Exclusive: UFC President and Penn’s Attorney Shed Light on Lawsuit

By Josh Gross and Mike Sloan Jul 28, 2004
LAS VEGAS, Nevada -- With news breaking late last week of former UFC welterweight champion BJ Penn’s lawsuit against Zuffa, representatives from both sides spoke on the record with Sherdog.com. In exclusive interviews, Penn’s attorney in Hawaii, Steve Strauss, and UFC president Dana White answered questions about the suit.

Before the complaint was filed on July 8, Penn and his attorneys protested Zuffa's belt-stripping of Penn after he signed a multi-fight deal with K-1. They also demanded that Zuffa not only reinstate the man who defeated Matt Hughes for the 170-pound title, but the promoter should also line up title defenses for him.

Las Vegas-based Zuffa refused, claiming that Penn breached his contract when he signed to fight Duane Ludwig in Japan; as a result it has penciled in Hughes to face Georges St. Pierre for the vacant title October 22 in Atlantic City.

In response, Penn retained the services of local Las Vegas law firm Raleigh, Hunt and McGarry, P.C, to pursue legal means of settling the dispute; the complaint against Zuffa, which was obtained by Sherdog.com, was filed with the District Court of Clark County, Nevada.

“The first thing I did was look at the Nevada State Athletic Commission’s rules and regulations and Nevada Statutes,” Strauss said Monday afternoon from Hawaii. “We had multiple discussions with the principles at Zuffa. I had one-on-ones with (Zuffa COO) Kirk Hendrick. I also participated in discussions with Dana White, with BJ and Kirk involved. I had an extensive review of the contract’s provisions that they had and the way the promotions are set up -- it seems that BJ’s case is a strong one.”

On the other hand, Zuffa suggests Penn remained under contract and since he was champion, his contract should have automatically extended. When Penn decided to sign with K-1, Zuffa -- fearing Penn would place the UFC brand at risk if he lost while holding the UFC welterweight belt -- had no recourse except to strip him of the title.

This is where the situation becomes cloudy. Did the contract expire, did a loophole in the contract allow Penn to retain his belt while fighting for another promoter, or was Zuffa in the right when it stripped its title from the welterweight?

“If you really want to look at it, basically the title was vacated," White asserted Friday from the UFC's Las Vegas offices. "We wanted to make it known that BJ no longer held the title when he fought over at K-1. His contract was up and he chose to leave and fight for another organization.”

Strauss, of course, believes Zuffa acted incorrectly.

“It became clear that we really have to address the exclusivity terms that Zuffa is trying to enforce,” explained Strauss. “We have really two approaches on this. First, within the confines of the agreement, an analysis of the agreement that’s drafted by Zuffa, and after review of the history between the parties, has there been a breach by BJ of the terms that would permit Zuffa to take the action that they did? My analysis is that no, there is no breach and that BJ did everything that he was supposed to do; and that we had extensive written communications with Zuffa explaining to them why we believe that their interpretation of their own agreement is incorrect -- that the term that they specifically identify for the duration of the agreement was satisfied. That is because he fought three times under the contract and that his championship [fight] occurred more than one year after his first bout [under the contract]; they had no automatic extension agreement that they apparently are seeking, or we are expecting that they’ll be seeking to enforce.

"Based on their own terms of the contract, without even challenging the terms, it seems that there is not a reasonable dispute. That BJ satisfied what he was supposed to do. That he performed his obligations.”

Strauss further elaborated that the next step was to look at the at the agreement under the spotlight of Nevada Law as it pertained to the Nevada State Athletic Commission, the Nevada Revised Statutes and the common law in terms of interpretation of contracts.

Strauss and Vegas-based attorney John Hunt are investigating whether Zuffa’s conduct is consistent with an applied covenant of good faith and fair dealing, and whether the exclusivity that Zuffa is attempting to promote violates Nevada law in terms of “little antitrust,” which applies to state, not federal cases.

According to Strauss, Penn claims that White was disgruntled after witnessing the Hawaiian's victory over Hughes.

