NLRB Advice Memoranda, ZUFFA, LLC d/b/a Ultimate Fighting Championship, National Labor Relations Board, (Sep 13, 2018)

This case was submitted for advice as to whether: (1) the Charging Party and other mixed-martial-arts fighters under contract with UFC are statutory employees within the meaning of the Act or independent contractors; and (2) UFC unlawfully discriminated against the Charging Party by failing to renew fight contract in violation of Section 8(a)(3). As to the second issue, we conclude, under Wright Line, [1] that there is insufficient evidence to establish a prima facie case of unlawful discrimination and significant evidence suggesting that the breakdown in contract negotiations occurred for nondiscriminatory reasons related to the Charging Party's demands. As to the first issue, because we find there was no unlawful conduct, it is unnecessary to reach the issue of whether the Charging Party and fighters are statutory employees. Accordingly, further proceedings are unwarranted and, absent withdrawal, the charge should be dismissed.

FACTS

Zuffa, LLC d/b/a Ultimate Fighting Championship (“UFC”) is a promoter of professional mixed-martial-arts (“MMA”) fights. It is headquartered in Las Vegas, Nevada, but promotes fights all over the world. UFC contracts with approximately 600 male and female professional MMA fighters and categorizes them into nine weight classes. UFC organizes all fights, including the individuals matched up to fight on a particular night and the order of the fights, arranges the venue, and contracts with various media networks to broadcast the fights. The week leading up to scheduled fights is referred to as “fight week” and includes various media events and a mandatory “weigh-in” for all participating fighters.

Professionals fighting under the UFC banner must each sign a Promotional and Ancillary Rights contract (“PARC”), which governs their relationship with UFC. Fighters may negotiate aspects of the PARC with UFC, including the number of fights, or “bouts,” that the contract will cover; how much the fighter will earn per fight (the “fighter's purse”); and how much additional the fighter will be paid if wins (the “win bonus”). Among other provisions, the PARC outlines what travel expenses UFC will cover for individual fighters and their team (e.g., coaches, trainers) during fight week. In addition to the PARC, UFC fighters enter into a “Bout Agreement” prior to each fight, which outlines issues and obligations specific to the particular fight. [2]

The Charging Party signed first PARC with UFC in April 2014 and second on March 27, 2016. The March 2016 PARC's term was for four fights or for 20 months following the Charging Party's first fight, whichever occurred sooner. Article 3.2 of the PARC states that UFC fulfills its obligation with regard to each of the four fights if it offers the Charging Party a fight and refuses to take the fight. Article 4.3 then states that UFC may extend the term of the PARC to provide the Charging Party with the minimum four bouts. Article 6.1 sets the Charging Party's fight purse and win bonus at $25,000 each. For each subsequent win, the fight purse and win bonus increase by $3,000, with the maximum fight purse and win bonus each being $34,000. Article 7 outlines “incidentals” that UFC will pay for: the Charging Party's transportation, lodging, meals, and bout tickets during fight week. Specifically, the Charging Party was entitled to two hotel rooms and two round-trip economy-class airline tickets for the Charging Party and one of affiliates (e.g., trainer or manager). When the PARC's term is set to expire, Article 12.1 provides UFC with the right of first negotiation for an extension of the term or renewal. If the parties fail to reach an agreement, Articles 12.1 and 12.2 give UFC the right to match any of the Charging Party's offers from third-party promoters.

The Charging Party's first fight under the March 2016 PARC was on May 14, 2016. [3] During an interview with an MMA publication about the fight, the Charging Party spoke about creating a fighters' association to improve UFC-fighters' terms and conditions. After hearing comments in the media, a UFC-employed commentator told the Charging Party that if wants to stay with UFC, then should not openly discuss unionizing. [4]

Around August 11, 2016, the Charging Party took part in a YouTube promotional video advocating for the Mixed Martial Arts Fighters Association. [5] On August 19, 2016, the Charging Party was interviewed about a burgeoning group, the Professional Fighters Association, and stated in video that wanted to show fighters that could openly talk about unionizing and not be kicked out of UFC. On November 29, 2016, following an information leak that contained the names of fighters who had signed authorization cards with the Professional Fighters' Association, the Charging Party wrote an open letter, via social media pages, to UFC fighters and apologized for the information leak. stated that next steps were to cut ties with the Professional Fighters Association and explore creating own fighters' union.

