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Vince McMahon Walks Back WWE Coup, Sowing Split Among Investors

Jan. 24, 2023, 6:18 PM

WWE Inc. investors leading litigation over chairman Vince McMahon’s surprise return are fighting over the path forward, after McMahon rescinded certain bylaw changes that would have seized power from the company’s board.

The dispute involves three groups of shareholders that sued McMahon this month—including a pension fund—after he ended his self-imposed exile, which began when he stepped down in July while facing a wave of sexual harassment and hush money allegations stretching back more than 15 years.

The lawsuits in Delaware’s Chancery Court accused McMahon of timing his comeback to seize control of upcoming negotiations over the WWE’s expiring media rights and forcing his way back by leveraging a threat to withhold support for any deal reached without his participation.

The move reinstalled McMahon as the head of a WWE royal family that includes his daughter, Stephanie—who stepped down as chairman and co-CEO in early January—and son-in-law, the former champion wrestler Paul “Triple H” Levesque, a member of the board.

Two of the investors suing McMahon, including the Police & Fire Retirement System of the City of Detroit, narrowly challenged solely his unilateral move to rewrite the WWE’s bylaws in his own favor. A third shareholder brought broader claims directly involving the sexual harassment accusations.

McMahon and the WWE haven’t yet made a court appearance, but a Jan. 17 securities filing showed that McMahon had repealed the most contentious changes, restoring power to the board. The filing prompted the current dispute among the shareholders.

In one corner, the pension fund and another investor are seeking to have the bylaw-related claims declared moot so they can take credit for the reforms and seek a “mootness fee” in recognition of their role in forcing McMahon to curtail his ambitions.

“This consolidated litigation is narrow in scope, it is moot, and the only remaining litigation in this action should concern the application for a fee award,” they said in a court filing Monday.

The other group of investors, meanwhile—those suing over McMahon’s alleged history of paying to cover up sexual harassment accusations—are seeking to sever their case from the consolidated action. That could keep the bylaw-related claims alive, interfering with any fee request.

The pension fund and its co-plaintiff, investor Scott Fellows, are represented by Labaton Sucharow LLP, Friedlander & Gorris PA, Friedman Oster & Tejtel PLLC, and Kaskela Law PLLC.

The investors seeking to proceed separately, Carole Casale and Chrystal Lavalle, are represented by Christensen & Dougherty LLP and Scott & Scott Attorneys at Law LLP.

The case is In re World Wrestling Ent. Inc. Stockholders Litig., Del. Ch., No. 2023-0022, motion to dismiss as moot filed 1/23/23.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editor responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com