The out-lawyering of Canelo Alvarez continues

By Scott Shaffer

10/10/2020

The out-lawyering of Canelo Alvarez continues

Attorneys for DAZN continue to outmanuever attorneys for Saul "Canelo" Alvarez in California courts. Alvarez's $280 million lawsuit to free himself from DAZN and Golden Boy is now a month old and has gotten nowhere, as DAZN's newly filed removal papers bought the case right back where it started, federal court in the Central District of California. To recap: Alvarez sued in federal court but failed to identify a proper basis for filing in federal court instead of state court. The federal court asked Alvarez's attorney to refile the case in two weeks. During that two-week period, the parties attended mediation, but could not resolve their differences, so Alvarez refiled the case in state court. Now DAZN has removed the case back to federal court and signalled that its next move will be to seek dismissal because the contracts at issue require the parties to go to private arbitration rather than any court (state or federal). A DAZN motion to dismiss will likely be filed this week. Golden Boy will probably file a motion to dismiss of its own. It is unclear why Alvarez's attorneys would file the same lawsuit on two separate occasions and wasted Alvarez's valuable time if both relevant contracts contain arbitration clauses, and even the process of letting the court decide whether the arbitration cluases are enforceable will likely take at least three months. Alvarez has not fought since November 2019.
 
Here is what Alvarez's attorney will have to overcome in order to avoid having the lawsuit dismissed in favor of arbitration: According to papers filed by DAZN's attorney, the federal court "has jurisdiction over this action under the Federal Arbitration Act [a federal law]... The DAZN contract [with Golden Boy] contains dispute resolution provisions which state that: '(a) This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and interpreted in accordance with the law of England and Wales... (b) any dispute, controversy or claim arising out of or in connection with this Agreement, whether in tort, contract, under statute or otherwise, including any question regarding its existence, validity, interpretation, breach or termination shall be finally resolved by arbitration under the Rules of Arbitration of the International Chamber of Commerce... The seat of the arbitration shall be New York, NY.”
 
Although more details of the Alvarez's greivance appear below, the key fact is that Alvarez is suing DAZN but has no contract with DAZN. The contract is between DAZN and Golden Boy, with Alvarez having a separate contract wth Golden Boy. Alvarez claims he is a third-party beneficiary of the Golden Boy-DAZN contract, but that is a very difficult legal argument to win. DAZN's papers neatly summed up the dispute as follows: "This lawsuit arises out of a three-way dispute between a boxer, plaintiff Saul "Canelo" Alvarez; his promoter, Golden Boy Promotions and its affiliates; and a broadcaster, DAZN, consisting of four entities. The parties’ relationship is governed by two separate contracts: one between Alvarez and Golden Boy, governed by the law of the State of Nevada, and one between Golden Boy and DAZN, governed by the law of England and Wales. Each of these contracts contains an arbitration provision requiring the parties’ disputes be resolved by arbitration." 
 
 
OCTOBER 7th UPDATE: Here is a short statement from the WBC on a possible super middleweight fight between Canelo Alvarez and Avni Yildirim of Turkey: "Understanding the current situation of WBC [middleweight] franchise champion, Saul 'Canelo' Alvarez, the WBC in good faith extends [for] 15 days and for a final time, the purse [bid] ceremony for the Alvarez vs Yildirim fight, for the vacant WBC super middleweight title. The WBC will inquire [about] the definite status in this period and in order to make a final determination and ruling on the division." Alvarez has not fought this year, and attempts to get the superstar in the ring before the close of 2020 have repeatedly failed, with Alvarez filing a $280 million lawsuit against his promoter, Golden Boy, and DAZN, the network that owns the right to broadcast his fights.
 
