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DON KING PROD., INC. v. DOUGLAS

April 4, 1990

DON KING PRODUCTIONS, INC. PLAINTIFF, TRUMP PLAZA ASSOCIATES, PLAINTIFF/INTERVENOR,
v.
JAMES "BUSTER" DOUGLAS, JOHN P. JOHNSON, GOLDEN NUGGET, INC., AND THE MIRAGE CASINO-HOTEL, DEFENDANTS.



The opinion of the court was delivered by: Sweet, District Judge.

    OPINION

Defendants James "Buster" Douglas, John P. Johnson, Golden Nugget, Inc. and The Mirage Casino-Hotel ("Mirage") move to dismiss on jurisdictional grounds, or alternatively, to transfer to the United States District Court for the District of Nevada the complaints brought against them in these consolidated actions by Don King Productions, Inc. ("DKP") and Trump Plaza Associates ("TPA"). For the reasons set forth below, the motion to dismiss is denied except as to the claims brought by TPA, as to which it is granted, and the motion to transfer is denied.

The Parties

Defendant Douglas, a professional boxer who resides in the State of Ohio, is the heavyweight champion of the world. Douglas's boxing career is managed by Johnson, who is also an Ohio resident. The Mirage and its parent corporation, the Golden Nugget, are Nevada corporations, the former a licensed gaming casino-hotel located in Las Vegas.

DKP, a New York corporation, engages in the promotion of professional boxing bouts. DKP, which is headed by Don King, assertedly has the rights to promote Douglas's fights pursuant to certain agreements. TPA is a New Jersey partnership, the principal general partner of which is Donald Trump, a resident of New York. TPA owns and operates the Trump Plaza Hotel and Casino in Atlantic City.

The Facts

On February 10, 1990, Douglas fought a title bout in Tokyo, Japan against then-heavyweight champion Michael Tyson which culminated in a tenth round knockout of Tyson. That fight was promoted by DKP, pursuant to a promotion agreement and a bout agreement between DKP and Douglas which allegedly gives DKP the exclusive right and option to promote boxing fights of Douglas.*fn1 DKP also is the promoter of Michael Tyson.

Immediately after the bout, Don King, the president, chief executive officer and principal shareholder of DKP, questioned Douglas' victory (on grounds that an eighth-round knock-down of Douglas might have ended the fight had it not been for a long count), and allegedly sought to have the decision in favor of Douglas invalidated by the World Boxing Association and World Boxing Council. King's efforts failed. Although not without initial hesitation, Douglas eventually was recognized by all three international boxing federations as the winner of the bout and, therefore, as the reigning heavyweight champion of the world.

Prior to the February 10 title fight (and apparently anticipating a different fight outcome), DKP had agreed with TPA to hold a match between Tyson and Evander Holyfield on June 18, 1990 in Atlantic City, New Jersey, at the Trump Plaza. After Douglas defeated Tyson, DKP and TPA at some point agreed instead to use that date for a rematch between Douglas and Tyson at Trump Plaza. According to King and Trump, the agreement (the "Trump-King deal") was reached on or around February 12, 1990, although Trump's original announcement of the deal on that date was at that time questioned by his own spokespersons and, more significantly, publicly challenged by King. DKP purportedly had the authority to enter into such an agreement contemplating Douglas' services, by virtue of DKP's exclusive promotional agreements with Douglas.

For several alleged reasons, including DKP's efforts to reverse the decision in favor of Douglas immediately following the February 10 bout, Douglas and his manager Johnson at some point after the Tokyo fight came to the view that they were no longer bound by the exclusivity provision of the promotional contracts with DKP. Douglas and Johnson commenced negotiations with various parties to find someone other than DKP to promote Douglas' next fight. On February 21, 1990, Douglas and Johnson signed a contract with the Mirage (the Douglas-Mirage contract), pursuant to which the Mirage would promote two fights of Douglas at the site of its hotel-casino in Las Vegas, Nevada. An express condition to Mirage's obligations under the agreement was the obtaining by Douglas and Johnson of a release or waiver from DKP of its purported exclusive promotional rights over Douglas or a final judgment from a Nevada state court or a federal court confirming that the exclusivity provision was void and unenforceable.

On February 21, 1990, Douglas, Johnson and the Mirage filed suit in Nevada state court, seeking a judicial declaration that the contracts between DKP and Douglas/Johnson were void in their entirety or alternatively without force with respect to the exclusivity clause. Grounds for invalidation included that King had breached duties he owed to Douglas under the contracts and that a regulation of the Nevada State Athletic Commission prohibited exclusive contracts between a boxer and promoter.

