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DON KING PRODUCTIONS, INC. v. HOPKINS

May 4, 2005.

DON KING PRODUCTIONS, INC., Plaintiff,
v.
BERNARD HOPKINS, JR., and GOLDEN BOY PROMOTIONS, INC., Defendants.



The opinion of the court was delivered by: PETER LEISURE, District Judge

OPINION AND ORDER

This case arises from a promotional relationship gone sour between two prominent members of the boxing world. Plaintiff, Don King Productions, Inc. ("DKP"), accuses defendant, Bernard Hopkins, Jr., currently the undisputed middleweight champion of the world, of breach of contract, and contends that defendant, Golden Boy Promotions, Inc. ("GBP"), a rival boxing promoter, tortiously interfered with that contract by negotiating its own agreement with Hopkins. DKP also seeks a judgment declaring that the Muhammad Ali Boxing Reform Act (the "Ali Act"), 15 U.S.C. §§ 6301 et seq., does not render its contract with Hopkins unenforceable. Hopkins and GBP now seek to have the complaint dismissed. Hopkins moves pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), contending that the Court lacks subject matter jurisdiction over DKP's claims and that DKP cannot properly plead a breach of contract claim because the Ali Act nullifies the contract in question. In addition to arguing that subject matter jurisdiction cannot be established, GBP claims that DKP's tortious interference claim should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(2) because the Court does not have personal jurisdiction over GBP. For the reasons that follow, defendants' motions to dismiss are granted because the Court cannot exercise subject matter jurisdiction over DKP's claims.

  BACKGROUND*fn1

  In the sport of boxing today, there are three major sanctioning organizations, all of which recognize champions in different weight divisions: the World Boxing Council ("WBC"), the World Boxing Association ("WBA"), and the International Boxing Federation ("IBF"). (See First Amended Complaint ("Compl.") ¶ 15.) Therefore, it is possible for there to be three world champions in each weight division. (Id.) Each of the three sanctioning organizations requires its champion to defend his title by fighting an opponent, known as the "mandatory challenger," every nine months. (Id. ¶ 16.) When such a "mandatory defense" becomes due, the promoters of the champion and the challenger attempt to negotiate a deal for the championship bout. (Id.) If no agreement can be reached within a set period of time, the sanctioning organization will order a "purse bid." (Id.) Under a "purse bid," any promoter registered with the sanctioning organization, regardless of whether it has a contractual relationship with either the champion or the challenger, may submit a sealed bid for the right to promote the bout. (Id.) The promoter who submits the highest bid is awarded the championship fight and is required to put it on within a set period of time, with the champion generally receiving 75% of the high bid, and the challenger receiving 25%. (Id.) In return, the promoter receives the right to stage the bout wherever it desires and to keep all of the profits generated by the bout. (Id.) If the champion refuses to participate in the mandatory bout following the purse bid, the organization will strip him of his title. (Id.) If the promoter does not stage the fight in a timely manner, the right to promote the fight is transferred to the promoter with the second highest bid. (Id.)

  In January 2001, DKP and Hopkins entered into a promotional agreement (the "Promotional Agreement"), which provided, inter alia, that Hopkins would receive certain minimum purses for bouts against opponents designated by DKP. (Id. ¶ 14.) Nine months later, in September 2001, Hopkins became the "unified champion" in the middleweight division, meaning that he was the WBC, WBA, and IBF champion. (Id. ¶ 17.) Accordingly, Hopkins was required to engage in mandatory defenses for each organization. (Id.)

  In October 2002, the WBC conducted a purse bid for Hopkins' title defense against the designated mandatory challenger, Morrade Hakkar. (Id. ¶ 19.) DKP won the purse bid with a bid of $1,501,000. (Id.) Hakkar's promoter, AB Stars, submitted the only other bid in the amount of $1,411,000. (Id.) Therefore, pursuant to WBC rules, DKP could stage the Hopkins-Hakkar fight at the site of its choosing, but had to do so by no later than January 2003. (Id.)

