In re World Wrestling Entertainment, Inc. Merger Litigation
This text of In re World Wrestling Entertainment, Inc. Merger Litigation (In re World Wrestling Entertainment, Inc. Merger Litigation) is published on Counsel Stack Legal Research, covering Court of Chancery of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
EFiled: May 27 2026 07:57AM EDT Transaction ID 79564177 Case No. 2023-1166-JTL IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE WORLD WRESTLING CONSOLIDATED ENTERTAINMENT, INC. MERGER C.A. No. 2023-1166-JTL LITIGATION
MEMORANDUM OPINION IMPOSING SANCTIONS FOR SPOLIATION
Date Submitted: May 13, 2026 Date Decided: May 26, 2026
Kimberly A. Evans, Lindsay K. Faccenda, Irene R. Lax, Robert Erikson, BLOCK & LEVITON LLP, Wilmington, Delaware; Gregory V. Varallo, Anthony M. Calvano, Tayler D. Bolton, Alexander J. Rigby, BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP, Wilmington, Delaware; Jason M. Leviton, Nathan Abelman, BLOCK & LEVITON LLP, Boston, Massachusetts; Rebecca Boon, Mark Lebovitch, Jonathan D’Errico, BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP, New York, New York; Brian J. Robbins, Stephen J. Oddo, Richard N. Lozano, ROBBINS LLP, San Diego, California; Richard A. Maniskas, RM LAW, P.C., Berwyn, Pennsylvania; Attorneys for Plaintiffs.
Michael A. Pittenger, T. Brad Davey, Nicholas D. Mozal, Adriane M. Kappauf, Megan R. Thomas, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; Sandra C. Goldstein, Stefan Atkinson, Haley S. Stern, KIRKLAND & ELLIS LLP, New York, New York; Attorneys for Defendant Vincent K. McMahon.
William M. Lafferty, Ryan D. Stottmann, Alexandra M. Cumings, Jacob M. Perrone, Jialu Zou, Anneliese Ostrom, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; Michele D. Johnson, Kristin N. Murphy, Ryan A. Walsh, Allison O’Hara, LATHAM & WATKINS LLP, Costa Mesa, California; Colleen C. Smith, LATHAM & WATKINS LLP, San Diego, California; Jordan Mundell, LATHAM & WATKINS LLP, San Francisco, California; Attorneys for Defendants Nick Khan, Paul Levesque, George A. Barrios, and Michelle D. Wilson.
LASTER, V.C. The plaintiffs contend that a corporation’s controlling stockholder steered a
sale of the company to his longtime friend. In return, the controlling stockholder
received a senior role at the post-transaction company and help dealing with a federal
investigation into his alleged sexual misconduct. Discovery revealed that the
controlling stockholder and the company’s senior officers communicated using
ephemeral messages.
Signal is a messaging application. Users can adjust its auto-deletion settings
to apply to all their chats or to individual chats. Signal’s default setting preserves
messages indefinitely, but the user can enable auto-deletion for all chats. For
individual chats, any participant can enable auto-deletion or adjust the setting for all
participants in the chat. That means that one participant can cause messages on
another participant’s application to disappear.
After receiving litigation holds, the controlling stockholder and the senior
officers did not take any steps to check the settings on their Signal apps and chats.
Not only that, but they manually changed the auto-deletion settings for individual
Signal chats to implement short-fuse destruction periods measured in hours or less.
Those changes resulted in the loss of the existing messages in those chats and meant
that any future messages would quickly disappear.
The plaintiffs moved for sanctions based on spoliation of evidence, including
electronically stored information (“ESI”). This decision finds that spoliation occurred
and that the controlling stockholder and the senior officers acted recklessly—at a
minimum—in allowing the spoliation to occur. As a consequence, the court will presume the truth of a limited number of facts
relating to the conduct and motivations of two defendants: the controlling stockholder
and the senior officer who openly encouraged Signal use. Presuming those facts to be
true forces the defendants to deal with the evidentiary uncertainty that the Signal
users created. The defendants remain free to present their case at trial and convince
the court to find differently.
In addition, the court will elevate the standard of proof for overcoming the
presumed facts from a preponderance of the evidence to clear and convincing
evidence. Elevating the burden recognizes that the plaintiffs lack access to the
spoliated evidence and therefore cannot use it in their case in chief or to impeach the
defendants’ testimony. Elevating the standard of proof levels the playing field by
forcing the defendants to make a convincing case for their position.
I. FACTUAL BACKGROUND
The facts are drawn from the operative complaint and the parties’ submissions
in connection with the sanctions motion.1 What follows are not formal factual
findings, but rather how the record appears at this stage of the case.
A. Vince And The Company
Vincent K. McMahon is a larger-than-life figure in the world of professional
wrestling. He co-founded World Wrestling Entertainment, Inc. (“WWE” or the
1 Citations in theform “Compl. ¶ __” refer to paragraphs of the operative complaint. Citations in the form “Ex. __ at __” refer to exhibits the plaintiffs submitted in connection with their motion for sanctions and reply brief.
2 “Company”) in 1982 with his wife Linda McMahon.2 From 1982 until 2009, Vince
served as WWE’s Chairman, and Linda served as CEO. After Linda left the Company
in 2009, Vince took over as CEO while continuing to serve as Chairman. Vince was
always the Company’s controlling stockholder with the ability to exercise a
supermajority of its outstanding voting power.3
Before the merger challenged in this litigation, the Company principally
engaged in the production and distribution of wrestling entertainment content and
related products. Its stock traded publicly on the New York Stock Exchange under
the ticker symbol “WWE.”
B. The Misconduct Allegations
In March and April 2022, the Company’s board of directors (the “Board”)
received a series of anonymous emails alleging that Vince had a sexual relationship
with a former Company employee and paid $3 million to cover it up. Other women
came forward with additional allegations of sexual harassment, sexual abuse, and
hush-money payments.
2 My ordinary practice is to refer to individuals by surnames without honorifics.
Because there are multiple individuals involved in the case with the surname McMahon, this decision uses their first names after their initial appearance. That usage is for clarity. It is not intended to imply familiarity or convey disrespect.
3 As of April 2, 2023, Vince owned (i) 28,682,948 shares of high-vote Class B
common stock and (ii) 69,157 shares of Class A common stock. Through his holdings, Vince could wield 81% of the Company’s outstanding voting power.
3 In June 2022, the Board formed a special committee to investigate the
allegations (the “Special Committee”). The results of the Special Committee’s
investigation have not been made public, but the Wall Street Journal published an
article detailing survivor reports about sexual harassment, sexual abuse, and hush-
money payments totaling nearly $15 million.
C. The Misconduct Hold
On June 21, 2022, WWE’s Assistant General Counsel circulated a legal hold
notice addressing the misconduct allegations against Vince (the “Misconduct Hold”).
