Professional Documents
Culture Documents
No. 19-1068
AUSTIN TROUT,
Plaintiff-Appellant,
vs.
Defendant-Appellee.
__________________________________________________________________
Appeal from the United States District Court for the District of Puerto Rico
__________________________________________________________________
BRIEF OF APPELLEE
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TABLE OF CONTENTS
Argument.................................................................................................................... 5
Conclusion ............................................................................................................... 23
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ADDENDUM:
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TABLE OF AUTHORITIES
CASES
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9 U.S.C. § 2 ............................................................................................................. 6
9 U.S.C. § 5 ....................................................................................................... 5, 18
15 U.S.C. § 6307c(c)................................................................................................ 19
OTHER AUTHORITIES
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The facts relevant to this appeal are few and are clearly presented in the
record. The issues are straightforward and the parties’ arguments are adequately
presented in the briefs, such that oral argument will not significantly aid the
decisional process. The additional cost to the parties and burden on the Court of
holding oral argument are not justified by need or benefit in the circumstances
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STATEMENT OF ISSUE
Whether the district court correctly determined that the claims asserted by
Appellant Austin Trout against Appellee World Boxing Organization in this lawsuit
must be arbitrated?
¶¶ 14, 22.) In the currently operative amended complaint, Trout alleges that he
was wrongfully dropped from the WBO rankings in his weight class, as a result of
(App. at 292-95.) He claims that the WBO’s actions violate requirements imposed
professional boxers by the Muhammad Ali Boxing Reform Act (“Ali Act”), Pub.
L. No. 106-210, 114 Stat. 321 (2000). (App. at 295-98.) Trout also claims that the
298-303.)
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This litigation developed in three phases leading to the present appeal from
the district court’s order compelling arbitration. In its initial phase, the suit was
filed in New Mexico state court in November 2015 (App. at 5) and was removed to
the United States District Court for the District of New Mexico in February 2016
In the second phase, the case was transferred to the United States District
Court for the District of Puerto Rico. In lieu of an answer in the New Mexico
federal district court, the WBO moved to dismiss the action for improper venue,
Puerto Rico. (App. at 89-95.) In August 2016, the district court denied the motion
to dismiss but directed the parties to address whether the case should be
transferred. (App. a 137-48.) The parties did so (App. at 149-243) and in July
2017 the court ordered the case transferred to the District of Puerto Rico (App. at
244-61).
In the third phase, the case was referred to arbitration by the Puerto Rico
federal district court. In August 2017 the WBO answered Trout’s complaint after
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78.) The following day, Trout amended his complaint and the WBO’s answer
parties briefed the motion (App. at 362-401, 404-18) and in September 2018 the
district court granted it (App. at 468-79, 480). Trout sought reconsideration of that
ruling (App. at 481-502, 515-32), which was denied (see Aplt. Br. at 11).1
Trout has appealed from the district court’s orders dismissing his lawsuit
SUMMARY OF ARGUMENT
President of the WBO. Trout does not dispute that he is bound by the Regulations.
1
While the foregoing proceedings were underway, the parties engaged in
discovery in the ordinary course of the litigation. As documents included in the
record indicate, the Puerto Rico district court entered a case management order
even before the WBO’s answer was filed which established a discovery deadline in
March 2018 (App. at 420 ¶ 3) which was subsequently extended to July 2018
(App. at 441, ¶ 14) and a further extension was requested (App. at 445, ¶ 29(a)).
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Section 35(d), is controlling and allows him to litigate his claims in the District of
Puerto Rico. But Section 35(d) is a forum-selection clause that does not affect the
harmonized.
Second, Trout contends that the WBO waived arbitration. The WBO
The WBO invoked arbitration as soon as it was required to answer. Although the
substantially invoked the judicial process in lieu of arbitration. Trout has failed to
merit. The mere fact that the WBO has the power to select the members of the
unconscionable as a matter of law, where Puerto Rico law presumes good faith in
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selection term were to be invalidated, the arbitration clause would not fail. The
selection provision may be severed and arbitrators may be selected by the district
Finally, Trout argues that his claims under the Muhammad Ali Boxing
statute may be subject to an arbitration agreement. Trout fails to show that there is
anything about the Ali Act that would cause it to be construed as a congressional
command against arbitration. Therefore the Ali Act claims are subject to
arbitration.
