Vince McMahon must face claims that he personally guaranteed to cover any losses that former XFL CEO Oliver Luck may incur from a lawsuit seeking to claw back up to $11.1 million Luck earned before the football league went bankrupt.
Luck has viable claims against the founder and former owner of the XFL based on the contract he signed in 2018 to helm the league’s operations, Judge Victor A. Bolden of the US District Court for the District of Delaware ruled Friday, rejecting McMahon’s request to toss the case. If Luck ultimately prevails, McMahon would be on the hook to cover any judgments against Luck in a pending bankruptcy court action to take back his CEO salary payments.
The guaranty provides that McMahon’s obligations “shall be absolute, unconditional, continuing and irrevocable,” Bolden noted, finding that Luck adequately pleaded claims under the employment agreement and never released McMahon from potential obligations despite settling a separate wrongful termination suit against him last year.
Alpha Entertainment Inc., the company McMahon created to operate the XFL, filed for bankruptcy in April 2020, cutting short the league’s inaugural season. The league was thereafter sold for $15 million to an investor group led by Dwayne “The Rock” Johnson.
Alpha’s bankruptcy plan administrator, Peter Hurwitz, sued Luck in 2022, alleging he should be required to return payments he received under a five-year contract paying him about $7 million annually. Hurwitz is tasked with clawing back funds to boost recoveries for the company’s creditors.
Hurwitz complained that Luck “failed to exercise proper business judgment; failed to comply with league policies; failed to comply with the XFL Employee Handbook; failed to attend meetings; disclosed confidential information without proper authorization; and effectively abandoned his responsibilities when faced with the Covid crisis.”
Hurwitz, echoing claims previously asserted by McMahon, said that Luck violated the league’s personnel policy by hiring wide receiver Antonio Callaway despite his suspension from the NFL for substance abuse.
Luck has said his firing was based on “pretextual and meritless allegations” regarding his performance. Luck earlier this year had the complaint transferred from a Delaware bankruptcy court to Bolden.
The case is In re Alpha Entertainment LLC, D. Conn., No. 23-00118, opinion issued 6/23/23.
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