The recipients included Vince, his Chief of Staff Brad Blum, Company President Nick
Khan, Chief Content Officer Paul Levesque, and his daughter and Company
executive Stephanie McMahon.4 It stated:
Free access — add to your briefcase to read the full text and ask questions with AI
EFiled: May 27 2026 07:57AM EDT Transaction ID 79564177 Case No. 2023-1166-JTL IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE WORLD WRESTLING CONSOLIDATED ENTERTAINMENT, INC. MERGER C.A. No. 2023-1166-JTL LITIGATION
MEMORANDUM OPINION IMPOSING SANCTIONS FOR SPOLIATION
Date Submitted: May 13, 2026 Date Decided: May 26, 2026
Kimberly A. Evans, Lindsay K. Faccenda, Irene R. Lax, Robert Erikson, BLOCK & LEVITON LLP, Wilmington, Delaware; Gregory V. Varallo, Anthony M. Calvano, Tayler D. Bolton, Alexander J. Rigby, BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP, Wilmington, Delaware; Jason M. Leviton, Nathan Abelman, BLOCK & LEVITON LLP, Boston, Massachusetts; Rebecca Boon, Mark Lebovitch, Jonathan D’Errico, BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP, New York, New York; Brian J. Robbins, Stephen J. Oddo, Richard N. Lozano, ROBBINS LLP, San Diego, California; Richard A. Maniskas, RM LAW, P.C., Berwyn, Pennsylvania; Attorneys for Plaintiffs.
Michael A. Pittenger, T. Brad Davey, Nicholas D. Mozal, Adriane M. Kappauf, Megan R. Thomas, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; Sandra C. Goldstein, Stefan Atkinson, Haley S. Stern, KIRKLAND & ELLIS LLP, New York, New York; Attorneys for Defendant Vincent K. McMahon.
William M. Lafferty, Ryan D. Stottmann, Alexandra M. Cumings, Jacob M. Perrone, Jialu Zou, Anneliese Ostrom, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; Michele D. Johnson, Kristin N. Murphy, Ryan A. Walsh, Allison O’Hara, LATHAM & WATKINS LLP, Costa Mesa, California; Colleen C. Smith, LATHAM & WATKINS LLP, San Diego, California; Jordan Mundell, LATHAM & WATKINS LLP, San Francisco, California; Attorneys for Defendants Nick Khan, Paul Levesque, George A. Barrios, and Michelle D. Wilson.
LASTER, V.C. The plaintiffs contend that a corporation’s controlling stockholder steered a
sale of the company to his longtime friend. In return, the controlling stockholder
received a senior role at the post-transaction company and help dealing with a federal
investigation into his alleged sexual misconduct. Discovery revealed that the
controlling stockholder and the company’s senior officers communicated using
ephemeral messages.
Signal is a messaging application. Users can adjust its auto-deletion settings
to apply to all their chats or to individual chats. Signal’s default setting preserves
messages indefinitely, but the user can enable auto-deletion for all chats. For
individual chats, any participant can enable auto-deletion or adjust the setting for all
participants in the chat. That means that one participant can cause messages on
another participant’s application to disappear.
After receiving litigation holds, the controlling stockholder and the senior
officers did not take any steps to check the settings on their Signal apps and chats.
Not only that, but they manually changed the auto-deletion settings for individual
Signal chats to implement short-fuse destruction periods measured in hours or less.
Those changes resulted in the loss of the existing messages in those chats and meant
that any future messages would quickly disappear.
The plaintiffs moved for sanctions based on spoliation of evidence, including
electronically stored information (“ESI”). This decision finds that spoliation occurred
and that the controlling stockholder and the senior officers acted recklessly—at a
minimum—in allowing the spoliation to occur. As a consequence, the court will presume the truth of a limited number of facts
relating to the conduct and motivations of two defendants: the controlling stockholder
and the senior officer who openly encouraged Signal use. Presuming those facts to be
true forces the defendants to deal with the evidentiary uncertainty that the Signal
users created. The defendants remain free to present their case at trial and convince
the court to find differently.
In addition, the court will elevate the standard of proof for overcoming the
presumed facts from a preponderance of the evidence to clear and convincing
evidence. Elevating the burden recognizes that the plaintiffs lack access to the
spoliated evidence and therefore cannot use it in their case in chief or to impeach the
defendants’ testimony. Elevating the standard of proof levels the playing field by
forcing the defendants to make a convincing case for their position.
I. FACTUAL BACKGROUND
The facts are drawn from the operative complaint and the parties’ submissions
in connection with the sanctions motion.1 What follows are not formal factual
findings, but rather how the record appears at this stage of the case.
A. Vince And The Company
Vincent K. McMahon is a larger-than-life figure in the world of professional
wrestling. He co-founded World Wrestling Entertainment, Inc. (“WWE” or the
1 Citations in theform “Compl. ¶ __” refer to paragraphs of the operative complaint. Citations in the form “Ex. __ at __” refer to exhibits the plaintiffs submitted in connection with their motion for sanctions and reply brief.
2 “Company”) in 1982 with his wife Linda McMahon.2 From 1982 until 2009, Vince
served as WWE’s Chairman, and Linda served as CEO. After Linda left the Company
in 2009, Vince took over as CEO while continuing to serve as Chairman. Vince was
always the Company’s controlling stockholder with the ability to exercise a
supermajority of its outstanding voting power.3
Before the merger challenged in this litigation, the Company principally
engaged in the production and distribution of wrestling entertainment content and
related products. Its stock traded publicly on the New York Stock Exchange under
the ticker symbol “WWE.”
B. The Misconduct Allegations
In March and April 2022, the Company’s board of directors (the “Board”)
received a series of anonymous emails alleging that Vince had a sexual relationship
with a former Company employee and paid $3 million to cover it up. Other women
came forward with additional allegations of sexual harassment, sexual abuse, and
hush-money payments.
2 My ordinary practice is to refer to individuals by surnames without honorifics.
Because there are multiple individuals involved in the case with the surname McMahon, this decision uses their first names after their initial appearance. That usage is for clarity. It is not intended to imply familiarity or convey disrespect.
3 As of April 2, 2023, Vince owned (i) 28,682,948 shares of high-vote Class B
common stock and (ii) 69,157 shares of Class A common stock. Through his holdings, Vince could wield 81% of the Company’s outstanding voting power.
3 In June 2022, the Board formed a special committee to investigate the
allegations (the “Special Committee”). The results of the Special Committee’s
investigation have not been made public, but the Wall Street Journal published an
article detailing survivor reports about sexual harassment, sexual abuse, and hush-
money payments totaling nearly $15 million.
C. The Misconduct Hold
On June 21, 2022, WWE’s Assistant General Counsel circulated a legal hold
notice addressing the misconduct allegations against Vince (the “Misconduct Hold”).