“I know that BJ expressed that when he won the title; Dana White had a pained look on his face,” said the attorney. “It was not expected and [Penn's win over Matt Hughes ] may have upset [White's] plans. ..."

Speaking with Sherdog.com before the suit was filed on the 8th, the UFC president said that had Penn not been welterweight champion when he fought in K-1, he would have been allowed to fight with virtually no strings attached.

"[BJ's representatives] came to me and asked if they could fight in another organization and I told them yes, but I would do it. I would do it like I did it with Chuck," White elaborated Friday. "I would cut the deal. I was trying to cut a deal to have him fight in PRIDE and the next thing I know is I hear that he's fighting in K-1. So he walked out on our deal, on our contract. He wouldn't re-sign with us."

“What they say and what’s expressed in the contract are two different things," countered Strauss. “Their contract does not say that if you are their champion, you’re theirs forever. It says that if on a date within one year of your first bout you become champion, then they extend the term for a year. But that’s not the case; he became champion more than a year after the date of his first bout of that contract. He only had three bouts with them (under the structure of his contract)."

"Zuffa is claiming that they had some heartbreak because they said [Penn] wanted to take some time and rest, and they said that they’d let him do that; and by implication, it should have been an extension of their agreement," he continued. "But there is no such term in the agreement itself, and in the contract it’s specific that any modification must be in writing.”

According to White, "BJ's management came back and said, 'no,'" to a contract extension, "because he took some time off and they said the contract was expired. So, at the end of the day, we let BJ walk. BJ wanted to go, we wished him well as a fighter in K-1.”

If, as Strauss claims, there was no contract written with specific modifications, could there have been a verbal agreement between the parties which could have kept Penn as UFC champion?

“In my understanding, there was no such verbal agreement,” he said. “There is no agreement that says, ‘We’ll let you rest, but we must extend the term of the agreement.’ It’s simply that he wanted to rest and that’s the way it was. The agreement that underlines this lawsuit, the basis of this lawsuit, contains a specific term that says modification must be in writing.”

“[BJ] wants to defend his title in the UFC and we expect that they would provide title defenses until such the time that they either retire the title and have no more welterweights or until BJ lost or retired himself,” Strauss said. “We would have to have an appropriate agreement that would cover compensation to that, but it’s not something that he’s willing to walk away from. If they absolutely refuse, then it comes down to a damages case.”

Before the case goes to trial there is a possibility that the two sides could settle out of court. But, according to Strauss. that appears unlikely.

“We’re always willing to talk to those people,” Strauss said. “But I can’t predict whether it could or could not [be settled]. We’re open to discussion, but nothing has come from their side. First we requested and then demanded title defenses, for weeks now.”

While many of the cases settled out of court reward one side with hefty monetary rewards, that’s not something which interests Penn. Said Strauss: He simply wants to fight and establish himself as the world’s best.

What it would take for Penn to settle?

“Title defenses and attorney’s fees would probably take care of it,” Strauss answered. “If BJ can get back in and defend his title, then the damages really go away. The contract is expired now, so we would have to cut an agreement that would provide title defenses and make it worthwhile. BJ’s motivating interest is really not the money. Surprisingly enough, he wants to be the world’s best. He wants that recognition and he is not willing to give up that title belt that he worked really hard for. In our discussions with Zuffa, they wanted him to give back the belt. BJ said, 'Look, I earned this belt. Maybe you don’t understand that, but when you earn something, you don’t just give it up.'"

White, however, remains confident in Zuffa's position, openly doubting Penn's chances at winning in a Las Vegas courtroom.

“Our litigators have reviewed the documents and believe there's absolutely no merit to the allegations,” said the UFC president. “Right now we have litigators who will aggressively defend this matter and will be seeking reimbursement for the litigation fees.”

Penn's suit versus Zuffa is the first of its kind in mixed martial arts, and both sides have decidedly different views on what it could mean. All Penn wants, said Strauss, is to defeat Zuffa in court so he can defend his title in the Octagon. Meanwhile, said White, it's an interesting change of pace when one of the finest fighters in the world is suing to get back into his show.
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