With the UFC receiving an unexpected setback in its $335 million settlement with former fighters, Head of Sports & Entertainment Mohit Pasricha discusses whether this case could set a bold precedent for sporting class actions.
Mohit’s article was published in Law360, 10 September 2024, and can be found here.
By refusing to accept a $335 million settlement agreed between Ultimate Fighting Championship and a group of former fighters, the U.S. District Court for the District of Nevada has delivered an unexpected knock-down requiring all parties to get back into the legal ring early next year.
In late July, U.S. District Judge Richard Boulware rejected the settlement reached in two class actions, Le v. Zuffa LLC, and Johnson v. Zuffa[1] in a dispute over a number of UFC fighters’ ability to negotiate other promotional opportunities. The judge had stated during a previous hearing that he was seeking a “life changing” settlement for fighters who had fought through 10 years of litigation. The ruling stated that the settlement amount that had been agreed between the parties was too low and, as a result, the settlement lodged with the court was rejected.
Prior to this decision, it had been hoped that the offer by UFC’s parent company, the TKO Group, would have resolved the long-standing dispute once and for all. Instead, a trial date has been set for February 2025.[2]
This is a seminal ruling that may have huge ramifications for UFC, a global business that merged with World Wrestling Entertainment in 2023 to form the TKO Group. It also sets a bold precedent within antitrust case law that will undoubtedly affect the sporting world more widely; there is not only the prospect of new claims arising, but also the risk of the floodgates opening on a long line of established antitrust case law.
In March, UFC had agreed to the $335 million sum in response to two class actions that represented about 1,200 former UFC athletes. These fighters had principally claimed, among other matters, that their UFC contracts suppressed their chances of taking advantage of other potentially lucrative options acquired through their sporting fame.
By way of background, there are currently two separate lawsuits, one filed by fighters Cung Le and Nate Quarry in 2014 representing fighters from 2010 to 2017, and a second filed by fighters including Kajan Johnson that represents fighters from 2017 to the present.
Zuffa, the predecessor entity that owned and operated UFC, was also the defendant in five related class actions filed between December 2014 and March 2015, which were consolidated into a single action in June 2015 — Le v. Zuffa.
The lawsuits alleged Zuffa violated antitrust laws by paying UFC fighters far less than they were entitled to receive and thereby eliminating or hurting other mixed martial arts promoters. UFC fighters Le, Quarry and Jon Fitch filed their initial complaint against Zuffa in federal court in the U.S. District Court for the Northern District of California in December 2014; that was subsequently joined by fighters Brandon Vera, Luis Javier Vazquez and Kyle Kingsbury.
On June 23, 2021, Johnson and C.B. Dollaway filed another antitrust class action with similar allegations that UFC engaged in illegal anticompetitive action.
Of the proposed $335 million settlement, 90% was to have been paid to the plaintiffs represented in Le v. Zuffa. Under the proposed settlement, fighters in this case were to receive on average $200,000, with a median recovery of $73,000 and a minimum of $13,000 — with 36 class members to have been paid more than $1 million.
UFC said at the time that they had reached a joint settlement that encompassed both cases. In such circumstances, UFC would have certainly hoped and very much anticipated that this was the end of the matter; unfortunately, none of the parties expected the District of Nevada’s decision, which, as rare as it was, remained fully within judicial discretion.
Following this ruling, which refused the negotiated settlement, UFC publicly announced that it disagreed with the decision. Nonetheless, it was evident from UFC’s public statement that the parties could reach a new settlement agreement — as a result, we would fully expect UFC to engage in new settlement discussions with regard to both class actions.
Plaintiffs in both cases also stated that they too are open to reengaging with UFC over a new settlement or moving forward with the trial. Eric Cramer, an attorney for the plaintiffs, said in a statement that the fighters in the case “respect the court’s ruling” but “are keeping an open mind with respect to a potential new resolution.”
As with any matter that proceeds to trial, there is always litigation risk to be considered and a settlement for both parties would be the most favorable way to resolve the disputes in question.
There is therefore a clear desire for both parties to get back up from the proverbial canvas and continue to build upon the momentum of the settlement position that had already been reached to find a new resolution — one that should avoid the need for a further costly and lengthy trial.
Beyond the high-octane world of professional fighting in the U.S., this case is one that may have far-reaching implications for entities involved in such lawsuits across the sporting world. In addition, this case also serves as an important and emphatic reminder that, regardless of the specific case background, the filing of a settlement does not automatically mean it will be approved or accepted, and it is likely that those involved in future sporting class actions will tread with caution as a result.
Going forward, and with the alarm bells sounded by this recent ruling, it is highly likely that UFC will not want to be exposed to any future litigation risk. The likelihood, therefore, is that a new settlement will be negotiated, as both sides seem extremely keen to avoid being counted out and suffer a defeat at the mercy of a trial. On this basis, both parties are undoubtedly going to remain keen to reach acceptable settlement well in advance of any trial.
In such circumstances, and given the time pressures involved, we may very well see a settlement sum agreed in excess of $1 billion to remove any possibility of a final knockout blow ahead of the next year’s trial.
