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Fighters Win Key Ruling in Case That Could Upend U.F.C.’s Business

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This case mostly concerns monopsony power, the lesser known cousin of monopoly power. The fighters say the U.F.C. is a monopsony, which is when there is one dominant buyer of a particular good or service — in this instance, the U.F.C. buying fighting services. So few monopsony cases reach trial that each one is almost by definition precedent-setting.

“This is an entirely novel case as far as I’m aware of,” said Marshall Steinbaum, an economics professor at the University of Utah. Most labor-related antitrust lawsuits concern things like anti-poaching agreements or disputes between companies, not workers suing employers. “There’s no generally accepted precedent about what constitutes damages arising from labor market monopsony,” Steinbaum said.

This case could also hinge on the definition of damages. Rather than look at an individual fighter and argue that illegal conduct by the U.F.C. suppressed his or her wages, the economic experts for the plaintiffs looked at the entire group of fighters and said the U.F.C.’s conduct suppressed their overall share of U.F.C. revenue.

While wage share is commonly used in professional sports, the U.F.C. argues this is because unions representing athletes choose to bargain based on it, not because there is any legal right to a specific share of wages. As the U.F.C. has grown, so has fighter income, the company’s lawyers say, showing that fighters have benefited from the company’s conduct. If the judge allows the plaintiffs to make a wage share argument, it will open the floodgates to class-action lawsuits across the country on this basis, they warn.

“Whether in the sports industry or in other industries, the courts — with good reason — are not in the practice of telling market participants what percentage of revenue they must assign to compensation,” William A. Isaacson, a partner at Paul, Weiss and the lead counsel for the U.F.C., wrote in an email. He added that doing so would “serve as a harmful disincentive to ingenuity, risk-taking, and investment” and that former fighters being unhappy with their compensation “does not equate to an antitrust violation nor is it sufficient to demonstrate antitrust injury.”

Other lawyers disagree. Hiba Hafiz, a professor at Boston College Law School who worked for the plaintiffs earlier in the case, said the U.F.C.’s suggestion that wage share is novel was simply “a litigation strategy.”

Sports labor markets are different from most other labor markets, she said. In sports, “a direct relationship can be measured between athlete performance and revenue generated by the sports organization,” said Hafiz, making wage share an appropriate metric. That isn’t the case with, say, Subway sandwich makers or computer programmers. While their labor has value, it is almost impossible to tie directly to a company’s overall revenue.

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