It was inevitable.  Following his “Fight of Century” with Floyd Mayweather, Jr. on May 2, 2015, Manny Pacquiao has been named in a class action suit filed in Nashville for allegedly defrauding pay-per-view customers.  The plaintiff in Crabtree v. Pacquiao et al. [1] claims that Pacquiao, along with the promoter, Top Rank, Inc., misled him when they failed to disclose Pacquiao’s shoulder injury. 

The plaintiff states that “[a]fter the fight, it was revealed that Pacquiao, before the fight, had been suffering from a very significant shoulder injury, making him unable to fight to his full ability.  On May 4, 2015, Los Angeles orthopedic surgeon Dr. Neal ElAttrache told ESPN that Pacquiao has a ‘significant tear’ in his rotator cuff that will require surgery and require him to be away from the ring for 9-12 months.”

One report states that Pacquiao injured his right shoulder in early April and had been using several anti-inflammatory drugs.  But the Nevada Athletic Commission refused to approve any injections before the fight because Pacquiao’s prefight medical questionnaire stated he wasn’t hurt.

Despite his shoulder injury, plaintiff claims, “[w]hen the Nevada State Athletic Commission administered the prefight examination on the Friday afternoon before the fight, Pacquiao was given a questionnaire.  Among the questions was:  ‘Have you had an injury to your shoulders, elbows, or hands that needed evaluation or examination?’  Under penalty of perjury, Pacquiao replied no.”  Pacquiao’s medical questionnaire is here.

Plaintiff asserts that Pacquiao and the other defendants intentionally lied about Pacquiao’s condition.  As a result, plaintiff claims, he lost “a significant amount of money to watch what was represented as the ‘Fight of the Century,’” and Pacquiao made at least $100 million.  Plaintiff also claims that Pacquiao’s actions violated the Tennessee Consumer Protection Act which carries a potential penalty of three times the actual damages caused by Pacquiao’s alleged lie and attorney fees.

Apart from the issue of whether Pacquiao did, in fact, lie about his medical condition, the main questions in this suit are whether the plaintiff and other pay-per-view customers have any grounds to sue Pacquiao, and, if so, what are their injuries?

Fraud claims in the commercial context generally arise out of a lie made directly to the plaintiff in order to gain an advantage in a business deal.  The plaintiff has a claim if he relied on the defendant’s misrepresentation to his detriment.  The problem in the Pacquiao case is that the alleged lie was not made to pay-per-view customers, but to the Nevada State Athletic Commission.

So, what grounds do pay-per-view customers have to sue Pacquiao?  There are some limited situations where a defendant may be liable for fraud even if he didn’t lie directly to the plaintiff.  For example, under Tennessee law, an auditor can be liable to a company’s investors for fraudulent statements made in an audit report, even though the audit report was not prepared for or given to the investors.  In those cases, the auditor is liable because he knows or reasonably should know the investors will review and rely on the audit report.[2]

In the Pacquiao case, plaintiffs appear to be arguing that Pacquiao and the promoter knew or should have known pay-per-view consumers would rely on Pacquiao’s statements in the medical questionnaire.  But unlike those cases where a person relies on representations made to a third party, there are no allegations that the plaintiffs in this case reviewed the medical questionnaire (or even knew it existed) and relied on Pacquiao’s statement that he had no shoulder injuries.

Another argument implicit in the plaintiff’s complaint is that had Pacquiao disclosed his shoulder injury, the Nevada State Athletic Association would have alerted the public and/or prohibited the fight.  But does the plaintiff have the right to sue Pacquiao for what the Nevada State Athletic Association might have done?

And finally, there is the question of whether the plaintiff suffered any injury as a result of Pacquiao’s alleged misrepresentation.  Though not explicit, plaintiff appears to claim he and other pay-per-view customers would not have paid to watch the fight had they known Pacquiao was injured.  Whether that’s true or not remains to be seen.

Tennessee, like most other states, has consumer protection laws which prohibit sellers of goods and services from engaging in deceptive and misleading practices.  The question in the Pacquiao case, of course, is whether Pacquiao actually misled the plaintiff and other pay-per-view customers in Tennessee.

According to ESPN, 13 other suits have been filed against Pacquiao making similar claims:  three in Nevada, three in California, two in Florida and one each in Maryland, New Jersey, Illinois, Texas and New York.  One lawyer for the Illinois plaintiffs is quoted as saying, “Our state has a law that prohibits concealing or misrepresenting material information with consumers and, within the context of boxing, Manny Pacquiao’s shoulder injury is a material fact . . . . Had our clients know that the underdog had a shoulder injury, they wouldn’t have thought that this fight was worth watching.”

The cases against Pacquiao and the promoter are worth watching.  These cases may set a precedent that sports stars are obligated to fans to disclose a medical condition which may affect their performance.