IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

AUSTIN TROUT,
CIVIL NO.: 17-1953 (PAD)
Plaintiff,

vs.

ORGANIZACION MUNDIAL DE BOXEO,

INC.

Defendant.

MEMORANDUM IN OPPOSITION TO THE WBO’S BRIEF ON SEVERABILITY OF

ARBITRATION CLAUSE

TO THE HONORABLE COURT:

COMES NOW, Plaintiff Austin Trout (hereinafter “Trout” or

Plaintiff), through his undersigned legal counsel, and very

respectfully states and prays:

PROCEDURAL BACKGROUND

1. On September 30, 2018, this Honorable Court issued

Opinion and Order dismissing the case and referring it to

arbitration (Docket No. 72).

2. On July 10, 2020, the United States Court of Appeals

for the First Circuit vacated the District Court’s dismissal and

remanded the case for further proceedings consistent with the

referenced July 10, 2020 opinion (Docket No. 86). The Appeals

Court concluded that “the arbitration agreement may not proceed

under the (WBO) Appeal Regulations…”. It left to this District

Court “to determine in the first instance whether the

arbitration-selection provision at issue is severable from the

remainder of the arbitration agreement.”

3. On September 22, 2020, this Honorable Court ordered

the parties to confer and file, no later than October 7, 2020 a

Joint Motion with their recommendations as to what the next step

in the litigation should be, particularly in light of the issues

that the Court of Appeals referred to in its July 10, 2020

opinion, at Pages 22 and 23 of its Opinion (Docket No. 85).

4. On October 6, 2020, the parties filed “Joint Motion in

Compliance with Order of September 22, 2020 (Docket No. 90)”.

The parties provided their respective recommendations as

requested by the Court.

5. On October 7, 2020, this Honorable Court issued Order,

stating:

Not later than November 9, 2020, at 5:00pm,

the parties shall file separate briefs, which
shall include relevant caselaw, discussing
whether the arbitrator-selection clause
contained in the WBO's Rules is severable
from the remainder of the arbitration
agreement.

6. In compliance with the Court’s Order, each party

submitted its brief as to the severability or not of the

arbitrator-selection provision contained in the arbitration

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provisions of the defendant World Boxing Council (“WBO”)

Regulations. (Docket Nos. 93 and 94)

7. On November 13, 2020, the Honorable Court ordered the

parties to submit the respective oppositions by December 1,

2020, and any reply thereto by December 15, 2020. (Docket No.99)

8. In compliance with the referenced order, Plaintiff

Austin Trout hereby submits his opposition to the WBO’s legal

brief contained in Docket No.93.

DISCUSSION

The WBO’s brief at Docket No.93 can be divided into 3 main

arguments, to wit: 1. that the arbitrator selection provision is

not integral or central to the WBO’s Rules and Regulations (the

“Integral Test”); 2. that the Championship Regulations contain a

savings clause which further demonstrates the parties intent

that provides for severability and; 3. the WBO proposes a way

for the parties to select a 3 member panel of arbitrators, with

what the WBO characterizes as “qualified arbitrators that have

the required expertise and experience in championship boxing and

its regulations”. (Docket No. 93, pages 1, 2 and 15). We will

address each of these arguments separately.

A. The “Integral Test” propounded by the WBO is

inapplicable to the instant case.

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 First and foremost, we must establish for the record that

the First Circuit found the clause at issue unconscionable:

And, given the choice of law provision in the

Championship Regulations, we understand the WBO to be
referring, thereby, to the doctrine of
unconscionability under Puerto Rico contract law. See
P.R. Elec. Power Auth. v. Action Refund, 515 F.3d 57,
68 (1st Cir. 2008) ("Puerto Rico law recognizes"
unconscionability as a basis for "judicial
intervention where a contract exhibits an 'excessively
onerous quality that reaches the point of bad faith,
and defeats those rules of collective conduct that
must be observed by every honest and loyal
conscience.'" (quoting López de Victoria v. Rodríguez,
13 P.R. Offic. Trans. 341, 349, 113 D.P.R. 26
(1982))). But, as we will explain, we are not
persuaded by the WBO's arguments for rejecting this
unconscionability challenge.

