agree to shutdown MMA operations if their clothing line could regain UFC sponsor status, which formally ties Affliction Clothing to the suit because they benefited from the Affliction Promotions Inc’s sabotage. M-1’s lawyer Steven Bash claims to have uncovered the UFC-Affliction meetings 2 days after it happened. The suit further claims that Fedor turned down other opportunities to clear his schedule for promoting and fighting on the 3rd Affliction show and wants compensation for that. Also the Fedor reality show project was canceled due to the Affliction shutdown so that’s another part in the suit.
5) This is in no way a frivolous lawsuit. If you screw over one of your contracted business partners to benefit your business (and losing money by running the PPV with a weakened main event versus making money with increased brand visibility by UFC sponsorships clearly benefited Affliction) then that violates your contract and is grounds for a lawsuit. They’re not going to get anywhere near the full $10 million they’re asking for, but I think they have a very good chance of winning at least what their deal called for or settling out of court with Affliction.
For those of you already condemning one party or another based on this filing, keep in mind that we are only seeing the M-1 version of events. Of course it looks like a slam dunk for their case. The other side of the story has not been revealed yet.
Exactly. Literally nothing may come of this. I see no reason to get excited one way or the other. I just find the weird undertone of “I hope the UFC throws so much at them that they bury them!” to be bizarre.
“1) They do make a clear distinction between the clothing company (Affliction Clothing) and the MMA company (Affliction Promotions Inc. and Affliction Entertainment LLC) They say at the beginning of the suit they will refer to everything as Affliction, but that doesn’t mean they are saying they’re one in the same as they are listed with separate introductions in the suit. Most lawsuits simplify names of parties by abbreviation or a notation like this one used.”
It is very simple to use the following abbreviations during the entire filing… Affliction Clothing will be refered to as “Clothing”. Affliction Entertainment will be refered to as “Entertainment”. And that is very commonly used. The lawyer is mucking the waters here. He could have EASILY used two abbreviations throughout the entire document. I have seen it done myself before in court documents for my previous job.
So why would a “good” lawyer do this? It’s very simple. He is trying to set it up that despite Affliction Clothing and Affliction Entertainment being two different entities, that they worked only as one unit. By doing this, it is easier for M-1 to get money out of CLOTHING.
Right now as it stands, M-1 is likely sueing a company with a net work of $0.00. Why would you do this? It has zero purpose. You can sue a company with no money all you want, but you will still get no money out of it.
It’s pretty shady if you ask me. It is perfectly legal to file this suit, but it is still shady. M-1 went into business with a company that had ZERO experience in that business. They sign a contract that was not fulfilled because the company was losing money and had to go out of business. Now they are butt hurt and are trying to get money out of the clothing company these guys own.
Affliction Entertainment has every right to shut down their business if they are losing money. What they do at that point with their clothing company has nothing to do with it.
Is there a connection? Could be… But talk about something being unprovable…. Geesh….
“I spent 3 1/2 hours typing up this 25-page legal document. And I type 120 words a minute. Typing legal filings is significantly more time-consuming than transcribing audio interviews.”
I would’ve scanned those documents, then opened them up in a program like NitroPDF then eventually copy and paste after running a scanner to recognize all of the characters. That would take 15 minutes maybe 30.
It’s pretty shady if you ask me. It is perfectly legal to file this suit, but it is still shady.
Its only “shady” if it gets thrown out by the courts. If the courts accept the claims of M-1, your complaint goes out the window. I don’t care if they file this suit. Why should you?
http://mmamania.com/2009/07/30/strikeforce-ceo-scott-coker-talks-fedor-emelianenko-affliction-merger-and-selling-out-brett-rogers-video/
Somebody posted this on The UG. Loretta Hunt does the interview. Scott Coker says in this video that they basically were not going to allow Brett Rogers to fight on short notice and without a rematch clause. The way he says it, sounds like no rematch clause was an option.
And this lawsuit isn’t frivilous? If this ever went further in the courts… A judge watches that video, and the case is thrown out in a heartbeat. This has 0% of winning. Fedor was not given Rogers as an option. There case is complete BS.
This will likely be settled out of court. Probably with Affliction giving M-1 part of the money they made on selling the rights to Fedor’s two Affliction fights to UFC. Or a portion of the money made from the rights on all of the fights.
Affliction folding did impact Fedor and therefore M-1’s earning potential. Fedor fights about twice per year, this year it would/could have been 3 times. He missed a payday in August and because of the nature of the sport that will never be made up.
If Affliction drew up a contract for the Belfort fight and M-1 turned it down it would seem like that would nullify the loss of compensation argument. Then they’ll just settle for some payment from Affliction based on loss of sponsorship and the video rights.
This should be a wake up call to Strikeforce about who they’re dealing with. M-1 makes out better as far as building Fedor with a star now that Affliction is gone and Fedor is on CBS. And they’re still trying to bleed Affliction for money.