  In November 2002, DKP informed Hopkins that it would not be able to stage the bout by January 2003. (Id. ¶ 21.) Following this development, Hopkins had the right to demand that the WBC replace DKP with AB Stars as the promoter for the Hakkar bout pursuant to AB Stars' second place bid. (Id. ¶ 22.) Instead, Hopkins decided to enter into a bout agreement with DKP (the "Hakkar Bout Agreement"), which provided that DKP would stage the fight in February, March or April of 2003 for a purse of $705,000 in Hopkins' hometown of Philadelphia. (Id. ¶ 24.) Moreover, DKP agreed to pay Hopkins $305,000 of the total purse upon the execution of the agreement, which is highly unusual in boxing. (Id. ¶ 26.) Hopkins apparently insisted upon this advance payment because he was in need of immediate funds to satisfy a judgment of $610,000 that had recently been rendered against him. (Id.) In addition, the Hakkar Bout Agreement provided that Hopkins would grant DKP four distinct six-month options to promote Hopkins' next four bouts following the Hakkar fight. (Id. ¶ 27.) DKP could exercise each option by giving notice to Hopkins within six months of the preceding bout or within six months of the expiration of the preceding option. (Id.) In the event that DKP exercised one or more of the options, the parties agreed that DKP would pay Hopkins pursuant to the January 2001 Promotional Agreement. (Id. ¶ 28.)

  The Hakkar bout took place in March 2003, and DKP did not exercise its first option over the following six months. (Id. ¶ 30.) In August 2003, DKP won a purse bid for Hopkins' mandatory defense of his WBA championship, which was staged in December 2003. (Id.) Again, DKP did not exercise its second option over the following six months. (Id. ¶ 31.) In September 2004, Hopkins agreed to fight Oscar de la Hoya without consulting with DKP, in contravention of the exclusive options provision of the Hakkar Bout Agreement, which was effective until at least March 2005. (Id. ¶ 32.)

  On November 15, 2004, DKP informed both Hopkins and GBP by letter that it was exercising its option rights under the Hakkar Bout Agreement, and advised GBP that a promotional agreement between Hopkins and GBP would constitute tortious interference with DKP's contractual rights. (Id. ¶¶ 34-35.) In response, Arnold Joseph, Esq., counsel to Hopkins, informed DKP that DKP's options had been rendered void by Section 6307 of the Ali Act. (Id. ¶ 36.) Moreover, Mr. Joseph indicated that Hopkins would immediately bring suit against DKP, if DKP contacted GBP or any other entity with whom Hopkins associated. (Id.) Thereafter, despite DKP's notice, Hopkins and GBP entered into an exclusive promotional agreement (the "Golden Boy Agreement"). (Id. ¶ 37.)

  As a result, DKP filed the instant suit on December 9, 2004, alleging that: (1) it is entitled to a judgment declaring that the Hakkar Bout Agreement is not rendered unenforceable by Section 6307b(b) of the Ali Act; (2) Hopkins breached the Hakkar Bout Agreement; and (3) GBP tortiously interfered with the Hakkar Bout Agreement. Section 6307b(b) of the Ali Act provides that: "No boxing service provider may require a boxer to grant any future promotional rights as a requirement of competing in a professional boxing match that is a mandatory bout under the rules of a sanctioning organization." 15 U.S.C. § 6307b(b).

  Also on December 9, 2004, GBP filed suit against DKP in California state court seeking a judgment declaring that the Hakkar Bout Agreement is invalid and unenforceable and the Golden Boy Agreement is valid and enforceable (the "California action"). That action was removed to federal court by DKP and was transferred to this Court by motion of DKP. Ultimately, GBP voluntarily dismissed the California action before DKP filed an answer.

  Hopkins and GBP now petition the Court to dismiss DKP's complaint. Hopkins argues that the Court lacks subject matter jurisdiction over the action and that DKP has failed to state a claim upon which relief can be granted, while GBP contends that the Court lacks both subject matter jurisdiction over the action and personal jurisdiction over GBP. The Court need only address defendants' subject matter jurisdiction argument because it is dispositive of the instant motion.

  DISCUSSION

  I. Standard of Review for Rule 12(b)(1) ...


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