Opinion, Page 17, paragraph 1. (Our Emphasis)

Thus, we agree with Trout that the arbitration may not

proceed under the Appeal Regulations, as we are not
persuaded by the WBO's only arguments as to why, by
permitting the WBO to act as -- in Trout's words --
"party and judge," the arbitration agreement is not so
"unreasonable and unjust" as to be unconscionable
under Puerto Rico contract law.

Opinion, Page 21, paragraph 1. (Our Emphasis)

Therefore, as stated by the Court of Appeals in its Opinion

and Order, unconscionability amounts to bad faith. The clause at

issue has been deemed a bad faith one. This is of paramount

importance to establish both, why the cases cited by the WBO to

support the “Integral Test” are inapposite and why Sections 2, 3

and 4 of 9 U.S.C. do not provide language for the severance of

bath faith clauses.

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 The case law cited by the WBO in support for the

application of the “Integral Test” to the instant case is

inapposite.

9 U.S.C. § 5 provides three possible situations in which

the judicial appointment of an arbitrator is appropriate. The

only scenario in which the Honorable Court may appoint an

arbitrator, in the instant case, is if it where to find that

there has been a “lapse” in the naming of the arbitrator.

However, the term “lapse” has been narrowly construed by the

courts.

The cases cited by the WBO in support of the application of

the “Integral Test” are inapposite and completely

distinguishable from the instant case. See, A-1 Premium

Acceptance, Inc. v. Hunter, 557 S.W.3d 923 (Mo. 2018)

(arbitration clause required arbitration before the National

Arbitration Forum, which was no longer available to hear

consumer claims); Ranzy v. Tijerina, 393 Fed. Appx. 174 (5th

Cir. 2010) (same); GGNSC Louisville Mt. Holly, LLC v. Mohamed-

Vall, 2016 WL 9024811 (W.D. Ky. Apr. 6, 2016) (same); In re

Salomon Inc. S’holders’ Derivative Litig., 68 F.3d 554 (2d

Cir.1995) (New York Stock Exchange, which was the arbitration

institution chosen in the contract, declined to hear the

dispute); Wilson v. Dell Financial Services, L.L.C., 2010 WL

503093 (S.D.W. Va. Feb. 8, 2010) (American Arbitration

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Association declined to hear debt collection disputes, and the

National Arbitration Forum ceased to hear consumer cases); and

Cobarruviaz v. Maplebear, Inc., 143 F. Supp. 3d 930 (N.D. Cal.

2015) (arbitral forum JAMS declined to hear the case).

In the above referenced cases, the courts are analyzing a

situation in which an entire arbitration institution is no

longer available or refuses to hear a case. It is noteworthy to

point out that the courts in the cited cases are not passing

judgment on whether an invalid procedure within a broader

arbitration agreement is integral to the agreement. Also, the

cited cases deal with extinct arbitration providers, and do not

address unconscionable and bad faith agreement clauses in an

adhesion contract, such as the case here.

The more applicable case to the one at hand, comes from

the Eleventh Circuit. In Perez v. Globe Airport Sec. Servs.,

Inc., 253 F.3d 1280, 1287 (11th Cir. 2001), the Court stated:

To sever the [invalid provision from the arbitration

clause] would reward the [the drafting party] for its
actions and fail to deter similar conduct by others.
If [a drafting party] could rely on the courts to
sever an unlawful provision and compel the [plaintiff]
to arbitrate, the [drafting party] would have an
incentive to include unlawful provisions in its
arbitration agreements. Such provisions could deter an
unknowledgeable [plaintiff] from initiating
arbitration, even if they would ultimately not be
enforced. It would also add an expensive procedural
step to prosecuting a claim; the [plaintiff] would
have to request a court to declare a provision
unlawful and sever it before initiating arbitration.

