District Court Judge Allows the UFC Antitrust Lawsuit to Proceed as a Class Action
Previously, we had written about a large antitrust lawsuit against the UFC brought by its fighters who claim that the group illegally depressed fighters' wages. Now, the fighters have scored a major victory in their case that may force UFC to come to the settlement table. There are estimates that the company may face up to $5 billion in legal liability for the alleged scheme. Now, the fighters will be allowed to proceed with their case as they seek back pay from UFC.
Here, a federal judge has granted class certification to the UFC fighters. This means that they have the necessary commonality of interest that they can sue the UFC together in a class action lawsuit. This means that each fighter does not have to file a separate lawsuit, and they could all use the same lawyers and legal grounds. Defendants always try to keep plaintiffs from filing a common lawsuit since denial of class certification is almost always a death knell for the plaintiffs' claims.
UFC Allegedly Used Monopoly Tactics to Keep Wages Down
Here, the lawsuit alleged that the UFC used monopoly tactics to become the sole employer of fighters. Then, they allegedly took advantage of this power to artificially depress fighters' wages. In other sports, athletes usually receive on the order of roughly 50% of the total revenues of the sport. UFC fighters end up with approximately 20% of the pie. Clearly, UFC has some sort of power over fighters' wages. Whether it is the result of illegality will now be determined as the lawsuit proceeds.
For UFC, there is massive potential liability. The period covered by the lawsuit goes all the way back to 2010. In that time, UFC has earned billions in revenue. Here, the fighters claim that their wages were depressed by approximately $1.6 billion. However, antitrust lawsuits allow the plaintiff to request treble damages. This would raise the potential legal liability for UFC to close to $5 billion if they lose the case in court.
Of course, this does not mean that the fighters have won their lawsuit. UFC will likely try to file motions for summary judgment to try to win the case before it even went to trial. There is no way that UFC will simply agree to pay its fighters $5 billion. In cases like these, it is likely that UFC will try to start a parallel track trying to settle the case. When these cases settle, it is usually for a small fraction of the amount sought in the lawsuit. Where this ruling is important is that UFC will need to change its payment practices in the future knowing that its fighters can band together and file further lawsuits. As much as damages, plaintiffs are seeking structural changes in the way that they are paid. This ruling increases their chances of better pay in the future.
The Fighters Accuse UFC of Buying Out Competitors
Here, UFC is accused of dictating unfair terms of payment to its fighters. UFC is alleged to have used anticompetitive practices to drive other competitors out of business. These other companies could have bid against the UFC for talent and driven up fighters' salaries. Instead, UFC fighters were in the position of having to take what they have been offered and lost the ability to get other pay packages that could compensate them more. For its part, UFC claims that there are still other competitors in the marketplace that could still bid for talent. However, the fighters point to competitors such as Pride, WEC and Strikeforce that were all bought out by UFC. There is little question that UFC is the dominant organization in the field and would seemingly have some power over fighters' wages.
This ruling is not entirely a surprise. In a September hearing, the judge in the case indicated that he may rule this way. His order formalizes his verbal opinion and allows the case to proceed. UFC will still try to appeal the class certification to a higher court, and has a few more arrows in its quiver before it really starts to begin settlement discussions. Usually, antitrust settlements do not even begin to pay damages beyond the initial amount to plaintiffs. Instead, the defendants end up paying a fraction of the original damages. For the UFC fighters, this would mean a total payment on the order of roughly $300 million.
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