Potential Class Action Lawsuit Filed Following Vince McMahon's WWE Return
On Tuesday night, the latest shoe dropped in the drama stemming from Vince McMahon's return to WWE, as a shareholder named Seth Fellows filed a lawsuit against McMahon personally in Delaware Chancery Court alleging breach of fiduciary duty. (For the uninitiated, that's acting against the interest of stockholders.) News of the lawsuit, which seeks "class action" status, was first reported Wednesday morning by Bloomberg Law's Mike Leonard.
"McMahon lacks the power he purported to wield," writes Fellows' attorney in the complaint, referring to McMahon using his voting control to rewrite company bylaws to require shareholder approval of a sale and/or "certain media rights deals" when reinstating himself to the board of directors last week. "Section 141(a) of the Delaware General Corporation Law (the 'DGCL') recognizes the inviolability of the board of directors' power to make significant decisions respecting the business and affairs of the Company. The Board members have an unremitting obligation to discharge their fiduciary duties."
Much of the complaint serves as a recap of the McMahon hush money scandal as it's unfolded since last spring, with the most relevant portions pertaining to the last few weeks. In stating that he would use his voting control to veto any media rights deal unless he was reinstated, the complaint argues, McMahon expressed a willingness to act against the best interests of the shareholders. It's further argued that McMahon's changes to the bylaws are unlawful under not just Delaware corporate law, but also WWE's corporate charter, which grants control to the board of directors.
The formal counts McMahon is being sued over are violations of both the Delaware law and the WWE charter's requirements for a corporation to be managed by a board of directors and breach of fiduciary duty. Fellows is seeking that the court declares the case a class action, declare that McMahon "breached his fiduciary duties, declare the company bylaw changes unlawful, invalidating those bylaw changes, awarding the plaintiff(s) their costs, and "[a]warding such other relief as this Court deems just and equitable."