New Jersey Sports Prod. v. Don King Prod., Inc.
| Decision Date | 21 July 1998 |
| Docket Number | No. 97-Civ-1175 (WGB).,97-Civ-1175 (WGB). |
| Citation | 15 F.Supp.2d 534 |
| Parties | NEW JERSEY SPORTS PRODUCTIONS, INC., d/b/a Main Events, Plaintiff, v. DON KING PRODUCTIONS, INC., Oliver McCall, Jimmy Adams, Time Warner Entertainment Co, L.P., Nevada Athletic Commission, a division of the Nevada Department of Labor and Industry, and John Does 1-5, Defendants. |
| Court | U.S. District Court — District of New Jersey |
Patrick C. English, Dines & English, Clifton, NJ, for Plaintiff New Jersey Sports Productions, Inc.
Pamela Labaj, Curtis, Mallet-Prevost, Colt & Mosle, Newark, NJ, for Defendant Don King Productions, Inc.
Andrew Muscato, Whitman Breed Abbott & Morgan, Newark, NJ, Eckley M. Keach, Goodman, Chesnoff & Keach, Las Vegas, NV, for Defendant Oliver McCall.
Plaintiff, New Jersey Sports Productions, Inc, d/b/a Main Events ("Main Events") moves for an Order: (1) permitting Main Events to pay into the Court registry the sum of $3,003,923.04 together with accrued interest, in connection with an interpleader action brought by Main Events; (2) restraining any other actions affecting the funds involved in this interpleader (except a disciplinary action brought by the Nevada Athletic Commission ("NAC") against the Defendant, Oliver McCall ("McCall")); and (3) directing that claims on the alleged fund be filed. Main Events asserts jurisdiction pursuant to 28 U.S.C. § 1332 (diversity of citizenship). For the reasons set forth below, the Court grants Main Events' motions seeking an Order: (1) permitting Main Events to pay into the Court registry the sum of $3,003,923.04 together with accrued interest, in connection with an interpleader action brought by Main Events; (2) directing that claims on the alleged fund be filed; and (3) restraining any other actions affecting the funds involved in this interpleader (except a disciplinary action brought by the NAC against McCall).
The central events of this lawsuit concern a heavyweight title bout between McCall and Lennox Lewis that took place on February 7, 1997. McCall's purse for the fight was agreed to be $3,075,500.00. (Complaint Ex. B ¶ 2).1
Main Events, the promoter of the bout, entered into two contracts with McCall and his manager, Defendant Jimmy Adams ("Adams"). Under the first of these contracts, the World Boxing Council Official Championship Bout Contract ("WBC Contract"), McCall agreed to, among other things, refrain from the use of drugs. (Complaint Ex. A ¶ 7).2 According to Main Events' Complaint, McCall thereafter was arrested on drug charges. (Complaint ¶ 44). Furthermore, McCall agreed to cooperate and assist Main Events in promoting the bout. (WBC Contract, attached as Ex. A to Complaint, ¶ 11). According to the Complaint, McCall breached this obligation by refusing to cooperate with Main Events in promoting the bout.3
McCall and Main Events4 entered into a second contract titled, "Official Boxing Contract, Nevada Athletic Commission" (the "NAC Contract"), which provided that McCall would not be entitled to the purse if the NAC determined that McCall did not engage in honest competition or give an honest exhibition of his skills. (Complaint Ex. B ¶ 3).
Paragraph 3 of the NAC Contract provides, in part:
[The parties agree] [t]hat the contest ... shall be conducted in all respects in conformity with the laws of the State of Nevada, and the rules and regulations adopted by the Nevada Athletic Commission, which are hereby made a part of this agreement. ... If the referee or the Nevada Athletic Commission shall decide that the Boxer and Manager, or either of them, did not enter into the contract in good faith; or the Boxer and Manager, or either of them, had any collusive understanding or agreement regarding the termination of the match other that the same should be an honest exhibition of skill on the part of the contestants, or that the Boxer is not honestly competing or did not give an honest exhibition of his skill, or is guilty of an act detrimental to the interest of boxing; it is agreed in any of such events that the Boxer shall not be entitled to the compensation above named, or any part thereof, unless so ordered by the Nevada Athletic Commission.
It is further agreed that the Promoter [Main Events] shall pay said compensation to the said Commission in the event the Commission shall so order upon any of the above-mentioned grounds. The Commission shall thereupon, in its discretion, make such disposition of said purse as it deems to the best interest of legitimate sport and may forfeit to the Nevada Athletic Commission all or any part of the compensation or order the same or any portion thereof paid to the Boxer. All parties hereto agree to accept and be bound by the decision of the said Commission and such decision shall be final and conclusive of the rights of the parties hereto.