ARGUMENT
In the familiar and oft-cited language of the Federal Arbitration Act, “[a]
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enforceable, save upon such grounds as exist at law or in equity for the revocation
of any contract.” 9 U.S.C. § 2. The district court correctly concluded that Section
35(e) of the WBO Championship Regulations constitutes just such a provision and
F.3d 25, 29 (1st Cir. 2015). The Court may affirm the district court “on any
Carlton San Juan Hotel Spa & Casino, 640 F.3d 471, 474 (1st Cir. 2011) (internal
(App. at 45.) The WBO Appeal Regulations describe a process for resolving any
as “a fair and independent arbitrator.” (Addendum at A-1 & A-2 (Articles 1, 3 &
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4).)2 Section 35(e) of the Championship Regulations further states that the
(App. at 45.)
F.3d at 475 (internal quotation marks & citation omitted). Generally, “principles
arbitrate exists.” Id. (internal quotation marks & citation omitted). Section 35(e)
clause[,] . . . the movant is entitled to invoke the clause, . . . the non-moving party
is bound by it, and . . . the clause covers the claims asserted.” FPE Found., 801
F.3d at 29. There is no dispute that the WBO is entitled to invoke its regulation
Committee. And Trout has affirmatively alleged that the WBO’s “Constitution,
Rules and Regulations constitute binding contracts between the WBO and its
2
The Appeal Regulations appear in the record as Doc. 40-3 (and elsewhere)
and are cited in Appellant’s opening brief (Aplt. Br. at 25-26), but they are not
contained in Appellant’s appendix. For completeness, they are included as an
addendum to this brief. 1st Cir. R. 28.0(a)(2).
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requirements – a valid arbitration clause covering the claims at issue – Trout raises
four objections which the district court rejected. This Court should do the same,
litigated in the Puerto Rico courts; (2) the WBO waived arbitration through its
recourse to litigation; (3) the arbitration clause should not be enforced because it is
unreasonable, unjust, inequitable, and contrary to public policy; and (4) his claims
venue in the Puerto Rico courts for matters that may properly be brought in a
judicial forum. The WBO timely invoked arbitration, and its litigation efforts were
devoted to countering Trout’s attempts to disregard both the venue and arbitration
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requirements in the meantime. Trout offers no support for his assertion that the
arbitration clause is unenforceable. Finally, Trout has made no showing that the
Rico. (Aplt. Br. at 14-16.) Section 35(d) begins by stating that the Regulations are
[T]he exclusive venue for any or all action in which the WBO is made
a party, whether it is to enforce, interpret or declare the application of
these Regulations or to appeal from any determination of the WBO,
including, but not limited to a determination of the Complaints and
Grievance Committee, may be maintained only in the Superior Court
of the Commonwealth of Puerto Rico, or, if applicable, in the U.S.
District Court for the Commonwealth of Puerto Rico.
(App. at 45.) This provision, which quite plainly is a choice-of-law and forum-
selection clause, says nothing about the manner of dispute resolution, which is
on the dispute resolution question. And Section 35(e) unmistakably calls for
arbitration. The district court properly found “no tension between the two
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Even if one were to detect a degree of tension between Section 35(d) and
Section 35(e), it is easily resolved. The law of Puerto Rico requires parts of a
contract to be interpreted in relation to one another, giving any part that is doubtful
the meaning that appears from considering the provisions as a whole. See Comite
Fiestas de la Calle San Sebastian, Inc. v. Cruz, 170 F. Supp. 3d 271, 273 (D.P.R
forum in the event the WBO is made a party to a litigation regarding a dispute not
WBO’s arbitral forum. See supra pp. 6-7, 9. Finally, as the district court noted,
any arguable ambiguity in the two provisions cannot be resolved against the WBO
would nonetheless trump the Puerto Rico law tenet” that would resolve ambiguous
adhesion contracts against the drafter. (App. at 474.) See Dialysis Access Ctr.,
LLC v. RMS Lifeline, Inc., 638 F.3d 367, 382 n.14 (1st Cir. 2011) (stating that,
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even if Puerto Rico principle of contra proferentem would lead to different result,
arbitration clause).