The Charging Party's second fight under the March 2016 PARC took place on December 17, 2016.

In May 2017, approximately 300 UFC fighters and officials, including the Charging Party, took part in a fighters' retreat. During the retreat there was a speaker panel that included a UFC owner. When the panel opened for questions from the audience, the Charging Party stepped up to a microphone set up for audience questions and talked about the need for fighters to unionize. Soon after, the moderator, who was hired by UFC, told fighters that there would be no more questions and the microphone for audience questions was being turned off.

On July 16, 2017, the Charging Party completed third fight under the March 2016 PARC.

In early September 2017, UFC offered the Charging Party fourth fight, which would take place in December. However, the Charging Party initially declined the fight, saying would consider UFC's match-up if it offered a new four-to-six-bout contract and $100,000 per fight. [6] UFC declined and later sent a letter to the Charging Party stating that “[a]s a result [of] your rejection to compete in a Bout … and in accordance with Article's [sic] 3.1 and 4.3 of your Agreement, [UFC] may elect to extend the Term of your Agreement for the period required to designate another opponent or for a period of six (6) months[.]”

On December 25, 2017, the Charging Party accepted a fight match-up proposed by UFC that would take place at a to-be-determined date in 2018.

Also in late December 2017, the Charging Party contacted UFC seeking a meeting to discuss questions concerning UFC's recent updates to its promotional guidelines, which were to take effect on January 1, 2018. UFC responded, scheduled a meeting for December 27, and asked the Charging Party to submit a list of specific questions. Prior to the meeting, the Charging Party sent UFC questions, which focused on the Charging Party's concern for how the policies, rules, and regulations contained in the promotional guidelines would, inter alia, affect UFC fighters' pay, their behavior in between bouts, sponsorship opportunities, and sanctions for violating the guidelines. The Charging Party showed up for the meeting, but UFC cancelled it.

On January 3, 2018, [7] UFC sent the Charging Party a letter notifying that PARC had been extended because accepted a bout in Atlantic City, New Jersey that was scheduled for April 21; the new contract termination date was May 14.

Also in early January, UFC's chief counsel invited the Charging Party to meet to discuss questions about the updated promotional guidelines. The Charging Party responded, saying would follow up to schedule the meeting. It is unclear whether the Charging Party did follow up but, in any event, the meeting never materialized.

In February, the Charging Party initiated a campaign to promote Project Spearhead, an organization created to solicit and collect union authorization cards to form a union of UFC fighters, and to promote collective action among UFC fighters to improve their terms and conditions of employment. The Charging Party promoted Projected Spearhead on social media platforms, and efforts to launch the organization were covered by several MMA-focused media outlets, receiving print, video, audio, and online coverage.

Days prior to fight week for the April 21 fight, the Charging Party sent UFC a picture of the mouth guard planned to use during the fight, per UFC's promotional guidelines. Typically, UFC does not permit any non-approved logos to be visible during a fight, and the Charging Party's mouth guard prominently displayed Project Spearhead's logo. The pictures were reviewed by UFC's Senior Vice President of Global Consumer Products and its Director of Equipment. In reviewing the pictures via email, these UFC managers were advised by another UFC employee that Project Spearhead is “a group of athletes who are seeking to be legally classified as UFC employees, rather than contractors.” Despite its strict logo guidelines, UFC approved the Charging Party's Project Spearhead-branded mouth guard for use during April 21 fight.

