UFC Parent TKO Evaluating Options, May Appeal After Judge Throws Out Settlement With Former Fighters In Class Action Suit – Update

UPDATED with TKO response: A Nevada judge has nixed a proposed $335 million settlement between UFC and former fighters and set a new trial date of October 28 in a setback to the Dana White-led mixed martial arts league and its Endeavor-owned parent TKO Group.

Judge Richard Boulware of U.S. District court in Nevada denied the settlement, which was reached in late March just before an initial April trial was set to start. A fuller written order with his reasoning should be issued in coming days.

There are two separate Class Action suits pending. Le v Zuffa is now tentatively set to head to court. A status conferences for both suits, when the trial date will be finalized, is set for August 19.

TKO shares, which fell earlier in the session after the ruling, are up by a hair just before market close at about $110.

TKO said it’s “evaluating all of its options, including, without limitation, an appeal, and has also initiated discussions with plaintiffs’ counsel, who have expressed a willingness to engage in separate settlement discussions for the Le and Johnson cases.”

Le et al. v. Zuffa is the class action consolidating five similar lawsuits. Johnson et al. v. Zuffa is a separate suit. A motion to dismiss the complaint in Johnson remains pending and no trial date has been set, TKO noted in an SEC filing today.

The lawsuits were launched in 2014 and 2015 by fighters claiming that the UFC violated the Sherman Antitrust Act by abusing its monopoly power to limit fighters’ pay. The UFC and TKO rejected the claim. The company said when it announced the settlement that it planned to pay in tax deductible installments.

A number of the former fighters behind the suit were pleased with the settlement. However, news reports today indicated that the judge may also be concerned about protections for current fighters going forward.

The initial suit against UFC alleged an “overarching anticompetitive scheme to maintain and enhance its (a) monopoly power in the market for promotion of live Elite Professional Mixed Martial Arts (“MMA”) Fighter bouts, and (b) monopsony power in the market for live Elite Professional MMA Fighter services. It claimed UFC eliminated “competition from would-be rival MMA Promoters by systematically preventing them from gaining access to resources critical to successful MMA Promotions, including by imposing extreme restrictions on UFC Fighters’ ability to fight for would-be rivals during and after their tenure with the UFC. As part of the scheme, the UFC not only controls Fighters’ careers, but also takes and expropriates the rights to their names and likenesses in perpetuity. As a result of this scheme, UFC Fighters are paid a fraction of what they would earn in a competitive marketplace.”

The sides will have a status conference on August 19.