on the WBO’s part to bring this dispute to the proper venue to enforce the
arbitration clause and finally to an arbitral tribunal. The WBO has consistently
case from New Mexico state court, transferring venue to the District of Puerto
Rico, and – when required to answer the complaint – moving at the same time to
compel arbitration. See supra pp. 2-3. None of these measures would have been
presenting this matter for arbitration by the WBO’s Grievance Committee. Supra
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pp. 6-7. Trout, who is single-handedly responsible for the extended judicial
proceedings, is hardly in a position to argue that the WBO has waived arbitration
arbitration. (Aplt. Br. at 20-22.) The parties were subject to a case management
order imposing a discovery cutoff date, so they had no choice but to engage in
discovery while awaiting the district court’s ruling on whether arbitration would be
compelled. The discovery that did occur – “written discovery in excess of 800
(Aplt Br. at 20) – falls well short of a full-spirited commitment to litigation that
The district court carefully analyzed the factors this Court considers in
assessing whether arbitration has been waived and correctly concluded that Trout’s
3
To say, as Trout does, that the delay that occurred “is not attributable to
him” (Aplt. Br. at 23) grossly mischaracterizes the course of proceedings.
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FPE Found., 801 F.3d at 29 (internal quotation marks & citations omitted)
(alterations omitted).
As the district court noted, before the WBO filed its motion to compel
arbitration it had only “raised issues related to jurisdiction and venue, without
reaching the merits of the complaint.” (App. at 475.) Raising those limited,
threshold issues did not substantially invoke the judicial process so as to amount to
waiver. (App. at 475-76.) Cf. Joca-Roca Real Estate, LLC v. Brennan, 772 F.3d
945, 949 (1st Cir. 2014) (finding waiver where party “evinced a clear intent to
forgo arbitration and resolve the disputed matter through litigation”). The WBO
filed a motion to compel “with its answer as soon as the complaint was brought to
the proper forum,” and no meaningful discovery had been conducted at that point.
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(App. at 476.) The WBO did not affirmatively invoke the district court’s
judgment on the merits, or requesting a trial. (Id.) The court therefore could not
conclude that Trout and the WBO were “‘well into preparation of the case by the
Grp., Inc. v. Pentzer Corp., 252 F.3d 28, 33 (1st Cir. 2001).)
Sevinor v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 807 F.2d 16, 19 (1st Cir.
1986). Trout did not demonstrate prejudice, because the delay and litigation
expense about which he complains (Aplt. Br. at 22-23) were the result of his own
Championship Regulations. Because the WBO invoked arbitration with its answer
and before any significant discovery had occurred, Trout had notice of the
arbitration defense and bore a “heavy” burden to show prejudice resulting from
subsequent proceedings. Hilti, Inc. v. Oldach, 392 F.2d 368, 371 (1st Cir. 1968);
see also Joca-Loca Real Estate, 772 F.3d at 950. In light of the “vigorous policy
favoring arbitration,” 392 F.2d at 371, the district court did not err in declining to
find waiver.
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Regulations cannot be enforced because it is invalid under Puerto Rico law. (Aplt.
Br. at 23.) But Trout cites no authority applicable generally to the enforceability of
contracts under the law of Puerto Rico. Instead, he relies on a single case
Ramallo Bros. Printing, Inc., 128 P.R. Dec. 842 (1991). As the district court noted,
contention that the arbitration clause is invalid lacks any support. (App. at 471
n.3.) The court could properly disregard Trout’s argument. See Cruz v. Bristol-
Myers Squibb Co., 699 F.3d 563,572 (1st Cir. 2012) (treating “woefully
authority” as waived).