The recipients included Vince, his Chief of Staff Brad Blum, Company President Nick
Khan, Chief Content Officer Paul Levesque, and his daughter and Company
executive Stephanie McMahon.4 It stated:
On June 15, 2022, an article was published by the Wall Street Journal which reported that WWE’s board of directors has been conducting an investigation into: a purported relationship involving . . . [Vince] McMahon and a former WWE employee; a monetary payment allegedly made by [Vince] to the former employee; a separation agreement allegedly entered into by the Company and the former employee; and, purported additional relationships between [Vince] . . . and one or more Company employees that also involve allegations of sexual relationships, monetary payments and related agreements (the “Matter”).5
The Misconduct Hold instructed its recipients that that they must “preserve and
retain all documents and ESI described in this Record Hold Notice.”6
4 See Ex. 1.
5 Id. at 1.
6 Id. (emphasis in original).
4 The Misconduct Hold specified that the recipients “must suspend any
procedures which you control that could delete, destroy or alter any
documents or ESI, including emails, PowerPoint slides, presentations,
spreadsheets, electronic documents, hard copy documents or other
materials that may be relevant to the Matter.”7 The legal hold specifically
referred to “instant messages” and “text messaging.”8 The legal hold later reiterated
that “you must take all reasonable steps necessary to prevent the
destruction or deletion of documents.”9 The legal hold further emphasized that
“[i]f your settings for emails, text messages or otherwise includes automatic
deletion protocols, it is your responsibility to ensure that Relevant
Documents, including relevant emails and text messages, are preserved.”10
The Misconduct Hold made clear that it applied to documents created in the
future. It stated: “The duty to preserve Relevant Documents applies not just to
documents that already exist, but also to documents created in the future
(including new emails). Accordingly, be sure to preserve all hard copy and
electronic Relevant Documents that you create or that you receive in the future.”11
7 Id. at 2 (emphasis in original).
8 Id. at 3.
9 Id. (emphasis in original).
10 Id. (emphasis in original).
11 Id. (emphasis in original).
5 The Misconduct Hold cast a wide net. After instructing recipients to retain
documents relevant to Vince’s alleged misconduct, the Misconduct Hold identified
more specific categories, including:
• “All documents that relate to or potentially relate to, involve, or concern the allegations against Vincent K. McMahon.”
• “All documents that relate to or potentially relate to, involve, or concern an alleged relationship between Vincent K. McMahon and any employee of WWE.”
• “All documents that relate to or potentially relate to, involve, or concern any investigation conducted by WWE regarding an alleged relationship between alleged relationship between Vincent K. McMahon and any employee of WWE.”
• “All documents that relate to or potentially relate to, involve, or concern any agreements between WWE and any WWE employee in connection with the Matter.”12
The Misconduct Hold did not suggest or imply that the categories were exclusive. In
other words, a document relevant both to a topic identified in the Misconduct Hold
and another topic would fall within the scope of the Misconduct Hold.
D. Vince’s Hiatus
On July 22, 2022, one month after the issuance of the Misconduct Hold, Vince
retired from his roles as CEO and Chairman. Stephanie took over as Chair. She and
Khan became co-CEOs.
On August 5, 2022, the U.S. Department of Justice sent WWE a request for
information regarding Vince’s alleged misconduct. That same day, Khan manually
12 Id. at 2.
6 changed the auto-delete setting for a Signal chat with Vince to delete messages after
one hour. The preceding day, Blum had manually changed the auto-delete setting for
a Signal chat with Vince to delete messages after one hour.
E. Endeavor Approaches Vince About A Deal.
Endeavor Group Holdings, Inc. (“Endeavor”) is a global sports and
entertainment company that owns and operates sports properties. One of its
subsidiaries owns and manages the Ultimate Fighting Championship (“UFC”).
Endeavor’s stock trades on the New York Stock Exchange under the ticker symbol
“EDR.”
Ari Emanuel is the CEO of Endeavor. He and Vince have been friends for over
twenty years. Mark Shapiro is the President and Chief Operating Officer for
Endeavor.
On July 22, 2022, the day Vince resigned from his roles at WWE, Shapiro
texted with another senior executive at Endeavor. He wrote:
Nick [Khan] and Stephanie are going to take over the WWE for the next nine months. At the end of the nine months Vince [will] be back with a new board or he will take the company private or he will sell it/coming to us. The race is on. The courtship is on.13
The other executive replied, “Let’s go.”14 Shapiro’s message links the eventual merger
to Vince’s hiatus from WWE and the misconduct allegations that caused it.
13 Ex. 3.
14 Id.
7 On August 8, 2022, Emanuel invited Vince to lunch on August 10. Vince
suggested bringing Khan and Stephanie. Emanuel was enthusiastic.
Jeff Sine is another key player in the story. He is an investment banker with
The Raine Group (“Raine”) and has served as Emanuel’s longtime financial advisor.
In preparation for the August 10 meeting, Sine sent Emanuel a presentation titled
“Project Stunner” that described a potential deal with WWE.
During the lunch on August 10, Vince, Khan, Stephanie, and Emanuel
discussed a potential transaction between Endeavor and WWE. That same day,
Stephanie manually changed the auto-delete setting for a Signal chat with Vince to
delete messages after one hour.
Eleven days later, on August 21, 2022, Sine met with Vince and reviewed a
version of the Project Stunner presentation. On August 22, Emanuel texted Vince to
say, “I know you met with Jeff Sine yesterday.”15 That same day, Blum manually
changed the auto-delete setting for a Signal chat with Vince to delete messages after
eight hours.
Emanuel and Vince set up a call for the following day, August 23, 2022. On
August 28, Sine proposed to switch sides and represent Vince instead of Endeavor in
connection with any transaction. Vince responded enthusiastically.16
15 Ex. 5.
16 Ex. 7 (“I Love that idea Jeff” with two thumbs-up emojis).
8 F. Vince’s Discussions With Emanuel Intensify.
In September 2022, Emanuel told Vince expressly that if WWE engaged in a
transaction with Endeavor, then he could help Vince with the federal investigation
into his alleged misconduct at WWE. In one voicemail message, Emanuel stated:
I spoke to my lawyer from Latham. Just FYI. Everybody at the DOJ is former Latham lawyers so on that side will be helpful. SEC of course is SEC, but that’s just a penalty. As it relates to everything else, yes we can indemnify you and we will. If it’s criminal of course you can’t stop criminal, but this is not criminal. Call me when you get a chance.17
In another voicemail message, Emanuel stated: “I really do think that we all need to
get together and talk through all the issues. Because I think whether it be the DOJ
or anything, there’s ways around this to figure this out, and I don’t know what you’re
hearing or thinking, so give me a call if you have five seconds.”18 Both messages link
the deal with Endeavor to the misconduct allegations against Vince.
In November 2022, the discussions about a deal intensified. Between
November 10 and 12, Sine and Emanuel had nine separate telephone calls. On
November 20, Vince asked Raine to analyze a management buyout (“MBO”). On
November 21, Vince and Sine had an eight minute call. That same day, Vince asked
a colleague for a draft letter pledging to reimburse the Company for the costs of
investigating the misconduct allegations. Also that same day, Khan repeatedly
17 Ex. 8.
18 Ex. 9.
9 changed the auto-delete setting for a Signal chat with Vince. As a result of those
changes, the chat was set to delete messages after one hour.
G. Vince Returns.
On December 13, 2022, Vince, Khan, and Stephanie met with Emanuel and
Shapiro to continue the merger discussions. Immediately after the dinner, Vince left
Sine a message telling him that he had a “very good meeting” with Emanuel and that
“I think it probably is the best thing to do is to go forward with the deal with Ari.”19
He added that “it solves a lot of problems” and that “together I think it’s a stronger
situation than either one of us on our own.”20 He concluded that while he had not
committed to Emanuel, he was “pretty sure that’s the way I want to go now” because
it was “easier, faster, and all that other kind of stuff.”21
One week later, on December 20, 2022, Vince sent a letter to the Board
proposing that the Company launch a review of strategic alternatives, including a
potential sale. Vince noted that any potential counterparty would likely want to speak
with him and have his support as the Company’s majority stockholder. He therefore
proposed that the directors invite him back as “Executive Chairman.” He asked the
Board to respond by January 3, 2023.