On February 22, 1990, DKP filed its complaint in this action, alleging that Douglas and Johnson had breached their contractual relations with DKP and that the Mirage had tortiously interfered with those relations. TPA commenced an action on March 2, 1990 alleging tortious interference by Douglas, Johnson and the Mirage with the Trump-King deal and sought by order to show cause to intervene in and to consolidate its action with the suit filed by DKP. That motion was granted on March 9, 1990.

Shortly after filing, the action commenced by Douglas, Johnson and the Mirage in Nevada state court was removed to the federal district court in Nevada. The federal court there recently denied a motion to remand the case to state court and has scheduled the case for a hearing on April 9, 1990. This court has been advised that a motion to transfer that action to this district is in the process of being filed or has been filed.

The Issues

Personal Jurisdiction over Douglas and Johnson

Defendants Douglas and Johnson urge dismissal of both the DKP and TPA actions on grounds that the court lacks in personam jurisdiction over them.*fn2 Although a plaintiff has the ultimate burden of establishing jurisdiction over a defendant by a preponderance of the evidence, prior to an evidentiary hearing the plaintiff "need make only a prima facie showing by its pleadings and affidavits that jurisdiction exists." CutCo Industries v. Naughton, 806 F.2d 361, 365 (2nd Cir. 1986) (citations omitted). For the reasons set forth below, DKP has made such a showing with respect to defendants Douglas and Johnson, and TPA has not.

A. The DKP Breach of Contract Claims

DKP has sued Douglas and Johnson for breach of the promotion and bout agreements. DKP asserts this court has personal jurisdiction over Douglas and Johnson with respect to this claim pursuant to the "transaction of business" provision of the New York long-arm statute, CPLR § 302(a)(1).*fn3 This section provides that a court may exercise personal jurisdiction over a nondomiciliary who in person or through an agent "transacts any business within the state," id., provided there is "some articulable nexus between the business transacted and the cause of action sued upon." Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 762 (2nd Cir. 1983). In determining whether the standard of § 302(a)(1) is satisfied in a breach of contract case, the court considers the totality of the defendant's contacts with New York, Citicorp International Trading Co., Inc. v. Western Oil & Refining Co., Inc., 708 F. Supp. 86, 88 (S.D.N.Y. 1989), asking "the central question . . . whether the defendant has performed purposeful acts in New York in relation to the contract." A.C.K. Sports v. Doug Wilson Enterprises, 661 F. Supp. 386, 389 (S.D.N.Y. 1987). See also CutCo Industries, Inc. v. Naughton, 806 F.2d 361, 365 (2nd Cir. 1986).

DKP has made a prima facie showing that Johnson and Douglas performed purposeful acts in New York in relation to the contract sufficient to satisfy the test of § 302(a)(1). Without question the principal performance required of Douglas by the contracts — fighting — did not take place in New York, Douglas and Johnson did not execute the agreements in New York, and the acts constituting the alleged breaching conduct also appear to have taken place outside the state. Nevertheless, in other respects Johnson and Douglas conducted activity in New York pursuant to the contracts so as to avail themselves of New York laws.

Included among their alleged New York transactions relating to their contracts with DKP were: (a) New York appearances by Douglas pursuant to the publicity provision of the promotional agreement to promote the two boxing events DKP had scheduled for Douglas under the Agreement (these consisted principally of a 1989 press conference in New York, arranged by DKP to promote the bout between Douglas and Oliver McCall, held in Atlantic City on July 21, 1989 as a warm-up to the Tyson/Williams fight on the same card, and the taping of an interview of Douglas and Tyson on HBO to be used in connection with HBO's delayed broadcast of the Tokyo bout); (b) two meetings in New York with Don King at which were discussed possible bouts for Douglas under the agreements (one such meeting occurred in 1989 before the fight with McCall, at which King discussed with Douglas a possible future bout between Douglas and Tyson; the other meeting, between King and Johnson, occurred after the Tokyo bout, on February 14 or 15, 1990, when King alleges he discussed future fight arrangements including a rematch of Douglas and Tyson under the contracts); (c) telephone and mail contact by Johnson and his lawyer, in Ohio, with King and DKP's counsel in New York in connection with the negotiation of the promotional agreement, which according to King were contacts initiated by Johnson; and (d) the inclusion in the final promotional agreement of a New York choice of law provision.

"Acts performed by a defendant subsequent to the execution of a contract are ordinarily of jurisdictional consequence." CutCo Industries v. Naughton, 806 F.2d 361, 367 (2nd Cir. 1986). Here, Douglas and Johnson did direct certain activities purposefully toward this jurisdiction in connection with Douglas' fighting contracts after they were executed, coming here twice to assist in the promotion of fights that had been arranged by DKP under the contracts, and, on those occasions, discussing with DKP possible future fights contemplated by contract. They also to some degree initiated New York contacts in negotiating the promotional agreement, although these "long-range communications" did not constitute "extensive purposive activity here without actually setting foot in the State." CT ...


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