The court nonetheless rejected Trout’s argument on the merits, and rightly
so. (App. at 477.) Trout objects that the WBO Appeal Regulations allow the
WBO to appoint and replace members of the Grievance Committee. (Aplt. Br. at
25-26; see Aplee. Addendum p. A-1.) He asserts in conclusory fashion that “there
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Looking beyond this rhetoric, however, the district court observed that a
(App. at 477; see Aplee. Addendum p. A-2.) The Grievance Committee is charged
to “act as a fair and independent arbitrator of any grievance . . . and it shall conduct
Addendum p. A-2; see App. at 477.) “Arbitration proceedings must meet the
Inc., 133 F.3d 89, 91 (1st Cir. 1997) (internal quotation marks & citation omitted).
That one party may appoint the arbitration tribunal does not establish that the
members of the tribunal, charged with the duty to be “fair and independent,”
cannot act impartially. Moreover, as the district court noted, the decision of the
The method of arbitrator selection does not make the arbitration clause in the
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(D. Ore. 2012); Davis v. Global Client Sols., LLC, No. 10-322, 2011 U.S. Dist.
Lexis 116063 at *11-*12 (W.D. Ky. Oct. 7, 2011). Trout’s implicit assumption
that the WBO will exercise its power of selection in bad faith to obtain a biased
tribunal runs contrary to the law of Puerto Rico. “[T]he Puerto Rico Supreme
Court has made clear that good faith on the part of contracting parties is always
presumed[.]” See, e.g., Citibank Glob. Mkts., Inc. v. Santana, 573 F.3d 17, 29 (1st
Cir. 2009) (internal quotation marks & citations omitted). Trout’s suspicions
cannot overcome this legal presumption or the duty of fairness and independence
Even if this Court were to conclude that the arbitrator selection provision of
the Championship Regulations is invalid, the proper result still would permit
include a savings clause, providing that “[i]f any of these Rules are determined to
be unenforceable, the balance of these Rules shall remain in full force and effect.”
(App. at 46.) In such circumstances, the Court may sever the offending provision
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Comcast Corp., 446 F.3d 25, 64 (1st Cir. 2006). If the arbitration agreement does
not provide a method for selecting arbitrators, “or if for any other reason there shall
application of either party . . . the court shall designate and appoint an arbitrator or
arbitrators . . . who shall act under the . . . agreement with the same force and effect
Rico Tel. Co. v. U.S. Phone Mfg. Corp., 427 F.3d 21, 26 (1st Cir. 2005) (stating
that “[u]nder the [Federal Arbitration] Act, federal courts may . . . appoint neutral
arbitrators” (citing 9 U.S.C. § 5)), overruled in part on other grounds by Hall St.
should be rejected.
arbitrate disputes with the WBO “aris[ing] from any right or status that is or could
be subject to these Regulations or which results or could result from or relate to the
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in this lawsuit that the WBO deprived him of his right under the Regulations to
from its rankings in violation of the Regulations. (App. at 13-16.) As the district
court concluded, Trout’s claims “fit neatly within the . . . reach” of the arbitration
Trout contends, however, that his claims brought under the private right of
action provision of the Ali Act, 15 U.S.C. § 6309(d), “cannot be [the] subject of an
compensation in connection with any boxing match, (1) to notify the boxers that it
criteria, the boxer’s rating, and the basis for the rating and (2) to post on its website
and report any change in ranking of a top-10 boxer and an explanation of the
change. See 15 U.S.C. § 6307c(b), (c). These provisions form the basis for
Trout argues that enforcement of the Ali Act “is clearly vested upon courts
of law” (Aplt. Br. at 28) by the private remedies provision. But “[i]t is by now
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clear that statutory claims may be the subject of an arbitration agreement.” Gilmer
v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991). “By agreeing to arbitrate
a statutory claim, a party does not forgo the substantive rights afforded by the
forum.” Mitsubishi Motors Copr. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614,
628 (1985). If the statutory creation of a private right of action were sufficient to
action would be rare indeed.” CompuCredit Corp. v. Greenwood, 565 U.S. 95,
101 (2012).
healthy regard for the federal policy favoring arbitration.” Gilmer, 500 U.S. at 26
(internal quotation marks & citation omitted). “Th[e] duty to enforce arbitration
U.S. 220, 226 (1987). Thus, a litigant seeking to avoid arbitration of a statutory
claim must demonstrate that the statute in question overrides the mandate to
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for certain statutory claims.” Campbell v. Gen. Dynamics Gov’t Sys. Corp., 407
F.3d 546, 552 (1st Cir. 2005). To carry that burden here, Trout “must point to
something in the text or legislative history of the [Ali Act] that precludes
the policies and purposes of the [Ali Act] and mandatory arbitration.” Bercovitch
v. Baldwin Sch., Inc., 133 F.3d 141, 149 (1st Cir. 1998).