19 Ex. 11.
20 Id.
21 Id.
10 By letter dated December 27, 2022, the Board advised Vince that it would
initiate a strategic review process. The Board also stated it would welcome Vince to
play a role in the strategic review process but rejected his proposal to return as a
director. The Board offered to enter into a settlement with Vince under which the
Company would not sue him if Vince agreed to pay for the millions of dollars the
Company had incurred in investigation-related expenses.
By letter dated December 31, 2022, Vince told the Board that his return to the
Company was necessary and that the Board’s position was unacceptable. He stated
that “unless I have direct involvement and input as Executive Chairman from the
outset, I will not be able to support or approve any media rights deals or strategic
transaction (including any commitments made by or on behalf of the Company
regarding a potential transaction or process).”22 On the same day Vince sent his letter,
Blum manually changed the auto-delete setting for a Signal chat with Vince to delete
messages after one day.
On January 3, 2023, the Board reiterated that it would not be in the Company’s
best interests for Vince to return to the Company because of pending government
investigations. Vince called Emanuel three times that day. That same day, Khan
manually changed the auto-delete setting for a Signal chat with Vince to delete any
messages after three hours.
22 Compl. ¶ 64.
11 On January 5, 2023, before receiving the Board’s response, Vince acted by
written consent to remove three independent directors. He replaced them with two
allies and himself. The next day, two independent directors resigned in protest. One
was the Company’s lead independent director. The Company then issued an
announcement stating that “the Board ceased to be comprised of a majority of
independent directors.”23 That same day, Khan manually changed the auto-delete
setting for a Signal chat with Vince, Levesque, and Stephanie to delete any messages
after three hours.
On January 10, 2023, Vince resumed his post as Executive Chair. Khan
continued as sole CEO. Vince’s daughter Stephanie resigned to facilitate those
changes. That same day, the Company announced that it was exploring strategic
alternatives.
The message Shapiro sent to his colleague at Endeavor on the day Vince
resigned had predicted correctly what would happen. It was just happening after six
months rather than nine.
H. The Sale Process Begins.
On January 12, 2023, the Board held a special meeting to discuss the
exploration of strategic alternatives. On January 13, 2023, WWE retained Raine—
Emanuel’s longtime financial advisor—as a third financial advisor. WWE had already
retained J.P. Morgan and Moelis.
23 Id. ¶ 38.
12 That day also saw Vince sign a settlement agreement resolving claims of
alleged sexual misconduct. He also spoke with Emanuel by phone. That same day,
Vince manually changed the auto-deletion settings for two Signal chats, one with
Khan and the other with Levesque. Vince changed both to delete after one day. Blum
separately changed the auto-deletion setting for a Signal chat with Vince and Khan to
delete after one day.
On January 17, 2023, the Board’s financial advisors—Raine, J.P. Morgan, and
Moelis—began contacting potential bidders. Sine and Emanuel spoke repeatedly
during January. Sine called Emanuel eight times, and Emanuel contacted Sine
twenty-one times.
I. The Sale Process Hold
On January 19, 2023, WWE’s Assistant General Counsel circulated another
legal hold notice, this time addressing matters related to Vince’s return to the
Company and the decision to evaluate strategic alternatives (the “Sale Process
Hold”).24 The recipients included Vince, Stephanie, Khan, Blum, and Levesque. It
stated:
The Company has become aware of certain lawsuits that have been filed relating to recent events at WWE, including changes to the composition of the Board, amendments to the Company’s bylaws, changes to the Company’s executive team, and the investigation by the Special Committee of the Board. In addition, investigations by certain governmental entities, including the U.S. Attorney’s Office for the
24 See Ex. 13.
13 Southern District of New York and the Securities & Exchange Commission (SEC) remain ongoing.25
The Sale Process Hold explained that “it is essential that WWE and its employees
preserve and retain all documents and ESI (including emails, texts and other
electronic communications) described in this Record Hold Notice.”26
Like the Misconduct Hold, the Sale Process Hold specified that the recipients
“must suspend any procedures which you control that could delete, destroy
or alter any documents or ESI, including emails, texts and other electronic
communications, PowerPoint slides, presentations, spreadsheets,
electronic documents, hard copy documents or other materials that may be
relevant.”27 Like the Misconduct Hold, the Sale Process Hold specifically referred to
“instant messages” and “text messaging.”28 It later reiterated that “you must take
all reasonable steps necessary to prevent the destruction or deletion of
documents.”29 The legal hold further emphasized that “[i]f your electronic mail
or text settings include automatic deletion protocols, it is your
25 Id. at 1.
26 Id. (emphasis in original).
27 Id. (emphasis in original).
28 Id. at 3.
29 Id. at 3–4 (emphasis in original).
14 responsibility to ensure that Relevant Documents, including relevant
electronic mail and text messages, are preserved.”30
In addition to instructing recipients to retain documents generally relevant to
the litigations and investigations, the Sale Process Hold identified more specific
categories, including all documents and communications concerning:
• “The investigation by the Special Committee”;
• “The decision by McMahon to temporarily step down as CEO”;
• “Correspondence between McMahon and the Board”;
• “The written consent of January 5, 2023”;
• “The negotiation and/or re-negotiation of WWE’s media rights deals”; and
• “The recently-announced review of strategic alternatives.”31
Like the Misconduct Hold, the Sale Process Hold made clear that it applied to
documents created in the future, stating: “The duty to preserve Relevant Documents
applies not just to documents that already exist, but also to documents created in
the future (including new electronic communications). Accordingly, be sure to
preserve all hard copy and electronic Relevant Documents that you create or that you
receive in the future.”32
30 Id. at 4 (emphasis in original).
31 Id. at 2.
32 Id. at 4 (emphasis in original). The Company issued another hold notice on
May 23, 2023, that went into greater detail about the merger. See Ex. 14. The third hold did not alter any of the preservation obligations already in existence.
15 J. The Sale Process Continues.
On February 6, 2023, the Company began entering into confidentiality
agreements with potential bidders. The next day, Endeavor submitted a proposal to
combine its UFC subsidiary with the Company to form TKO Group Holdings, Inc.
(“TKO”). Endeavor envisioned a transaction in which WWE stockholders could choose
between cash or stock, with the consideration valued at $88.43 per share, and with
Endeavor paying a maximum of $2 billion in cash. If no Company stockholders elected
to receive cash, resulting in the greatest possible dilution for Endeavor, then
Endeavor would own 57% of the combined business.
On February 24, 2023, the Company told interested bidders that any written
indications of interest must be received by March 13. The Company did not tell
potential bidders that Endeavor had submitted its offer weeks before, that Endeavor
was already far along in its due diligence process, or that Emanuel and Shapiro had
already met with Vince and Khan to discuss Endeavor’s offer.
By March 13, 2023, the Company had received three other expressions of
interest in a whole company sale. Liberty Media Corporation (“Liberty”) proposed to
acquire the Company for cash in the range of $95 to $100 per share. KKR proposed
to acquire the Company for cash in the range of $90 to $97.50 per share. Base 10
proposed to acquire the Company for a mix of stock and cash in the range of $76.83
per share. None of the bidders gave any indication that they intended to retain Vince.
