The opinion of the court was delivered by: Michael Baylson, District Judge.
The issue presented is whether Plaintiff Alfredo Marchio, trading as Marchio's International Productions (hereinafter "Marchio") is entitled to a preliminary injunction against professional boxer Julian Letterlough ("Letterlough") and Letterlough's manager, Michael Marley ("Marley"), both of whom are the Defendants in this suit. Plaintiff's Complaint seeks relief against Letterlough for breach of contract, and against Marley for tortious interference of the contract, and against both Defendants for unjust enrichment and defamation, in addition to equitable relief.
On June 20, 2000, Marchio and Letterlough entered into an exclusive promotional agreement for Marchio to act as promoter for Letterlough's professional bouts. The theory on which Marchio seeks a preliminary injunction is that the boxing services of Letterlough, and Marchio, as a professional boxing promoter, are unique; and although Marchio could not, and does not, seek to enjoin Letterlough's alleged breach of this contract, Marchio does assert that, as having the exclusive rights to be Letterlough's promoter, he would be irreparably injured if Letterlough were to engage in professional bouts promoted by someone else. Thus, Plaintiff does seek a preliminary injunction based on a so-called "negative covenant," to enjoin Letterlough from fighting under the aegis of another promoter. Marchio also seeks to enjoin Marley, who currently serves as Letterlough's manager, from tortious interference with the Marchio-Letterlough promotional contract.
Shortly after the filing and service of the Complaint, the parties entered into a Stipulation for Temporary Restraining Order, which the Court entered, and which gave Plaintiff injunctive relief pending entry of this Court's further Order after an evidentiary hearing.
In summary, the Court finds that Marchio has established that because of his significant work in building up Letterlough as a nationally ranked and reputable professional fighter, he has a protected legal interest in continuing, during the term of his exclusive promotional contract with Letterlough, to be identified with Letterlough as a promoter or co-promoter of bouts in which Letterlough is fighting, and that Marchio has established the other requirements for a preliminary injunction. Thus, Marchio is entitled to specific, albeit limited injunctive relief to protect and preserve his reputation and relationship with Letterlough, pending a final hearing in this case. However, because the services at issue in this case are personal services, and courts are usually very reluctant to enter an injunction in the realm of personal services, the Court cannot grant Marchio the wide sweeping relief which he seeks. There is no basis to grant any injunctive relief against Marley, as any liability which he may have to Marchio can be compensated in damages.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332, based on complete diversity of citizenship. Because evidence was introduced at the hearing which tended to show that Defendant Letterlough was, at certain times, a resident of Pennsylvania, and thus there would be no diversity of citizenship, the Court required the parties to submit supplemental information as to the citizenship of Mr. Letterlough. Plaintiff submitted an affidavit establishing that at the time of commencement of the lawsuit (which is the relevant time, see Freeport-McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428, 111 S.Ct. 858, 112 L.Ed.2d 951 (1991)), Mr. Letterlough resided in Indiana. Mr. Letterlough has not submitted any supplemental information. There is no dispute that the amount in controversy exceeds $75,000. Thus, diversity of citizenship exists.*fn1
This Court has personal jurisdiction over the parties in that both Defendants have done business in Pennsylvania. Moreover, within the promotional agreement at issue, Defendant Letterlough consented to jurisdiction in Pennsylvania, in the event of a dispute. See Ex. P-4. Defendants have not contested these jurisdictional facts.
Upon review of the evidence presented at the hearing on December 3, 2002, this Court finds that Plaintiff is credible and has established the following essential facts.
On June 2, 1998, Marchio and Letterlough entered into a written Boxer Manager Contract, with a stated term of three years, which terminated by its own terms. See Ex. P-3. On June 20, 2000, Plaintiff and Letterlough entered into a separate Exclusive Promotional Agreement. See Ex. P-4. The promotional agreement granted Plaintiff the exclusive right to "promote" Letterlough's boxing contests for a period of thirty-six months, ending on June 20, 2003. Id. ¶ 1, 3.
Paragraph 1 of the promotional agreement provided:
Fighter hereby grants to Promoter the exclusive right
to promote all professional boxing contests to be
engaged in by Fighter during the term of this
Agreement. Promoter or its designees shall promote
such bouts subject to the terms and conditions set
forth herein. Such exclusive promotion rights shall
include, without limitation of the foregoing, (a) all
rights required to stage and sell tickets of
admission to all boxing contests as well as (b) the
ancillary rights thereto, including without
limitation all exclusive world wide rights to
broadcast, telecast, record and film such bouts for
exhibition in all media in perpetuity and all
merchandising rights relating to such bouts. Fighter
retains all personal endorsements as long as they do
not conflict with the show sponsors.
Although the agreement also provides, in paragraph 4, that "fighter shall box and otherwise engage in the bouts arranged by promoter . . . as mutually agreed upon by fighter and promoter," the testimony revealed that if the fighter, for whatever reasons, refused to fight, there was really nothing that the promoter could do about it. However, it is usually in the fighter's interest to engage in bouts that the promoter arranges, because it is in the economic interest of both that the fighter fights in bouts that can be arranged. Nonetheless, the testimony provided examples of disputes which arise between a fighter and a promoter, where the parties disagree as to whether a particular fight, because of the identity of the opponent, the location, the purse, etc., is in the best interest of the fighter and/or the promoter. There was substantial testimony that such recent disagreements between Marchio and Letterlough have caused their past close relationship to deteriorate.