From what Zach kindly transcribed the suit is pretty solid. And I’m not being biased because I have absolutely nothing against Affliction and while I enjoy watching Fedor fight I’m not fond of his M-1 team. I’m not one of those who think they’re mobbed up or believe Fedor is helpless against them, but they’re not the most likable bunch of people. And my argument isn’t necessarily that M-1/Fedor are going to win a slamdunk case, but that it is not frivolous like many are knee jerk claiming.
There are 2 ways this lawsuit will be frivolous
1) There wasn’t a “we won’t go under until the third show” clause or that clause is legally unenforcible. That’s unlikely because the legal team has reviewed the contract with a fine tooth comb and would never lie about the key piece of their suit.
2) M-1 turned down reasonable compensation for the cancellation of the third show and their canceled reality show project. That’s the most possible issue with the suit. It was said Affliction were wanting to repay the fighters on the card by giving them endorsement deals and/or their own line of Affliction shirts to make up for the canceled payday. Obviously Fedor/M-1 were offered something by Affliction, but whether it was reasonable is the pressing issue. All that’s said is that M-1 wasn’t given what they would have made if the show took place, but they don’t say what was offered in its place. So that will be interesting to see what Affliction claims. But I still say they settle out of court because they’re paying them something plus legal fees. It’s cheaper and not an admission of guilt.
[quote]it is very simple to use the following abbreviations during the entire filing… Affliction Clothing will be refered to as “Clothing”. Affliction Entertainment will be refered to as “Entertainment”. And that is very commonly used. The lawyer is mucking the waters here. He could have EASILY used two abbreviations throughout the entire document.[/quote]
I know that’s an attempt at a strawman, but I think it’s fair to say the people who matter (ie lawyers and the judge) won’t be confused. Who gives a crap if a bunch of people on the internet who weren’t supposed to even see this really can’t understand the difference.
And for the last time: the clothing end benefited from the supposed contractual violation of ending the promotion early to make UFC happy. That ties the promotion with the clothing line. Whether it would win in court is to be decided but it is enough to tie them to a lawsuit. That’s all that matters for now.
You’re insulting a very good law firm by claiming they’re so stupid they’re being duped by M-1’s lack of MMA knowledge. They’re not tacky ambulance chasers, if you’d research them a little you’d see they’re very respected and have MMA contractual experience. And they wouldn’t sully their reputation on a frivolous lawsuit by a gang of shady characters if they didn’t believe it was just as you seem to believe.
In that video posted above Scott Coker clearly implies that no deal with Brett Rogers was achieved to fight at Affliction 3, clearly filmed days after Affliction folded.
Yet the lawsuit states a deal was reached a day before Affliction folded.
Not the best way to start out a lawsuit…
If this guy is so good… Then tell me how a quick search online can bring up evidence that completely disproves Rogers being offered? From Scott Cokers mouth specifically to make it even more damaging.
Sorry, but no good lawyer can be proven that wrong that easily… This is bad work. If I made errors this gaping in my previous job, I would have been fired. People can bash me all they want for that comment… But not only does this guy take on a client who is as shady as Vadim, but then files a lawsuit with more holes then a slice of swiss cheese.
Mark… I don’t think you get it. M-1 is within their rights to try and prove that Clothing benefitted from Entertainment’s actions. But the distinction has to be made, which this filing does not have. And like I said… it’s for the sole purpose of trying to go after where the money is. I’m not sure why you are ignoring that fact.
I’m also not sure there is any precedent for this case. I never seen Fedor’s contract with Affliction or the consulting contracts between M-1 and Affliction. Though I have seen several UFC contracts and contracts from various other promotions, including Afflcition.
I’ve yet to see a clause that relates to compensation for a fighter if the promotion goes under. The CSAC makes promoters carry a bond to pay 20% of the purse if the show is canceled. I don’t really see how a jury can find Fedor is owed more than that.
If this guy is so good… Then tell me how a quick search online can bring up evidence that completely disproves Rogers being offered?
I dunno 45, I don’t believe fight promoters at face value. Maybe you can wait for evidence to be entered into the case? I understand that it would force people to exercise restraint, but maybe that’s not the worst thing….
In the case of the bond… It would be the insurance company who pays Fedor, not Affliction Entertainment, since they went out of business.
If the bond holder did the deal properly (because Affliction Entertainment had no real value), they got the financial backing of either Affliction Clothing or the owners themselves… Which in that case the insurance company would be made whole.
Now that you mention it, I wonder if any of the fighters ever made claims on the bond. It would be stupid not to.
I’ve yet to see a clause that relates to compensation for a fighter if the promotion goes under.
I don’t see them seeking compensation for the fighter’s purse. I see them (M-1 Global) seeking compensation for deals they cut for the event’s international broadcasting when that fell through. That’s the crux here. I have no idea if they have an argument (I wouldn’t be surprised either way) nor do I really care if they’re successful or not in recovering any damages if its determined that they deserve some from whoever would potentially be owing them money.