According to the Complaint, DKP, purportedly on behalf of McCall, demanded that a letter of credit be provided to DKP in McCall's name. (Complaint ¶ 30). The Complaint further alleges that Main Events procured a letter of credit in the amount of $2,983,997, which was provided to DKP in McCall's name. (Id.).5 The letter of credit expired, by its terms, on March 7, 1997. (Complaint ¶ 31). No parties have drawn against the letter of credit; the funds representing McCall's disputed purse are kept in a segregated, interest-bearing account in Bergen Commercial Bank under Main Events's control. (Complaint ¶ 51).
According to the Complaint, McCall simply stopped fighting after the third round of the bout. (Complaint ¶ 48). As a result, the referee stopped the bout fifty-five seconds into the fifth round. (Id.). Main Events alleges that McCall's actions breached both the NAC Contract and WBC Contract. (Complaint Count II).6
On February 7, 1997, shortly after the bout was stopped, the Nevada Athletic Commission notified Main Events that McCall breached the terms of his agreements and that he should not be paid the approximately $3 million provided for in the contracts between the parties. On February 18, 1997, the Nevada Attorney General's Office initiated a disciplinary action before the Nevada Athletic Commission seeking the imposition of fines totaling ten percent of McCall's purse and the revocation of McCall's Nevada boxing license. (Plaintiff's Moving Brief Ex. B ¶¶ 15-18).
On April 1, 1997, approximately 20 days after the Complaint in this action had been filed, McCall and the Nevada Attorney General's Office entered into a settlement agreement (the "Settlement"), a copy of which is attached to the Certification of Eckley M. Keach at Exhibit 3. According to the terms of the Settlement, McCall admitted that the manner and method in which he conducted himself was detrimental to boxing. (Settlement ¶ 1). McCall further agreed to pay a $250,000 fine to the State of Nevada and to suffer a one-year suspension from boxing in Nevada to commence nunc pro tunc February 7, 1997. (Settlement ¶¶ 3-4).
The Settlement must be approved by the NAC before it becomes final. (Settlement ¶ 9). The Settlement provides that the parties' agreement will be placed on the agenda of the next scheduled meeting of the NAC, which had been scheduled for April 26, 1997. (Settlement ¶ 10; Keach Cert. ¶ 5). (The parties, at oral argument, revealed that at the April 26, 1997 meeting, the NAC postponed consideration of the McCall Settlement). The Attorney General agreed to recommend that the NAC approve the Settlement. (Settlement ¶ 10). The Attorney General also agreed to recommend that the NAC order that McCall receive the remaining monies due him, less and except the $250,000 fine, as per the WBC and NAC contracts. (Id.).7
Main Events indicates, in its reply brief, that, while it was aware of the pendency of the NAC hearings, Main Events was not a party to the settlement negotiations and in no way participated in them. (English Aff. ¶ 8). Nor, it would appear, were any parties other than McCall and the NAC privy to the proposed settlement terms.
According to the Complaint, possible claimants to the disputed purse include:
(A) McCall, who allegedly claims that he is due the entire purse;
(B) DKP, which has also raised a claim to part of McCall's purse;8
(C) Time Warner Entertainment, Co., L.P. ("Time Warner"), which, through its broadcast division, Home Box Office, Inc., broadcast the bout;9 (D) Adams, McCall's manager;
(E) The NAC, which has the power to fine McCall;10 and
(F) Main Events, which claims that the amount on deposit is not due because of various contract breaches.
Both DKP and McCall oppose Main Events's application to place the funds on deposit with the Court, to enjoin any other actions affecting the funds (except the pending disciplinary action), and to direct that claims against the fund be filed. They argue: (1) that this Court lacks subject matter jurisdiction over Main Events's interpleader claim; (2) that the interpleader claim is improperly venued in this district; (3) that this Court should abstain from exercising its interpleader jurisdiction in favor of the action pending before the NAC; (4) that the Court lacks personal jurisdiction over McCall; and (5) that the NAC Contract, by its terms, designates the NAC as the exclusive forum to hear these claims.
Interpleader is an equitable device that enables a party holding a fund to compel persons asserting conflicting claims to that fund to adjudicate their rights to the fund in a single action. American Family Mut. Ins. Co. v. Roche, 830 F.Supp. 1241 (E.D.Wis. 1993). The classic interpleader scenario involves a neutral stakeholder, such as an insurance company, faced with completing claims over the rights of the res — e.g., the proceeds of a life insurance policy where the beneficiaries dispute their relative distributions. 7 Charles A. Wright & Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1701 at 486 (1986...
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