16 K. A Post-Deal Position For Vince Becomes A Key Term.
Vince and the Board did not respond substantively to Liberty, KKR, or Base
10. They negotiated exclusively with Endeavor, even though its proposal carried a
lower value than the Liberty and KKR offers.
On March 21, 2023, Vince and the Board countered Endeavor’s proposal with
an all-stock deal with no cash election. The surviving company’s board would have
eleven seats, six appointed by Endeavor and five by WWE. Emanuel would be the
CEO of the combined company. The five WWE directors would select the Executive
Chair. The term sheet implied a value for WWE of $95.66 per share. That value fell
at the low end of Liberty’s opening range and toward the upper end of KKR’s range.
On March 22, 2023, Vince and Khan met with Emanuel and Shapiro to discuss
the deal. They agreed in principle to the all-equity consideration and the 51/49% split.
On March 23, 2023, Endeavor submitted a revised term sheet that
incorporated the new 51/49% split. It also proposed that Vince would (1) serve as
Executive Chair of the combined company until his death, resignation, or incapacity,
(2) select five of the eleven directors on the combined company’s board, and (3) enjoy
veto rights over various corporate actions. Those rights were later incorporated in a
governance agreement.
The merger agreement was finalized on April 1, 2023. At the time, Emanuel,
Vince, and Khan were together at Wrestlemania 39 in Los Angeles, California. On
April 3, the Company announced the deal. It closed on September 12.
17 L. This Litigation
Various plaintiffs now representing a class of the Company’s stockholders filed
suit in November 2023. They contend that Vince and his fellow directors breached
their fiduciary duties in connection with the merger. One of the plaintiffs’ principal
theories asserts that Vince steered the deal to Endeavor and his friend Emanuel
because he knew he would have a role with the surviving company, receive help with
the legal fallout from his alleged sexual misconduct, and be indemnified.
Discovery has been extensive. As part of discovery, Vince disclosed that federal
agents had seized his iPhone and iPad (the “Seized Devices”) in July 2023 as part of
their investigation into his alleged misconduct. Vince disclosed that there could be
discoverable information on the Seized Devices that was not otherwise available
because Signal stores data locally.
In September 2025, the government returned the Seized Devices. Vince’s
counsel conducted a forensic analysis of the Seized Devices that identified when each
Signal chat was created, who participated in it, and whether any participant adjusted
the retention settings. The contents of the chats, however, were no longer available.
II. LEGAL ANALYSIS
The plaintiffs contend that Vince, Stephanie, Khan, Blum, and Levesque (the
“Signal Users”) spoliated evidence by not checking the Signal application’s message
settings to ensure that messages were preserved after receiving the Misconduct Hold
18 and later the Sale Process Hold, then manually changing individual chat settings so
that prior messages would be destroyed and future messages deleted.33
“Spoliation is the destruction or significant alteration of evidence, the failure
to preserve evidence properly for another’s use, or the improper concealment of
evidence.”34 Court of Chancery Rule 37(e) addresses the failure to preserve ESI. It
states:
If ESI that should have been preserved in the reasonable anticipation of or actual notice of imminent litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:
(1) upon finding prejudice to another party from loss of information, may order measures no greater than necessary to cure the prejudice; or
(2) only upon finding that the party acted recklessly or with the intent to deprive another party of the information’s use in the litigation, may, among other things:
(A) presume that the lost information was unfavorable to the party; or
(B) dismiss the action or enter a default judgment.35
Signal chats are ESI, so Rule 37(e) applies.
33 The plaintiffs also contend that Khan deleted specific text messages and that
Vince and Blum failed to preserve hard copy documents. The Signal messages are the main event. The remedy that the court imposes for the spoliation of the Signal chats also remedies any spoliation involving specific text messages and hard copy documents.
34 Goldstein v. Denner, 310 A.3d 548, 567 (Del. Ch. 2024).
35 Ct. Ch. R. 37(e) (formatting altered).
19 To obtain sanctions for a party’s failure to preserve ESI, the requesting party
must show (i) the responding party had a duty to preserve the ESI, (ii) the ESI is lost,
(iii) the loss is attributable to the responding party’s failure to take reasonable steps
to preserve the ESI, and (iv) the requesting party suffered prejudice. For an adverse
inference or case-dispositive sanctions, the plaintiff must show that the responding
party acted recklessly or intentionally when failing to preserve ESI.36
A. The Threshold Issue Of Timing
When considering a motion addressing spoliation, there is always a threshold
question of timing.37 The defendants argue that the court should defer ruling on the
plaintiffs’ motion until after trial.
Rule 37 does not contain any specific reference to the timing of the filing of a
motion seeking spoliation sanctions.38 “Delaware trial courts have inherent power to
control their dockets.”39 That authority includes determining how a case should
proceed for the “orderly adjudication of claims.”40
36 Goldstein, 310 A.3d at 557.
37 In re Facebook Inc. Deriv. Litig., 2025 WL 262194, at *6 (Del. Ch. Jan. 21,
2025); Goldstein, 310 A.3d at 569.
38 See Ct. Ch. R. 37; Goldstein, 310 A.3d at 570.
39 Solow v. Aspect Res., LLC, 46 A.3d 1074, 1075 (Del. 2012).
40 Unbound P’rs Ltd. P’ship v. Invoy Hldgs. Inc., 251 A.3d 1016, 1030 (Del.
Super. 2021) (internal quotation marks omitted).
20 As a general matter, Rule 37 is a rule about discovery, implying that a motion
under Rule 37(e) should generally be part of the discovery process. Nevertheless,
determining when to address a spoliation motion “rests in the discretion of the court
based on the facts of each case.”41 Pertinent factors include “the nature of the
[spoliation] issue, the stage of the case, the court’s ability to provide case-specific
relief, and any scheduling order that might apply.”42 “If a party seeks an order
compelling the defendants to provide additional discovery or to pay for the movant to
conduct additional discovery, then it would be foolish to defer the motion until trial.”43
Along similar lines, “[i]f a ruling on the motion will help the parties prepare for trial
or limit the issues to be addressed at trial, then it often will make sense to address
the motion before trial.”44 But “[i]f the motion turns on evidentiary issues that the
court will evaluate at trial, then it will make sense to defer the motion until trial.”45
Here, the motion rests on undisputed facts regarding the failure to preserve
ESI and affirmative steps to change automatic deletion settings for ESI. The motion
does not turn on disputed facts that would warrant an evidentiary hearing or post-
trial adjudication. The defendants argue that the court should defer ruling on the
41 Goldstein, 310 A.3d at 571.
42 Id.
43 Id.
44 Id.
45 Id.
21 motion so it can observe the Signal Users’ credibility before making a finding of
intent, but recklessness provides an adequate basis for the sanctions the plaintiffs
request.
Equally important, the plaintiffs seek remedies that will affect how trial
unfolds. Whether the court grants those sanctions will affect how the parties prepare
for trial and present their evidence. The proper time to consider the plaintiffs’ motion
is now.46
B. Was There A Duty To Preserve The Signal Chats?
Under Rule 37(e), the first question is whether the ESI “should have been
preserved.”47 “Rule 37(e) does not apply . . . when information or evidence is lost
before a duty to preserve attaches.”48
A party must “preserve potentially relevant evidence as soon as the party
either actually anticipates litigation or reasonably should have anticipated
46 United States District Judge Iain D. Johnston has provided particularly
helpful and characteristically insightful guidance on the timing of spoliation motions. See Groves Inc. v. R.C. Bremer Mktg. Assocs., 2024 WL 4871368 (N.D. Ill. Nov. 22, 2024). Applying his framework, the court here has access to the specific facts necessary to decide the motion, and the remedy sought will affect how the parties approach trial, which is the next key stage in the case. Cf. id. at *5–6. But as he explains, when to rule on a spoliation motion requires a case-by-case call. See id. at *6.