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 The decision in Pérez is consistent with 9 U.S.C. § 2,

which does not provide for the severance of unconscionable and

bad faith agreements such as the one at hand, as stated by the

First Circuit. Neither do Sections 3 and 4 of 9 U.S.C., which

deal with an arbitration in accordance with the terms of the

agreement, not with the severance of bad faith clauses. (Our

Emphasis).

Here, the First Circuit already found that the arbitrator

selection provision was a bad faith provision and, as such,

should be excluded from coverage under 9 U.S.C. § 2, 3 and 4,

which are the sole provisions allowing for an order compelling

arbitration under the FAA.

The language of 9 U.S.C. § 2, 3 and 4 and 5, and the

controversy at hand, are more compatible to the ratio in Perez

v. Globe Airport Sec. Servs., supra.

The instant case was originally filed on November 2015.

Any purpose or north in achieving a speedy resolution of the

case has been defeated. Rewarding defendant with the beginning

of an arbitration proceeding 5 years into a litigation will

only deter boxers, with fewer resources than plaintiff, to

seek vindication of their rights. It will only perpetuate the

WBO dilatory tactics.

B. The WBO’s Appeal Regulations do not Contain a

Severance Clause

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 The Circuit Court of Appeals squarely decided on July 10,

2020, at page 21, that “we agree with Trout that the

arbitration may not proceed under the (WBO) Appeal

Regulations”.

As stated in our November 9, 2020 brief (Docket No. ):

the “WBO Appeals Regulations” and the “WBO

Regulations of World Championship Contests” are two
(2) separate, different regulatory bodies of the WBO.
The savings clause that the WBO alludes to is
contained only in Article 36 of the “WBO Regulations
of World Championship Contests”. However, the
arbitration-selection clause that was invalidated by
the Circuit Court was located in the “WBO Appeals
Regulations” which does not contain a savings clause.
We have seen no legal support from the WBO to
sustain the proposition that the savings clause
located in the document “WBO Regulations of World
Championship Contests” is extensive or applicable to a
different document, the “WBO Appeals Regulations”.
Because the “WBO Appeals Regulations” do not
contain a savings clause, the invalidation of the
arbitrator-selection provision in those regulations
has the effect to invalidate the entire arbitration
process therein.
Trout feels that there is no ambiguity here. If
the WBO was interested that the savings clause of the
“WBO Regulations of World Championship Contests” be
applicable to the “WBO Appeals Regulations”, it should
have stated so in its regulations. Even if ambiguity
is assumed in this matter, Santiago v. Kodak
Caribbean, Ltd., 129 D.P.R. 114 (1993) is applicable
(noting that under the doctrine of “adhesion
contracts” any ambiguity in the interpretation of a
contract should be interpreted in favor of the party
that did not participate in its drafting). Trout
clearly did not participate in the drafting and
approval of neither the “WBO Appeals Regulations or
the “WBO Regulations of World Championship Contests”.
It is worth noting that the nature of the adhesion
contract, and the way the applicable case law
interprets it under Puerto Rico law are squarely

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 alleged in the Amended Complaint. See, Docket No. 28,
page 7, paragraph 211.

See, Docket No.94, Pages 7-9.

Conveniently, the WBO tries to shift the attention

from the clause that was invalidated, contained in the Appeals

Regulation, to Section 35 of the Championship Rules. This, we

presume, in an effort to transmigrate the severance clause

contained in Section 36 of the Championship Rules and literally

drafted in a different document (Appeals Regulations), where is

nowhere to be found.

Again, and as stated before, if the WBO was interested that

the savings clause of the “WBO Regulations of World Championship

Contests” be applicable to the “WBO Appeals Regulations”, it

should have stated so in its regulations. By having the option

of inserting a severance clause in the Appeals Regulations, but

choosing unilaterally not to include such severance clause, the

WBO willingly decided that the arbitration provisions within the

Appeal Regulations were to be enforced or invalidated in their

entirety, without the severance of particular terms.

C. If the Honorable Court Decides to Appoint an

Arbitrator, Such Designation should be made solely by
the Honorable Court.