OCTOBER 1st UPDATE: Saul "Canelo" Alvarez is moving forward with his $280 milion lawsuit against DAZN, Golden Boy Promotions and Oscar De La Hoya, but he is doing it in California state court rather than in United States federal court (where the lawsuit was originally filed). In a forthcoming story, Boxingtalk will analyze the additional information alleged in the state court suit. With the new suit pending, the federal court has now dismissed the original lawsuit. Here is what the federal court wrote [slightly edited for ease of reading]: "On September 11, 2020, the Court dismissed the Complaint filed by plaintiff Santos Saul Alvarez Barragan (“Canelo”) and SA Holiday, Inc. for lack of subject matter jurisdiction. In dismissing the Complaint with [permission] to amend, the Court ordered Alvarez to file an amended complaint by no later than September 28th. The Court warned Plaintiffs that the failure to file an amended complaint by that date or to adequately allege the Court’s jurisdiction may result in the dismissal of this action without prejudice [which means the lawsuit can be filed again]. Despite the expiration of the deadline, and the Court’s warning, Alvarez has not filed an amended complaint. As a result, the Court concludes that it lacks subject matter jurisdiction over this action. The Court therefore dismisses the action without prejudice for lack of subject matter jurisdiction."

 

SEPTEMBER 30th UPDATE: The reliable Jake Donovan of Boxingscene reports that Alvarez has filed an amended complaint in state court instead of federal court. 

SEPTEMBER 29th UPDATE: Seventeen days ago, Judge Percy Anderson set a September 28th deadline for Saul "Canelo" Alvarez to refile his lawsuit against DAZN, Golden Boy and Oscar De La Hoya. Judge Anderson set the deadline to allow Alvarez's legal team to correct pleading defects in their legal complaint, which was filed on September 8th. At midnight Pacific time on September 29th, the deadline passed and Alvarez had not refiled the lawsuit. Failure to meet the deadline does not necessarily prevent Alvarez from refiling at a later date, but it does seem to indicate the parties are trying to settle the dispute out of court. Media reports had the parties engaged in private mediation last week. Boxingtalk will continue to follow this story...

SEPTEMBER 20th UPDATE: More than a week has past since a federal court dismissed a $280 million lawsuit filed by world middleweight champion Saul "Canelo" Alvarez's against broadcaster DAZN and promoter Golden Boy Promotions. The amount of work needed for Alvarez's attorneys to refile the complaint is small, so the delay in refiling indicates that negotiations are taking place behind the scenes. Meanwhile, there is one avenue by which Alvarez could seek a relatively big fight while continuing to dispute Golden Boy's exclusive promotional rights. The WBC has rescheduled a purse bid for a fight between Alvarez and Avni Yildirim of Turkey. Such a fight would be for the vacant WBC super middleweight championship [David Benavdez was stripped when he failed to make weight]. The WBC is now saying it intends to hold the purse bid on Tuesday October 6th via open video conference. A purse bid would allow a third party, possibly one financed by Alvarez or some other company flush with cash that wants to enter the boxing business, to win the right to promote Alvarez-Yildirim. It is unknown whether the contract between Alvarez and Golden Boy specficially permits Alvarez to take such a fight, but it is not unusual for promotional contracts in general to permit a boxer to fight for a title on another promoter's card if the boxer signs over a percentage of his purse to his promoter of record. 

So far one promoter, Tuff Boxing, has indicated it will bid for the fight, submitting a registration through a man named Simon Whittle. However, Tuff Boxing does not appear to be a serious promoter for a fight involving an international superstar like Alvarez. Tuff Boxing was advertising its inaugural show for September 5th in Manchester, England, but there are no official results posted, and the show appears to have been closer to a tough man contest than to true professional boxing.

SEPTEMBER 11th UPDATE: Saul "Canelo" Alvarez's $280 million lawsuit against DAZN and Golden Boy was dismissed on a technicality by United States District Judge Percy Anderson in California. The issue is that Alvarez's attorneys named the defendants as if they were corporations, when they are actually limited liability companies. When filing a federal lawsuit, and no federal laws are involved, a complaint must allege where the owners of the limited liability companies are located. The court's dismissal will likely mean that the case will be delayed by only a few days, and Alvarez has until September 28th to correct his complaint with no further repercussions.The Court wrote: "because the Complaint alleges the citizenship of the LLC defendants as if they were corporations, rather than as limited liability companies, the Complaint has not properly alleged the citizenship of those parties... As a result, Plaintiffs’ allegations are not sufficient to invoke this Court’s diversity jurisdiction. Accordingly, the Court dismisses Plaintiffs’ Complaint for lack of subject matter jurisdiction. Therefore, the Court grants Plaintiffs leave to amend the Complaint to establish federal subject matter jurisdiction. Plaintiffs’ First Amended Complaint, if any, is to be filed by September 28, 2020.The failure to file a First Amended Complaint by that date or to adequately allege the Court’s jurisdiction may result in the dismissal of this action without prejudice."
 