47 Ct. Ch. R. 37(e).
48 Goldstein, 310 A.3d at 571 (quoting Living Color Enters., Inc. v. New Era
Aquaculture, Ltd., 2016 WL 1105297, at *4 (S.D. Fla. Mar. 22, 2016)).
22 litigation.”49 “A party is not obligated to preserve every shred of paper, every e-mail
or electronic document.”50 But a party is obligated to “preserve what it knows, or
reasonably should know, is relevant to the action, is reasonably calculated to lead to
the discovery of admissible evidence, is reasonably likely to be requested during
discovery and/or is the subject of a pending discovery request.”51 “An organization’s
decision to circulate a litigation hold notice is a strong indication that a duty to
preserve evidence exists, because it shows that the organization subjectively
anticipated litigation.”52
The Signal Users accept that an obligation to preserve documents existed on
June 21, 2022, when the Company circulated the Misconduct Hold, but they maintain
that the Misconduct Hold only encompassed materials relating to Vince’s alleged
misconduct. As they see it, the Misconduct Hold did not explicitly encompass the sale
process or the merger. Nor could it, because the sale process did not formally start
until February 2023, and the merger would not take place until months later. The
defendants conclude that no duty to preserve sale-process-related documents arose
until January 19, 2023, when the Company circulated the Sale Process Hold.
49 Id. (footnote omitted); see also Beard Rsch., Inc. v. Kates, 981 A.2d 1175, 1187
(Del. Ch. 2009).
50 Seibold v. Camulos P’rs LP, 2012 WL 4076182, at *23 (Del. Ch. Sept. 17,
2012) (internal quotation marks omitted).
51 Id. (internal quotation marks omitted).
52 Goldstein, 310 A.3d at 573.
23 The defendants’ argument falls short because the lost Signal chats could
readily address both Vince’s alleged misconduct and the possibility of a transaction.
The evidence adduced in discovery suggests the two were linked. Shapiro
immediately understood the connection between Vince’s departure and a future deal.
Emanuel expressly connected the two concepts in his voicemails. The Signal chats
likely included communications addressing both issues.
The Misconduct Hold put the Signal Users on notice that they needed to retain
communications related to Vince’s alleged misconduct, including communications
relating to Vince’s alleged misconduct and the merger. As of June 21, 2022, the date
of the Misconduct Hold, the defendants took on an affirmative duty to preserve their
Signal chats.
The defendants are also incorrect to assert that no duty to preserve sale-
process-related documents arose until January 19, 2023, when the Company issued
the Sale Process Hold. The duty to preserve information indisputably applied after
that date, but the duty actually arose earlier.
In M&A transactions, a duty to preserve can arise before a litigation hold is
issued because litigation involving M&A transactions is sufficiently common that
sophisticated parties anticipate it.53 In August 2022, Vince met with Emanuel to
discuss a potential transaction, then later met with Sine to discuss a deal. In
September 2022, Emanuel made at least two offers to help Vince with the federal
53 Id.
24 investigation into his alleged misconduct, as long as WWE engaged in a transaction
with Endeavor. By November 2022, discussions about Vince returning to the
Company and pursuing a merger with Endeavor had reached a serious stage. On
November 20, Vince asked Raine to analyze an MBO. On November 21, Vince and
Sine had an eight minute call. That same day, Vince asked President and Chief
Financial Officer Frank Riddick for a draft letter pledging to reimburse the Company
for the costs of investigating the misconduct allegations.
Vince’s plan to return to the Company and pursue a merger in the face of the
misconduct allegations against him was a high-risk strategy that would draw
litigation. Although it is difficult to mark a specific time when the Signal Users
reasonably should have anticipated litigation, that time had arrived by August 31,
2022. As of that date, the Signal Users had a duty to preserve evidence relating to
Vince’s return and a potential sale of the Company.
C. Are The Signal Chats Lost?
The second question in the Rule 37(e) analysis is whether the ESI “is lost.”54
“Information is lost for purposes of Rule 37(e) only if it is irretrievable from another
source, including other custodians.”55 “Because [ESI] often exists in multiple
54 Ct. Ch. R. 37(e).
55 Goldstein, 310 A.3d at 574.
25 locations, loss from one source may often be harmless when substitute information
can be found elsewhere.”56
The Signal Users admit that the Signal chats are lost. They cannot be
recovered or obtained from other sources.
D. Were The Signal Chats Lost Due To A Failure To Take Reasonable Steps To Preserve Them?
The third question in the Rule 37(e) analysis is whether the ESI was lost
“because a party failed to take reasonable steps to preserve it.”57 When a party has a
duty to preserve evidence, that “party must act reasonably to preserve the
information that it knows, or reasonably should know, could be relevant to the
litigation, including what an opposing party is likely to request.”58 The party need not
preserve all documents in its possession; “it must preserve what it knows and
reasonably ought to know is relevant to possible litigation and is in its possession,
custody, or control.”59 In determining reasonableness, a court “should be sensitive to
the party’s sophistication with regard to litigation in evaluating preservation efforts;
some litigants, particularly individual litigants, may be less familiar with
56 Id. (quoting Fed. R. Civ. P. 37(e) advisory committee’s notes).
57 Ct. Ch. R. 37(e).
58 Goldstein, 310 A.3d at 576.
59 Id. (internal quotation marks omitted).
26 preservation obligations than others who have considerable experience in
litigation.”60
Simply circulating a litigation hold is not sufficient.61 “The organization must
take steps to ensure that the recipients of the hold understand what it means and
abide by it.”62 “The organization also must suspend or modify routine document
retention or document destruction policies so that evidence is not lost.”63
Individuals must take similar steps. “[T]hey must disable auto-delete functions
that otherwise would destroy emails or texts.”64 “They also must back up data from
personal devices before disposing of them.”65 Failing to disable the auto-delete setting
or back up messages before deletion demonstrates that a defendant acted
unreasonably.66 Individuals may not claim ignorance. “After receiving a litigation
60 Id. (quoting Fed. R. Civ. P. 37(e) advisory committee’s notes).
61 Id. at 576–77.
62 Id. at 577.
63 Id.
64 Id.
65 Id.
66 See id. at 577–78.
27 hold, an individual must take steps to determine what is necessary to comply.”67 This
includes learning what is necessary “to prevent destruction or automatic deletion.”68
The Signal Users failed to take reasonable steps to preserve ESI. Starting on
June 21, 2022, the Signal Users had a duty to preserve ESI relating to the topics
identified in the Misconduct Hold, including any ESI about those topics that touched
on a sale process or deal with Endeavor. Starting on August 31, the Signal Users had
a duty to preserve ESI relating to Vince’s anticipated return to the Company, the sale
process, and a deal with Endeavor.
