Friday night Kevin Iole first reported here that Zuffa, LLC filed a lawsuit against Bellator Sport Worldwide, Pavia Holdings, LLC d/b/a as MMA Agents, Does 1-100, and Roe Corporations 1-100.
I have now had a chance to review the complaint.
In total, Zuffa asserts seven (7) causes of action (as an aside, they only list six (6) causes of action because they have a typo and use the heading “Fifth Cause of Action” twice), including for: (1) violation of the Uniform Trade Secrets Act (against all defendants); (2) civil conspiracy (against all defendants); (3) breach of contract (against Roe and Doe defendants); (4) breach of the implied covenant of good faith and fair dealing (against Roe and Doe defendants); (5) aiding and abetting inducement (against Pavia Holdings), i.e. that Pavia induced Doe and Roe defendants to breach their agreements with Zuffa; (6) conversion (all defendants); and (7) injunctive relief (all defendants).
Zuffa alleges that when it acquired the UFC brand from Semiphore Entertainment Group (“SEG”), i.e. the former owners of the UFC, among the assets it acquired were the intellectual property and confidential and proprietary information that had been developed by SEG.
Since the acquisition, Zuffa alleges that it has continued to develop:
confidential and proprietary business and technical information relevant to its operations including, but not limited to, independent contractor and fighter/athlete information, venue contact and pricing lists, vendor lists, strategic plans, pending projects and proposals, production processes and practices, designs, data and results of research, demographic information, contract and agreement forms, marketing and selling strategies and techniques, long range planning, marketing studies, financial and pricing information, compensation data, trade secrets and the like [].
Zuffa claims that this property constitutes “extremely valuable business assets developed [] over the years” and that it has expended significant time, effort and money protecting these assets.
Zuffa alleges that Pavia (and MMA Agents), as a “self-professed agent for 40 current and former Zuffa fighters, []would have access to various agreements entered into between its clients and Zuffa” and that Pavia allegedly turned these agreements over to Bjorn Rebney, Bellator’s founder and CEO.
Zuffa’s complaint provides the text of an alleged email from Rebney to Pavia (cc to Tim Danaher), which according to the complaint, provides in part as follows:
Tim and I know that you’ve been great about sending us ‘All’ of the seminal docs . . . Please list each in terms of what it is for and how the UFC uses them/implements . . . [t]hen I’m going to have our team Monday re-type them and we will sufficiently alter them such that they will appear to be ours and not theirs.”
Zuffa admits that it cannot be sure what “all” of the seminal docs are but speculates that the agreements include those containing its allegedly confidential and proprietary information.
The crux of the complaint is Zuffa’s allegation (upon information and belief) that MMA Agents, through Pavia, and Bellator have conspired to misappropriate Zuffa’s confidential information and trade secrets in an effort to unfairly compete against Zuffa in the marketplace.”
For your reference, here is a link to the Trade Secrets (Uniform Act).
According to Kevin Iole, Bellator’s attorney, Patrick English, had the following to say about the allegations:
“I’ve looked at the paperwork, and I understand what’s going on here, and it is literally much ado about very little,”
“There were documents sent by Mr. Pavia to Bellator, but they are not of a competitive nature and they would give no advantage or disadvantage to the viewer. The bulk of them in no way, shape or form would be considered confidential and are not what I consider to be documents that Zuffa should be concerned about.
“I did attempt to reach out to Zuffa [Thursday] and, unfortunately, have not gotten a return call. It happens that Bellator has not used any of the documents in any case.”
Maybe Bellator’s attorney is right and whatever was turned over contains no confidential information, but he does at least tacitly acknowledge that the alleged Rebney email could lead to an opposite conclusion when he states that it “was phrased in an unfortunate way.”
A couple interesting things to note.
At the outset, from the face of the complaint, it is not clear what information was allegedly disclosed that is subject to trade secret protection. That said, Zuffa alleges that it doesn’t know yet what “all” of the seminal documents are and so it would be pretty difficult to allege the confidential terms with any sort of specificity. Zuffa certainly seems to have enough to assert the claim.
In this regard, what you pay someone, who you deal with, or the duration of an exclusive contract could be a trade secret as could idiosyncratic or confidential business terms. That said, if stuff like that was redacted (that is, if the allegedly confidential information was whited out), then this would severely undercut any potential trade secret claim. In fact (and this is more complicated), if the confidential information was redacted, copyright preemption would likely come into play to bar a claim based upon retyping and rephrasing the non-confidential sections of the documents.
Next, it seems plausible from the allegations that the Doe defendants are fighters that allegedly had these confidential agreements with Zuffa and that the Roe defendants are plausibly venues and/or sponsors that allegedly had agreements with Zuffa that contained allegedly confidential or proprietary information.
Finally, and as an interesting competition point, assuming the case goes forward, Zuffa should get access to the Bellator agreements in discovery — although this will likely be subject to a protective order that provides that the agreements are for “attorney’s eyes only.”
