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From Antitrust Law Daily, June 1, 2015

MMA event promoter’s monopolization claim “knocked out”

By Greg Hammond, J.D.

A promoter of mixed martial arts (MMA) events blocked an attempt to dismiss claims that competing promoters and two casinos refused to deal in violation of Section 1 of the Sherman Act. The plaintiff’s attempted monopolization and essential facilities doctrine claims, however, were dismissed by the federal district court in Reading, Pennsylvania, as inadequately pleaded (Xtreme Caged Combat v. Cage Fury Fighting Championships, May 29, 2015, Stengel, L.).

Background. Ryan Kerwin, owner and operator of MMA events promoting company Xtreme Caged Combat, filed suit against competing promoters Xtreme Fight Events and Cage Fury Fighting Championships (collectively, “CFFC”), as well as Chester Downs and Marina LLC and Valley Forge Casino Resort (collectively, “the casinos”), alleging that the defendants conspired to monopolize and restrict trade in the MMA events market in the Philadelphia Region. Specifically, Kerwin alleges that the casinos entered into exclusive venue contracts with CFFC, offering a free venue, chairs, tables, and other perks, along with an agreement to pay CFFC $10,000 for each match it hosts at its respective casino. These exclusive agreements consequently block Kerwin from hosting events at both casinos and will drive competition out of business, achieving a monopoly in the MMA event market in the Philadelphia region, Kerwin claims. Kerwin further alleges that CFFC has dominant market position and has already increased ticket prices for its events. The defendants moved to dismiss.

Antitrust standing. The casinos first argued that Kerwin and Xtreme Caged Combat failed to plead antitrust injury. The court disagreed, noting that the plaintiffs alleged that by restricting access to the casinos, CFFC will eliminate all competition in the relevant geographic market. Further, Kerwin allegedly claimed that CFFC achieved dominant market position through its control of the casinos and has considerably raised prices as a result. Harm to competition was therefore sufficiently alleged, the court found.

The casinos additionally argued that the plaintiffs are not proper parties in this action because they are not competitors in the MMA market and the plaintiffs are not licensed to promote MMA events in Pennsylvania. This argument was rejected, however, because the complaint alleged the Kerwin holds a matchmaker’s license for Xtreme Caged Combat and that the company could therefore legally host and promote MMA events. The court consequently concluded that the plaintiffs plausibly claimed antitrust injury and that they have antitrust standing to bring their claims.

Refusal to deal. Next, the court concluded that the plaintiffs stated a sufficient refusal to deal claim in violation of Section 1of the Sherman Act, because they alleged concerted effort, an unreasonable restraint on trade, and an effect on interstate commerce. Specifically, the court found that the plaintiffs alleged a vertical agreement between CFFC and the casinos, prohibiting plaintiffs and other promoters from hosting MMA events at the casinos, which is actionable concerted effort in antitrust law; the plaintiffs satisfactorily pleaded relevant and geographic markets, in support of demonstrating an unreasonable restraint on trade; and allegations that CFFC’s control of the casino venues has allowed CFFC to sign nearly 100 fighters to exclusive contracts in both Pennsylvania and New Jersey easily satisfied the plaintiffs’ pleading burden of alleging that the restraint on trade affects interstate commerce.

Essential facilities doctrine. Kerwin, however, could not plead a viable essential facilities claim against the casinos because they failed to claim that the casinos are monopolists or that either casino is attempting to monopolize the MMA market in the Philadelphia region. Rather, Kerwin asserts that the casinos are being controlled by the alleged monopolist. The essential facilities doctrine count was consequently dismissed with prejudice.

Monopolization. The plaintiffs also failed to adequately plead attempted monopolization or conspiracy to monopolize, the court concluded. Although Kerwin alleged that CFFC controls the casino venues and allowed CFFC to achieve dominant market power, the court found that the plaintiffs jumped to the conclusion that both Casino defendants participated in the same monopoly conspiracy being carried out by CFFC. In addition, the plaintiffs failed to allege that the casinos intended to monopolize the MMA event market. This claim was therefore dismissed with prejudice.

The tortious interference with contract claim was also dismissed with prejudice as time-barred under the applicable statute of limitations.

Contempt. The court additionally found that Kerwin, who is proceeding pro se, continued to represent Xtreme Caged Combat after the court issued an order stating that he may not legally represent Xtreme. Although an appearance was filed by attorney A. Jordan Rushie, the court found his representation a sham. The court consequently stated that these continuing violations of representing Xtreme could lead to a finding of contempt, which could include dismissal of the complaint with prejudice.

The case number is 14-5159.

Attorneys: A. Jordan Rushie (Mulvihill & Rushie LLC) for Xtreme Caged Combat. Jeffrey A. Dilazzero for Cage Fury Fighting Championships. Robert J. Bush (Robert J. Bush & Associates) for Xtreme Fight Events. Peter Michael Ryan (Cozen O'Connor) for Valley Forge Casino Resort.

Companies: Cage Fury Fighting Championships; Valley Forge Casino Resort

MainStory: TopStory Antitrust PennsylvaniaNews

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