Maskaev v. Rappaport et al

Filing 17

ORDER denying 10 Motion to Dismiss for Failure to State a Claim. Moreover, defendants' 16 request for oral argument on the topics raised in the supplemental briefing is denied as unnecessary. Ordered by Judge John Gleeson on 5/13/2013. (O'Reilly, Helen)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

FOR ONLINE PUBLICATION ONLY

OLEG MASKAEV,
Plaintiff,
-versusDENNIS RAPPAPORT, and DENNIS
RAPPAPORT PRODUCTIONS, LTD.,

ORDER
12-cv-6008

Defendants.
APPEARANCES
By:

Jethro M. Eisenstein
PROFETA & EISENTEIN
45 Broadway, Suite 2200
New York, NY 10006
Attorney for Plaintiff

By:

Patrick C. English
DINES AND ENGLISH, L.L.C.
685 Van Houten Avenue
Attorney for Defendants

JOHN GLEESON, United States District Judge:
This is an action for damages brought by a heavyweight boxer against his
promoter. On February 14, 2013, Plaintiff Oleg Maskaev filed an Amended Complaint1 against
defendants Dennis Rappaport and Dennis Rappaport Productions, Ltd. (“DRP”), asserting two
violations of the Muhammad Ali Boxing Reform Act, 15 U.S.C. § 6301, et seq., (the “Ali Act”).
Specifically, Maskaev asserts that (1) the defendants “received compensation in connection with a
Maskaev match . . . without disclosing to Maskaev the amount of compensation they had
contracted to receive,” in violation of 15 U.S.C. § 6307e(b); and that (2) the defendants “received

1
Maskaev filed his initial complaint on December 5, 2012. On February 1, 2013, Defendants laid out their
arguments in favor of a motion to dismiss. A few days later, Maskaev amended his complaint to drop claims alleging
breach of the contract and breach of fiduciary duties against the defendants and dropping Linda Goldrich Rappaport –
his manager – as a named defendant.

a financial interest from the management of Maskaev by directing payment of [a share] of
Maskaev’s purse for the [Hasim] Rahman fight to . . . the wife of defendant Dennis Rappaport” in
violation of 15 U.S.C. § 6308(A). Before me now is defendants’ Motion to Dismiss for failure to
state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) or, in the alternative, to stay
this action pending the outcome of arbitration pursuant to section 3 of the Federal Arbitration Act
(“FAA”), 9 U.S.C. § 3. Defendants contend that Maskaev is contractually bound to raise his Ali
Act claims in an arbitral forum.
I heard oral argument on the motion on March 28, 2013. On April 14, 2013, I
ordered the defendants to submit supplement briefing.2 See Order, ECF No. 13. For the reasons
that follow, I conclude that Maskaev’s claims under the Ali Act fall outside the scope of the
arbitration agreement. Accordingly, the motion to dismiss is denied.3
BACKGROUND
A.

Background Facts
Maskaev is a heavyweight professional boxer and Dennis Rappaport is a boxing

promoter and the president and owner of defendant DRP. Am. Compl. ¶ 3, 4. In March 2006,
Maskaev signed an exclusive promotional agreement with DRP. Id. ¶ 11. On April 27, 2006,
DRP entered into an agreement with Top Rank, Inc. to provide Maskaev’s services for a World
Boxing Council (“WBC”) championship fight against Rahman in Las Vegas, Nevada. Id. ¶ 12.
According to the complaint, the truth of which I assume at this stage, if Maskaev fought and
defeated Rahman, Top Rank would provide for payment of $1,500,000 to DRP; DRP, in turn, was
responsible for paying Maskaev’s purse from this amount. Id. Maskaev’s purse was valued at

2

Specifically, I asked the defendants to address the following three questions: “(1) whether the plaintiff may
vindicate his rights under the Ali Act in the arbitral forum; (2) whether the fee-shifting provision that requires
that attorneys’ fees be awarded to the prevailing party is enforceable in the arbitral forum, see Promotional
Agreement ¶ 38, Ex. A, Decl. of Dennis Rappaport, ECF No. 10; (3) why the Court shouldn’t strip the arbitration
agreement of the requirement that the plaintiff pay the defendants’ attorneys’ fees if the defendants prevail in
arbitration.” Order, ECF No. 13.
3
As I conclude that the parties did not agree to arbitrate plaintiff’s claims under the Ali Act, I need not
address issues raised in the supplemental briefing.
2

$900,000 plus $100,000 training expenses. Id. ¶ 13.
On August 12, 2006 Maskaev fought and defeated Rahman, securing the title of
WBC heavyweight champion. Id. ¶ 14. DRP received and accepted a $500,000 payment from
Top Rank, Inc., but did not inform Maskaev or obtain his consent before receiving this payment.
Id. ¶ 15. Next, without informing Maskaev or obtaining his consent, the defendants “benefited
from Maskaev’s purse by directing payment to Linda Goldich Rappaport4 of the one-third
manager’s share of Maskaev’s purse,” id. ¶ 16.
DISCUSSION
A. The Agreement to Arbitrate
The parties entered into a written promotional contract under which DRP would
become the exclusive promoter of Maskaev’s prizefights. This agreement contained a mandatory
arbitration provision. The crux of the parties’ disagreement on this motion is whether Maskaev’s
alleged violations of the Ali Act fall within the scope of the agreement to arbitrate. The
arbitration provision at issue reads in full:
In the event of any dispute arising under or relating to the terms of this
Agreement or any breach thereof, it is agreed that the same shall be
submitted for arbitration to be held in accordance with the Commercial
Arbitration Rules promulgated by the American Arbitration Association,
and judgment upon any award rendered may be entered in any court having
jurisdiction thereof. In the event of litigation or arbitration arising from or
out of this Agreement or the relationship of the parties created hereby, the
prevailing party or parties shall be entitled to recover any and all reasonable
attorney’s fees and other costs incurred in connection therewith. This
arbitration provision shall remain in full force and effect notwithstanding the
nature of any claim or defense hereunder.
Promotional Agreement, Defs.’ Ex. A, ECF 10-3 (emphasis added).
Defendants argue that claims under the Ali Act “relate[] to the terms of the

