Case 1:16-cv-04870-ALC Document 24 Filed 08/05/16 Page 1 of 3

Kent A. Yalowitz
Kent.Yalowitz@aporter.com
+1 212.715.1113
+1 212.715.1399 Fax
399 Park Avenue
New York, NY 10022-4690

August 5, 2016
VIA ECF AND EMAIL
The Honorable Andrew L. Carter, Jr.
United States District Judge
United States District Court
Southern District of New York
40 Foley Square, Room 435
New York, NY 10007
Re:

World of Boxing LLC et al. v. Wilder et al., No. 16-cv-04870 (ALC)

Related Case: 1-1:6-cv-04423 (ALC)

Dear Judge Carter:

This firm represents Plaintiffs in the above-referenced action. We respectfully request a
pre-motion conference with the Court, in accordance with Rule 2.A. of Your Honors Individual
Practices, in anticipation of a motion for partial summary judgment on Count II of the
Complaint.
The case arises out of a boxing match that did not go forward as scheduled on May 21,
2016. The parties dispute the reason for this, but all agree that the boxing match did not take
place.
1. Liability Under Count II.
In anticipation of the contest, Plaintiff World of Boxing LLC (WOB) and Defendants
Wilder and DiBella Entertainment Inc. (DBE) executed an Escrow Agreement, pursuant to
which WOB placed the purse of approximately $4.4 million in an escrow account.
The Escrow Agreement provided that if the contest went forward, the $4.4 million would
be delivered to Wilder and DBE. But if the contest did not go forward for any reason, the
escrowed funds were to be returned. The Escrow Agreement is unambiguous that the only
prerequisite for the Escrow Propertys return to World of Boxing is a showing that the boxing
match did not take place. Thus, Section 1.3 of the Escrow Agreement provides: Upon receipt
by the Escrow Agent of an original affidavit signed by an officer of WOB, containing the
signature and a seal of the notary public, stating that the Bout did not or will not place on May
21, 2016 and a copy of an article from www.fightnews.com, reporting that the Bout between

Case 1:16-cv-04870-ALC Document 24 Filed 08/05/16 Page 2 of 3

Hon. Andrew L. Carter, Jr.

August 5, 2016
Page 2
Wilder and Povetkin is cancelled or postponed and did not or will not take place on May 21,
2016, the Escrow Agent shall disburse the entire Escrow Property to WOB. (Emphasis
added).
It is undisputed that the match was postponed,1 and that Wilders attorney sent a letter to
the Escrow Agent on May 16, 2016, directing the Escrow Agent not to disburse any of the
Escrow Funds. It is also undisputed that the Escrow Agent has stated that it will not release the
funds absent a joint instruction by the parties or an order of a court of competent jurisdiction.
2. Remedy Under Count II.
The most obvious remedy is the return of the Escrow funds because the bout did not take
place. That is, the Court should declare that Defendants opposition to release of the Escrow
funds is meritless, and that the funds should disbursed to WOB.
There is an additional remedy arising from the plain text of the Escrow Agreement.
Defendants anticipatory blocking of the return of the Escrow Property triggered the Escrow
Agreements liquidated damages provision. That provision provides: The parties agree and
acknowledge that the submission of an objection in writing to the Escrow Agent which is not
made in good faith would cause harm to the party entitled to disbursement and . . . the party who
has filed such objection agrees to pay liquidated damages to the party entitled to the
disbursement in the amount of USD $2.5 million, not as a penalty but as a fair estimation of the
loss suffered. Escrow Agreement 1.3(d). Given the clarity of the obligation to return the
escrow money if the contest did not go forward for any reason, Defendants cannot have had a
good faith basis for their objection.
Under New York law,2 the well established rule is that [a] contractual provision fixing
damages in the event of breach will be sustained if the amount liquidated bears a reasonable
proportion to the probable loss and the amount of actual loss is incapable or difficult of precise
estimation. Truck RentACtr., Inc. v. Puritan Farms 2nd, Inc., 41 N.Y.2d 420, 425 (1977).
The burden is on the party seeking to avoid liquidated damages ... to show that the stated
liquidated damages are, in fact, a penalty. JMD Holding Corp. v. Cong. Fin. Corp., 4 N.Y.3d
373, 380 (2005).
1

This was reported in fightnews on May 15, 2016 (http://www.fightnews.com/Boxing/wilder-vspovetkin-postponed-338095)

2
The parties agreements are governed by New York law.

Case 1:16-cv-04870-ALC Document 24 Filed 08/05/16 Page 3 of 3

Hon. Andrew L. Carter, Jr.

August 5, 2016
Page 3
New Yorks Court of Appeals has cautioned generally against interfering with parties
agreements, id. and teaches that it has become increasingly difficult to justify the peculiar
historical distinction between liquidated damages and penalties. Today the trend favors freedom
of contract through the enforcement of stipulated damage provisions as long as they do not
clearly disregard the principle of compensation. Id. 4 N.Y.3d at 380-81 (quoting 3 Farnsworth,
Contracts 12.18, at 303-04 (3d ed.); see Fifty States Mgt. Corp. v. Pioneer Auto Parks, 46
N.Y.2d 573, 577 (1979) (Absent some element of fraud, exploitive over-reaching or
unconscionable conduct ... to exploit a technical breach, there is no warrant, either in law or
equity, for a court to refuse enforcement of the agreement of the parties).
Whether the early termination fee represents an enforceable liquidation of damages is a
question of law, giving due consideration to the nature of the contract and the circumstances.
JMD, 4 N.Y.3d at 379.
Here, the parties understood that damages would be difficult to ascertain: WOB had
recently been a successful plaintiff in an action for breach, and had been required to forgo
expectation damages because they were too difficult to ascertain. See World of Boxing, LLC v.
King, 107 F. Supp. 3d 265, 276 (S.D.N.Y.) (WOBs lost profitsi.e., its expectation
damagescannot be reasonably quantified), affd, No. 15-554 (2d Cir. 2015) (unpublished
order) (expectation damages for breach of contract would be highly speculative). Ultimately,
WOB recovered approximately $1.8 million in the King case. Id.
The burden is on the party seeking to avoid liquidated damages ... to show that the stated
liquidated damages are, in fact, a penalty, and to demonstrate either that damages flowing from
[the breach] were readily ascertainable at the time [the parties] entered into their ... agreement or
that the [liquidated damages] fee is conspicuously disproportionate to these foreseeable losses
JMD, 4 N.Y.3d at 380.
World of Boxing respectfully requests that the Court schedule a pre-motion conference in
anticipation of a motion for partial summary judgment on Count II.
Respectfully submitted,

cc:

EFC Counsel