The hush money scandal which forced Vince McMahon to briefly “retire” from WWE led to a number of law firms exploring class action suits against the company and its once and current Chairman. It was expected that his forcing his way back into power against the wishes of the WWE’s Board of Directors would lead to more.
Bloomberg Law reports the first suit has been filed.
A WWE investor named Scott Fellows sued McMahon in Delaware’s Chancery Court (WWE, like many business, is incorporated in Delaware for tax purposes), claiming McMahon breached his fiduciary duty by using his control over 81% of voting stock to reshape the Board to facilitate not only his return, but also the change the bylaws to “impose his will on the board and WWE.”
PWInsider published this portion of Fellows’ claim:
Following an investigation into allegations of sexual harassment against McMahon, the Board unanimously determined it was not in the best interests of the Company and its stockholders for McMahon to return to WWE. Nonetheless, McMahon executed the Written Consent to remove certain directors who opposed him and add himself and two cronies to the Board. The Stockholder Approval Amendment went further and usurped the power of the Board to manage the affairs of the Company. It even prohibits the Board and officers from advocating for transactions McMahon may oppose even if they believe those transactions are in the best interests of the Company and its stockholders.
As such, McMahon violated his fiduciary duties by executing the Written Consent.
Plaintiff is entitled to a declaration that the Stockholder Approval Amendment is void and invalid. Plaintiff has no adequate remedy at law.
The suit requests the court invalidate the changes Vince made to WWE’s bylaws, as well as reimbursing Fellows and any fellow shareholders who join the case for the costs and fees associated with it. It alleges thousands of other investors who hold 43.3 million WWE shares could be added as class action plaintiffs.