Case 2:13-cv-00063-JLL-MAH Document 37 Filed 04/08/13 Page 1 of 11 PageID: 1015

Patrick C. English, Esq. (PCE 7898) DINES AND ENGLISH, L.L.C. 685 Van Houten Avenue Clifton, New Jersey 07013 (973) 778-7575 Attorney for Plaintiff, Bellator Sport Worldwide, LLC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY __________________________________________ : : BELLATOR SPORT WORLDWIDE, LLC, : : Plaintiff, : : v. : : EDDIE ALVAREZ AND JOHN DOES 1-5, : : Defendants. : : : __________________________________________: Civil Action No.: 2:13-cv-00063-JLL-MAH

Oral Argument Requested Return Date: April 15, 2013

______________________________________________________________________________ REPLY BRIEF IN FURTHER SUPPORT OF THE MOTION FILED ON BEHALF OF BELLATOR SPORT WORLDWIDE, LLC TO DISMISS COUNTS 3 AND 4 OF THE COUNTERCLAIM OF EDDIE ALVAREZ FOR FAILURE TO STATE A CAUSE OF ACTION ______________________________________________________________________________

DINES AND ENGLISH, L.L.C. 685 VAN HOUTEN AVENUE CLIFTON, NEW JERSEY 07013 Attorney for Plaintiff, Bellator Sport Worldwide, LLC

PATRICK C. ENGLISH, ESQ. On the Brief

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TABLE OF CONTENTS

TABLE OF CONTENTS .............................................................................................................i

TABLE OF AUTHORITIES .......................................................................................................ii

PRELIMINARY STATEMENT ................................................................................................1 LEGAL ARGUMENT .................................................................................................................2 POINT 1 Mr. Alvarez Failed to Set Forth A Legitimate Cause Of Action And Thus The Counterclaim Should Be Dismissed ................................................................2 POINT 2 Mr. Alvarez Fails to Show Why The Assertion Of A Legal Position Is Non-Privileged .................................................................................................................4 POINT 3 Bellator Had Every Right to Submit An Offer It Claimed Matched. Doing So Is Not A Breach of Contract. ..........................................................6 POINT 4 We Do Not Dispute That Alvarez Has The Right To Apply To The Court For Leave To Amend .....................................................................8 CONCLUSION ............................................................................................................................8

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TABLE OF AUTHORITIES

Page(s)
Ashcroft v. Iqbal, 566 US 622 (2009)................................................................................ ... 7 Baglini v. Lauletta, 338 N.J. Super. 282 (App. Div. 2001) .................................................................................... 5 Bell Atlantic Corp. v. Twombly, 550 US 544 (2007) .................................................................................................................. 2,4,7 Ideal Dairy Farms v. Farmland Dairy Farms, Inc., 282 N.J. Super. 140 (1995) ..................................................................................................... 3 New Jersey Sports Productions, Inc. v. Bobby Bostick Promotions, LLC, 405 N.J. 179 (Ch. 2007) .......................................................................................................... 4,5,7 Printing Mart-Morristown v. Sharp Electronics, 116 N.J. 739 (1989) ................................................................................................................ 3 Seidenberg v. Summit Bank, 348 N.J. Super. 243 (App. Div. 2002) .................................................................................... 6

RULES F.R.C.P. 11 .............................................................................................................................. 3,4,7 F.R.C.P. 12(b)(6) .................................................................................................................... 2,3 F.R.C.P. 15(a)(2) ..................................................................................................................... 8 Local Rule 7.1(f) ..................................................................................................................... 8

ii

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PRELIMINARY STATEMENT These counterclaims are about one thing. Can a party to an agreement which contains a right to match provision bring an action when the other party proffers a contract which it claims matches? We have diligently searched and have not found a single case where the proffer of a contract where a right to match exists gives rise to either a claim for tortious interference or breach of contract. To emphasize, we have found not one case in the entire United States! The Court will look in vain through the brief of Mr. Alvarez for any such case, as Mr. Alvarez has cited not a single decision for the proposition that the tendering of a contract under a right to match gives rise to any cause of action. It is certainly safe to say if counsel for Mr. Alvarez has located such a case they would have cited it. Bellator has a legal, contractual right to proffer a contract to Mr. Alvarez which it believed (and still believes) matches the Zuffa contract. Mr. Alvarez agreed that it could do so twice once in the original Promotional Agreement at paragraph 18 and once, more recently, when he asked for the right to negotiate earlier than he otherwise would have been permitted with Zuffa. 1

