The silent money scandal that forced Vince McMahon to briefly “retire” from WWE led to a number of law firms exploring class action lawsuits against the company and its current and incumbent president. His return to power against the wishes of the WWE Board of Directors was expected to lead to more.
Bloomberg reports The first lawsuit has been filed.
A WWE investor named Scott Fellows has sued McMahon in Chancery Court in Delaware (WWE, like many corporations, is incorporated in Delaware for tax purposes), alleging that McMahon breached his fiduciary duty by using his control of 81% of the voting shares to reconfigure the Board of Directors to facilitate not only his return, but also change the bylaws to “impose his will upon the Board of Directors and WWE.”
PWInsider is published This part of the fellows’ prompt:
After investigating allegations of sexual harassment against McMahon, the Board unanimously determined that it was not in the interest of the company and its shareholders to return McMahon to WWE. However, McMahon implemented the written consent to remove some of the directors who opposed him and add himself and two associates to the board of directors. The shareholder approval amendment went further and usurped the board’s authority to manage the affairs of the company. It even prohibits the board of directors and officers from defending transactions that McMahon might oppose even if they believe such transactions are in the interest of the company and its shareholders.
As such, McMahon breached his fiduciary duties by executing written consent.
The plaintiff is entitled to state that the amendment of the shareholder’s consent is null and invalid. The plaintiff does not have adequate compensation in law.
The suit asks the court to invalidate Vince’s changes to WWE bylaws, as well as compensate the associates and any other contributors joining the case for associated costs and fees. It claims that thousands of other investors who own 43.3 million shares in WWE could be added as collective plaintiffs.