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ORIGINAL STORY, SEPTEMBER 9, 2020:
 
Saul "Canelo" Alvarez, boxing's biggest box office draw and a multi-weight class champion, has sued DAZN, Golden Boy Promotions and Golden Boy principal Oscar De La Hoya for $280 million for breach of contract. In addition to the $280 million, the lawsuit seeks punitive damages and, most importantly to boxing fans, a "judicial determination [that] Alvarez is eligible to participate in bouts arranged and promoted by entities other than Golden Boy and broadcast by entities other than DAZN." The lawsuit was filed in United States federal court in the Central District of California, where Golden Boy is based. Although the lawsuit is carefully worded, it appears that the major legal hurdle for Alvarez will have to overcome is that he does not have a contract directly with DAZN. It appears that Golden Boy, as Alvarez's promoter, has the contract with DAZN, and that Golden Boy has a separate contract promising to pay Alvarez the money it receives from DAZN. If that is the case, in order to win his lawsuit against DAZN, Alvarez must prove he is a third-party beneficiary of the DAZN-Golden Boy contract, something that is a lot harder to do in a court of law than it sounds. Generally speaking, there is a legal presumption against third-party beneficiaries and the Alvarez lawsuit did not quote any specific contractual language that would overcome the presumption.
 
The lawsuit admits Alvarez has never seen the DAZN-Golden Boy contract, alleging he repeatedly requested copies from both Golden Boy and DAZN, but both refused to share it with him.
 
Alvarez's lawsuit has some additional legal theories against DAZN, including that DAZN tortiously interfered with the Golden Boy-Alvarez contract as follows: "DAZN's conduct prevented Golden Boy Promotions from arranging, promoting, and paying Alvarez for his bouts as required under the [Golden Boy-Alvarez] Agreement. Due to [this] interference, Alvarez has suffered harm and damages, including, but not limited to, the denied guaranteed payments, lost gate revenue, and opportunities for ancillary revenue associated with bouts, such as sponsorships and apparel revenue."
 
Alvarez also alleges that Golden Boy promised DAZN that it would deliver a third fight between Alvarez and Gennadiy Golovkin even though, says Alvarez, that Golden Boy had no authority to promise such a fight. According to Alvarez, the Golden Boy-Alvarez contract did not require Alvarez to box any specific opponent other than Fielding. Instead, it specified that Alvarez’ opponents would “be mutually selected by [Alvarez] and [Golden Boy Promotions], subject to [Alvarez’] final approval, not to be unreasonably withheld.” Thus, Alvarez believes he was damaged by Golden Boy trying to deliver a third fight between Alvarez and Golovkin, which, before Alvarez left the middleweight division, was one of the most in-demand fights in the sport.
 
Alvarez also alleges he was never told that Golden Boy "had entered into an agreement with DAZN that gave DAZN a role in approving his future opponents. Neither did Golden Boy [...] disclose that they had represented to DAZN that Alvarez would have a bout with Mr. Golovkin in 2019. Golden Boy [...] intentionally failed to disclose that they had made representations and/or promises to DAZN that exceeded or were inconsistent with the terms of the [Golden Boy- Alvarez] contract. Had Golden Boy [...] disclosed that their representations and/or promises to DAZN exceeded or were inconsistent with the terms of the [Golden Boy- Alvarez] contract, Alvarez reasonably would have behaved differently, negotiated differently, and may not have agreed to the [Golden Boy- Alvarez] contract without further protections. Alvarez is informed and believes that DAZN is now using the previously undisclosed representations and/or promises of Golden Boy [...] as excuses for its failure to approve of and pay for Alvarez bouts in the fall 2020 and beyond.
 