The letter agreement of November 2, 2012 stated in pertinent part: For the avoidance of doubt, upon your signature below, you are permitted to negotiate with and entertain offers from, and only from, Zuffa, LLC. Upon receipt of such an offer you are thereafter obligated to produce to Bellator a true copy of the proposed agreement with Zuffa, LLC, at which time Bellator shall have fourteen (14) business days from receipt of the full agreement to consider whether it will match the terms of the offer. Should Bellator elect to match the offer, no further offers may be entertained by you and you will be obligated to contract with Bellator on the terms that Bellator agreed to match.

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Bellator was simply exercising its legal rights to match. That does not give rise to either a tortious interference action or an action for breach of contract. Formulaic references to bad faith are not sufficient. LEGAL ARGUMENT POINT 1 Mr. Alvarez Failed to Set Forth A Legitimate Cause of Action And Thus The Counterclaim Should Be Dismissed.

Mr. Alvarez, at point II (A) of its brief argues that its counterclaim contends Bellator did not match the offer of Zuffa, citing to paragraph 16 of its counterclaim. Yet, the subsections of paragraph 16 of the counterclaim do not show or allege that there was any tortious interference with the rights of Mr. Alvarez. They merely are a laundry list (frivolous, we contend) of changes to the proffered Zuffa contract. Nothing in those provisions reflect any allegation that Bellator tendered its offer in bad faith. There is a footnote to paragraph 16 of the counterclaim (a rarity in a complaint) which contains argument. It cross references a letter which is not part of the contract proffered by Zuffa and alleges that Bellators legal argument by Bellator is untenable and unconscionable. Putting aside that the whole footnote is improper as well as being incorrect, a legal argument in a pleading (which is what is referenced in the footnote) cannot give rise to a tortious interference claim. Db. at 13. Mr. Alvarez goes on to state that In fact, Bellator is seeking a factual determination by way of motion as to its intentions and, whether it has a business related explanation justifying it actions. Pb. 4. However, Mr. Alvarez seems to forget that, in the words of the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) a complaint, to withstand a Rule

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12(b)(6) motion requires more than labels and conclusions and a formulaic recitation of elements of a cause of action will not do. Yet this is all that Alvarez does if even that. Id. at 555. The business purpose in submitting an offer that Bellator asserts matches the Zuffa offer is manifest on the fact of Alvarezs own pleadings and attachments thereto. Alvarezs own

pleadings show that Bellator twice negotiated for the right to match any third party offer. See, e.g. Verified Counterclaim at 8, 9 and exhibits A and B thereto. There cannot possibly be any argument that Bellator had no business purpose in negotiating those clauses Bellator wanted at least the opportunity to continue to promote Mr. Alvarez. This is clear from the last section of the letter agreement, providing that if a match was made no further offers may be entertained by you and you [Alvarez] will be obligated to contract with Bellator on the terms Bellator agreed to match as well as the correspondence annexed to the complaint in this matter which Mr. Alvarez adopted in his answer/counterclaim by reference. See e.g. Exhibits I and J to Bellators complaint, acknowledged in Mr. Alvarezs answer at 20. There is no allegation anywhere in the complaint nor could there be consistent with Rule 11 that Bellator did not have a legitimate business purpose in submitting what it contends was a matching offer. Mr. Alvarez completely ignores the malice requirement for tortious interference required in Printing Mart-Morristown v. Sharp Electronics, 116 N.J. 739 (1989), defined expressly as the intentional doing of a wrongful act without justification or excuse. Supra at 576. See also, Ideal Dairy Farms v. Farmland Dairy Farms, Inc., 282 N.J. Super. 140, 147 (1995). Mr. Alvarez simply fails to analyze this requirement at all in his papers, and thus the tortious interference count must fail. To the extent that Alvarez presents the novel concept that simply submitting to Alvarez a contract which it contends matches the Zuffa contract and, then when Alvarez breaches his express agreement to accept that contract brings litigation, the concept is simply legally

