I won't focus on the arrest and the charges filed, but the contract dispute intrigues me. Based on reports here and in Japan, Kobayashi claimed that the MLE sought to change its contract restrictions regarding out-of-competition income. According to CalorieLab.com, which has covered the story here and here, Kobayashi, who has earned endorsement income from deals with MasterCard, Coors Light and Western Canadian Lottery claimed that the revised contract prohibits him from earning any outside endorsement income, while prior agreements only limited his right to compete in non-MLE sanctioned earning contests in the United States and Canada.
Despite not having access to the particular contract terms [if anyone has a copy, please upload a link], Kobayashi has a legitimate argument that the agreement is anti-competitive if it strips him of the right to earn endorsement monies. The question is how restrictive it is. I think a court would allow a restriction on companies that directly compete with MLE sponsors, but if it precludes any endorsements because of the possibility of a conflict, then it is severely restrictive. I do not see how this would fall the rule of reason test, especially in a sport which does not pay winning contestants large amounts of money. Also, a good case can be made that the MLE is the "relevant market" for competitive eating (as the major league of the sport). If it would go to trial, I think it's a good bet that a court and a jury would look skeptically at such restrictions. In fact, another well-known competitive eater, Sonia Thomas, has to work as a manager at a Burger King because her earnings from competitions are not enough to sustain a living.
I would even find some question under traditional contract law. Given that Kobayashi popularized the hot dog eating event from a unknown localized stunt years ago to an ESPN-covered staple of July 4th, with tens of thousands braving the heat to attend, MLE may have utilized economic duress (threatening to prevent him from competing in the leading eating competitions) to force him to accept a one-sided restriction, thereby ending his claim to fame and much of his livelihood. Unconscionable perhaps? A tough order, I realize, but an argument that merits at least some consideration.
I'll be watching this case and if I find a copy of the proposed contract I will update the post.