Zuffa vs. Couture: A Landmark case for MMA?

by LR 1/15/2008 12:59:00 PM

The long awaited lawsuit that would either sink Randy Couture's aspirations of fighting Fedor Emelianenko or would expose the giant of its faulty ways. Zuffa filed a lawsuit on Monday in the Clark County District Courthouse claiming that Randy Couture made comments about the UFC and its senior management that led to “irreparable damage”. The lawsuit also outlines that Couture breached his contract.

According to the Las Vegas Review-Journal, the lawsuit will seek damages in excess of $10,000, and that the amount of both compensatory and punitive damages would be proven in trial. Zuffa will also seek an injunction on Couture that would restrain him from participating in any way in any promotion competing against the UFC.

Oddly enough, many fans feel that Couture doesn't stand a chance in this real life David vs. Goliath court battle. Zuffa has more money, more lawyers, and more power in this case. They've proven Randy wrong in the past, and have the leverage to do so again. The fact is that people have beaten the giant in the past, and this case may be no different.

Couture's no-compete clause could be an unenforceable, courts rarely force an individual to fulfill a contract, a court most likely won't be able to stop him from venturing to another country to fight, and Zuffa is probably putting themselves under the microscope rather than Couture. Inconvenience, yes... but a loss, not entirely true.

Champion's clauses

One of the more interesting topics of this case will be the terminating circumstances of his contract. Adam Swift at MMAPayout.com had this to say in his Sherdog posting back in October:

Sherdog.com has confirmed the existence of a so-called champion's clause, which provides that "if, at the expiration of the Term, Fighter is then UFC champion, the Term shall be automatically extended for a period commencing on the Termination Date and ending on the earlier of (i) one (1) year from the Termination Date; or (ii) the date on which Fighter has participated in three (3) bouts promoted by ZUFFA following the Termination Date ("Extension Term"). Any references to the Term herein shall be deemed to include a reference to the Extension Term, where applicable."

The champion's clause is the main factor here. It will extend his contract for another year. It is safe to say that Zuffa wouldn't allow Couture to fight three fights before that year is up. We all know how they deal with fighters who are nearing their contract deadline.

It is highly probable that this clause was the reason behind maintaining Couture as the current champion. By keeping him champion, he will have had his contract extended for another year, squashing hopes of Fedor vs. Couture even more.

No-compete clause

There is also a no-compete clause within Couture's contract. The lawsuit cited that Couture breached a stipulation in the contract that a fighter could not be in “direct or indirect competition” with the UFC for a period of 12 months following his termination.

This is where things will become very tricky. Typically, no-compete clauses can only last a specific amount of time. In this case, one year is the term, but Couture's contract has yet to terminate either. No-compete clauses can generally fall on a line in contract law known as unconscionability. The longer the term of no-compete, the more likely it is that a judge may see the clause as unenforceable because of the length of time that the person would be unable to work for other companies inside his/her own expertise. This falls under the judgment of the court and whether or not the clauses are deemed “shocking to the conscience of the court”. Swift also cited this clause which would most likely be deemed unenforceable:

For all practical purposes, sub clause (i) allows Zuffa to retain the rights to a retired fighter in perpetuity. Sherdog.com has confirmed that this clause does not appear in every Zuffa contract; it is believed to be reserved for top fighters.

The term of the contract may also be extended indefinitely for any period when a fighter is "unable, unwilling or refuses to compete or train for a Bout for any reason whatsoever."
 

Although not an example of a No-compete clause, it is an example of the extreme nature of a clause that would most likely be voided. The length of the contract in which the fighter is now put through is infinite, and most courts will deem those contracts unenforceable.

Unreasonable terms and clauses leading to duress

Another defense would be to prove that the contract clause will cause Couture unreasonable duress. Since he would be unable to work with any promotion in any way for a specific term, his capability of living in the same capacity that he has been would be severely diminished. This is usually deemed unacceptable to the courts.

If you want a comparison case, check out Brock Lesnar's lawsuit against the WWE back in '04-'05. WWE and Lesnar eventually settled, but it was disclosed that his no-compete clause was until June 2010, an unbelievable amount of time. The case was settled as of June 12, 2006, after nearly 3 years of back and forth lawsuits and legal hassles.

Couture has other problems as well. Publicly disclosing contract figures and agreements breaks the confidentiality agreement that he signed when he signed the contract. This is deemed as a breach of contract as well.

Courts and contracts

Couture has other things in his favor besides what happened with Brock Lesnar. Courts generally do not force an individual to fulfill a contract because an individual has already refused to do so in the first place. Even in the consumer marketplace, if you bitch and moan enough, you can get out of your cell phone plan or any other consumer contract you may have.

Courts usually penalize the individual that has breached the contract monetarily. It is unlikely that Couture will avoid any fines, but fines are a much smaller problem compared to a lengthy injunction.

Tables turning

There are some other pieces of information from the past that may come to light in this case as well. Since Couture's original claim was that he wasn't being paid correct bonuses from his contract, it could be his prerogative to provide proof of that. If he can provide proof that contradicts Zuffa's claims, the contract could be deemed a misrepresentation and voided. This was mentioned in a previous article here at MMA-Analyst.com.

So, what happens?

Oddly enough, Zuffa could be on their heels in the coming months. Their contracts will become the spotlight in this case, and they could simply try to settle with Couture much like Lesnar did with the WWE. Zuffa may not want to risk exposing their contract to scrutiny from a judge who could deem it unenforceable. If found to be unenforceable, Couture would have dealt a huge blow to the contracts that Zuffa had written for its other fighters.

