Court – Promoters Have No Standing To Sue Using Ali Act

Posted: January 27, 2017 in Uncategorized

This week a lawsuit alleging that Al Haymon and the Premier Boxing Championships were conducting business in an anti-competitive way was dismissed by the US District Court, Central District of California.  For a great breakdown of this decision along with what it may mean for the UFC anti-trust lawsuit I recommend this piece by Paul Gift.

One interesting development are the Court’s comments on the scope of the Ali Act -legislation which rarely receives judicial scrutiny.

The Plaintiff promoter alleged that one of the anti-competitive actions of the Defendant promoter was acting as as both a manager and promoter in violation of the Ali Act.  The court found that even if this allegation was true it was of no assistance as the Ali Act can only aid boxers and government agencies.  Other promoters simply do not have standing to allege harm.  In dismissing this aspect of the Plaintiff’s claim District Judge John Walter provided the following reasons:

Plaintiffs contend that Defendants have violated the Ali Act by acting as both a manager and promoter of Championship-Caliber Boxers, and that this violation has given Defendants an unfair advantage over their competitors. The Ali Act, enacted in 2000, requires a “firewall” between managers and promoters. It makes it unlawful for “a promoter to have a direct or indirect financial interest in the management of a boxer;” or “a manager—(i) to have a direct or indirect financial interest in the promotion of a boxer; or “(ii) to be employed by or receive compensation or other benefits from a promoter, except for amounts received as consideration under the manager’s contract with the boxer.” 15 U.S.C. § 6308.

A plaintiff may only pursue an antitrust action if it can show “antitrust injury,” i.e., “‘injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.’” Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990) (quoting Brunswick v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977)). The four requirements for antitrust injury are: “(1) unlawful conduct, (2) causing an injury to the plaintiff, (3) that flows from that which makes the conduct unlawful, and (4) that is of the type the antitrust laws were intended to prevent.” Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of California, 190 F.3d 1051, 1055 (9th Cir. 1999).
“Injury of the type antitrust laws were intended to prevent” means harm to competition, not harm to individual competitors. See Brunswick, 429 U.S. at 488 (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)) (“The antitrust laws . . . were enacted for ‘the protection of competition not competitors.’”).

Plaintiffs cannot establish antitrust injury based on alleged violations of the Ali Act because the only parties with standing to assert a violation of the Ali Act are boxers or government agencies. See 15 U.S.C. § 6309(a). As such, any alleged harm to Plaintiffs would not “flow[ ] from that which makes defendants’ acts unlawful.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977).  Indeed, the specific provision that Plaintiffs claim that Defendants violated, 15 U.S.C. § 6308, was intended to protect boxers from promoters and managers. As the Senate Report states:

The final protection for boxers established in this section is the prohibition of conflicts of interests between promoters and managers. Most boxers have limited educational backgrounds and, as the top promoters in the sport readily concede, are no match for experienced promoters during contractual discussions. While the role of managers has been diminished in the sport over the last decade, it remains essential that managers, if a boxer does hire a manager, that the manager serve and protect the interests of the boxer. They should not be serving the financial interests of the promoter, while simultaneously taking a 33% earnings cut from the boxer for biased representation as manager. It is not plausible for a boxer to receive proper representation and counsel from a manager if the manager is also on the payroll of a promoter. This is an obvious conflict of interest which works to the detriment of the boxer and the advantage of the promoter. The Committee received testimony about instances wherein boxers had suffered significant career and economic injury due to their manager’s clear conflicting interests. A manager must be a determined advocate for the boxer’s interests and not be influenced by financial inducements from a promoter. This provision tracks a similar regulation of many State boxing commissions.

S. REP. 106-83, at 11 (1999). The Court concludes that the conflict of interest provision in the Ali Act was not intended to compensate promoters for lost profits.

Moreover, absent some other antitrust violation (such as tying, exclusive dealing or predatory pricing), Plaintiffs’ claimed injury as a result of the Defendants’ alleged violation of the Ali Act would be exactly the same as if a new competitor entered the promotion market. In other words, Plaintiffs’ injury was caused by conduct that was beneficial to competition in the promotion market. “If the injury flows from aspects of the defendant’s conduct that are beneficial or neutral to competition, there is no antitrust injury, even if the defendant’s conduct is illegal per se.” Rebel Oil, 51 F.3d 1433.

Accordingly, the Court concludes that Plaintiffs have failed to demonstrate the requisite antitrust injury as a result of Defendants’ alleged violations of the Ali Act.

The full decision can be found here – golden-boy-v-haymon-full-summary-judgement

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