During fight week, the Charging Party contacted UFC with concern that it did not pay for luggage expenses as part of fight week travel costs. also noted that UFC's policies did not include a per diem payment for the final day of fight week. The issue was routed to UFC's chief legal officer, who replied by email to the Charging Party, stating that “it is important to me, as well as our organization, that you feel fully mentally and physically prepared to compete … I instructed our finance department to send you a discretionary bonus … for an additional $500 … that I hope will assist you in focusing your attention on the fight ahead of you[.]”

On April 20, the day before the fight, the Charging Party and fight opponent attended the required weigh-in to ensure that each fighter was within the 135-pound Bantam-weight category. The weight category provides for a one-pound variance. The Charging Party was within the required weight limit, but opponent missed the weight limit by 1.8 pounds. Per the Bout Agreement for that fight, this gave the Charging Party the option to fight and be entitled to 20% of opponent's fight purse in addition to own, or the Charging Party could choose not to fight. The Charging Party then discussed options with coaches and agent. A news reporter asked the Charging Party what was planning to do; the Charging Party stated that felt this was an opportunity to negotiate to extend contract and ask for $100,000 for two more fights. The reporter tweeted the Charging Party's comments, and other MMA news outlets picked up the statement. [8]

Shortly after the failed weigh-in, the Charging Party asked agent to contact UFC to try to negotiate a new fight contract. The agent informed UFC that the Charging Party would not fight opponent unless UFC gave more money and added an additional two fights to contract. UFC responded that it understood that the Charging Party wanted $100,000 per fight for the two additional fights, and that request was unaceeptable. [9] The agent responded that he needed to confirm with the Charging Party whether that was indeed demand or whether wanted “100 flat.” UFC then said that it was not interested in negotiating with the Charging Party. The agent asked the UFC representative whether it was not interested in negotiating “at this time or ever.” According to the Charging Party's agent, the UFC representative advised that UFC was “not interested at this time.” UFC further advised that it would pay the Charging Party fight purse and win bonus—arnroximatelv $62,000—in satisfaction of contract, despite not actually fighting. The agent later responded to UFC, saying that the Charging Party had changed mind and would like to fight despite opponent not making weight, but that wanted to still receive fight purse and win bonus, as well as one additional fight. UFC declined and stated that it was too late to hold the light because it had already informed the opponent that the Charging Party refused the fight.

Shortly thereafter, on April 20, UFC emailed a letter to the Charging Party affirmatively stating that it was not exercising its “Right of First Negotiation” or “Right to Match any Fighter Offers” under sections 12.1 and 12.2 of the Charging Party's PARC. At that point, the Charging Party was no longer under contract with UFC and soon after was removed from UFC's active fighter rankings. There were no further communications between the Charging Party and UFC concerning a new PARC.

ACTION

We assume, without deciding, that the Charging Party is a statutory employee and conclude that, under the Wright Line analytical framework, there is insufficient evidence to establish a prima facie case of unlawful discrimination under Section 8(a)(3). Accordingly, the charge should be dismissed, absent withdrawal.

The Board applies the analytical framework set out in Wright Line [10] to determine whether an employer's adverse employment action was unlawfully motivated by the employee's union or protected concerted activities, as opposed to legitimate business reasons. [11] To establish a violation, the General Counsel has the initial burden of showing that the employee's union or protected concerted activities were “a motivating factor” for the employer's adverse action against [12] To satisfy this initial burden, the General Counsel must make out a prima facie case by showing that the employee was engaged in union or protected concerted activities, the employer had knowledge of those activities, and the employer exhibited animus or hostility toward those activities. [13] Once the General Counsel makes that initial showing, the burden of persuasion shifts to the employer to show that it would have taken the same adverse action even in the absence of the employee's protected activities. [14]

It is well established that direct evidence of anti-union animus is not required and the General Counsel may use circumstantial evidence to infer an employer's unlawful motive. [15] Factors to consider when inferring unlawful motive include: (1) the timing of the adverse employment action in relation to the employee's protected concerted activity; (2) the contradictory nature of the employer's words and deeds at the time of the adverse action; (3) the absence of a cogent reason for the employer's adverse action; and (4) employer behavior that is inconsistent with past practice. [16] While circumstantial evidence may be used, the General Counsel still has the burden to “persuasively establish” a prima facie case of unlawful employee discrimination. [17]