The Signal Users did not take reasonable steps to identify and preserve likely
sources of ESI. Instead, they took affirmative steps to delete likely sources of ESI.
Khan both used Signal and encouraged others to use it. After receiving the
Misconduct Hold, Khan failed to disable auto-deletion on any Signal chats. Instead,
he frequently adjusted the Signal retention settings for individual chats so that past
messages would be lost and future messages deleted. After receiving the Sale Process
Hold, Khan again failed to disable auto-deletion on any Signal chats.
Instead, Khan encouraged others to shift to Signal. For example, during the
middle of the sale process, Khan had the following exchange with Vince:69
67 Id. at 578.
68 Id. (internal quotation marks omitted).
69 Ex. 22.
28 Blum used Signal and its ephemeral message feature. After receiving the
Misconduct Hold and the Sale Process Hold, Blum did not do anything to check the
settings on his phone to ensure that auto-delete was not in operation on any Signal
chats. Like Khan and Vince, Blum manually changed auto-deletion settings for
Signal chats so that past messages would be lost and future messages deleted.
Stephanie used Signal and its ephemeral message feature. After receiving the
Misconduct Hold and the Sale Process Hold, Stephanie did not do anything to check
the settings on her phone to ensure that auto-delete was not in operation on any
Signal chats. Like Khan, Vince, and Blum, Stephanie manually changed auto-
deletion settings so that past messages would be lost and future messages deleted.
Levesque used Signal and its ephemeral message feature. After receiving the
Misconduct Hold and the Sale Process Hold, Levesque did not do anything to check
the settings on his phone to ensure that auto-delete was not in operation on any
By not taking steps to disable the auto-delete settings on their Signal chats,
the Signal Users failed to take reasonable steps to collect and preserve the ESI.
Instead, they affirmatively changed the auto-delete settings to ensure prompt
deletion, and Khan selectively deleted text messages.
E. Prejudice
The imposition of sanctions for spoliation requires a showing of prejudice.
Absent prejudice, the failure to preserve ESI need not be remedied because, by
definition, no harm was done.
30 “Prejudice exists when spoliation prevents a party from obtaining and
potentially using relevant evidence.”72 Determining whether prejudice exists is
difficult because spoliation creates an evidentiary vacuum. Proving the relevance of
the lost evidence is difficult “precisely because the evidence no longer exists.”73
The prejudice analysis starts by requiring that the requesting party “provide
some minimal explanation as to why the lost ESI could have been relevant and either
admissible in its own right or reasonably likely to lead to the discovery of admissible
evidence.”74 The mere fact that evidence is lost is not sufficient to demonstrate
prejudice; the requesting party must “provide a plausible explanation as to why the
evidence could have been relevant such that the failure to preserve is prejudicial.”75
“‘Prejudice’ under Rule 37(e) includes the thwarting of a party’s ability to obtain the
evidence it needs for its case.”76
Once the party seeking sanctions meets that initial burden, then the party that
failed to preserve the ESI must convince the court that the lost ESI did not result in
72 Goldstein, 310 A.3d at 583.
73 Id.; see Hollis v. CEVA Logistics U.S., Inc., 603 F. Supp. 3d 611, 623 (N.D.
Ill. 2022) (“Establishing prejudice can be a dicey proposition because the ESI is gone.”).
74 Goldstein, 310 A.3d at 585.
75 Id. at 584.
76 Hollis, 603 F. Supp. 3d at 623; accord DR Distributors, LLC v. 21 Century
Smoking, Inc., 513 F. Supp. 3d 839, 981 (N.D. Ill. 2021).
31 prejudice. Possible reasons include that the material could not have been relevant,
would not have been admissible or potentially have led to the discovery of admissible
evidence, or otherwise could not have been used by the requesting party to its
advantage.77
Here, the plaintiffs have provided a plausible explanation as to why the
evidence could have been relevant such that its loss is prejudice. The Signal Users
communicated about Company business, Vince’s alleged misconduct, Vince’s return
to the Company, the sale process, and the eventual merger. The record reveals
extensive backchannelling between and among Vince, Khan, Sine, and Emanuel. The
Signal Users specifically changed the auto-deletion settings for individual chats.78
They took those actions at times that corresponded with key events in the timeline.
It is reasonable to infer that the lost ESI would have included candid communications
shedding light on the reasons for the merger.
The plaintiffs now lack access to that evidence. They cannot use the messages
as affirmative proof. They cannot use the messages to question witnesses. They
cannot use the messages to cross examine witnesses. The burden therefore shifts to
the spoliators to show a lack of prejudice.
To show that the lost messages did not result in prejudice, the Signal Users
argue that none of the spoliated documents were relevant. No one can know that.
77 Goldstein, 310 A.3d at 585; accord Facebook, 2025 WL 262194, at *10.
78 Khan also selectively deleted text messages.
32 Instead, context suggests that the deleted Signal chats and messages were relevant.
At this point in the case, the record shows that the Signal Users discussed Vince’s
resignation, strategized about his legal and reputational difficulties, and engaged in
backchannel discussions about Vince’s return and a sale of the Company. It is far
more likely that the messages contained relevant evidence than that they did not.
Vince argues that because he and Emanuel met openly and left each other
voicemail messages about the deal and its link to his alleged misconduct, it makes no
sense that they would communicate ephemerally about the same topic. That does not
follow. Figures who make public statements do not only communicate in public.
Troves of internal communications typically exist regarding the public statements.
The same is true about figures who communicate via a discoverable channel while
also using ephemeral channels. The existence of the discoverable channel does not
foreclose the possibility of candid and probative content on the ephemeral channel. It
makes its existence more likely, not less likely.
Khan testified that his most frequent use of Signal was for dealing with a
foreign entity. Vince similarly testified he primarily communicated over email, text
messages, phone calls, and using his computer. Taking both statements as true does
not mean that neither used Signal chats for relevant and now lost communications.
Khan and Vince both used Signal and changed the auto-deletion settings for their
33 chats repeatedly between August 2022 and January 2023. The timing of those
changes suggests a close relationship to the matters at issue in this proceeding.79
The Signal Users also rely on their own testimony about their purported lack
of familiarity with Signal retention settings. Yet the evidence objectively shows that
the Signal Users frequently modified the retention settings for their chats. In light of
those frequent modifications, their denials cannot be credited.80 In any event, they
were reckless. After receiving the Misconduct Hold, they had a duty to take steps to
preserve ESI and consult with WWE’s in-house counsel if there was any uncertainty
or confusion.
Finally, the Signal Users argue that even if some deleted Signal messages were
relevant, losing a small number of messages against an expansive record does not
result in prejudice. To that end, they tout the total number of documents they
produced.
Discovery has been extensive, with TKO and Endeavor alone producing more
than 37,000 documents. Vince’s counsel engaged in particularly commendable efforts
79 The same is true for Khan’s selective deletion of individual texts. Although
context suggests that some of Khan’s selectively deleted texts likely lacked relevance to this case, others suggest a close connection.
80 Vince and Khan gave testimony about Signal use that was notably strained.
E.g., Vince Dep. 323 (“Q. If you read that word backwards, it says Signal, right? A. I don’t know. I didn’t bother reading it. Q. Langis is Signal? A. I don’t know. I’d have to take my pencil out and do it. I’ll take your word for it.”); Khan Dep. 398 (“Q. Langis backwards is Signal; right? A. Yes. Q. Why did you write Signal backwards? A. I have no idea.”).
