Thoughts and Questions on the Nate Diaz Lawsuit

Earlier this week it was reported that MMA fighters Nate Diaz and Leslie Smith along with lawyer Sam Awad were being sued for alleged breach of contract along with other claims.

I have had a chance to review the Plaintiff’s petition (h/t to Marc Raimondi for providing me with a copy) and a few questions come to mind.

The lawsuit, in a nutshell, claims that Diaz retained the Ballengee Group, a self-described outfit that “represents Mixed Martial Arts Fighters, Professional Golfers, and Professional Baseball Players, among other groups, and offers a wide array of services for their clients” to work as Diaz’s agent, that they indeed did work as his agent and ultimately were not paid for their services.  Similar allegations are made against Smith.

The alleged services include the following

  1. Advised and supported Nate in connection with the Rafael dos Anjos UFC bout and the Michael Johnson UFC bout.
  2. Negotiated, at Nate’s request, his Promotional and Ancillary Rights Agreement with Zuffa, LLC and the following UFC bout agreemetns: 1) Conor McGregor 1 (UFC 196); and Conor McGregor 2 (UFC 200).
  3. In or around February 2014, after Sam Awad recommended changes to UFC 196’s Promotional Agreement, the Bellangee Group negotiated amendments to the Promotional AGreement at Nate’s instruction and demand.
  4. After Conor McGregor was pulled from UFC 200, on Nate’s behalf and at his request, the Ballengee Group attended negotiations in Stockton, CA in May 2016.  These negotiations were to finalize the terms for the UFC 202 bout between Nate and Conor McGregor.

The lawsuit states that Diaz terminated the Ballengee Group’s representation of him on or about July, 2016.

What is interesting, however, is the lawsuit does not mention how much Diaz agreed to pay the Ballengee Group or what specific payments have not been made.

It also is unclear if Diaz ever signed a contract with the Ballengee Group with the lawsuit only noting that, after Nick Diaz retained the Group and referred Nate that

Both Nate and Nick represented and assured the Ballengee Group that, in exchange for its services as Nate’s agent, he would compensate The Ballengee Group on the same terms and as set forth in the Nick Diaz Agreement and that The Ballengee Group would, if such terms were agreeable to it, represent Nate on all future bouts and matters.  Based upon Nate’s solicitation, and his representations, assurances and agreements, The Ballengee Group agreed to represent Nate, and he agreed to retain The Ballengee Group, as his agent, on a goinog forward basis (the “Nate Diaz Agreement”).

That’s a lengthy paragraph to use if there is a simple contract.  It appears, and I am speculating, that Nick signed a contract and the Ballengee Group is simply saying that they had a verbal agreement with Nate under similar terms.  Lawsuits on verbal contracts can succeed but they create new layers of uncertainty.

Next, it is unclear exactly how or how much Nate allegedly agreed to pay the Ballengee Group other than “on the same terms as set forth in the Nick Diaz Agreement“.

If the lawsuit is alleging a cut of his purse from the various bouts referenced above there could be difficulty in success.

Going through the alleged services it worth noting that

  1.  Diaz v. RDA took place in Arizona
  2. Diaz v. Johnson took place in Florida
  3. Diaz v. McGregor 1 took place in Nevada
  4. Diaz v. McGrgor 2 took place in Nevada

To the extent that the Plaintiff is seeking a portion of his earnings from these bouts we run into regulatory issues of each governing jurisdiction.

To take Nevada as one example, the State regulates the relationship between fighters and managers. Specifically a manager is defined to include anyone that has”any financial interest in the unarmed combatant’s management or earnings from contests or exhibitions.”. If the Ballengee Group is seeking to take part of Diaz’s purse  for the McGregor bouts they seem to meet this definition.

The relationship is regulated with the following requiremetns:

  1.  The Commission may refuse to honor a contract between a manager and an unarmed combatant unless it is filed with the Commission at least 72 hours before a scheduled contest or exhibition and it complies with the requirements of this section. The Commission will not honor a contract between a manager and an unarmed combatant if the term of the contract is for a period of more than 4 years.

     2.  A manager may not contract to receive the services of an unarmed combatant under his or her management for a contest or exhibition which is scheduled to take place after the expiration of the contract.

     3.  A contract between an unarmed combatant and a manager that is executed and notarized on a form provided by the Commission may provide for voluntary binding arbitration of disputes by the Commission. The arbitration must be conducted by a representative of the Commission appointed by the Chair. The arbitration must be conducted pursuant to the Uniform Arbitration Act of 2000, NRS 38.206 to 38.248, inclusive.

     4.  The Commission may honor a contract that is not executed and notarized on a form provided by the Commission if the terms of the contract comply with the requirements of this section. If the terms of the contract exceed the limitations contained in this section, the Commission may honor the contract to the extent of those limitations.

     5.  A manager may not negotiate or sign for contests or exhibitions for an unarmed combatant who is not under contract to the manager. An unarmed combatant who does not have a contract with a licensed manager must sign for his or her own contest or exhibition and sign the receipt for his or her own purse.

     6.  A manager or managers may not participate separately or collectively in more than 33 1/3 percent of the earnings of the unarmed combatant in the ring.

     7.  An interest, other than a monetary interest, which an unarmed combatant or a manager has in a contract may not be assigned unless:

     (a) A written assignment, signed by the unarmed combatant and the manager, is submitted to the Commission; and

     (b) The Commission approves the assignment.

If there is no written contract between Diaz and the Ballengee Group there may be difficulty in successfully going after Diaz’s Nevada purses.  Similar analyses would likely be made in other jurisdictions.  As Ronda Rousey’s former manger learned, Athletic Commission regulations have teeth and failing to abide by them can lead to a loss of compensation.

Perhaps there is a written contract and the above pleadings are simply vaguely worded.  If not, however, it appears the Plaintiff will have some challenges in aspects of this lawsuit.

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