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LAWSUIT FILED AGAINST VINCE MCMAHON, WWE, THE ROCK AND MORE OVER XFL 'TRADE SECRETS'

By Mike Johnson on 2022-07-28 15:11:00

A lawsuit against Vince McMahon, World Wrestling Entertainment, Dani Garcia, ESPN, Dwayne Johnson, Dick Ebersol, WWE Chief Financial Officer Frank Riddick, Riddick's wife Carol and many others were filed on 7/20 before the United States District Court for the Northern District of Texas by a David Adrian Smith related to the XFL football league.

In his lawsuit, Smith alleges that on 5/10/16 he "disclosed confidential trade secret information" via email to Carol Riddick including "market analysis, opportunity analysis, strategic analysis and other business information regarding a concept for a minor league or developmental league spring football league."  Smith alleges that in his first email to Carol, he told her "Please feel free to share with Mr. Riddick but ya'll keep it under your hats until we have a chance to discuss how to proceed or that it has not merit."  

The lawsuit claims that Smith's "stated desire" was to discuss with Frank Riddick the failed original version of the XFL to learned what Riddick had ascertained from the original failed version and what they might do differently if another version was launched.  The lawsuit notes that at the time, Riddick was on WWE's Board of Directors.  He has since come on board with the company full-time as CFO.

Smith states that he had a back and forth series of emails with Carol Riddick with her asking "several rounds of questions" and Smith providing answers and "further analysis of the opportunity including further trade secret information."  Smith stated that the correspondence stopped after he received no responses from Frank Riddick or Vince McMahon "with feedback on what Defendant #1 [World Wrestling Entertainment] learned from their previous failed venture."

Smith is alleging that The Riddicks disclosed the information and trade secrets Smith brought to them to another defendant, Scott Jackson, without his authorization.  Jackson, Smith stated, was referred to by Carol Riddick during one of their email exchanges.

Smith also alleges the information was brought to Vince McMahon, who then shared it with former NBC executive Dick Ebersol and his son Charlie as well as ESPN and that the "trade secret information" was used in the production of the ESPN 30 For 30 documentary This Was The XFL, which aired on 2/2/17.   That would be a year after Smith and Carol Riddick were exchanging emails, based on Smith's timeline.

Smith is alleging that since WWE sold the rights and trademarks of the original XFL over to McMahon's Alpha Entertainment, it was due to members of the WWE Board (McMahon and Riddick) being involved as they knew of Smith's "trade secrets" and that Ebersol launched the AAF as well in part due to his knowledge of the trade secrets Smith possessed.   Smith noted they intended to discover and prove this when the lawsuit entered the discovery phase.

Smith is also alleging that when Alpha Entertainment filed for bankruptcy and the XFL was purchased by Dwayne Johnson, Dani Garcia, and the remainder of the current owners of the XFL, his trade secrets were "disclosed / conveyed to and acquired / received" to the new ownership without Smith's authorization.  

Smith's 60-page lawsuit is alleging 89 counts of misappropriation of trade secrets, 115 counts of Theft of Trade secrets and 134 counts of RICO violations.  Smith never actually states what these trade secrets are in the filing in the lawsuit, includes a motion to seal court records to prevent them from being restricted for public access.  Smith noted that he "at this time refuses to disclose the evidence of communications" with Carol Riddick and was petitioning the court to issue orders to prevent the Defendants from disclosing the trade secrets.  

Smith is requesting, among other things, a declaration that the defendants' actions as alleged are unlawful, an injunction to prevent any actual or threatened misappropriation of his trade secrets, an injunction to prevent the defendants from engaging in unlawful acts, an order from the court conditioning that future usage of his trade secrets result in royalty payments, an award from damages brought by the unjust enrichment of the defendants for using his trade secrets, award of damages from the misappropriation of his trade secrets (with the figures estimated at greater than $15 million), court costs, pre and post-judgment interest adjusted for inflation and anything else the court deems appropriate.

The original XFL launched in 2001 as a joint venture between NBC and WWE, existing for one season before shutting down.  In 2018, Vince McMahon launched a new company, Alpha Entertainment, to pursue a number of potential entertainment endeavors as well as a potential relaunch of the XFL. This version of the XFL was birthed coming out of the aforementioned 2017 ESPN documentary on the XFL.

That documentary included footage of McMahon and NBC Executive Dick Ebersol discussing their memories of their partnership in the league over dinner and the idea of launching it today.  During those discussions, McMahon admitted that he had "recently" had talks with Dallas Cowboys owner Jerry Jones about the idea of a "minor league NFL."   The Director of that documentary was Charlie Ebersol, Dick's son, who later approached McMahon with the idea of purchasing the XFL rights and resurrecting the league.   The Ebersols are named as defendants in Smith's lawsuits.

Instead, McMahon resurrected the XFL himself while Ebersol went on to form the Alliance of American Football (AAF), which launched in February 2019, one year before the XFL's planned 2020 kickoff.   Despite having a broadcast agreement with CBS, the AAF League almost immediately ran into cash flow difficulties, requiring a new $250 million investment, which made Tom Dundon the new majority owner.  Dundon later made the decision to shut down the league, leaving the XFL's goal of becoming a new alternative football league unencumbered while also spotlighting the dangers of such a business launch.

As it turned out, XFL 2.0 shut down as well, just weeks into its first relaunched season due to COVID-19.  Although initially promising to return next year, TV deals with ABC/ESPN and FOX in hand, it instead went into a quick bankruptcy, issuing the following statement at the time:

"The XFL quickly captured the hearts and imaginations of millions of people who love football.  Unfortunately, as a new enterprise, we were not insulated from the harsh economic impacts and uncertainties caused by the COVID-19 crisis.  Accordingly, we have filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code.  This is a heartbreaking time for many, including our passionate fans, players and staff, and we are thankful to them, our television partners, and the many Americans who rallied to the XFL for the love of football."

Right before the bankruptcy, the league fired its Commissioner, Oliver Luck, who responded by filing a lawsuit against Vince McMahon over his departure.  That lawsuit was just settled several weeks ago.

Court records do not note that any of the defendants have been served with Smith's lawsuit as of this writing.

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