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PWInsider.com has acquired a copy of the 52 page lawsuit filed against World Wrestling Entertainment [Elite subscribers, click here] by former WWE performer Rene "Dupree" Goguen filed in United States District Court of Connecticut on 4/6 as a Class Action Complaint on behalf of former WWE performers who believe they are not receiving "contractually owed royalties" from WWE's usage of material featuring performers on streaming services.
While The Hollywood Reporter article Dave Scherer wrote about yesterday specifically covered the WWE Network, the lawsuit also cites WWE material on Netflix as well. WWE had a number of their DVD documentaries on Netflix from 2012-2015, but stopped providing new material to the service and began phasing out existing material after the WWE Network launched in February 2014.
Using Dupree's 2003 WWE contract as the basis, he claims that there were two different types of intellectual properties involved. Anything Dupree had created prior to his WWE run was his original IP while anything created during the time period he was signed with the company would remain WWE's IP.
The lawsuit noted that under that 2003 deal, WWE was required to pay Dupree and others twenty five percent (25%) of Licensed Product Royalties (that 25% is shared among all of the performers if more than one are featured on a product, so if six wrestlers appear on a WWE cup, for example, they share in the 25% royalty for that item).
In regard to WWE PPV events, "WWE shall allocate 25% of the Net Receipts paid to WWE by licensees authorized to reproduce and sell video cassettes, videodiscs, CD ROM, or other technology, including technology not yet created (hereinafter referred to as “WWE Video Products”), of WWE Pay-Per-Views in their entirety (“WWE Pay-Per-Views”) to a talent royalty pool. Thereafter, WWE shall pro-rate payment to Plaintiff and all other talent appearing in such WWE Pay-Per-Views in the same proportion as was the compensation paid to Plaintiff for his appearances in the pay-per-views to the total amount paid to all talent for their appearances in the pay-per-view."
In regard to WWE videos, "WWE Video Products are a compilation or derivative work of multiple individual WWF Pay-Per-Views in their entirety, such as a collection of videos, e.g., a WrestleMania box set, payment to Plaintiff shall be calculated as follows: 25% of the Net Receipts paid to WWE by licensees shall comprise the talent royalty pool, which shall first be pro-rated based on the number of individual videos in the compilation, and then the payment to Plaintiff for each video shall be consistent with the royalty payment to the Plaintiff at the time that each individual video was first released."
The line about "including technology not yet created" is what Goguen is hanging his hat on when it comes to the WWE Network and other streaming devices, arguing that the technology falls under the "not yet created" banner from the contract he signed in 2003.
Goguen is arguing that by selling WWE Network subscriptions and by streaming WWE titles via Netflix (no mention of any other streaming services that feature or in the past, had featured WWE material) without providing royalties, WWE has effectively breached their contract with Goguen and others.
Goguen's lawsuit is meant to be a Class Action lawsuit for other performers allegedly in a similar situation, describing them as, "All individuals who have assigned their original and new intellectual property rights to WWE or a promotion that WWE has acquired the assets and/or the video library of, in exchange for perpetual royalty payments from WWE’s (or acquired promotion) or licensees’ sales of past pay-per-view events or non pay-per-view productions."
The lawsuit filing claims the entire class could feature "hundreds, if not thousands" of performers "whose identities and royalties owed can be readily ascertained from Defendants’ books and records."
The class action was then broken down into the following sections:
*Talents who signed from 2/21/80-1/1/92.
*Talents who signed from 1/1/92-1/1/99.
*Talents who signed from 1/1/99-1/1/04.
*Talents who signed from 1/1/04-1/1/12.
*Talents who signed from 1/1/12-4/4/16 (date of lawsuit filing)
The classes were broke down by language in WWE's Booking Contracts for talents, noting the different changes as technology changed from VHS to DVDs, etc. The current language reads, "“product sale- the sale of any WWE authorized product, merchandise, consumer material or good, which is made by or on behalf of WWE.”
The lawsuit also addresses the material WWE has acquired via the purchase of other promotions (WCW, ECW) or older video libraries (Mid-South, AWA, World Class, etc.), including performers who signed deals with WCW, ECW or other promotions over the course of those companies' individual runs.
In short, the lawsuit seeks to address whether WWE breached their booking contracts, whether talents are due royalties, whether the talents are due any damages. It claims that WWE has failed to pay royalties and that in their position of "superior knowledge, skill or expertise in managing such affairs", WWE had a duty to handle such for talents, who were placed in a "relationship of dependency" with WWE.
The lawsuit alleges, "Defendant has, in violation of its clear obligation, engaged in a massive and profitable scheme, pattern and/or practice of intentionally underpaying required royalties, expressly designed to enrich Defendants at the expense of the Plaintiff and the class he brings this claim on behalf of."
The lawsuit is claiming that Plaintiffs would be owed in excess of $5 million dollars.
WWE attorney Jerry McDevitt told The Hollywood Reporter that a contract Goguen signed in 2011 would prevent him from bringing a lawsuit against the company but declined to discuss in further details, citing privacy. McDevitt said that he informed Goguen's attorneys of that and that they were, at the time, unaware.
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