Monday, June 17, 2019

Legal Roundup: 2nd Circuit Affirms Dismissal Of Breach Of Contract Claims In Wilder v. World of Boxing/Povetkin Doping Case

Last week, the 2nd Circuit Court of Appeals affirmed U.S. Magistrate Judge Gabriel Gorenstein's April 2018 decision in the Wilder/DiBella Entertainment (Wilder) vs. World of Boxing/Povetkin (WOB) case that dismissed both sides breach of contract claims and allowed Deontay Wilder's escrowed purse for a proposed fight with Alexander Povetkin to be returned to Povetkin's promoter WOB, in spite of a jury verdict that found Povetkin had ingested a banned substance in the time period it was banned by WADA.

This was a complicated case that was previously summarized on this blog. In essence, Judge Gorenstein's lower court ruling came down to the parties agreement to allow the WBC to draft the controlling bout agreement.  In the bout agreement, it stated that the WBC Rules governed the event, "in its entirety and shall be binding on all parties . . ."  In the event of a dispute, the parties were bound by the WBC's rules and regs.  The WBC's rules on PEDs leave any determination as to penalties solely in the discretion of the WBC on a case-by-case basis and explicitly state that they "do not adhere to a 'strict liability' standard in anti-doping matters."

Thus, because of the discretion given to the WBC in the bout agreement, Judge Gorenstein found that the parties were bound by the WBC's ultimate determination that it could not be conclusively proved that Povetkin ingested a banned substance.  The fact that the WBC ignored a jury verdict to the contrary was not enough to save Wilder's breach of contract claims.

The 2nd Circuit affirmed quoting the lower court's decision that to accept Wilder's arguments now "'would require this Court to determine that Povetkin breached the contract by failing to abide by 'WBC anti-doping requirements' when the parties specifically agreed that the WBC's decision on this question would be conclusive."

Similarly, the 2nd Circuit affirmed the dismissal of WOB's claims based on the lower court's determination that any damages suffered by WOB flowed from Povetkin's positive test and the WBC's determination to postpone and investigate and ultimately never reschedule the fight and not any alleged anticipatory repudiation by Wilder.

The 2nd Circuit also affirmed the award of Wilder's escrowed purse back to WOB as that was the instruction of the escrow agreement if the fight did not take place.  They similarly affirmed the lower courts dismissal of WOB's breach of the covenant of good faith and fair dealing claim for liquidated damages ruling that Wilder "did not act objectively unreasonably in objecting to the disbursement of the funds."

I've previously stated my takeaways from this case in my article from April 2018.  Suffice it to say that future parties drafting bout agreements for major title fights need to be extremely aware of the anti-doping provisions of the sanctioning body whose belt they are contesting.  The WBC has very open-ended rules that subject the parties to the whims of the WBC.  With the 2nd Circuit citing precedent that courts should "defer[] to a [private sports organization's] interpretation of its own rules in the absence of an allegation that [the organization] acted in bad faith or in violation of any local, state or federal laws" - parties need to be very aware of the rules they are up against.

See Opinion below:

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