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Some updates on the lawsuit Scott "Raven" Levy and Marcus "Buff" Bagwell 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, allegedly breaching their contracts by failing to pay direct sales royalties as well as WWE allegedly not paying within a 90 day window following the end of each financial quarter.
As previously reported on PWInsider.com, 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.
Bagwell and Levy have argued against that stance. Levy specifically has argued 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's attorneys have argued 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."
Bagwell made similar claims about WWE failing to pay royalties on material on the WWE Network that features WCW and WWE content featuring his work, also alleging that by selling WCW content but not paying him his royalties, WWE breached an agreement both parties signed when he was released by WWE following a short tenure there in 2001.
Levy is also arguing that once WWE purchased the WCW and ECW video libraries, those libraries should 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.
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 most recently amended version of the 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. At a case conference on 8/30, it was noted that some of the aforementioned allegations would be withdrawn by Levy and Bagwell, but thus far, it's not clear if any actually have been, so we are including them in our reporting.
Over the course of the summer, Levy and Bagwell changed attorneys, which slowed the progress of the case as the former attorneys, according to court filings, refused to release material that the plaintiffs would need for the case.
Bagwell and Levy have claimed 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. According to documents filed on 9/25, that class would include another 253 former WWE performers who's work may fit similar parameters.
Bagwell and Levy have requested details on "the amount of money collected or received by WWE for video product royalty payments made and the methodology for the calculation of those royalty payments, and the amount of money actually paid to Performers with the applicable kind of booking contracts for video product royalties and the methodology for calculating those royalties."
WWE, who have already provided over 4,600 pages of materials, stated yesterday that they would be willing to provide that material in relation to Bagwell and Levy but not for every performer who may be part of the potential class action, noting they are not Plaintiffs (yet) and that releasing that material was outside the scope of what the court had allowed thus far in the Discovery portion of the case.
In their 9/25 filing, WWE stated they were willing to do that, but to have that information only limited to Bagwell and Levy, not any other members of a potential class lawsuit. The material they do release would be via confidential, "for your eyes only" releasing and presumably, not to be released publicly.
Bagwell and Levy have requested that information in regard to another 253 performers who may fit the same parameters as the circumstances of their allegations, being that they are seeking to bring a class action lawsuit against WWE. They are claiming, according to the filing yesterday that the information would be "relevant to demonstrate the requisite commonalty and typicality of the class."
A good portion of yesterday's filing dealt with WWE arguing why certain documentation and information was not necessary for the lawsuit, including a requested breakdown of the organization of the WWE Network when it came to executives and those who worked on the advertising and marketing of the Network. WWE noted that the amount of information being requested was not only cumbersome due to its amount but that much of what was being requested was outside the scope of what the court had approved as being within fair game of the discovery.
Attorneys for Levy and Bagwell also requested that WWE release all contracts featuring "all versions of standardized or prototype contracts entered into between You and Performers where the definition of Video Products includes “other technology, including technology not yet created” language as set forth in Levy’s 2000 Booking Contract." WWE stated that they were released 12 contracts with similar wording as part of the case but would not go beyond that as it was beyond the scope that the court was allowing. WWE also argued that a request for contracts “made available or offered to any Performer” was overbroad and needless.
WWE also argued that a request for records for every year the company provided royalties to performers, including the total money paid out was "overbroad, unduly burdensome and not limited to information or documentation that is relevant to any party’s claims or defenses and not proportional to the needs of the case" because that would mean WWE would have to deliver all of their recorded related to years 1996 to present. WWE is producing records related to how talents were paid royalties for video products.
WWE also stated there were no contracts that related to the “payment of royalties” to WWE talents “for any revenue generated by the WWE Network” because WWE has never agreed to pay such royalties.
So, the two sides are now going through the tedious nature of requesting information from the other to build their arguments. Given the nature of the case, it appears this is going to drag on for some time and there may already be a ripple effect from it on the WWE Network.
PWInsider.com had confirmed with numerous sources that WCW Thunder was set to debut on the Network's VOD Vault section this month, but with just four days remaining, it has been nowhere to be seen. We are told that the episodes had been prepared to be added and are sitting there, waiting to go.
Instead, World Class Championship Wrestling episodes have been uploaded and it would appear that they are in Thunder's place. It could be that WWE has put the brakes on utilizing content that would feature Bagwell and strengthen his claims to potential royalties should the case not go WWE's way. If that is the case, one would suspect that plans to begin adding episodes of WWE's Sunday Night Heat, which featured Raven over the course of that series' lifespan, may also be scuttled.
One would then think any material from the GWF utilizing Bagwell (as the Handsome Stranger) or Levy (as Scotty the Body) would also be unavailable to be added. Currently, material from WWE and WCW TV and PPVs featuring each talent as well as ECW content featuring Levy as Raven are available on the WWE Network.
Unless WWE wishes to start editing around talents (which would certainly ruin the entertainment value of watching the show from an episodic nature; How do you showcase the NWO when Buff Bagwell is on screen as part of the group, for example?), it may be that WWE has handicapped themselves, legally, from using that material, until this situation is resolved, for fear of having to pay out royalties for it, should the legal process not go in their direction, if and when this is all resolved.
WWE had previous shied away from using Stampede Wrestling content after discovering that Bret Hart owned the rights to his matches from that library and that, although they own the physical library, they would need to come to terms with Hart to use the footage he is featured on. WWE responded by pulling several hours of Stampede that had been uploaded to the WWE Network and to date, has only utilized specific matches that did not feature Hart.
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