Trout’s sparse argument fails to do so. Expanding slightly on the even more
bare-bones argument he made to the district court (App. at 29-30), Trout asserts
that it would “defeat the purpose of the Act” to allow an arbitration panel
appointed by the WBO to hear claims against the WBO. (Aplt. Br. at 29.) Trout
supports this assertion with no evidence. In its essence, Trout’s argument reflects
the “mistrust of arbitration” that has long been rejected by the law. Shearson, 482
U.S. at 233. “[T]here is no reason to assume at the outset that arbitrators will not
follow the law[.]” Id. at 232; see also Mitsubishi, 473 U.S. at 632-34 (discounting
concern that arbitrators drawn from business community would be innately hostile
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Allied Professionals Local 5067, 848 F.3d 41, 49 (1st Cir. 2017) (“We are not to
presume that an arbitrator will make mistakes.”). And “although judicial scrutiny
arbitrators comply with the requirements of the statute.” Shearson, 482 U.S. at
232.
Trout’s claims under the Ali Act are no more “important or complex” than
other statutory claims that have been held to be suitable for resolution through
Corp., 271 F.3d 6, 11 (1st Cir. 2001). Indeed, arbitration of Trout’s claims is
Regulations states, “the nature of the sport requires a prompt, final and uniform
experienced with the application of these Regulations and with special knowledge
478.) “So long as the prospective litigant effectively may vindicate its statutory
cause of action in the arbitral forum, the statute will continue to serve both its
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remedial and deterrent function.” (Id. (internal quotation marks & citations
omitted).) The court correctly concluded that Congress did not foreclose
CONCLUSION
requires him to arbitrate the claims he asserts in this lawsuit. Trout offers no valid
reason why the arbitration provision should not be enforced according to its terms.
Respectfully submitted,
s/ Edward Ricco
By_________________________
Edward Ricco, Bar No. 1187395
David W. Bunting, Bar No. 1187442
Post Office Box 1888
Albuquerque, New Mexico 87103
Telephone: (505) 765-5900
FAX: (505) 768-7395
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CERTIFICATE OF SERVICE
I hereby certify that on May 16, 2019, I electronically filed the foregoing
document with the United States Court of Appeals for the First Circuit by using the
CM/ECF system. I certify that the following parties or their counsel of record are
registered as ECF Filers and that they will be served by the CM/ECF system: (for
Appellant Austin Trout) Miguel J. Ortega Nuñez, mortega@cnrd.com; (for
Appellee WBO) David W. Bunting, dbunting@rodey.com, Andrew W. Horn,
lawofficehorn@msn.com, Joseph C. Laws, lawofficesofjosephlaws@gmail.com,
Edward Ricco, ericco@rodey.com.
s/ Edward Ricco
By_________________________
Edward Ricco
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ADDENDUM
Table of Contents
ARTICLE: 1
Three persons designated by the President will constitute the WBO
Grievance Committee. They shall not be members of the Executive
Committee. The Members of the Grievance Committee shall be nominated
by the President and confirmed by the Executive Committee.
ARTICLE: 2
Of the three members of the Committee, one designated by the President will
exercise the function of Chairman. The Chairman and all other members of
the Committee have indeterminate terms and, and are subject to replacement
by the nomination of the President of the WBO and confirmation of their
replacement by the Executive Committee.
ARTICLE: 3
Any Appeal, Complaint, or Grievance (hereinafter referred to as a
"Complaint") shall be submitted in writing to the President. Any WBO
participant may submit a Complaint. The President is authorized to attempt to
resolve any such Complaint by alternative dispute resolutions such as
negotiation or mediation. If, after ten (10) days of attempting methods of
alternative resolution, the President determines such methods of alternative
dispute resolution will not fully and finally resolve the Complaint, he shall
submit such Complaint for determination to the Complaints and Grievance
Committee.
