WWE Discredits Reports On Dealings With Saudi Arabia
WWE is looking to drop a securities fraud class action lawsuit filed by the City of Warren Police and Fire Retirement System this past March.
WWE lawyer Jerry McDevitt filed a motion to dismiss the case on June 26 in the United States District Court Southern District Of New York.
The case, which has been consolidated by 6 firms, and includes multiple separate class action lawsuits is lead by the Firefighters Pension System of the City of Kansas City Missouri Trust. The pension system claims they lost over $121 million due to a drop in WWE stock prices.
The lawsuit is centered around WWE’s dealings in the Middle East, more specifically The Kingdom of Saudi Arabia, and the state-run television network MBC.
The plaintiffs allege WWE made misleading statements regarding their dealings in the region, which caused stock prices to drop.
WWE feels statements outlined in investor documents cautioned stockholders that agreements between them and MBC were ongoing, and a new television deal between both parties was not finalized.
The lawsuit also spoke on supposed tensions between WWE and the Kingdom of Saudi Arabia, which led to Vince McMahon cutting the feed to the Crown Jewel pay-per-view, and talent being “held hostage” in retaliation.
WWE denies those allegations, and says the plaintiffs sources are from a serious of “news reports” picked up by various wrestling news sites, which are founded on hearsay and unverified Twitter statements.
The only sources cited in the CAC are two confidential witnesses (neither of whom interacted with the Individual Defendants, participated in negotiations over the MENA rights deal, or worked at WWE’s corporate offices), declarations provided by Defendants prior to filing the CAC, and a series of “news reports” that consist almost exclusively of unsupported content cherry-picked from wrestling websites founded on multiple layers of hearsay and unverified statements from Twitter.
The company also shot down statements from former WWE commentator Hugo Savinovich, who was one of the first to speak on the alleged incident following Crown Jewel
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)
WWE says all fees owed by the Kingdom of Saudi Arabia are paid for events in 2018 and 2019. THe only outstanding payments owed are “certain reimbursable costs” from the 2019 Crown Jewel event. The company states approximate 2.4 million is owing from that show.
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).
The company also responded to reports from a “self-proclaimed wrestling journalist”, who later had his story aggregated by several “wrestling focused websites”
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
Investors cited an anonymous former WWE wrestler who corroborated reports suggesting WWE had tensions with the Kingdom, and a “hostage” situation occured on the plane prior to leaving Saudi Arabia.
The witness statement is below for reference
WWE immediately responded to that story claiming the former WWE talent was “disgruntled”.
In the latest motion, WWE legal provide a more lengthy response to the anonymous former WWE talent.
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.
he 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.
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