World Wrestling Entertainment, Inc. v. Jakks Pacific, Inc.

425 F. Supp. 2d 484, 2006 U.S. Dist. LEXIS 15712, 2006 WL 851152
CourtDistrict Court, S.D. New York
DecidedMarch 31, 2006
Docket04-CV-8223 (KMK)
StatusPublished
Cited by32 cases

This text of 425 F. Supp. 2d 484 (World Wrestling Entertainment, Inc. v. Jakks Pacific, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
World Wrestling Entertainment, Inc. v. Jakks Pacific, Inc., 425 F. Supp. 2d 484, 2006 U.S. Dist. LEXIS 15712, 2006 WL 851152 (S.D.N.Y. 2006).

Opinion

OPINION AND ORDER

KARAS, District Judge.

Plaintiff World Wrestling Entertainment, Inc. (“WWE”) filed this action against Defendants Jakks Pacific, Inc. (“Jakks”), Jakks Pacific H.K. Ltd. (“Jakks H.K.”), Road Champs, Ltd. (“Road Champs”), THQ, Inc. (“THQ”), THQ/Jakks Pacific LLC (“THQ/Jakks”), Stanley Shenker & Associates, Inc. (“SSAI”), Bell Licensing, LLC (“Bell Licensing”), Stanley Shenker (“Shenker”), James Bell (“Bell”), Jack Friedman (“Friedman”), Stephen Berman (“Berman”), Joel Bennett (“Bennett”), and Brian Farrell (“Farrell”). Plaintiffs original Complaint asserted federal claims arising under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c), (d), and the Robinson-Patman Act, 15 U.S.C. § 13(c). The Complaint also alleged causes of action under New York State law for commercial bribery, fraudulent inducement, unjust enrichment, breach of fiduciary duty, inducement of breach of fiduciary duty, tortious interference with contractual relations, and conspiracy to engage in each of the above acts.

As will be discussed more fully below, on March 31, 2005, Plaintiff filed an Amended Complaint. The Amended Complaint contains more detailed factual allegations of wrongdoing by Defendants and also adds a Sherman Act cause of action. Plaintiff seeks compensatory, statutory, and punitive damages, a declaration that the licensing agreements entered into or extended as a result of the alleged bribery are void, an accounting of all revenues and profits obtained by Defendants under the licenses, *488 disgorgement and/or restitution for any improper revenues and/or profits obtained under the agreements, disgorgement and/or restitution of any amounts allegedly paid to Defendants as bribes, and attorney’s fees and costs.

All Defendants have moved to dismiss the RICO causes of action on the ground that they fail to adequately plead a RICO enterprise. Certain Defendants have also moved to dismiss the Robinson-Patman and Sherman Act causes of action against them. Furthermore, Defendants Shenker and SSAI have moved to dismiss the RICO causes of action on res judicata and abstention grounds. 1 For the reasons discussed in detail herein, the Motions to Dismiss the RICO causes of action are denied and the Motions to Dismiss the Robinson-Patman and Sherman Act causes of action are granted.

I. Background

A. Parties

This action involves a large number of parties with various roles in the unlawful scheme alleged by Plaintiff. For clarity, the Court provides a summary of the Parties and their respective roles in the alleged scheme.

Plaintiff WWE is principally engaged in the development, promotion, and marketing of television and pay-per-view programming and live arena events related to professional wrestling. (Am.Compl.K 9) As part of its business, WWE also creates characters whose names and likenesses may be licensed to third parties. (Am. ComplJ 9)

Defendant Jakks principally sells action figures and toys. (Am.ComplJ 10) Defendant Jack Friedman is the Chief Executive Officer and Chairman of Jakks. (Am. ComplJ 13) He co-founded Jakks with Defendant Berman. (Am.ComplJ 13) Prior to founding Jakks, Friedman was the CEO of Defendant THQ. (Am.ComplJ 14)

