A Delaware Court of Chancery judge delivered a blow to wrestling impresario Vince McMahon and other World Wrestling Entertainment officials earlier this week.
Judge J. Travis Laster, vice chancellor of the Delaware Court of Chancery, issued sanctions for “spoliation of evidence” in the shareholder lawsuit over the 2023 merger between Ultimate Fighting Championship and WWE.
Laster ruled on Tuesday that WWE executives destroyed evidence by using the auto-delete setting on the messaging app Signal, enabling potentially relevant communications to be deleted.
The ruling means the court will operate under the assumption that five potentially damaging statements are true while allowing the defendants to rebut them.
The statements, according to the ruling, include that McMahon’s decision on the merger was “influenced” by Endeavor Executive Chairman Ari Emanuel’s “promise” to provide him with a continued role at the company and to indemnify him and provide legal support as federal investigators were looking into claims of alleged sexual misconduct.
McMahon pursued a deal with Endeavor in 2022 before WWE initiated its strategic review process, and both McMahon and then-WWE President Nick Khan worked with The Raine Group, a strategic financial advisor, “to steer the process to Endeavor and away from other potential bidders,” the ruling states.
In September 2023, entertainment giant Endeavor, the parent company of UFC, acquired WWE and merged the two sports entities to form a new, publicly traded company, TKO Group Holdings, in a deal worth $21.4 billion.
A month later, a group of shareholders filed suit against McMahon and other company officials in Delaware Chancery Court, claiming McMahon orchestrated a “sham sale process.”
Representatives for McMahon, WWE and TKO were not immediately available for comment.
According to the suit, McMahon, WWE’s controlling shareholder, turned down higher offers and excluded other bidders who would have ousted him and instead chose a deal that favored Endeavor’s Emanuel, a “close friend and longtime ally,” enabling McMahon to continue running WWE and shielding him from federal investigations related to a raft of sexual misconduct claims.
The complaint also alleges that the $21.4-billion deal undervalued the company and was “far below the offers” WWE’s board could have received from other interested parties had they “made any effort to negotiate in good faith.”
The litigation is related to the 2022 investigation by WWE’s board that found that McMahon made at least $14.6 million in payments between 2006 and 2022 for “alleged misconduct.” McMahon has denied claims of misconduct.
The settlements were made to women, including WWE employees, who alleged that McMahon initiated unwanted sexual contact and coerced women into performing sexual acts on him. In one case, first reported by the Wall Street Journal, a woman claimed that McMahon sent her unsolicited nude photos of himself.
McMahon’s alleged misconduct became the subject of ongoing investigations by the Securities and Exchange Commission and the U.S. Department of Justice.
“I am confident that the government’s investigation will be resolved without any findings of wrongdoing,” McMahon said in a statement to The Times in 2023.
Last January, the SEC announced it had settled charges against McMahon alleging he had violated federal securities laws by failing to disclose a pair of settlement agreements to WWE worth $10.5 million.
McMahon agreed to pay more than $1.7 million in a civil penalty and in reimbursement to WWE, without admitting or denying the agency’s findings. Federal prosecutors also have dropped their criminal investigation.
In January 2024, McMahon resigned as executive chairman of the board of TKO Group, one day after a former WWE employee, Janel Grant, sued the company, McMahon and former head of talent relations John Laurinaitis, alleging sexual assault, trafficking and emotional abuse.
Grant claimed that McMahon agreed to pay her $3 million in exchange for her silence.
The shareholder trial is set to begin on June 8. McMahon, Emanuel, Khan, TKO President Mark Shapiro, and WWE Chief Content Officer Paul “Triple H” Levesque are expected to testify.