1 “21. Since the privilege of membership requires Members to abide by the

governing rules and regulations of the WBO, and other WBO mandates, since the
terms of the WBO Constitution, Rules and Regulations can be unilaterally and
arbitrarily changed and amended by the WBO, and since the provisions of these
Constitution, Rules and Regulations are not subject to any kind of
negotiation between the WBO and its Members, the WBO’s Constitution, Rules
and Regulations constitute an adhesion contract.”

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 The appearing party, in compliance with the Honorable

Court’s order, will address this portion of the WBO’s argument.

However, it must be clearly established that Plaintiff believes

the instant case should proceed in its ordinary track and go to

a jury. Having stated the obvious, let us discuss plaintiffs

argument.

The WBO’s intent for a 3 member panel with boxing

background is an attempt to circumvent the spirit of the FAA.

The boxing industry is a world industry in its global scope and

reach. But, in terms of who runs the industry, its is a rather

close circle, more so in these COVID times, which has only

allowed the big companies and promoters to stay afloat. The WBO,

the WBC, the WBA and the IBF are the four major sanctioning

bodies in the world. Every worthy world title comes from one of

these four entities. All promoters, managers, boxers, sport

related lawyers, even boxing commissions are looking for these

sanctioning bodies to classify and eventually sanction a world

or regional title fight for their fighters. That is how the

industry works. As a matter of fact, we know that at least 2 of

the 3 members of the now infamous Grievance Committee were or

are legal representatives of promoters and/or managers with

boxers who were or are, or are expected to be, classified by the

WBO or WBO Regional and/or World Champions per se.

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 The WBO was established more than 30 years ago. Mr.

Francisco Valcárcel is the WBO President since 1996. In the

event the Honorable Court decides to send the case to

arbitration, in order to insure the transparency of the outcome,

the Court must name one arbitrator by itself.

To do as the WBO suggests, will only amount to an increase

in the costs to the Court and the parties. But most of all, it

could allow the WBO to submit individuals with ties to it,

something very possible given the nature of the industry of

professional boxing.

C. Conclusion

The arguments brought by the WBO in its brief do not

warrant the case to be sent to arbitration.

The “Integral Test” is inapplicable to the instant case.

Said test applies when an entire arbitration institution is no

longer available or refuses to hear a case. Such is not the case

here. The instant controversy deals with a bad faith clause on a

written body that does not contain a severance clause.

The arbitration provisions contained in the WBO regulation

emanate from two (2) separate set of rules. The first is called

the “WBO Appeal Regulations”. It does not contain a savings

clause. The second is called “WBO Regulations of World

Championship Contests”. It contains a savings clause in its

Article 36.

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 The Appeals Regulation, the one containing the clause

invalidated by the First Circuit, does not contain a severance

clause. There is simply none. The WBO tries to draft a severance

clause where there is none. The Championship Rules and the

Appeals Regulations are two different, distinct documents. As

such, the arbitration agreement contained in the Appeals

Regulations is not severable, should be invalidated in its

entirety, and the case should proceed to jury trial.

WHEREFORE, Plaintiff Trout respectfully requests that the

Honorable Court rules that the arbitrator-selection provision

contained in the arbitration provisions of the WBO Regulations

is not severable from the remainder of the terms contained

therein, and thus the case should continue in this Court,

resulting in a jury trial.

RESPECTFULLY SUBMITTED.

WE HEREBY CERTIFY that on this same date we electronically

filed the foregoing with the Clerk of the Court using the CM/ECF

system which will send notification of such filing to the

attorneys of record.

In San Juan, Puerto Rico, this 1st day of December, 2020.

/S MIGUEL J. ORTEGA NÚNEZ

Miguel J. Ortega Núnez
USDC 220609
CANCIO, NADAL, & RIVERA, PSC
PO Box 364966
San Juan, PR 00936-4966
403 Ave. Muñoz Rivera

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Hato Rey, PR 00918-3345
Tel. (787) 767-9625
Email:

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