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WWE has issued a lengthy response to the
consolidated amendment case that was filed by the lead plaintiffs of the Firefighters’ Pension System of the City of Kansas City, Missouri. WWE is issuing for an order to dismiss the lawsuit that also lists Vince McMahon, and former company co-presidents George Barrios and Michelle Wilson as defendants. This is the case that featured two confidential witnesses with one listing themselves as a former employee at MBC regarding WWE’s television rights deal in the MENA region and another witness that worked for WWE until this past April alleging of problems during the Crown Jewel event last year and the hold-up regarding talent and staff getting back to the United States from Saudi Arabia.
Regarding the MENA rights deal and CV-1 (confidential witness #1) asserting that the disclosures were either insufficient or materially false or misleading, the statements say that the lawsuit is “devoid of reference to any source to support these speculative and conclusory assertions.” They state the confidential witness never interacted with the defendants or participated in the negotiations over the MENA rights deal, or worked at WWE’s corporate offices. They added that the language in their releases covers risks associated with deals.
Furthermore, WWE’s side argues that the plaintiff doesn’t satisfy the requirements to display that the defendants made false or misleading statements.
CW-1 does not claim to have been directly involved in any negotiations with WWE, to have exchanged a single message with WWE, or to have been present for a single meeting or telephone call with anyone at WWE. He had a very short stint at MBC: he joined in the fall of 2019—months after the start of the Class Period—and he left at some unknown point less than a year later.13 He therefore cannot support any allegations as to the July 2019 agreements-in-principle.14 The allegations also reveal that, even for the short period when he was at MBC, he had a limited and apparently junior role with respect to WWE, focused only on an internal-to-MBC study used to estimate the potential deal value for MBC. All of his assertions as to the actual discussions with WWE are based on second- or thirdhand information he purportedly heard from unidentified persons (some of whom he does not even recall).
Otherwise he offers his personal opinions about what he viewed as “optimistic” or whether he “thinks” negotiations are still ongoing as of June 2020.
Regarding payments from Saudi Arabia being late are allegations that “centers on innuendo” and labeled as “specious and defective”. They dismiss any stress in the relationship between WWE and Saudi Arabia by the fact that days after Crown Jewel 2019 they announced an expanded partnership confirming two events per year.
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). Plaintiff tries to emphasize the significance of $60 million that was owed for the June 7, 2019 event, but Plaintiff’s only criticism is that the payment was made within 30 days after Defendants said that they expected it would be. Defendants never guaranteed the date of payment and Plaintiff does not allege that the payment missed a contractual deadline.
On the problems coming back from Saudi Arabia last year after the Crown Jewel event, the statement stands by WWE’s response that it was due to mechanical issues on their charter flight. They stated the plaintiff is relying on “speculative so-called ‘news outlets’ and Twitter accounts, as well as a former wrestler”.
This was their response to CW-2 (confidential witness #2) sharing a conversation they alleged to have had with Marc Carrano regarding problems between Vince McMahon and the Crown Prince and the live feed being cut during Crown Jewel:
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.
Further, none of the allegations related to Crown Jewel creates a plausible inference that any of the Defendants committed securities fraud. By the time of this event (October 31, 2019), WWE had already lowered its year-end guidance to assume a MENA media rights deal would not be completed, explaining that although “the Company continues to work toward the completion of a MENA agreement, no assurances can be given in this regard.” The ultimate yearend financials were consistent with that adjusted guidance. And, days after the event, WWE announced that it expanded its partnership with GEA to include a second live event every year through 2027. Thus, even were the Court to credit Plaintiff’s third-hand allegations from CW-2, they do not support that anything related to the Crown Jewel event rendered any of the Company’s forward-looking opinion statements false or misleading.
The last allegation addressed in the response was regarding stock sales by the defendants that they argue the plaintiffs have not proven to be “unusual” or “suspicious” and the onus in on the plaintiffs to prove that. Specific to Vince McMahon’s big stock sale, they noted the launch of the XFL as a reason for a larger than usual stock sale. They added that McMahon’s sale was for approximately 11% of his overall holdings and they didn’t classify as a significant amount with McMahon remaining its largest shareholder.