Page 1 of 3
c) Shall have attached clear and legible copies of all the documents,
contracts, instruments, reports, tests, precedents or other materials relevant to
the Complaint, and shall indicate clearly the provision of the WBO
constitution, by-law, rule or regulation the Complainant considers relevant to
the resolution of the Complaint.
ARTICLE: 4
Upon receipt of the Complaint, the Chairman will confer by teleconference
with the WBO Participants interested in the Complaint to determine a
schedule for submittals and assembly for hearing. The hearing may be
conducted by live hearing, by teleconference, or by written submittals only,
in the discretion of the Chairman. The format for the hearing shall be
designated by the Chairman and communicated to all participants within 10
days. In the event that live testimony is received, either by live hearing or
teleconference, it shall be recorded in such manner as the Chairman
determines, including by court reporter, by tape recorder, or by notations by
the Chairman. The Chairman will attempt to have as many members of the
Committee hear the testimony as is practical, but a committee member need
not be present for testimony to participate in the decision of the Committee.
The Chairman will close the hearing as soon as practical, and will prepare a
summary of the testimony, documents, contracts, instruments, reports, tests,
the Complaint and arguments of the interested WBO Participants for each of
the members of the committee, and shall transmit a copy of said summary to
each such member and the President. It is the intention of the WBO
Constitution, the WBO By Laws, and the WBO World Championship Rules
that the Grievance Committee shall act as a fair and independent arbitrator of
any grievance arising out of WBO Participation and it shall conduct all of its
proceedings as Amiable Compositeur, Ex Aequo et Bono.
The Committee will render its decision as soon as practicable, and not later
than ten (10) business days after close of the hearing or thirty (30) days after
referral of the Complaint from the President.
ARTICLE: 5
The decisions of the Grievance Committee will be issued in writing, through
the vote, of the majority of its members. The Chairman shall transmit this
decision to the WBO Participants at the addresses, fax numbers and/or e-mail
address as identified in the Complaint and any Appearances filed by any
Page 2 of 3
ARTICLE: 6
All the activities of the Grievance Committee, recommendations and relevant
conclusions, will be reported to the General Assembly of the Organization.
The Chairman will be available at the request of the President to report on the
activities of the Committee. The Chairman will prepare an annual report to
the President of the activities of the committee to be presented to the
Executive Committee at the WBO Convention.
ARTICLE: 7
The decision of the Grievance Committee is a final Arbitrations within the
contemplation of 32 LPRA Section 3201 et. seq. and the US Arbitration Act,
Title 9 of the United States Code, and the Inter-American Convention on
International Commercial Arbitration of July 30, 1975 and the Convention on
the Recognition and Enforcement of Foreign Arbitration Awards of June 10,
1958. All WBO participants stipulate and agree that the nature of the sport
requires a prompt, final and uniform resolution of all disputes concerning
application of these Regulations by a tribunal experienced with the
application of these Regulations and with special knowledge and experience
in world championship professional boxing.
ARTICLE: 8
These WBO Appeals Rules are to be interpreted in conformity with the Laws
of the Commonwealth of Puerto Rico. All WBO Participants agree and
consent that the exclusive venue for any or all action to appeal from any
determination of the WBO Grievance Committee, may be maintained only in
the Superior Court of the Commonwealth of Puerto Rico pursuant to the
Arbitration Law of Puerto Rico, 32 LPRA Section 3201 et. seq. , or, if
applicable, in the U.S. District Court for the Commonwealth of Puerto
pursuant the US Arbitration Act, Title 9 of the United States Code.
ARTICLE: 9
These Rules and Regulations may be modified or amended in accordance
with the Constitution and By Laws of the World Boxing Organization. All
provisions of these Rules are subject to, and shall be interpreted and enforced
as consistent with, the Professional Boxing Safety Act, Title 15 Chapter 89
Sections 6301 et. seq., and any other Federal statute or regulation in force.,
and as amended from time to time.
Page 3 of 3