UFC Forced To Disclose Documents Showing Negotiating Business Strategies in Anti Trust Suit

Posted: February 21, 2017 in Uncategorized

Reasons for judgement were released last week in the ongoing anti-trust lawsuit against UFC parent company Zuffa ordering disclosure of various documents that “contain Zuffa’s negotiating positions and business strategies and decisionmaking.”

In the recent judgement (Le v. Zuffa) Zuffa tried to hold back 12 documents from production arguing they were subject to attorney-client privilege.  The court largely disagreed ordering production of 11 of the 12 disputed documents which deal with contract negotiation strategy and clothing sponsorship issues.  In reaching this decision Magistrate Judge Peggy Leen provided the following reasons:

The court carefully reviewed the documents, considered the context of the communications in which various individuals who sent or received the documents was involved, and found Zuffa simply had not met its burden of showing the documents were privileged. The summary merely recites what the fighter, through counsel, was requesting in contract negotiations. The summary contains no legal analysis or advice, nor do the emails which forward information about what the fighter was requesting, and comment on whether Zuffa should agree or disagree. The court finds these documents contain Zuffa’s negotiating positions and business strategies and decisionmaking, and are not attorney-client privileged communications. The documents involve discussions, and requests for input on business decisions involvin contract negotiations with the fighter, express the business implications of setting precedent in negotiations with others, and comment on whether proposed terms were reasonable or ridiculous, and/or whether certain requested terms had been given to any other fighter in the past.

Most of the Mersch memo contains comments about whether Zuffa could or should agree or “push back” on proposed changes requested by the fighter rather than legal analysis or discussion of the legal ramifications of the fighter’s proposals. However, portions of Mr. Mersch’s memo to Mr. Fertitta, read in context, contain his legal analysis of existing contract terms and the legal consequences of agreeing or disagreeing with what the fighter’s counsel was proposing. Although the memo does not specifically use terms or phrases such as “this is my legal advice” or “this is the legal effect” of what the fighter’s counsel is requesting, legal analysis of the proposed terms is evident. The court will therefore require that the document be produced to Plaintiffs as redacted below.

The second set of documents are emails exchanged between Zuffa’s Vice President of Licensing and Merchandising, and Executive Vice President and General Counsel during the relevant time period. The emails involve discussions about a clothing line company promoting its line at UFC events which had also entered into an agreement with a national retailer to sell UFCrelated clothing. The email chain starts with a newspaper article commenting on what the clothing line company was doing and contains internal business discussions about Zuffa’s licensing and sponsorship decisions and strategies. The exchanges describe what Zuffa was doing, what various executives thought it should be doing, whether a change in the relationship with the clothing line company would impact the compensation of one of Zuffa’s fighters who had an agreement with the company, the fighter’s likely response should Zuffa change the arrangement, and comments Zuffa should be developing its own brand to maximize its revenue potential. Zuffa has not met its burden of showing these emails were to solicit or receive legal advice. Rather, the documents discuss business positions, strategies, options Zuffa had for addressing the situation and potential business consequences of various alternative courses of action.

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