A prima facie case of unlawful discrimination may not be made in the absence of sufficient evidence to infer animus or if the evidence negates animus. For example, in New Otani Hotel & Garden, the Board affirmed the ALJ's finding that there was insufficient evidence to infer animus where the ostensible animus evidence was “too equivocal” or “quite innocuous.” [18] Specifically, the ALJ determined that it “strain[ed] credulity” to cite a supervisor's comments to a union supporter that should “be careful” as substantial evidence of animus concerning the employer's decision to terminate and two other union supporters. [19] The ALJ further noted that, in any event, the fact that the comments were made approximately eight months prior to the employee's termination rendered them too “temporally remote” for the General Counsel to rely on as proof of antiunion animus. [20]

Similarly, in Alexian Bros. Medical Center, the Board reversed the ALJ's inference of anti-union animus because, although the employer instructed a supervisor to redo an evaluation that led to the charging party's termination, the employer made no mention of the union and the ALJ's inference of animus was mere speculation. [21] The Board stated, “[i]f the unlawful motive is not present or cannot be inferred as a matter of law, there is no violation of the Act, even if the employer's conduct is deemed unjustified or unfair.” [22] In W. R. Case & Sons Cutlery Co., the Board affirmed the ALJ's dismissal of the complaint where there was insufficient evidence of animus in the employer's refusal to hire three union activists; rather, the fact that the employer had hired a majority of the predecessor-employer's union officers and stewards, and readily recognized the union, belied any anti-union intent. [23] The Board also stated that “it is not for the Board to second-guess” an employer's legitimate business judgments. [24]

Charging Party claims that UFC's failure to continue to negotiate and enter into a new PARC with was an adverse employment action. While we note that a failure to renew an employment contract can be an adverse employment action akin to discharge in certain circumstances, [25] that is not what occurred here. Here, the Charging Party's PARC expired by its terms and the parties failed to reach an understanding on a new agreement. Twice, the Charging Party requested a new contract, demanding $100,000 per bout, and twice UFC rejected that demand. The discussion of terms ended because UFC was not interested in continuing to negotiate while the Charging Party was seeking to leverage decision whether to fight the next day. Thereafter, neither party made any counter offers or demands that modified its or original bargaining position. In addition, neither party refused to communicate with the other party concerning a new contract. The negotiations simply stopped. The Act does not require any party to enter into a contractual agreement or to offer any specific terms in a contract or renewal of a contract. Thus, it is not clear that UFC took any adverse employment action concerning the Charging Party by not making additional offers to or by failing to enter into a new PARC with

Even assuming that the failure to enter into a new contract with the Charging Party could be considered an adverse action in this case, we cannot establish a prima facie case under Wright Line of a violation of the Act by UFC because there is insufficient evidence that the Charging Party's protected concerted activities were a motivating factor in UFC's decision to discontinue negotiations with

The Charging Party has established that was engaged in protected concerted activity through work with fighters' associations and creation and promotion of Project Spearhead. And, although there is no direct evidence of UFC's knowledge of Charging Party's Project Spearhead activities, and publicity of those activities in the MMA media alone is not sufficient to show knowledge on the part of UFC, it could be argued that there is sufficient circumstantial evidence of knowledge to meet this Wright Line factor. [26]

