As TMZ first reported, Suge and Katt were caught on video tangled up in a huge fracas last weekend outside Eden nightclub in Hollywood (see below).
A rep for Suge tells TMZ ... the rappers in NO WAY started the fight. The rep claims while Katt was talking to a TMZ photog ... a horde of guys started calling him the N-word, specifically shouting "f**king ni**er" and then "F**k Obama."
*** WARNING: VIDEO CONTAINS LOTS AND LOTS OF PROFANITY
We're told Katt walked over the culprits to ask them to stop, but the group wouldn't quit. The verbal exchange got heated and Suge's rep says one guy got physical with Katt.
The rep tells us that's when Suge stepped in, trying to keep the incident from escalating further ... but Suge and Katt realized it was two against 15, so that's when they decided to get out of there.
But you'll recall ... an eye-witness that night -- who claimed Suge punched him -- said it was Katt who started the melee by calling some guy "a Mexican" and it escalated from there.