Jakks and Friedman also own Jakks H.K. and Road Champs, both Hong Kong Corporations. (Am.CompLU 11-12)

During'the times relevant to the Amended Complaint, Defendant Berman was the Executive Vice President of Jakks. (Am. ComplJ 15) Berman also served at times as Jakks’s President, Secretary, and Chief Operating Officer. He currently serves on Jakks’s Board of Directors. (Am. ComplJ 15)

Defendant Bennett was Jakks’s Chief Financial Officer during the times relevant to the Complaint. (Am.ComplJ 16)

Defendant THQ, Inc. markets and sells video games. (Am.ComplJ 17) Defendant Farrell is the President, Chief Executive Officer, and a member of the Board of Directors of THQ. (Am.ComplJ 18)

THQ and Jakks formed THQ/Jakks Pacific LLC as a joint venture on June 10, 1998. (Am.ComplJ 19) THQ/Jakks was formed in order to be the official licensee for WWE’s video game license. (Am. ComplJ 19) Defendant Berman was authorized to act on behalf of the joint venture. (Am.ComplJ 19)

Defendant SSAI served as WWE’s licensing agent from approximately April 1995 through June 13, 2000. (Am. *489 ComplJ 20) Defendant Shenker is the sole owner and President of SSAI. (Am. CompU 21) He is also the sole owner and alleged alter ego of a Hong Kong corporation known as Stanfull Industrial, Ltd. (Am.Compl^ 21) Shenker allegedly used Stanfull for a variety of criminal and fraudulent enterprises. (Am.ComplY 21)

Defendant Bell Licensing is a limited liability company and was allegedly formed to launder bribes paid to Bell while he was an executive at WWE. (Am.Compl^ 22) Defendant Bell is a former WWE executive and is the President and sole owner of Bell Licensing. (Am.Compl.f 23) On February 10, 2005, Bell pled guilty in the United States District Court for the District of Connecticut to one count of mail fraud in violation of 18 U.S.C. § 1342 in connection with his receipt of bribes relating to WWE’s licensing program. (Am. Comply 24)

B. Facts

For purposes of this Motion, the Court accepts as true the allegations in the Amended Complaint, which are: In March 1995, WWE hired Bell to negotiate and procure licenses for its intellectual property. (Am.CompU 29) From October 1996 to his termination on March 24, 2000, Bell served as WWE’s Senior Vice President of Licensing and Merchandising. (Am. ComplY 29)

At Bell’s urging, WWE entered into a nonexclusive agency agreement with SSAI in April 1995. (Am.Compl^ 32) SSAI was to procure and negotiate licensing contracts on behalf of WWE. (Am.Compl^ 32) The agreement between SSAI and WWE provided that SSAI would receive a commission of eleven percent of royalties on licenses negotiated by SSAI. (Am. Comply 77)

Shortly after SSAI and WWE entered into the agency agreement in 1995, Friedman approached Bell and Shenker at the annual New York Toy Fair. (Am. Comply 35) Friedman inquired about obtaining a license on behalf of Jakks to make WWE toys. (Am.OomplJ 35) On October 24,1995, WWE and Jakks entered into a domestic toy license which was scheduled to terminate on December 31, 1997, with a one-year right to renew. (Am.ComplY 35)

At around the same time, Shenker and SSAI entered into undisclosed agreements with Jakks to represent Jakks’s interests at the same time as Shenker and SSAI were serving as WWE’s agents. (Am. Compile 40-46) At first, Shenker’s work for Jakks was on matters unrelated to WWE. But at the New York Toy Fair in 1996, Shenker and Jakks discussed hiring Shenker as Jakks’s agent on WWE matters as well.

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Bluebook (online)
425 F. Supp. 2d 484, 2006 U.S. Dist. LEXIS 15712, 2006 WL 851152, Counsel Stack Legal Research, https://law.counselstack.com/opinion/world-wrestling-entertainment-inc-v-jakks-pacific-inc-nysd-2006.