World Wrestling Entertainment Inc. investors who accused the company of misleading them about its relationship with Saudi Arabia will have a pension fund take charge of their would-be class suit, a New York federal district judge said.
The Firefighters’ Pension System of the City of Kansas City Missouri Trust didn’t have the largest financial interest in the case, but is still best suited to represent the proposed class, Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York said May 22.
WWE allegedly kept secret the deterioration of its business relationship with the government of Saudi Arabia, then suffered a significant stock drop. WWE described the suit as “meritless” and “based on false and incorrect gossip” in a March statement to Bloomberg Law.
Another movant had a larger financial interest than Kansas City FPS and was presumptively the most adequate plaintiff, but the pension fund presented sufficient evidence that he wouldn’t adequately protect the investor class’s interests, Rakoff’s order said.
The other movant testified that he didn’t have significant litigation experience, and the way he selected his attorneys provided “reason to question his adequacy,” the order said. Although he said he’d aggressively negotiated over attorneys’ fees, those negotiations “appear inadequate” because “the fee percentages set forth in the retainer agreement he signed are on the high side for a case like this, and very much higher than” those Kansas City FPS negotiated, Rakoff said.
“Since every penny paid to plaintiff’s counsel is effectively a penny out of the pockets of the plaintiff class, such minimal and unsuccessful negotiation on Howland’s part strongly suggests that he will not adequately serve as lead plaintiff,” the order said.
Rakoff approved Kansas City FPS’s selection of Labaton Sucharow LLP as lead counsel.
K&L Gates LLP represents WWE.
The case is City of Warren Police & Fire Ret. Sys. v. World Wrestling Entm’t Inc., 2020 BL 193098, S.D.N.Y., No. 20-cv-02031, lead plaintiff appointed 5/22/20.