216 F. Supp. 3d 1154
D. Nev.2016Background
- Plaintiffs are Elite professional MMA fighters ("Bout Class" and "Identity Plaintiffs") suing Zuffa, LLC (UFC) under Section 2 of the Sherman Act for monopolization (output market: promotion of live Elite Professional MMA bouts) and monopsony (input market: Elite Professional MMA fighter services) in the U.S.
- Plaintiffs allege UFC controls ~90% of live Elite MMA bout revenues and has foreclosed competition through exclusive contracts, acquisitions, and coercive conduct that restrict rivals’ access to fighters, venues, sponsors, and broadcast outlets.
- Key contractual provisions challenged include exclusivity, champion/retention clauses, right-to-match/first-offer, perpetual ancillary/identity rights, promotion obligations, and retirement retention rights.
- Plaintiffs allege anticompetitive effects: suppressed fighter compensation, expropriation of identity rights, reduced output of Elite bouts, and diminished competition in promotion and fighter markets.
- Procedural posture: lead case filed in Northern District of California, transferred to District of Nevada; Zuffa moved to dismiss under Rule 12(b)(6); the Court denied the motion and granted an ESI stipulation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs properly plead relevant markets (Elite fighter services; Elite live bouts) | Plaintiffs: "Elite" is an industry-recognized submarket (championship/elite tier) and supports market-definition for Section 2 | Zuffa: "Elite" is vague/subjective and circular (single-brand market of UFC fighters) | Court: Market definitions survive Rule 12(b)(6); "elite" is plausible and analogous to recognized sports submarkets (e.g., championship boxing) |
| Whether alleged conduct plausibly shows willful acquisition/maintenance of monopoly/monopsony power | Plaintiffs: combination of exclusive contracts, acquisitions, and coercive practices form an exclusionary scheme that forecloses rivals and suppresses compensation | Zuffa: conduct is legitimate competition; exclusive deals are pro-competitive and insufficiently pleaded to show substantial foreclosure | Court: Allegations taken as whole sufficiently plead an anticompetitive scheme and preliminary showing of significant harmful effects on competition is met |
| Whether challenged contract terms (ancillary/identity rights) are lawful and non-antitrust-violating | Plaintiffs: ancillary clauses are part of foreclosure scheme that expropriates fighter identity and restrains competition | Zuffa: name/likeness licenses and IP protections are common and pro-competitive | Court: Ancillary rights pled as part of the overall scheme may have anticompetitive effect; claim survives pleading stage |
| Whether acquisitions and historical acts plausibly caused anticompetitive effects and antitrust injury | Plaintiffs: acquisitions and conduct reduced output, harmed competition, and suppressed wages/identity value | Zuffa: many acquisitions are time-barred or lack pleaded anticompetitive effect; barriers to entry not plausibly alleged | Court: At pleading stage, plaintiffs have alleged sufficient facts of antitrust injury and reduced output to survive dismissal |
Key Cases Cited
- Am. Prof'l Testing Serv. v. Harcourt Brace Jovanovich, 108 F.3d 1147 (9th Cir.) (requirements for monopolization claim under §2)
- Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421 (9th Cir.) (market-definition and showing market power circumstantially)
- Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038 (9th Cir.) (pleading standard for relevant market in antitrust claims)
- Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 549 U.S. 312 (U.S.) (monopsony concept and application of predatory-bidding analysis)
- Int'l Boxing Club of N. Y., Inc. v. United States, 358 U.S. 242 (U.S.) (recognition of championship/elite sporting submarkets as relevant markets)
- Verizon Commc'ns Inc. v. Trinko, 540 U.S. 398 (U.S.) (difficulty in defining exclusionary conduct; exclusionary vs. competitive acts)
- Cascade Health Solutions v. PeaceHealth, 515 F.3d 883 (9th Cir.) (limits on bundled discount theory as exclusionary conduct)
- Allied Orthopedic Appliances Inc. v. Tyco Health Care Grp. LP, 592 F.3d 991 (9th Cir.) (exclusive-dealing liability requires foreclosure of a substantial share)
- Movie 1 & 2 v. United Artists Commc'ns, Inc., 909 F.2d 1245 (9th Cir.) (willful acquisition/maintenance via exclusionary conduct)
- Costco Wholesale Corp. v. Maleng, 522 F.3d 874 (9th Cir.) (consider alleged conspiracies in aggregate; look to overall scheme)