Caseflicks

District Court, S.D. New York • 2014

World of Boxing LLC v. King

56 F. Supp. 3d 507

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Takeaway

In short, this case shows that under New York law, a party that promises a specified result—not merely best efforts—bears foreseeable risks that prevent that result unless the contract expressly allocates those risks differently.

Background

Russian boxing promoters Vladimir Hrunov and Andrey Ryabinskiy, doing business as World of Boxing (WOB), contracted with American promoter Don King in January 2014 for a rematch between Guillermo Jones and Denis Lebedev. King represented that he held Jones’s exclusive promotional rights and promised to cause Jones to participate in a twelve-round WBA Cruiserweight World Title bout in Moscow on April 25, 2014. The agreement also required Jones to arrive early and submit to drug testing under WBA rules.

Jones had previously defeated Lebedev in 2013, but that result was vacated after Jones tested positive for furosemide, a banned diuretic. The WBA stripped Jones of the title and suspended him. Two days before the scheduled rematch, Jones again provided a urine sample that tested positive for furosemide. Because WBA rules barred a boxer with a positive test from fighting in a sanctioned bout, Lebedev withdrew and the bout was cancelled. The WBA later confirmed the result, suspended Jones for two years, and named Lebedev champion.

WOB sued King for breach of contract. King argued that the agreement required only efforts within his control and that any breach was excused by impossibility because he could not control Jones’s drug use. King also counterclaimed, contending that Lebedev’s withdrawal breached or dissolved the agreement. WOB moved for partial summary judgment on liability, dismissal of the counterclaims, and entitlement to disputed escrow funds. The court granted summary judgment on King’s liability and dismissed the counterclaims, while reserving the escrow question for later resolution.

Issues

Issue #1

Whether King breached the agreement by failing to produce Jones for the WBA-sanctioned title bout after Jones tested positive for a banned substance.

Holding

Yes. King’s unqualified promise to cause Jones to participate required actual performance, not merely reasonable or best efforts, and Jones’s disqualification made that performance impossible.

Reasoning

Under New York law, a contract is construed according to the meaning that a reasonable promisee would draw from its language, including rules incorporated by reference. The agreement required King to “cause” Jones to participate in the title match, and it required drug testing in compliance with WBA rules. Those rules provided that a boxer who tests positive for prohibited substances may not fight in a WBA-sanctioned bout for at least six months.

The material facts were undisputed: Jones ingested furosemide, tested positive, and was consequently ineligible to participate in the scheduled WBA bout. Since Jones could not fight, King necessarily could not cause him to fight. That established a breach as a matter of law.

King’s proposed reading—that he had only to do everything within his control to obtain Jones’s participation—would turn an express performance promise into a best-efforts obligation. The parties could have negotiated language limiting King’s duty to reasonable or best efforts, but they did not. Questions about how burdensome the promise was concerned excuse, not whether King failed to perform.

Issue #2

Whether Jones’s positive drug test excused King’s nonperformance under New York’s impossibility doctrine.

Holding

No. A second positive test was foreseeable and was a risk King assumed by promising to secure Jones’s participation without negotiating a contractual allocation of that risk.

Reasoning

New York generally treats contractual obligations as strict liability. Impossibility may excuse performance only when an unanticipated supervening event objectively destroys the means of performance and the event could not have been foreseen or guarded against in the contract.

Jones’s second positive test was not unanticipated in the legally relevant sense. Jones had tested positive for the same substance after the first Lebedev bout, and the parties specifically included mandatory pre-bout testing in the rematch agreement. Those facts showed that the possibility of another positive test was within the range of risks for which the parties could plan.

King argued that a repeat violation was so unlikely that he could not reasonably have anticipated it, particularly because Jones knew testing would occur. The court rejected that probability-based approach. An event need not be likely to be foreseeable; the question is whether a reasonable party could have anticipated and contractually guarded against it. King’s own assertion that testing would deter another violation showed that he had contemplated the possibility.

Although King could not personally prevent Jones from using furosemide, he controlled whether to accept an unconditional obligation or seek protective terms. WOB likewise had no practical ability to prevent Jones’s misconduct. Because King promised to secure Jones’s participation and did not allocate the foreseeable doping risk elsewhere, King bore the resulting loss.

Issue #3

Whether Lebedev’s withdrawal after learning of Jones’s positive test breached the agreement or otherwise released King from his obligations.

Holding

No. King had already materially breached when Jones became unable to participate, so WOB and Lebedev could treat the agreement as broken.

Reasoning

Jones’s participation was the central purpose of the agreement. Once his positive test made him ineligible to fight in a WBA-sanctioned championship bout, King had failed to supply the promised performance.

A nonbreaching party may treat an agreement as terminated after a material breach. Thus, Lebedev’s withdrawal did not create a new breach by WOB or dissolve an otherwise intact agreement; it followed King’s prior breach. King’s counterclaims, both premised on the theory that Lebedev wrongfully withdrew, therefore failed as a matter of law.