However, there is insufficient evidence of animus to infer that the Charging Party's protected concerted activities were a motivating factor in UFC's decision not to renew, PARC. First, UFC's letter to fighters in 2014 regarding the Culinary Workers' unionization attempt is too remote in time and was wholly independent of and unconnected from the Charging Party's protected concerted activities in 2017 and 2018. Second, the comments made by a UFC-employed commentator in May 2016, stating that the Charging Party should not pursue unionization, cannot be ascribed to UFC, because there is no evidence that the commentator was a UFC agent and the Region has determined that he was not a statutory supervisor. Third, the allegation that an unnamed UFC official at the May 2017 UFC retreat and panel turned off the microphone and ended audience participation is too speculative to support a finding of animus. Fourth, the hearsay statement of a UFC official in October 2016 to a UFC fighter about unionization is also too remote in time, uncorroborated, and unconnected to the Charging Party's activities. Finally, the timing and circumstances of UFC's failure to renew the Charging Party's contract or make a counteroffer in April 2018 is not sufficient to infer an unlawful motivation, considering that this was the second time the Charging Party attempted to use rejection of a fight as leverage to negotiate an extended contract and the second time that had demanded some iteration of $100,000 for additional fights, [27] which was as much as a 222% increase per fight from then current contract.

Indeed, UFC's actions at key moments appear to have benefited the Charging Party so as to belie anti-union motivation. First, UFC arguably could have ended its relationship with the Charging Party in September 2017 but instead extended contract twice. These renewals occurred after May 2017 statements about unionization. Section 3.2 of the Charging Party's PARC states that “[UFC] shall be deemed to have complied with its obligation to promote any Bout if [UFC] shall have made an offer to Fighter to promote a Bout … and Fighter shall have refused to participate.” After the Charging Party rejected in September 2017 a fight that was to occur in December 2017, UFC extended contract beyond January 2018 for six months for the purpose of finding a different bout and fight opponent. UFC was not obligated to extend agreement. Thus, notwithstanding that UFC knew that the Charging Party was a vocal proponent of unionization, UFC extended the Charging Party's contract and offered a fourth bout when the Charging Party refused UFC's offer in September 2017 and then another fight three months later. Further, even if UFC was not contractually privileged to terminate its relationship with the Charging Party in September 2017, the PARC's term was scheduled to end on January 14, 2018. Rather than letting the PARC expire, UFC instead offered the Charging Party another fight and extended contract for an additional four months.

Second, following the Charging Party's submission of questions regarding UFC's updated promotional guidelines in December 2017 and, more importantly, the creation of Project Spearhead in February 2018, UFC approved the Charging Party's Project Spearhead-branded mouth guard for April 21 fight. Had the fight taken place, the Project Spearhead logo, situated at the front of the mouth guard, would have been visible on national television anytime the Charging Party opened mouth with the guard in place. Considering that UFC maintains heavy restrictions on the display of third-party logos, it was to the Charging Party's benefit that UFC approved mouth guard at a time when it could have stifled a major opportunity for national exposure of organization.

Third, just prior to the April 21 fight, UFC provided the Charging Party with a discretionary allotment of $500 when expressed concern that travel expenses were not sufficiently covered. According to an email from UFC, the money was provided because it was “important to … [UFC] that [the Charging Party] feel fully mentally and physically prepared to compete …” and that the money “will assist [the Charging Party] in focusing [ attention on the fight ahead of [ instead of concerning [herself] with luggage and per diem matters.” UFC was not contractually required to provide the discretionary payment and could have instead withheld the money or simply ignored the Charging Party's request if it had indeed harbored any animus against or protected activities.

Finally, it is clear based both on UFC's and the Charging Party's statements to each other and in the media that negotiations broke down over the public manner in which the Charging Party conducted the negotiation of contract and in demands for bout purses representing as much as a 222% increase over then current contract. It is not the proper role of the Regional Director or the Board, in the absence of evidence pointing to animus or pretext, to second-guess UFC's business decision not to continue to negotiate or renew the Charging Party's contract in response to these kinds of demands.

Because there is insufficient evidence to establish a prima facie case under Wright Line of an unlawful adverse employment action and, instead, there is evidence that directly contradicts a finding of any unlawful action, no further analysis concerning the Charging Party's employment status is necessary. Accordingly, for the foregoing reasons, the charge alleging that UFC violated Section 8(a)(3) should be dismissed, absent withdrawal.

/s/

J.L.S.

H: ADV.04-CA-219498.Response.Zuffa-UFC .doc