WWE continues to move forward with trying to drop the recent securities fraud class action lawsuit filed by the City of Warren, Michigan Police & Fire Retirement System, which was originally filed this past month. We recently covered the lawsuit here and included a response from longtime WWE attorney Jerry McDevitt.
The class action suit includes dealings with the Kingdom of Saudi Arabia, and has been consolidated by six different law firms. It includes multiple separate suits and is led by the Firefighters Pension System of the City of Kansas City, Missouri Trust. The pension system claims they lost more than $121 million because of the WWE stock price dropping. It's alleged that WWE made misleading statements regarding their dealings with the Kingdom of Saudi Arabia, and state-run TV network MBC, which caused the stock to drop.
McDevitt filed a motion to dismiss the case on June 26 in the United States District Court for the Southern District of New York. (H/T to HeelByNature)
It was noted in the motion that WWE feels statements from investor documents cautioned stockholders that agreements between the company and MBC were ongoing, and that the new TV deal for that region was not finalized.
WWE also denied allegations from the lawsuit that had to do with WWE Chairman Vince McMahon and the infamous Crown Jewel pay-per-view. The suit mentioned the story that Vince allegedly cut the Crown Jewel pay-per-view feed, which led to the infamous Saudi travel debacle where employees were "held hostage" at the airport. WWE denied the allegations and said the plaintiffs are using sources from a series of "news reports" that were picked up by different pro wrestling news websites, which they say are founded on unverified Twitter statements and hearsay.
WWE also dismissed recent statements on the matter made by former Spanish-language announcer Hugo Savinovich. He was one of the first people to speak out on the incident in the Kingdom, revealing some of the first details that made the rounds. WWE responded:
"The allegations are all based on 'speculation' from 'news reports,' such as 'a wrestling-focused website' that itself is based on statements by a 'WWE Spanish commentator' (who is not employed by WWE and who based his own story on another unnamed party)"
The filing also mentioned reports from a "self-proclaimed wrestling journalist" and how his story was later aggregated by several "wrestling focused" sites that were responsible for the various stories.
"The so-called 'media reports' also include other unidentified 'wrestling-focused websites' that cite to 'an individual' who was supposedly 'in contact with sources in the WWE' that stated 'the [Saudis] come up short' by a couple million dollars every show (i.e., the three done so far)quotes in the CAC are from the Twitter page of a self-proclaimed wrestling journalist. Even if these websites and Twitter cites could be deemed 'news sources,' none of these unverified, non-particularized hearsay allegations supports that any payments breached a contract or indicates a relationship so tattered that no deal could be done.
"Finally, Plaintiff's allegation that the WWE-Saudi Arabia relationship was strained by the activities surrounding the 2019 Crown Jewel event (i.e., the supposed 'cut feed' and alleged incidents related to travel back to the United States) are also conclusory and do not establish any falsity or scienter. As Plaintiff acknowledges , WWE and the charter airline company released statements explaining the mechanical issues with the plane. Ex. 21 (Forbes, 11/01/19). In contrast, Plaintiff relies on the same speculative so-called 'news outlets' and Twitter accounts described above, as well as a former wrestler (CW-2). The CAC also cites an article that acknowledges WWE's description of the mechanical issues, while also citing a radio commentator who (without any explanation or sources) offered his own contrary opinion on his radio show and Twitter"
That part of the of the filing above mentions the former WWE Superstar that's been referred to as CW-2, who has said he is able to confirm some of the reported details on the Saudi debacle. The original witness statement read like this:
"CW-2 became aware that something was wrong and explained that a number of the other personnel were referring to the event as a 'hostage' situation." CW-2 explained that he asked the Senior Director of Talent Relations, Mark Carrano, about what was going on and that Carrano told him that Crown Prince Mohammed bin Salman and McMahon had gotten into an argument over late payments in connection with the June 7, 2019 Super ShowDown event. Carrano also informed CW-2 that McMahon had cut the live feed for the Crown Jewel event and that this had made the Crown Prince 'very mad.'"
WWE denied the claim in the new motion, saying the former WWE talent was disgruntled. The motion included the following response to that story from the wrestler:
"As to CW-2, most of the allegations he raises are innocuous or completely irrelevant to issues of falsity or scienter, such as CW-2's observation that persons boarding an airplane 'appear[ed] to be 'in a hurry,'' a flight attendant made a colloquial statement about not taking off, CW-2's opinion that the pilot's voice sounded 'distressed,' and CW-2's observation regarding the presence of armed security at an airport. The most specific item CW-2 provides—the hearsay that a WWE Senior Director of Talent Relations informed him that Defendant McMahon cut the live feed and got into an argument with the Crown Prince as to late payments—is directly contradicted by Plaintiff's own allegations and items Plaintiff relied upon. KSA made the $60 million payment before the Crown Jewel event began, as was publicly disclosed earlier that day on the earnings call. It thus does not make sense, logically, that this payment (even accepting the conclusory allegation that it was "late") would have prompted Defendant McMahon to temporarily 'cut' and then shortly thereafter resume a live broadcast feed."
WWE's motion also said the fees owed by the Saudis for events in 2018 and 2019 have been paid. The only outstanding payment the Kingdom owes to WWE are "certain reimbursable costs" related to Crown Jewel 2019, amounting to approximately $2.4 million. The response noted:
"Plaintiff relies upon statements in a declaration by the WWE Senior Vice President for Finance, which reflects that all fees due for the 2018 events were paid in 2018, all fees for the Super ShowDown 2019 event were paid prior to the Crown Jewel 2019 event, and all fees for the Crown Jewel 2019 event have been paid. Certain reimbursable costs were outstanding after each of the events, which have all since been paid (but for approximately $2.4 million not yet paid for Crown Jewel 2019)."
Stay tuned for updates on the matter.
You can see the full filing below:
(H/T to HeelByNature)