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Former WWE and WCW star Marcus Bagwell and former WWE, ECW and WCW star Scott "Raven" Levy filed a second amended lawsuit against World Wrestling Entertainment on 5/19 in the United States District Court of Connecticut in regard to their allegations that WWE owes them royalties from usage of material featuring their work in matches and segments from WCW and WWE on the WWE Network.
In the lawsuit, they are alleging WWE had breached the contracts of both Bagwell and Levy by failing to pay direct sales royalties
In the amended lawsuit, Levy specifically stated that his June 2000 contract with WWE provides a royalty from material featuring his work via a direct sale, with direct sale defined as "...including without limitation, at the arena, via mail order sales or directly on television, or via the Internet...." and that WWE has direct sales of their content via WWE Network subscriptions yet fails to pay royalties on those sales. Levy noted in the lawsuit that according to the language of his contract, WWE would pay royalties on "“video cassettes, videodiscs, CD ROM, or other technology, including technology not yet created.” and that the streaming technology of the Network falls under the "technology not yet created."
In previous filings in this case, WWE has argued there is no direct sale involved in WWE Network subscriptions because there is no physical product being sold to a consumer, just that they are granted a license to watch material on the WWE Network as long as their subscription is active.
Levy is arguing that talent should be paid for the WWE Network under the same royalty rate that they would receive contractually, from PPV and video sales.
Levy is also arguing that once WWE purchased the WCW and ECW video libraries, those libraries would now fall under the promised royalty rate that he was promised contractually from WWE for direct sale of WWE events and that when he was released by WWE in 2013, the agreement to release him noted WWE had completely bought Levy out of any claims against them or any money owed "other than the obligation to pay Levy the royalties due to him pursuant to, and as determined by, the Contract", which would be the aforementioned June 2000 contract.
The Bagwell made similar claims in the lawsuit about WWE failing to pay royalties on material on the WWE Network that features WCW and WWE content featuring Bagwell. Bagwell is also alleging that by selling WCW content but not paying him his royalties, WWE breached the agreement both parties signed when he released by WWE in 2001.
Bagwell is also alleging that WWE has failed to pay royalties within 90 days, was late in paying royalties and has not paid any royalties since February 2014 when the WWE Network launched. The non-payment of royalties is another breach of his contract, Bagwell alleges.
The lawsuit also alleges that WWE breached its fiduciary duty to Levy and Bagwell because WWE was in a superior position when it came to knowledge of finances and money owed to the talents.
The amended lawsuit carried over the allegation that Bagwell's WWE contract allows for him to have his own independent certified accountant audit WWE-WCW's books, citing, "for the purpose of verifying the accuracy thereof, during WCW’s normal business hours and upon reasonable notice. Such audit shall be conducted in a manner that will not unreasonably interfere with WCW’s normal business operations. Wrestler shall not audit WCW’s books and records more than twice during any calendar year and no such audit shall be conducted later than one (1) year after the last statement of royalties is given, delivered or sent to Wrestler. Each audit is limited to seven (7) days in duration. Statements of royalties may be changed from time to time to reflect year-end adjustments, to correct clerical errors and for similar purposes."
According to the lawsuit, Bagwell attempted to do exactly that in June 2016 and was initially told an audit could be done in late July or early August 2016, only to later be informed by WWE's counsel, K&L Gates, that there would be no audit, as Bagwell's accountant, "asserted a pretextual and invalid audit request to attempt to stealthily obtain that information (WWE network royalty audit)" and that since Bagwell is not paid WWE Network royalties, "there is nothing to audit."
Since WWE blocked Bagwell's attempts to audit the records as he was contractually allowed to do, he is now claiming that the company has forfeited any claim that Bagwell did not satisfy any of WWE's prerequisite actions contractually before he filed his lawsuit.
The lawsuit also claims that WWE has violated the Connecticut Unfair Trade Practices Act "by failing to account for millions of dollars in owed WWE Network royalties and failed to pay royalties due within 90 days following the end of the quarter." The lawsuit alleges that by doing so, WWE was "immoral, oppressive, unscrupulous, and caused substantial injury" to Bagwell, Levy and other professional wrestlers who signed similar contracts.
The lawsuit also alleges that WWE Network, Inc. a subsidiary of WWE, has licensed video material to other licensees without the knowledge of Levy and Bagwell and that doing so was a breach of contract when it came to their royalty payments.
Bagwell and Levy claim that they are filing as a class lawsuit on behalf of similar performers, alleging that the class is owed in the area of $5 million and have requested a jury trial.
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