Former WWE Chairman Vince McMahon and current President Nick Khan were dealt quite a blow in the pending lawsuit fied against them (and others) by shareholders who allege that McMahon didn't do his due diligence in scouting prospective buyers for WWE instead selling to Endeavor so that he could score a favorable position under the new ownership.
With the trial set to commence on June 8, a judge has ruled that McMahon and Khan both acted "recklessly" with the messaging app Signal by purposely changing their settings so that the messages between them would delete after a certain and short amount of time. Because this has led to the destruction of evidence, the judge has ruled in favor of those who launched the lawsuit in sanctioning the defendants. What that means it hat the burden of proof will now be on the defense to prove that McMahon and others did not act in good faith, making the case harder to defend.
"As a consequence, the court will presume the truth of a limited number of facts relating to the conduct and motivations of two defendants: the controlling stockholder and the senior officer who openly encouraged Signal use. Presuming those facts to be true forces the defendants to deal with the evidentiary uncertainty that the Signal users created. The defendants remain free to present their case at trial and convince the court to find differently.
In addition, the court will elevate the standard of proof for overcoming the presumed facts from a preponderance of the evidence to clear and convincing evidence. Elevating the burden recognizes that the plaintiffs lack access to the spoliated evidence and therefore cannot use it in their case in chief or to impeach the defendants’ testimony. Elevating the standard of proof levels the playing field by forcing the defendants to make a convincing case for their position."
What the court will now assume is:
- McMahon’s decision-making regarding the merger was influenced by Emanuel’s promises that he would remain at WWE and have legal support for federal investigations into allegations of sexual misconduct
- McMahon had decided to pursue a deal with Endeavor before the WWE began a strategic review process
- Khan communicated with Emanuel in 2022 to facilitate the deal; and
- McMahon and Khan worked with their financial adviser to steer negotiations toward Endeavor and away from other potential bidders
A group of shareholders is suing McMahon, Khan, Paul “Triple H” Levesque, Michelle Wilson, and George Barrios, claiming that McMahon, steered the sale of WWE to Endeavor after being influenced by promises from Ari Emanuel that he would remain a key figure in the new regime's leadership team. The suit contends that other bids were more financially beneficial to the company and that by accepting the Endeavor offer, McMahon did not act in the best interest of shareholders.
