Vince McMahon Agrees to Pay Legal Costs in Resolved Stockholder Lawsuit

WWE Chairman Vince McMahon has agreed to pay legal fees related to the dropped lawsuit filed by stockholders concerning his return to the board of directors.

The lawsuit, brought by the Detroit Police and Fire Retirement System and stockholder Scott Fellows, alleged that McMahon had breached his fiduciary duties by rejoining the board to oversee a potential sale of the company.

According to an official SEC filing made on Friday, the lawsuits were combined and subsequently dropped after McMahon agreed to repeal the contested bylaw amendments that were at the center of the dispute. As part of the resolution, McMahon has agreed to pay plaintiffs’ counsel a sum of $1.65 million to cover legal fees, including associated expenses. The motion to dismiss the case was filed by the plaintiffs on January 23rd and granted just two days later.

The filing provided a detailed statement regarding the lawsuit, including the consolidation of the actions and the subsequent resolution:

“In re World Wrestling Entertainment, Inc. Stockholders Litigation, C.A. No. 2023-0028-JTL (Del. Ch.) On January 10, 2023, a stockholder of World Wrestling Entertainment, Inc. (the “Company”), Scott A. Fellows, filed a direct class action against Vincent McMahon in the matter styled Fellows v. McMahon, C.A. No. 2023-0022-JTL (Del. Ch.) in the Delaware Court of Chancery (the “Court”)…”

The statement continued to outline the sequence of events leading to the dismissal of the case and the agreement reached between McMahon and plaintiffs’ counsel.

It’s important to note that the court has not been asked to review or pass judgment on the fee payment or its reasonableness. The resolution of the lawsuit does not require any further action from the stockholders, and the case will be officially closed after the filing of an affidavit certifying the completion of the process.

The legal teams involved in the case include Ned Weinberger, Mark Richardson, Joel Friedlander, Christopher Foulds, and David Hahn, who represent the plaintiffs, McMahon’s legal representation consisting of Michael Pittenger, T. Brad Davey, and Eric Nascone, and Daniel Kramer, Richard Tarlowe, Gregory Laufer, and Matthew Stachel representing the company.

Below is the full statement:

In re World Wrestling Entertainment, Inc. Stockholders Litigation, C.A. No. 2023-0028-JTL (Del. Ch.)
On January 10, 2023, a stockholder of World Wrestling Entertainment, Inc. (the “Company”), Scott A. Fellows, filed a direct class action against Vincent McMahon in the matter styled Fellows v. McMahon, C.A. No. 2023-0022-JTL (Del. Ch.) in the Delaware Court of Chancery (the “Court”). The lawsuit alleged that McMahon breached his fiduciary duties and violated Section 141(a) of the General Corporation Law of the State of Delaware and the Company’s certificate of incorporation by executing a written consent in January 2023 to amend certain Company bylaws to allegedly restrict the power of the Company’s board of directors. On January 12, 2023, another Company stockholder, Police & Fire Retirement System of the City of Detroit, filed a direct class action against McMahon and named the Company as a nominal defendant, which made substantially the same allegations as in the Fellows action. These two actions were subsequently consolidated.

Following discussions among counsel for the plaintiffs and McMahon, McMahon agreed to repeal the challenged January 2023 bylaw amendments by written consent, which McMahon executed on January 16, 2023. On January 23, 2023, the plaintiffs filed a motion that, among other things, sought dismissal of the consolidated action as moot, with the Court reserving jurisdiction solely for consideration of an application for attorneys’ fees and expenses. The Court granted that motion on January 25, 2023.

In lieu of an application for attorneys’ fees and expenses and after engaging in arms’-length negotiations, McMahon agreed to make a payment to plaintiffs’ counsel in the amount of $1,650,000 in attorneys’ fees (inclusive of expenses). The Court has not been asked to review, and will pass no judgment on, the payment of a fee or its reasonableness.

Within three business days after this Current Report on Form 8-K (“Form 8-K”) has been filed with the Securities and Exchange Commission, the Company will file an affidavit with the Court certifying that the Form 8-K has been filed and, after the affidavit has been filed, the consolidated action will be closed for all purposes and the Court will no longer retain jurisdiction over it.

Plaintiffs are represented by Ned Weinberger and Mark Richardson, of Labaton Sucharow LLP, 222 Delaware Avenue, Suite 1510, Wilmington, Delaware 19801, (302) 573-2540 and Joel Friedlander, Christopher Foulds, and David Hahn of Friedlander & Gorris, P.A., 1201 Wilmington, Delaware 19801, (302) 573-3500, McMahon is represented by Michael Pittenger, T. Brad Davey, and Eric Nascone of Potter Anderson & Corroon LLP, 1313 N. Market Street, Wilmington DE 19801, (302) 984-6000, and the Company is represented by Daniel Kramer, Richard Tarlowe, and Gregory Laufer of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, NY 10019-6064, (212) 373-3000 and Matthew Stachel of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 500 Delaware Avenue, Suite 200, P.O. Box Wilmington, Delaware 19899-0032, (302) 655-4410.

This recent development marks a significant step in resolving the legal matters surrounding McMahon’s return to the WWE board. The dropped lawsuit provides clarity as the company moves forward with its future plans and operations.

What are your thoughts on Vince McMahon agreeing to pay the legal fees related to the dropped lawsuit? Leave a comment below.