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DON KING PRODUCTIONS, INC. v. DOUGLAS

June 29, 1990

DON KING PRODUCTIONS, INC., PLAINTIFF,
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

Don King Productions, Inc. ("DKP") moves for partial summary judgment against defendants James "Buster" Douglas ("Douglas") and John P. Johnson ("Johnson") striking these defendants' affirmative defense of unconscionability and dismissing their counterclaims for slander and intentional infliction of emotional distress. The motion is granted for the reasons set forth below.

The Parties and Prior Proceedings

  Facts and past proceedings relating to this action are set
forth in the court's prior opinion of May 18, 1990 742 F. Supp. 741
 (the "May 18 Opinion") which determined the parties'
cross-motions for summary judgment, familiarity with which is
assumed. The present motion, which followed the submission of
defendants' answer and counterclaims and their responses to
interrogatories in connection therewith, originally was made
returnable on June 19, 1990. That same day several additional
motions in limine were argued and, with the parties' blessing,
argument of this partial summary judgment motion was adjourned
until June 22 to provide the parties additional preparation
time. The motion was argued on that date, after which a
supplemental submission was received from DKP on June 27, 1990.

Standards Applicable to Summary Judgment Motions

Summary judgment is authorized if "there is no genuine issue as to any material fact and. . . the moving party is entitled to a judgment as a matter of law." Fed.R. Civ.P. 56(c). The moving party bears the burden of proving that no genuine issue of material fact exists. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986); Corselli v. Coughlin, 842 F.2d 23 (2d Cir. 1988). All ambiguities are resolved against the moving party, and all favorable inferences are drawn in favor of the party against whom summary judgment is sought. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1608-09, 26 L.Ed.2d 142 (1970); Ramseur v. Chase Manhattan Bank, 865 F.2d 460, 465 (2d Cir. 1989); Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir. 1985), cert. denied, 484 U.S. 918, 108 S.Ct. 269, 98 L.Ed.2d 226 (1987).

However, courts should not be reluctant to grant summary judgment in appropriate cases. "One of the principal purposes of the summary judgment rule is to isolate and dispose of factually insupportable claims," Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986), thereby permitting courts to avoid "protracted, expensive and harassing trials." Meiri v. Dacon, 759 F.2d 989, 998 (2d Cir.), cert. denied, 474 U.S. 829, 106 S.Ct. 91, 88 L.Ed.2d 74 (1985).

The Unconscionable Contracts Defense

Douglas and Johnson plead as an affirmative defense that the contracts they entered into with DKP are unconscionable. Under New York law (which previously has been found to govern the validity of these contracts, see May 18 Opinion at 759), a determination of unconscionability

  requires a showing that the contract was both
  procedurally and substantively unconscionable
  when made — i.e., "some showing of an `absence of
  meaningful choice on the part of one of the parties
  together with contract terms which are unreasonably
  favorable to the other party.'"

Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 10, 537 N.Y.S.2d 787, 791, 534 N.E.2d 824, 828 (1988) (citations omitted and emphasis supplied). The factual contentions set forth in the Douglas/Johnson interrogatories to support the unconscionability defense — that the Tokyo conduct of King was unconscionable, that King is a powerful promoter, and that exclusive, extendable terms of the contracts are unreasonably favorable to King — are as a matter of law insufficient.

The Douglas/Johnson contention that the contracts "became unconscionable" after their inception owing to King's conduct during the Tokyo fight is unavailing, as the underlined language in Gillman illustrates. The doctrine of unconscionability implicates the circumstances and terms of a contract at the time of formation — not the parties' subsequent performance under it. See State v. Avco Financial Service of New York, Inc., 50 N.Y.2d 383, 390, 429 N.Y.S.2d 181, 185, 406 N.E.2d 1075, 1079 (1980) (referring to "circumstances existing at the time of the making"). The Tokyo performance by King is, of course, relevant to whether King breached his obligations of good faith and fair dealing under the contracts, an issue discussed at length in the May 18 Opinion and which has been reserved for trial to a jury. That conduct has, however, absolutely no bearing on the defense of unconscionability, which relates to substantive and procedural fairness of a contract "when made." Gillman, 73 N.Y.2d at 10, 537 N.Y.S.2d at 791, 534 N.E.2d at 828.

Douglas/Johnson next contend that King so dominates promotion of heavyweight fights that the Douglas — King contracts are inherently procedurally unconscionable. That assertion, if true, sounds more probative of an antitrust claim for monopolization than it is demonstrative of the particularized showing of an unfair bargaining process that is requisite to the defense of unconscionability. Douglas/Johnson make no allegation here that deceptive or high-pressure tactics were employed in concluding the contracts, that contract terms were concealed in fine print, or that there was a gross asymmetry in the experience and education of the parties, each of whom was represented by counsel throughout the course of their arms-length negotiations. See May 18 Opinion at 747; cf. Gillman, 73 N.Y.2d at 11, 537 N.Y.S.2d at 791, 534 N.E.2d at 828 (identifying relevance of these and other factors to establishment of procedural unfairness).

At least as stated in the responses to the contention interrogatories, the unconscionability defense does not here implicate its primary use as "a means with which to protect the commercially illiterate consumer beguiled into a grossly unfair bargain by a deceptive vendor or finance company." Marvel Entertainment Group, Inc. v. Young Astronaut Council, No. 88-5141, 1989 WL 129504 (S.D.N.Y. October 27, 1989), 1989 U.S. Dist. LEXIS 12803, at 11 (quoting Gillman v. Chase Manhattan Bank, N.A., 135 A.D.2d 488, 491, 521 N.Y.S.2d 729, 732 (2d Dep't 1987), aff'd, 73 N.Y.2d 1, 537 N.Y.S.2d 787, 534 N.E.2d 824 (1988)). Without some definite allegation of a defect in the contract negotiation process apart from King's stature in the boxing field, which alone does not suggest "inequality so strong and manifest as to shock the conscience and confound the ...


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