Lawsuit: UFC ‘inadvertently produced’ e-mail from PRIDE acquisition

The UFC accidentally handed over an e-mail that purports to contain its business strategy in the PRIDE acquisition, and they want it back.

We’ve all sent texts or e-mails we’ve immediately wanted back. For the UFC’s current and former attorneys, it’s happened twice. New filings in the class-action antitrust lawsuit reveal a battle over whether the plaintiff fighters will be able to use the contents of accidentally-produced documents or whether they’ll have to be completely ignored.

According to a letter written by UFC attorney Marcy Norwood Lynch, when documents were produced in the Federal Trade Commission’s (FTC’s) 2011 investigation of the Strikeforce merger, the UFC’s outside counsel at the time, Axinn, Veltrop & Harkrider LLP, “inadvertently produced some privileged documents that were later clawed back with the cooperation of the FTC.”

According to Lynch, the documents were sequestered by the FTC but “the privilege log and the production media were not necessarily updated to reflect such claw backs. The result is that the privilege log and the production data from the 2011 investigation that were provided to [current UFC outside counsel Boies, Schiller & Flexner LLP] contained several inadvertent omissions that we were unable to identify prior to producing these documents to Plaintiffs in this case.”

In other words, it appears that the UFC’s former attorneys accidentally gave privileged documents to the FTC and, since the privilege log wasn’t updated, the UFC’s current attorneys turned around and handed the exact same documents to the fighters in the antitrust lawsuit.

Oh boy.

A court filing lays out exactly what happened during the discovery process.

On January 27, 2016, Plaintiffs notified Zuffa that Zuffa had produced a number of documents with an electronic “slipsheet” that states “This document has been withheld as privilege” [sic]. Despite the presence of the slipsheet, Zuffa had failed to remove the document itself from the production and produced an electronic file that contained the text of the document.

It appears that five documents the UFC believes to be privileged were turned over to the fighters. The privilege status of four documents is not being challenged, but included among them is an e-mail from Strikeforce’s VP of Legal Affairs to CEO Scott Coker with “legal advice regarding fighter contracts” and an analysis of four sets of agreements between a television network and its cable and satellite carriers “in contemplation of Zuffa’s possible purchase of the television network.”

The document in which attorney-client privilege is being challenged is a Jan. 31, 2007 e-mail from C. Thomas Paschall, a corporate and transactional attorney at Milbank, Tweed, Hadley & McCloy LLP, to Zuffa’s CEO, COO, CFO, two Zuffa managers, and two other Milbank lawyers “containing confidential legal analysis and advice relating to the acquisition of PRIDE FC.”

That would seem to make it a privileged document but the fighters have a different story. They argue that even though the e-mail is from a UFC attorney, there is only one sentence which meets the standard for attorney-client privilege. Other than that, the e-mail “simply rehashes the respective positions of parties to an arms-length business transaction.”

The fighters believe that communications regarding the business purposes of an acquisition “are ordinary, common business decisions” and should not be privileged. Their position is that the e-mail gives a status report on PRIDE negotiations and shares the UFC’s business strategy in the acquisition. One particular paragraph in the e-mail “reiterates Zuffa’s business purpose in the Pride FC acquisition and recounts Pride FC’s response to Zuffa’s offer.”

The fighters spend two paragraphs restating claims from their complaint that the UFC’s acquisition of PRIDE is a “Material Allegation,” and was part of an anticompetitive scheme to eliminate rivals. They requote Dana White’s famous line, “Pride is dead dummy! I killed em!!!” and cite Brent Brookhouse’s 2012 Bloody Elbow piece in which White denies killing PRIDE, “We didn’t kill Pride. I’ve said this many times, Pride is the only other organization that I’ve ever respected.”

Given what we know so far, it seems likely that the paragraph in question would fall into one of two categories. It might be used in a direct attempt to contradict the UFC’s denial that it purchase PRIDE in an anticompetitive scheme to eliminate rivals.

It could also be used more along the lines of a “hot doc” where an insider makes a statement that reveals a true intention or simply looks bad. This would be the case if the e-mail contains some sort of statement about how dominant the UFC will be after the purchase, how it will have X% of the market, or won’t have to compete as hard for fighters.

Then again, maybe it’s more of a “lukewarm doc.” We just don’t know. The e-mail in question has been filed under seal with the following placeholder.

Whatever the exact text of the e-mail, it’s highly unlikely to make or break the case, but there’s clearly something the fighters want to be able to use and the UFC doesn’t want an expert witness or jury to see.

Somewhere out there, Sakakibara is probably smiling.

The fighters have asked the judge to hear arguments on their motion to challenge the UFC’s privilege designation at the next status conference on Apr. 25. Bloody Elbow will keep readers informed as more information becomes available.

Paul is Bloody Elbow’s analytics writer and former provider of expert witness support in antitrust cases. Follow him @MMAanalytics.