All of the following details are based on the allegations contained in Alvarez's complaint, which is his side of the story only, not yet proven as fact and not even evidence. The defendants will have at least thirty days to file answers or motions telling their sides of the story. 
 
In October 2018, Golden Boy and DAZN entered into a contract for DAZN to broadcast boxing matches to be promoted by Golden Boy. The contract also gave Golden Boy additional shows on the DAZN streaming service. According to Alvarez's complaint, the DAZN-Golden Boy contract required DAZN to pay to Golden Boy a license fee of $40 million dollars per bout for ten Alvarez bouts expected to occur in the years 2019 to 2023. Alvarez was not actually party of the negotiations for the DAZN-Golden Boy contract. Instead, Alvarez signed a separate contract with Golden Boy that required Golden Boy to pay Alvarez guaranteed payments totaling $365 million for his next eleven boxing matches: $15 million for the December 2018 bout with Rocky Fielding and $35 million dollars for each of his ten bouts thereafter. The ten bouts were expected to be on or about May 5th and September 15th of the years 2019 to 2023.
 
De La Hoya, Golden Boy's CEO, is named as a defendant because he personally assumed, along with Golden Boy, liability to Alvarez for making all guaranteed payments to Alvarez. The last fight Alvarez participated in was his win over Sergey Kovalev in November 2019, meaning he missed his first fight of 2020 and is about to miss his second unless this lawsuit gets resolved very quickly.
 
In late 2019 and early 2020, the parties began discussions regarding potential opponents and venues for Alvarez’ 2020 bouts. In March 2020, there was agreement regarding an opponent and venue for Alvarez’ May 2020 bout, but that bout was never finalized announced due to the coronavirus pandemic.  In May 2020, the parties resumed negotiations for Alvarez’ 2020 bouts. They discussed holding boxing matches at unusual venues such as the top of skyscrapers to elevate an Alvarez boxing match into a historic event. Both Alvarez and Golden Boy acknowledged that bouts without fans would deprive them of the gate (ticket sales), but agreed that they were willing to forgo that revenue. During these discussions, DAZN inquired if Golden Boy and Alvarez would be willing to accept payment of less than the $40 million license fee for 2020 bouts in exchange for delayed or alternate compensation. Golden Boy and Alvarez agreed they would evaluate such offers in good faith if they were made, but that time was of the essence because Alvarez was ready, willing, and able to fight in both September and December 2020 so Alvarez wanted the bouts to be arranged quickly.
 
Despite repeated promises that an offer was imminent, DAZN failed to make a proposal for several months. When Golden Boy and Alvarez proposed opponents, DAZN refused to confirm that it would broadcast Alvarez’s September 2020 bout or pay the contracted $40 million license fee. On June 24, 2020 – approximately ten weeks before Alvarez’s expected September bout date and the time when Alvarez would need to begin training camp-- Alvarez’s attorney wrote to Golden Boy and DAZN to confirm that Alvarez was prepared to face multiple opponents, but that DAZN and Golden Boy needed to affirm their commitments so that the bout could be finalized, promoted, and his training could commence.
 
In response, DAZN [according to Alvarez's allegations] responded with an anticipatory breach of contract. DAZN stated that it would not pay the required license fee, and provided a series of excuses, including the fact that Alvarez had not fought Gennadiy Golovkin [for a third time] in 2019 and that Golden Boy had not put forth a plan for a second Alvarez fight in 2020. After extended discussions between the parties, [Alvarez admits] that DAZN offered to pay Alvarez and Golden Boy a fraction of the contracted $40 million license fee, part in cash and part in DAZN stock, in advance of a potential initial public stock offering. However, the entire value of the package was substantially less than Alvarez’s contractual guarantee. Throughout the spring and summer of 2020, Alvarez repeatedly asked Golden Boy to explore alternative broadcast options for a fall 2020 bout. Although Golden Boy said it was talking to various broadcasters, it never put forth a plan to pay Alvarez the $35 million it had promised him for each of his fights.
 
Alvarez has fought the first three of his eleven fights under the Alvarez and DAZN Contracts, and says he is owed remaining guaranteed payments of $280 million.