Marchio testified extensively to his efforts over several years to develop Letterlough into a well known fighter and support him financially. Plaintiff's own testimony was detailed and persuasive on this point. Plaintiff testified that he conveyed a residence in Reading, Pennsylvania worth $27,000 to Letterlough to provide him with a place to live and helped support him financially, by advancing to Letterlough over $100,000 in cash. In his testimony, which the Court also finds generally credible, Letterlough acknowledged Marchio's support in the early years of their relationship, but testified that Marchio had recently stopped giving financial support to him, which was one of the reasons why Letterlough went to Defendant Marley for a new managerial contract.*fn2
Exhibit P-9 contains a summary of the professional fights in which Letterlough has engaged. in most of these fights, Marchio was the sole promoter, but in several of them, Marchio served as co-promoter. He is listed as promoter or co-promoter in all of Letterlough's fights. There was testimony about the financial aspects of each bout. Letterlough's record is considered, under the testimony, to be very good in that he has won 18 bouts, lost 3, and one came to a draw. There was testimony that he is a potential world championship contender, who has been on television on several occasions, and is able to attract significant attention in the fighting world, and recently, substantial purses.
From the documents, Marchio had both a managerial contract and a promotional contract with Letterlough for a certain period of time. This period was for approximately one year between June 20, 2000, when the exclusive promotion contract was signed, and June 2, 2001, when the managerial contract between Marchio and Letterlough terminated by its own terms. Marchio testified that once the promotional agreement was signed, he only acted as Letterlough's promoter. Letterlough testified that he thought Marchio had acted as his manager throughout their relationship.
On September 16, 2002, Letterlough sent a letter to Plaintiff, stating that Plaintiff was "terminated" as Letterlough's "manager." Ex. P-11. However, as stated above, the management contract had already terminated. Thereafter, Letterlough and Defendant Marley entered into a management contract. Ex. P-12. On September 30, 2002, Marley sent a letter to Marchio stating that Marley was "the one and only boxing manager" for Letterlough. See id. The letter also demanded that Plaintiff "cease and desist" from tortious interference with the Marley-Letterlough contract. Id.
At the hearing, the testimony was consistent that there is a distinction between the duties of a promoter and a manager. A promoter arranges for the bouts and any television rights, and his interest is to maximize the revenues for the event, as well as his own revenues; the promoter has no fiduciary duty to the fighter. On the other hand, the manager has the fighter's best interests at heart, has a fiduciary relationship with the fighter, and often assists the fighter in the fighter's "corner" during the bout. Generally, the manager receives a cut of the fighter's purse. The financial arrangement between the fighter and his manager, on the one hand, may be subject to state regulation, but the financial relationship between the fighter and the promoter, on the other, is subject to negotiation between them. Although Marchio denied that he had acted as a manager for Letterlough after the promotional contract between himself and Letterlough was signed, there was some evidence, from the documents that Marchio had signed, either purposely or carelessly, indicating that he was serving as Letterlough's manager. Marchio denied that he had acted as Letterlough's manager in these instances.*fn3
Defendant Marley, who is also an attorney in New York State, and who represented himself at the hearing, conducted a spirited cross examination of Marchio. Marley contends, in his written submissions to the Court, as well as by his cross examination and arguments, (but he did not testify), that there is an inherent conflict of interest between an individual serving as both a promoter and a manager. Marchio was unwilling to concede an absolute conflict, although he did recognize the difference in the services provided by a promoter and a manager.
In his testimony, Letterlough (who is not represented by counsel) described his relationship with Marchio and corroborated a good deal of Marchio's testimony as to Marchio's building up Letterlough's reputation. Letterlough testified that he thought that Marchio was always his manager, but also recognized that he and/or Marchio's ex-wife also performed promotional services. Letterlough testified that he now recognized that his promotional contract with Marchio was still in existence, and that he was not opposed to Marchio still acting as promoter. However, he felt uncomfortable with Marchio's recent conduct towards him, and clearly, at this time, has greater confidence in Marley acting in his interest, and Marley is, indeed, currently the manager of Letterlough.
There was substantial testimony as to whether certain recent fights of Letterlough have been in his interest, whether they have advanced or deterred his career and reputation as a professional fighter, and what should happen next in his fighting career. Letterlough stated that he was currently 33 years old and that he only had a few additional years remaining as a competitive professional fighter. There was also testimony, supported by the Declaration of Robert Yalen, Director of Boxing Programming and Acquisitions at ESPN, the leading national sports television network, that he had given Marchio the right to promote a fight on November 24, 2002, between Letterlough and another fighter named Ravea Springs, but that Marley had recommended to Letterlough that he not fight Springs, even though he would appear on ESPN, with the financial rewards and television exposure which would have resulted. As a result of Marley's recommendation, Letterlough did not fight in this match. Marchio has presented this as evidence that Marley is not acting in Letterlough's best interest and is not doing anything to protect Marchio's reputation as having exclusive promotional rights with Letterlough, and that injunctive relief is necessary to protect Marchio's rights in enforcing his exclusive promotional contract.
Marchio also presented testimony that, as a result of his acting as promoter or co-promoter in virtually all of Letterlough's bouts to date, he has acquired a reputation in the closely-knit professional boxing world, that he is known to be Letterlough's promoter. Marchio testified that if Letterlough is allowed to have future bouts arranged with another promoter, this will irreparably injure Marchio's general reputation as a promoter and specifically will ...