When we blogged about some recent developments in the ongoing investor lawsuit which claims the 2023 sale of WWE to Endeavor was a “sham”, we focused on what they revealed about Vince McMahon’s return to the company in between his retirement-due-to-hush-money-allegations and his retirement-due-to-abuse-allegations, and the relationship between WWE president Nick Khan and WWE chief content officer Paul “Triple H” Levesque.
But while that was interesting to wrestling fans, from a legal perspective the
updates we were discussing focused on the plaintiffs request that the Delaware Court of Chancery sanction the defendants (McMahon, Khan, Levesque, and former WWE executives George Barrios and Michelle Wilson, all WWE Board members pre-TKO) for essentially destroying evidence by using the messaging app Signal and setting it to auto-delete messages days after they were set.
Text message exchanges alerted attorneys for the plaintiffs to the defendants’ use of Signal, which Khan is alleged to have “spearheaded”. One such exchange came in February of 2023 when Vince was only supposed to be focused on the sale of WWE but texted Khan about WrestleMania creative, and featured this unintentional bit of comedy between the two:
Khan to McMahon: Langis.
McMahon to Khan: What in the blue hell is ‘Langis’ lol.
Khan to McMahon: Read it backwards!
Further confirmation came when McMahon was deposed in the case last year, and said:
“I was always told about the Signal, and it’s good for business because no one can trace you and so forth. It’s kind of like [the email platform] Proton. You can’t find out much about the call or the text.”
That and much of the detail for this blog post on the case comes from Brandon Thurston’s reporting for Post Wrestling, and we encourage you to read his work for more information and educated analysis — including his report today (May 27) on Vice Chancellor J. Travis Laster’s May 12 ruling that Khan and McMahon will be sanctioned for spoliation of evidence.
Laster’s sanction impacts all five defendants in the case (neither WWE nor TKO among them), because while they will still have a chance to argue their case, they will now have to disprove five arguments that it had previously been the plaintiffs’ responsibility to prove. Laster also ruled that the arguments must be disproven by “clear and convincing evidence”. That’s a higher standard than the usual burden of by a “preponderance of the evidence”.
The five arguments now presumed to be true deal with the plaintiff’s central claim: that McMahon sold to Endeavor without seriously considering other options because then-Endeavor CEO and now TKO CEO & Chairman Ari Emanuel offered to help with the Federal investigation Vince was under at the time, and promised McMahon could stay with the company despite his scandals. Specifically, they are that:
- Emanuel’s promise to provide keep Vince on post-merger influenced his decision-making with regards to the sale of WWE
- Emanuel’s offer of indemnification and other legal support related to pending federal investigations of McMahon influenced his decision-making with regards to the sale of WWE
- McMahon decided to pursue a sale to Endeavor in 2022, before the Company initiated its strategic review process
- Khan communicated with Emanuel between Aug.-Dec. of 2022 about a transaction between WWE and Endeavor
- McMahon and Khan worked with paid advisors at Raine to steer the sale process toward Endeavor and away from other potential bidders
Another piece of evidence that’s been disclosed in the case makes the prospect of refuting the second one even more difficult. Transcription of an voicemail Emanuel sent to McMahon reads:
“I spoke to my lawyer from Latham. Just FYI. Everybody at the DOJ is former Latham lawyers so on that side will be helpful. SEC of course is SEC, but that’s just a penalty. As it relates to everything else, yes we can indemnify you and we will. If it’s criminal of course you can’t stop criminal, but this is not criminal. Call me when you get a chance.”
Thurston’s latest for Post also summarized how the defendants and others involved in the sale set their Signal apps to auto-delete after WWE legal instructed them to retain all evidence for possible use in a case such as this one, and after meeting with Khan. Laster’s entire 41 page ruling is also available via that report.
Seems like an uphill legal climb for the defendants’ legal teams, but I’m no lawyer. Whether you are or not, weigh in below.