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untenable no matter how labeled. No court anywhere has ever adopted the proposition that simply attempting to exercise a right to match and filing an action in court to vindicate rights constitutes tortious interference. Factually, putting aside labels and conclusions and formulaic recitations as we must under Twombly, nothing else is asserted here. Based upon the factual allegations here, putting aside conclusions and labels all Bellator did here was to place before Mr. Alvarez an offer it claimed, through counsel, matched and, when Alvarez declined to enter into a contract with Bellator as Bellator asserts he was contractually obligated to do, proceeded to court to vindicate its right. That is not tortious interference. POINT 2 Mr. Alvarez Fails to Show Why The Assertion Of A Legal Position Is Not Privileged. In our original submission we argued that the submission to Alvarez of the contract and legal correspondence that led to Bellators filing was covered under the privileges set forth in New Jersey Sports Productions, Inc. v. Bobby Bostick Promotions, LLC, 405 N.J. 179 (Ch. 2007) and the other cases set forth in our brief at point 2. In response Mr. Alvarez contends that we misapprehend the allegation because it is premised upon an allegation that Bellator had no ability or intention to perform the Bellator offer. First, this is creative but nowhere in the counterclaim is there the allegation that Bellator had no ability or intention to perform its own offer. No paragraph is cited making such an allegation, and none could be consistent with F.R.C.P. 11. The allegation in the counterclaim is not that Bellator could not perform its own offer, but that the offer did not match the Zuffa offer. Thus Mr. Alvarezs argument sidesteps the issue by creating in its brief an allegation it did not make in its complaint.

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The assertion of a legal right (in this case the right to match) is privileged in New Jersey. So long as conveyed by counsel, bear a relationship to the subject matter of potential litigation, and so long as basically factual without scurrilous diatribe, evidencing a reasonable belief in the clients intention deserving of protection. Bostick at 183-184. As noted elsewhere in this brief, the gravamen of Mr. Alvarezs counterclaim is that Bellator claimed that its submitted contract matched the Zuffa contract. That is a legal position. It would be bad precedent indeed if the courts were to hold that mere assertion of such a position was the basis for a cause of action. Bellator is not afraid to show that its offer matched that of Zuffa. It did not stand back here and makes naked assertions. When it became clear that Mr. Alvarez was not going to accept the legal position of Bellator, Bellator went to court to vindicate its rights. The entire series of events is part of the process leading to this litigation. As such, it is privileged. We suggest that the claim that Mr. Alvarez really seeks to assert as explained in his brief is one for malicious use of process. He claims that Bellator submitted its offer in (and thus by inference, its claim in this case) in bad faith. The elements of a malicious use of process case are: 1) The action must be brought without probable cause 2) The action must be actuated by malice 3) The action must be terminated favorably to plaintiff and 4) Plaintiff must show a special grievance E.g. Baglini v. Lauletta, 338 N.J. Super. 282, 297 (App. Div. 2001). Ignoring the inability of Mr. Alvarez to meet the first two aspects of the cause of action for the moment, his counsel would certainly know of the third prong (successful termination).

