The UFC Suppressed Fighters' Wages Faces a Class-Action Antitrust Lawsuit
The Ultimate Fighting Championship has faced a new challenge. The federal judge from the U.S. District Court of Nevada, Judge Richard J. Boulware, has granted class-action certification for the Cung v. Zuffa LLC case.
The fighters for the Ultimate Fighting Championship have won a great victory by overcoming this roadblock, which went into effect on Thursday. Nate Quarry and Cung Le Jon fitch filed the original antitrust lawsuit in 2014.
Allegations of Financial Corruption
The fighters argue that the UFC violated antitrust laws by engaging in unfair competitive practices. UFC took advantage of the competition through monopoly. The MMA was against the helm of the UFC because they engaged in exclusive long-term contracts, which prevented elite fighters from obtaining exclusive deals on their own in the open market.
The monopoly included controlling the MMA by leaving out the competition, buying their businesses, and then shutting down their promotions.
Because there was not much competition, the elite fighters were paid less than what they could have earned in an open, free market. UFC bought out the competitors, Strikeforce, PFL, WEC, and Pride, stifling the market.
Cung Lee and the Bout Class
Cung Lee mentioned that this is a great win for all elite UFC fighters. These include fighters in the present, the past, and the future. The UFC has made significant profits from taking advantage of the representatives who make their organization a success.
Elite fighters did not receive their due. They lost millions in compensation for every year of service. Judge Boulware made the right decision. All UFC fighters can now be included in the class-action antitrust lawsuit.
The new “bout” class can move forward, starting this Monday. The class members will include any professional athletes who competed professionally in UFC events that MMA promoted. These are fighters from events broadcasted on the airways or took place in live arenas inside the U.S.A. from December 16, 2010, to June 30, 2017.
By current estimates, the plaintiff class includes approximately 1,200 certified fighters.
However, Judge Boulware has not certified the “identity class.” UFC used the likeness of elite fighters during a period of seven years who may become part of the litigation lawsuit at a later time.
Fighter Nate Quarry wanted to be mentioned in the “identity class.” He said in a statement that a competitive market would let elite fighters be paid what they are really worth. The judge’s decision would re-establish a more competitive marketplace.
The lawsuit has brought many deceptive UFC practices to light. For the past 25 years, class members saw how the UFC split revenues unfairly and used coercive tactics when negotiating contracts.
The antitrust lawsuit has changed forever the way the MMA conducts business. Judge Boulware could have decided not to allow the case to proceed, preventing a rich treasure trove of the UFC financial information from being disclosed publicly.
The plaintiffs are not just seeking damages anywhere from multimillions to several billion, but they want the UFC to stop stifling the competition and divulging in anticompetitive activities. However, if the UFC loses this battle in court, the lawsuit could cost the organization $5 billion.
UFC pays its athletes less than other professional sports organizations, like the NBA, NFL, and the NHL. Those organizations typically split 50/50 of the promotional revenues with their athletes. On the other hand, the UFC pays its fighters less than 20% of all the revenue streams.
Calculated over several years, the revenue splits come up to the amount of $1.6 billion. Nevertheless, in an antitrust lawsuit, the damages are tripled. This could cause the UFC to pay its fighters closer to $5 billion, causing the organization financial distress. More than likely, though, this is probably not going to happen, as the UFC will contest every action of the court.
UFC lawsuit faces many obstacles before the case reaches the trial phase. The UFC will contest the forming of the class-action lawsuit. Their lawyers have already filed a motion asking the judge to dismiss the case.
If that fails, the UFC may want to settle the case rather than risk taking the case to trial. Court experts say that most antitrust lawsuits usually settle at 19% of damages. The 1,200 fighters could collectively get settlements in the range of $300 million.
The UFC would have to change its business model to keep from alienating and signing new fighters. The plaintiffs would also want structural changes to the organization and a ban against the long-term contracts.
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