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:
 

Boxing Podcast With Bob Yalen

My guest on this podcast is Connecticut Boxing Hall of Famer, six-time sports Emmy award-winner and new President of MTK Global Management, Bob Yalen.  We spoke about the future of MTK's top fighters Tyson Fury, Carl Frampton and Billy Joe Saunders.  We also spoke about MTK's broadcast deals with ESPN and IFL TV. 

We then got into Bob's rich experience in the sport as a researcher for Flash Gordon, The Ring Record Book and Fight Fax.  We also talked about his time as head of boxing programming at ABC and ESPN networks and as the Chairman of the WBC Ratings Committee.  We closed with a discussion of the state of televised boxing today.

It was a really informative conversation.  Enjoy!

This podcast is presented by The Ring.  I'm honored to be working with The Ring and my good friend, Doug Fischer, the Editor-in-Chief.  You can find the podcast on the website at Ringtv.com.

This podcast is distributed by the Leave It In The Ring podcast network.  The LIITR network also includes great podcasts by founder David Duenez, Gabriel Montoya and Evan Rutkowski.

You can still find this podcast and older Boxing Esq. podcasts on this blog and on Soundcloud or subscribe to the Boxing Esq. Podcast on either iTunes, Spotify or Stitcher.  If you enjoy the podcasts, please leave a comment or rating, that would be greatly appreciated.  The podcast will appear on both the LIITR network of podcasts as well as under the Boxing Esq. Podcast name.

Povetkin Files Opposition Papers and Cross-Motion for Summary Judgment in Wilder Case

Alexander Povetkin/Wikimedia Commons-Przemek Garczarczyk

Attorneys for top heavyweight contender Alexander Povetkin and his promoter World of Boxing LLC ("WOB"), recently filed opposition papers to the summary judgment filed by WBC Heavyweight Champion Deontay Wilder and his promoter, DiBella Entertainment Inc. ("DBE").  Povetkin and WOB also filed a cross-motion for summary judgment in this lengthy litigation in the Southern District of New York.

The case stems from the aborted WBC Heavyweight title bout scheduled for May 21, 2016 in Moscow, but postponed due to Povetkin testing positive for Meldonium.  In February 2017, a jury trial was held on the sole issue of whether Povetkin had ingested Meldonium after January 1, 2016, the date when WADA placed Meldonium on the banned substance list.  The jury needed little over half an hour to return with a verdict against Povetkin.

District Judge Andrew Carter denied Povetkin's Motion for Judgment as a Matter of Law and Motion for a New Trial in September 2017.  Wilder's attorneys then filed their motion for summary judgment on the remaining causes of action in the case: breach of the bout agreement and release of the escrow funds to Wilder.  (For a more fulsome summary of Wilder's motion see this blog's recap.)

In Povetkin's opposition papers, his attorneys make the argument that the bout agreement was governed by the WBC and its rules at all times and the WBC made a determination at the time of the positive test to postpone the fight and not cancel it.  They further argue that the WBC stated that they would postpone the fight until after they conducted an investigation.  In August 2016, the WBC came back with a decision that they could not definitively determine that Povetkin ingested Meldonium after January 1, 2016 and they cleared Povetkin to participate in an "interim" world title bout.  Povetkin's attorneys argue that because the WBC essentially cleared Povetkin at that time, he could not have breached the bout agreement and that, to the contrary, Wilder, by not flying to Russia for the fight, had been the one who repudiated the bout agreement.

The WBC allowed Wilder to make an optional defense while their investigation took place and Wilder got injured on his way to stopping Chris Arreola.  Povetkin's attorneys argue that Wilder's injury caused him to be unable to fight Povetkin after the WBC cleared him and thus, Wilder breached one of the representations and warranties of the bout agreement.

Povetkin argues that he is entitled to $2,616,589.92 in reliance damages, plus 9% simple interest, as well as $2,566,135 in expectation damages, plus 9% simple interest.

Povetkin further argues that though the jury verdict in this case found that he had indeed ingested Meldonium after January 1, 2016, the WBC ruled on November 7, 2017, after conducting an additional investigation, that it would adhere to their August 2016 ruling stating it was not possible to ascertain if Povetkin ingested Meldonium after January 1, 2016.  Povetkin was reinstated to compete in WBC-sanctioned bouts as of December 6, 2017.  (Povetkin had subsequently tested positive for another PED, Ostarine, when prepping for the "interim" WBC title bout with Bermane Stiverne and was suspended by the WBC indefinitely).

Regarding their counterclaims, Povetkin and WOB's attorneys argued that Wilder and DBE breached the covenant of good faith and fair dealing because of the way they manipulated Povetkin's positive test to avoid participating in the bout yet still want to take home their bout purse from the escrow account.

They additionally argued that WOB was entitled to $2,500,000 in liquidated damages due to breach of the escrow agreement, as the escrow agreement does not provide for a claim of breach of the bout agreement as grounds to freeze the escrowed funds.

See Povetkin/WOB's motion below: