UPDATED with TKO response : UFC parent TKO slammed a ruling today by a Nevada judge rejecting its proposed settlement with former fighters in a class action lawsuit.
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“We obviously disagree with this ruling and believe it disregards the expertise of counsel from both sides, as well as that of an accomplished and expert mediator – all of whom have decades of experience in antitrust case law,” the Endeavor-owned company said in a statement this afternoon,” insisting that the $335 million settlement announced in the spring is in the best interest of athletes.
Nixing it “prevents the athletes from receiving what they have argued is in their best interest and unwinds an extensively negotiated settlement that, in the plaintiffs’ counsel’s own words, ‘would far surpass the typical antitrust class action settlement’ and ‘is an excellent result for the Settlement Classes by all traditional measures.’
“Additionally, by taking the unusual step of denying the settlement at this preliminary approval stage, the Judge is also denying the athletes their right to be heard during this pivotal moment in the case,” TKO said after Judge Richard Boulware of U.S. District court in Nevada denied the settlement earlier today.
It was unveiled in late March just before an April trial was set to start. The judge today also set a new trial date of October 28 in a setback to the Dana White-led mixed martial arts league.
A fuller written order with his reasoning should be issued in coming days.
There are two separate class action suits pending. Le v Zuffa — the class consolidating five similar lawsuits — is the one now tentatively set to head to court. A status conference for both suits, where the trial date will be finalized, is set for August 19. A motion to dismiss the complaint in Johnson remains pending and no trial date has been set, TKO noted in an SEC filing today.
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TKO shares, which fell earlier in the session after the ruling, are up by a hair just before market close at about $110.
TKO said it’s “evaluating all of its options, including, without limitation, an appeal, and has also initiated discussions with plaintiffs’ counsel, who have expressed a willingness to engage in separate settlement discussions for the Le and Johnson cases.”
The lawsuits were launched in 2014 and 2015 by fighters claiming that the UFC violated the Sherman Antitrust Act by abusing its monopoly power to limit fighters’ pay. The UFC and TKO rejected the claim. The company said when it announced the settlement that it planned to pay in tax deductible installments.
A number of the former fighters behind the suit were pleased with the settlement. However, news reports today indicated that the judge may also be concerned about protections for current fighters going forward.
The initial suit against UFC alleged an “overarching anticompetitive scheme to maintain and enhance its (a) monopoly power in the market for promotion of live Elite Professional Mixed Martial Arts (“MMA”) Fighter bouts, and (b) monopsony power in the market for live Elite Professional MMA Fighter services. It claimed UFC eliminated “competition from would-be rival MMA Promoters by systematically preventing them from gaining access to resources critical to successful MMA Promotions, including by imposing extreme restrictions on UFC Fighters’ ability to fight for would-be rivals during and after their tenure with the UFC. As part of the scheme, the UFC not only controls Fighters’ careers, but also takes and expropriates the rights to their names and likenesses in perpetuity. As a result of this scheme, UFC Fighters are paid a fraction of what they would earn in a competitive marketplace.”
The sides will have a status conference on August 19.
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