34 to gather, preserve, and produce evidence. But the comparison stresses a
denominator in search of a numerator, because it is impossible to know how many
messages were in the lost chat threads. More important, not all litigation documents
carry equal weight. The Signal Users selectively destroyed specific Signal chats and
messages. Because the Signal Users acted selectively, “it is likely that the most
sensitive and probative exchanges are gone.”81
F. The Sanctions Necessary To Cure The Prejudice
Rule 37(e) authorizes a range of sanctions to cure prejudice. The court can
deem certain facts to be true, preclude the use of certain evidence, strike particular
pleadings or claims, modify the burden of proof for particular issues, allow additional
discovery, enter default judgment, and award expenses.82
Before the court can draw an adverse inference or enter default judgment, the
court must conclude that the party “acted recklessly or with the intent to deprive
another party of the information’s use in the litigation.”83 “Delaware courts have
defined recklessness in the spoliation context as a conscious awareness of the risk
81 Facebook, 2025 WL 262194, at *11.
82 Goldstein, 310 A.3d at 583; see also Ct. Ch. R. 37(b); Terramar Retail Ctrs.,
LLC v. Marion #2-Seaport Tr. U/A/D June 21, 2002, 2018 WL 6331622, at *14 (Del. Ch. Dec. 4, 2018).
83 Ct. Ch. R. 37(e)(2).
35 that one’s action or inaction may cause evidence to be despoiled. Intentional
destruction simply means that the spoliator acted ‘with purpose.’”84
“For purposes of recklessness, knowledge of their duty to preserve
[communications] coupled with the loss of [communications] and the lack of any
explanation [is] dispositive.”85 The Signal Users acted recklessly—at a minimum—by
failing to check on the operation of the auto-delete function for their Signal messages,
changing the auto-delete settings for individual Signal chats, and selectively
destroying messages.
To remediate the prejudice, the plaintiffs ask the court to
• Presume that specified facts are true; and
• Require that the defendants can only overcome the presumed facts through clear and convincing evidence.
Those are appropriate sanctions.
1. The Presumed Facts
The plaintiffs principally seek relief in the form of factual presumptions. They
do not ask the court to deem facts established. They only seek to shift the burden of
proof to the defendants on specific factual issues.
Shifting the burden of proof is a significant sanction but one warranted here.
The burden of proof “determine[s] what happens if there is no credible evidence on a
84 TR Invs., LLC v. Genger, 2009 WL 4696062, at *17 (Del. Ch. Dec. 9, 2009)
(footnote omitted) (quoting Beard Rsch., 981 A.2d at 1191), aff’d in part, rev’d in part on other grounds, 26 A.3d 180 (Del. 2011).
85 Goldstein v. Denner, 2024 WL 776033, at *16 (Del. Ch. Feb. 26, 2024).
36 topic, or if there is some credible evidence, but not enough that either side could carry
a burden by a preponderance.”86 In such a case, the party with the burden of proof
loses. In a typical civil case, the plaintiff bears the burden of proof. Shifting the
burden of proof changes who wins in the absence of sufficient credible evidence.
Because the Signal Users created the absence by selectively deleting Signal chats and
texts, they should appropriately bear the burden of that absence.
For purposes of this case, the court will presume the following:
• Emanuel’s promise to provide Vince with a continued role at any post-merger company after a transaction influenced Vince’s decision-making with respect to the merger.
• Emanuel’s offer of indemnification and other legal support related to pending federal investigations of Vince’s alleged misconduct influenced Vince’s decision-making with respect to the merger.
• Vince decided to pursue a transaction with Endeavor in 2022, before the Company initiated the strategic review process.
• Khan communicated with Emanuel between August and December 2022 to facilitate a transaction between WWE and Endeavor.
• Vince and Khan worked with Raine to steer the process toward a deal with Endeavor and away from other potential bidders.
Those presumed facts represent a subset of the list the plaintiffs requested.
The defendants who are not Signal Users assert that presuming these facts is
unfairly prejudicial to them. That is not so. The presumed facts relate to the conduct
86 Goldstein, 310 A.3d at 586 (discussing how presumptions and burdens operate).
37 of Vince and Khan. The court is not presuming that other defendants knew about
their actions or were involved.
Even in an entire fairness case, the actions of self-interested fiduciaries do not
necessarily result in liability for other defendants. “The entire fairness test is, at its
core, an inquiry designed to assess whether a self-dealing transaction should be
respected or set aside in equity. It has only a crude and potentially misleading
relationship to the liability any particular fiduciary has for involvement in a self-
dealing transaction.”87 A finding that a transaction is not entirely fair could lead to
transaction-based relief, such as an injunction, rescission, or an equitable
modification of the transaction’s terms.88 But to determine whether individual
fiduciaries should be held liable, a court must analyze each fiduciary’s conduct to
decide whether the fiduciary breached the duty of loyalty, including its subsidiary
element of good faith, or the duty of care.89 “The liability of the directors must be
determined on an individual basis because the nature of their breach of duty (if any),
and whether they are exculpated from liability for that breach, can vary for each
87 Venhill Ltd. P’ship v. Hillman, 2008 WL 2270488, at *22 (Del. Ch. June 3,
2008).
88 See, e.g., In re Loral Space & Commc’ns Inc., 2008 WL 4293781, at *32 (Del.
Ch. Sept. 19, 2008) (modifying terms of stock issuance to de facto controlling stockholder after finding that terms were not entirely fair).
89 See Venhill, 2008 WL 2270488, at *22.
38 director.”90 Establishing presumed facts about Vince and Khan’s conduct does not
implicate the other defendants.
The defendants remain free to put on their case at trial. They can introduce
documents. They can call witnesses. Their witnesses may well testify credibly and
overcome the presumption. Nothing stops them from rebutting the presumed facts.
2. The Increased Standard Of Proof
The plaintiffs also ask the court to raise the standard the defendants must
meet to rebut the presumed facts. This is another significant sanction,91 but also a
logical and measured response to selective deletion. Imposing a higher burden
ensures that the defendants must convincingly overcome the uncertainty they
created.
In Genger, the court imposed a higher burden of proof and then went further,
holding that the spoliator “will be unable to prevail on any material factual issue if
the only evidence in support of his position is his own testimony.”92 Under that ruling,
“[a]bsent corroborating testimony or documents, [the spoliator’s] mere word will be
insufficient to meet his burden of persuasion.”93
90 In re Emerging Commc’ns, Inc. S’holders Litig., 2004 WL 1305745, at *38
(Del. Ch. May 3, 2004).
91 See James v. Nat’l Fin. LLC, 2014 WL 6845560, at *9 (Del. Ch. Dec. 5, 2014).
92 TR Invs., LLC v. Genger, 2010 WL 541687, at *2 (Del. Ch. Feb. 3, 2010).
93 Id.
39 In this case, the court will not go that far. The combination of a narrow set of
presumed facts and a heightened standard of proof is sufficient.
III. CONCLUSION
The motion for sanctions is granted.
Related
Cite This Page — Counsel Stack
In re World Wrestling Entertainment, Inc. Merger Litigation, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-world-wrestling-entertainment-inc-merger-litigation-delch-2026.