Time will tell, but one thing is for sure... Couture better have some backing because this case will most likely see an appeal and a year or two. We'll be lucky if we see Couture vs. Fedor at all. Unless the judge deems the contract voided within the first few months of this case, get ready for the long haul.

If Couture manages to prove the contracts to be unenforceable however, this would be a landmark case for MMA fighters. It would open up contracts to better terms and hopefully a bit more freedom.

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Randy Couture | UFC



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Comments

January 15. 2008 21:03

It's interesting to note, as MMAPayout's Adam Swift has, that Zuffa's lawsuit against Couture only mentions his employment contract with Zuffa (ie, commentating duties), not his promotional contract (ie, fighting). Even though all of Zuffa's public statements up to this point have been all about the fighting contract, the lawsuit itself doesn't allege that he breached his fighting contract, it only alleges that he breached his employment/commentating contract.

And by Zuffa's own admission in the lawsuit, he does have the right to resign from his employment contract and then work elsewhere following a one-year period from the date of his resignation, so that would only tie him up contractually through October 2008, which is the date that Couture has been publicly citing all along as the date when he believes he'll be contractually free and clear from the UFC. According to the detailed article by Adam Swift, there is nothing in the lawsuit talking about the promotional contract (ie, the fighting contract) at all, which would mean that there's nothing in the lawsuit disputing that October 2008 timeframe.

What is in the lawsuit, however, is Zuffa's attempt to get an injunction that would serve as a temporary restraining order to prevent Couture from "competing with the UFC" during that time period, and that would include fighting for any other organization. We've known for months that Zuffa's legal position is that they're going to do everything in their power to prevent him from ever fighting for another organization, so ultimately what they want here is a temporary injunction leading to a more long-term injunction.

By only focusing on the commentating contract and not the fighting contract in this initial lawsuit, what they've done is basically make a strategic decision to try to attain their end-goal here (which is an injunction preventing Couture from fighting anywhere else), without having to actually claim or prove a breach of contract on his actual fighting contract. If a judge agrees with the case that they've laid out, they could theoretically get an injunction that prevents Couture from fighting without ever even directly challenging his right to fight elsewhere after a certain date.

The reason this is vitally important is because it gives them the chance to potentially get what they're ultimately seeking (an injunction that prevents Couture from fighting elsewhere) without having the legally questionable aspects of their fighting contracts potentially thrown out of court. (In particular, the de-facto no-compete-clause-for-life would likely never hold up in any court, and the so-called champion's clause would be unlikely to hold up in court very well, either, since it didn't hold up very well in the BJ Penn lawsuit.)

If they had sued Couture directly on the basis of a claimed breach of contract on his promotional/fighting contract, then they'd be seeking what they ultimately want, but they'd be doing so at the risk of getting some of their key contractual clauses thrown out of court and declared invalid, which would affect a lot of other UFC contracts.

By only suing on the basis of the employment/commentating contract for now, they're still seeking the injunction that they ultimately want, but without the risk of having to put the aforementioned contractual clauses under legal scrutiny.

I would expect that when or if anything goes poorly for Zuffa's side in this legal case, or it looks like there's a good chance they're not going to be getting the injunction that they're seeking via this particular lawsuit, then at that point you can expect another lawsuit to be filed with the full gamut of legal claims about Couture's actual fighting contract. What has happened up to this point has essentially just been a gamble to see if they can get that injunction without having to subject all of their fighter contractual clauses to legal scrutiny.

Ivan Trembow us

January 15. 2008 21:03

As for the actual merits of the case on whether the IFL thing is a violation the no-compete clause in Couture's employment contract, it would be a fairly blatant violation of Couture’s no-compete clause if he was actually the coach of that team in the IFL, but he’s not, nor was he ever scheduled to be. Shawn Tompkins is. The only potential issue there is the fact that the word “Couture” is in the name of the gym that Shawn Tompkins coaches out of (ie, “Team Xtreme Couture”). This could be a non-issue if they just change the name of the IFL team to “Team Tompkins,” with the same coach that it was always going to have: Shawn Tompkins.

Ivan Trembow us

January 16. 2008 12:35

Good points Ivan.

I read today that this contract issue was referring to the employment contract, but I do agree with you in that the UFC is definitely looking for the injunction to stop Couture from competing with the UFC in fighting along with anything else.

My thinking is that the promotional contract will most likely be up for a lawsuit as well. Maintaining that Couture is champion is only a precursor to that type of lawsuit.

We won't see much of these arguments I mentioned in this article since my article specifically hit on points pertaining to the promotional contract, but I will say that this doesn't look good for Couture.

By having his gym's team in the IFL with his name on the team, it should be noted that this is direct competition.

Adam Swift's article at Sherdog says this:

"any Couture-associated "business enterprise" is prohibited from "promoting or producing events or programming related to unarmed combat, developing products or services related to unarmed combat, or otherwise conducting any business relating to unarmed combat."

To me, that says it all. It was also noted in the article that Zuffa claims more than just this incident as a breach in contract. If the lawsuit only pertains to the employment contract, Couture has a tough battle, but in the end, the consequences may not be that harsh. I imagine a fine would be in order, and the court would void the contract, although they may still make him abide by the no-compete clause or slap a small injunction on him for a time period.

LR us

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