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We suspect this is why they attempt to convert the counterclaim to a tortious interference case. However, labels do not prevail, substance prevails. The third count should be dismissed. POINT 3 Bellator Had Every Right to Submit An Offer It Claimed Matched. Doing So Is Not A Breach of Contract. Mr. Alvarez purports to clarify in his brief that the contract referred to in its breach of contract count is the right to match provision. Db. 7. Those provisions appear at paragraph 18 of the original 2008 contract between the parties and the November 2, 2012 letter agreement slightly modifying the 2008 agreement in Mr. Alvarezs favor and at his request. The key here is paragraph 18(C) which provides: FIGHTER shall provide PROMOTER with prompt written notice of any such offer, containing full details in regards thereof. Such notice shall constitute an irrevocable offer to contract with PROMOTER on the same terms and conditions. PROMOTER shall have fourteen (14) business days after receipt of said notice to either accept or reject the offer... In this regard the letter agreement of November 2, 2012 is virtually identical. Now, apparently, Mr. Alvarez is contending that Bellators notice that it would match was given in bad faith. The troubled with this is that the allegations do not constitute a breach of contract. We have no difficulty accepting the law cited by Mr. Alvarez, that the covenant of good faith and fair dealing has been utilized to allow redress for bad faith performance of an agreement even where the defendant has not breached any express term. Seidenberg v. Summit Bank, 348 N.J. Super. 243, 257 (App. Div. 2002) (emphasis added). But Bellator owed no performance to Mr. Alvarez under the 2008 contract of the letter agreement. To be sure, it would have had to perform under the contract it purported to match, but it was never given the opportunity and Mr. Alvarez never executed the matching contract

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proffered by Bellator. Alvarez puts the cart before the horse. If he executed the proffered match contract and if Bellator failed to perform he would have a cause of action for breach. He cannot, however, blithely, assert (without substance) that if he had entered into the agreement Bellator would not have performed under it. Further, we also take issue with Alvarezs assertion that an allegation of bad faith is all that is required at the pleading stage. Db. at 7. Most respectfully, we suggest that counsel for Mr. Alvarez knows that is simply not an accurate statement of law under Twombly, supra, and Ashcroft v. Iqbal, 566 US 622 (2009) which require the district court to ignore such labels and look to the actual facts alleged. Paragraphs 29 and 46 of the counterclaim, cited later in defendants brief are completely devoid of specific facts. It is not enough, in this context, to say that Bellator delivered an offer which, allegedly, Bellator had no intention to perform as to certain provisions. 46. 2 Additionally, Mr. Alvarez may not gloss over the facts as disclosed in his own complaint. Those facts are that in November of 2012, through counsel, Mr. Alvarez and Bellator agreed on a contract amendment which, inter alia, confirmed Bellators right to match. Through counsel, Mr. Alvarez submitted a draft contract from Zuffa. Through counsel Bellator took the position that it would match and when Alvarez, through counsel balked, Bellator through counsel attempted to convince Alvarez why there was a match and when that was unsuccessful through counsel brought this action to vindicate its rights. This is all part of a process and falls squarely within the protection of New Jersey Sports Productions, Inc. v. Bobby Bostick Promotions, Inc., as shown more fully in our original brief and earlier herein.

What provisions? Alvarez must make global statements like this or his pleadings will run afoul of Rule 11. 7

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POINT 4 We Do Not Dispute That Alvarez Has The Right To Apply To The Court For Leave To Amend. We are familiar with F.R.C.P. 15(a)(2). We are well aware that Mr. Alvarez has the right to apply to the Court to amend his pleadings. To do so, under Local Rule 7.1(f), Alvarez would be required to annex a copy of the proposed amended counterclaim. We would comment on the appropriateness of any such

proposed amendment when it is proffered; it is premature at this stage. We simply note that the propriety of any amendment would depend on what was alleged and the Courts rulings on this matter. CONCLUSION For the reasons set forth in our original brief and herein we respectfully request that counts three and four of Mr. Alvarez be dismissed.

BY:

/s/ Patrick C. English, Esq. PATRICK C. ENGLISH (PCE7898) DINES AND ENGLISH, L.L.C. 685 Van Houten Avenue Clifton, New Jersey 07013 (973) 778-7575 Attorney for Plaintiff

Date: April 8, 2013