Its much to do about nothing right now. No side has given any evidence, no proceedings have really gone through, hell, there might not be any actual action for months.
If the bond holder did the deal properly (because Affliction Entertainment had no real value), they got the financial backing of either Affliction Clothing or the owners themselves… Which in that case the insurance company would be made whole.
Which begs the question as to whether or not the courts will decide that M-1 can only go after the shell company or Affliction in general should it be determined that they’re inseparable. But who cares about that? Crazy Russians! If Scott Coker sells Strikeforce to the UFC he better look out!
A media interview is not sworn testimony.
UFC was not a party to the Affliction/M-1 or the Affliction/Fedor agreements, and unless M-1/Fedor later allege conspiracy, they won’t be part of this.
They had a written agreement, they had a verbal modification to the agreement (which forbade verbal modifications), then M-1 went off on its own and abrogated the written agreement, and now they want Affliction to pay them remuneration for all the trouble they went to breaking the agreement.
They went to a lot of contortions trying to say that it’s not really breaking the agreement if you tell the other party exactly what you’re doing and they don’t say boo (which isn’t a solid legal grounding as far as I am aware), but that’s how it boils down for me.
There’s a reason that you put no-verbal-modification clauses in contracts, and there’s a reason that some types of contracts are required to be in writing.
I honestly believe that M-1 spent money in anticipation of Trilogy and lost face when it was canceled, but I don’t think they have a cause here.
Of course, I’m a CPA, not a lawyer.
WTF 45? A video, that might not even be allowed in as evidence b/c its hearsay, is somehow proof that M1 is wrong? That’s not proof, thats a dude with a dog in the fight talking on tape, nothing more, nothing less. As for the use of Affliction in the filing, again, NOT odd, illegal, or otherwise shady. Go read up on rule 11 and come back to me.
Even if Rogers was not going to take the fight that is not all she wrote. This is about good faith efforts and Affliction having an obligation to M1, not just Fedor v. Rogers. There is NO WAY in hell this lawsuit is frivolous.
One more point. I don’t think some of you have a clue what the initial filing is all about. Its not a final brief, a complete argument, or even a complete opinion. Its merely to put the party opponent on notice and to provide enough information to survive a 12b6 motion to dismiss. The initial pleadings can be amended at a later date, the cause(s) of action can be changed, the named parties, and if justice requires it, the initial filing can all be amended.
This is VERY preliminary and tells us little about the ultimate disposal of the case
Now that you mention it, I wonder if any of the fighters ever made claims on the bond. It would be stupid not to.
I’m not 100% clear on this, but I could have sworn there was talk of fighters being compensated by way of Affliction shirt deals.
Guys, don’t hate on 45 too much. I know he can give the image of a little child with his fingers in his ears chanting ::::la la la la la la la la – not listening!:::: But the truth is, he’s entitled to both his behavior and his (erroneous) opinion.
A guy talking on tape isn’t proof of any kind. It might be evidence, it might not be (probably is here, and it is exculpatory for Affliction if it is allowed as more than just hearsay). That’s for the judge to decide.
Otherwise, we can all say “I saw it on TV! It must be true!”
*hears someone chanting ::::la la la la la la la – still not listening::::*
I love it when people on the internet think they’re superior experts to respected masters of their field.
Yes, we don’t know what Affliction’s side of the story is. They may have proof that negates everything M-1 says and it won’t go to court. But looking at their complaints all I am saying is it is not a frivolous suit since you have a possible contract violation. They’re asking for a ridiculous amount of money (since Fedor’s purse, PPV royalties and money made from the “Fighting Fedor” canceled project would not come out to $10 million more than likely) but if they truly didn’t offer compensation for their contract violation so they could help out their other business, that counts for something whether you like the parties involved or not.
And yes, a freaking YouTube video is not going to qualify for anything in court, nor is the Hines Smith firm wrong for not checking with the Underground message board to see what they thought about the case. If Coker gets called to testify and says the same allegations under oath offering proof then that counts. But right now when you look at it, it’s a promoter giving an interview about an event that’s demise was to his benefit. You might as well call in Dana White to rant on the stand about the “dumb ass t-shirt guys” and “shady Russians.”
The only thing that video might do is hurt is their chances of successfully dragging Zuffa in as one of the John Does.
IIRC, the standard for interference is ‘reasonable business expectation’, and having a video out there where one of the parties involved says the deal is dead certainly impacts that ‘reasonable expectation’.
It’s an internet video. They will call Coker to the stand if it is made an issue by Affliction and ask him questions about his statements. If he’s telling the truth he’ll repeat it on the stand and M-1 will be hurt. If he isn’t his story will be picked apart and Affliction will be hurt. Either way for all we know right now both sides could be telling the truth and it was Brett Rogers’ people who were stringing both sides along to attempt to double book him believing he was too valuable for Strikeforce to punish for working an Affliction fight without their permission. Stranger things have happened in MMA.
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