4
Linda Rappaport, Maskaev’s “‘personal manager’ in relation to boxing,” is married to Defendant Rappaport.
Compl. ¶ 6. Maskaev signed a personal service agreement with Linda Rappaport at defendant Rappaport’s
“direction and request,” even though Ms. Rappaport was “not licensed as a boxing manager,” and “never provided
services for Maskaev.” Id. ¶¶ 6-7, 11.

3

contract,” because, “[w]ere it not for the contracts[,] plaintiff and defendants would have no
relationship,” Defs.’ Mem. in Supp. of Mot. to Dismiss 7, ECF No. 10-2; see also id. 1-2. Thus,
defendants contend that Maskaev’s allegations that the defendants violated the Ali Act fall within
the scope of the arbitration clause.
In response, Maskaev argues that the arbitration provision is drafted to encompass
only those disputes “arising under or relating to the terms of th[e] Agreement,” Pl.’s Mem. of Law
in Opp’n to Mot. to Dismiss 5-6, ECF No. 11 (emphasis added). The arbitration agreement does
not extend to any dispute arising from “the relationship of the parties.” Id. at 6 (quoting the
second sentence of the arbitration agreement). And, the argument concludes, “[s]ince defendants’
statutory obligations to plaintiff have nothing to do with the terms of the agreement,” the claims
under the Ali Act fall outside of the scope of the agreement to arbitrate. Id. In further support,
Maskaev points out that the arbitration provision expressly contemplates that “litigation or
arbitration [may] arise[e] from or out of this Agreement.” Id. (emphasis added) (quoting the
second sentence of the arbitration agreement).
B. The Governing Law
The Federal Arbitration Act is a “congressional declaration of the liberal federal
policy favoring arbitration agreements.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24 (1983). Any doubts or ambiguities should be resolved in favor of arbitration. Id.
at 24-25. To decide this motion, I must consider, first, whether there is a valid arbitration
agreement and, second, whether the parties’ dispute falls within the scope of that arbitration
agreement.5 If a dispute falls within the scope of an agreement to arbitrate, I then must either (1)
stay the action that is subject to arbitration until the arbitration is complete or (2) dismiss the
action when all of the issues in it must be arbitrated. See Borrero v. Ruppert Housing Co., Inc.,
No. 08 CV 5869, 2009 WL 1748060, at *2 (S.D.N.Y. June 19, 2009). The determination of

5
The parties agree that these questions ought to be decided by this Court in the first instance.
4

whether to dismiss or stay a claim governed by an arbitration clause depends on whether any
“useful purpose will be served by granting a stay of [the] proceedings.” Berger v. Cantor
Fitzgerald Secs., 967 F.Supp. 91, 96 (S.D.N.Y. 1997).
C. Analysis
The determination of whether Maskaev’s claims under the Ali Act fall within the
scope of the arbitration clause depends on the parties’ intent when forming the agreement. When
interpreting a contract, courts “must be careful to carry out the specific and limited intent of the
parties.” McDonnell Douglas Fin. Corp. v. Pa. Power & Light Co., 858 F.2d 825, 832 (2d Cir.
1988). Under New York law – which the parties agree applies in this case – an interpretation of a
contract that has “the effect of rendering at least one clause superfluous or meaningless . . . is not
preferred and will be avoided if possible.” Galli v. Metz, 973 F.2d 145, 149 (2d Cir. 1992)
(internal quotation marks omitted). Therefore, in interpreting the parties’ arbitration agreement,
courts are obliged to give “full meaning and effect to all of its provisions.” Am. Express Bank Ltd.
v. Uniroyal, Inc., 164 A.D.2d 275, 277 (1st Dep’t 1990) (citation omitted). Although federal
policy “requires us to construe arbitration clauses as broadly as possible,” S.A. Mineracao da
Trindade-Samitri v. Utah Int’l, Inc., 745 F.2d 190, 194 (2d Cir. 1984), we are bound by the words
on the page.
Under defendants’ theory, since the promotional contract created a relationship
between Maskaev and the defendants, any dispute arising between the parties “relates to the
terms” of the contract. Under the defendants’ construction of the arbitration provision, the word
“terms” would be entirely superfluous, as any dispute arising out of the contractual relationship –
not just one relating to its terms – would be subject to arbitration. Such a broad reading of the
arbitration provision does not comport with the plain language of the agreement. Read together,
the entire arbitration provision expressly contemplates that disputes may be subject to litigation or
arbitration, and identifies a subset of disputes – those related to the terms of the agreement – that

5

will be subject to mandatory arbitration. Financial disclosure is not discussed in the agreement;
thus, Maskaev’s claims that the defendants violated the federal statutory disclosure obligations
under the Ali Act do not relate to the terms of the agreement.
Since the present dispute is related to a matter that is not encompassed in the terms
of the agreement, I conclude that the present dispute is outside the scope of the arbitration
agreement. Accordingly, defendants’ motion to dismiss, or in the alternative to stay the
proceeding, is denied.
So ordered.
John Gleeson, U.S.D.J.
Dated: May 13, 2013
Brooklyn, New York

6