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FLOSPORTS LAWSUIT AGAINST WWNLIVE DISMISSED THIS MORNING

By Mike Johnson on 2018-02-28 11:25:00

The lawsuit brought against WWNLive, Inc. by Flosports in September 2017 before the United States District Court for the Western District of Texas, Austin Division was officially dismissed this morning by Judge Lee Yeakel, one day after FloSports filed a voluntary motion requesting the case be dismissed.

The lawsuit, which sought $1 million in damages, revolved around allegations that WWN, run by Sal Hamaoui and Gabe Sapolsky, had "robbed Flosports" by provided false information that led to the streaming provider paying inflated prices for WWN content.   Today's dismissal was made with prejudice, meaning that the court ruled that Flosports could not re-file a similar claim against WWNLive in the future.

Flosports' requests to dismiss the case yesterday came as all parties were scheduled to have a status conference on the lawsuit before Judge Yeakel.  WWN had been arguing that the court lacked the jurisdiction over their company, which the court had not ruled on one way or other.  With the dismissal of the case, that point is now moot.

The contract between Flosports and WWNLive was revealed in the 11/27 filings, noting that it called for WWN to be paid $75,000 in 2016, $500,000 in 2017, $550,000 in 2018, $605,000 in 2019, $670,000 in 2020 and $740,000 in 2021.

It is also interesting to note the following language in the contract: "FloSports has the right to terminate this Agreement by providing notice during the month of January each year, starting in 2018. If FloSports exercises this option, the agreement will continue for 12 months after the date of notification before terminating." 

Flosports terminated their deal with WWN in September of 2017 (well before January 2018) shortly after filing their now-dismissed lawsuit, so, by the letter of the contract, a court might have considered the argument from WWNLive that Flosports actually breached their own deal. 

WWN sources had claimed last year they intended to file a counter-suit against Flosports, but today's dismissal stipulates that each side will be dropping their claims about the other.

Each side will be responsible for their own legal and court costs, Judge Yeakel ruled.

Flosports had claimed in the lawsuit, that WWNLive had misled their company, alleging WWN had, "induced FloSports to enter this Exclusive Media Agreement (“the Agreement”) by misrepresenting the number of fans purchasing viewership access to their events, and that representation and warranty was expressly incorporated into the parties’ written contract. In fact, WWN contractually promised that “all data [it] provided . . . regarding financial performance of events [it] put on . . . was accurate, reliable and truthful.” FloSports paid hundreds of thousands of dollars to WWN in reliance on this promise. But WWN’s data was false. When pressed for the data that backed up WWN’s representations, WWN originally claimed the data was lost or deleted. Ultimately, WWN sent records listing subscribers more than once and including customers who had not purchased broadcast services. Even accounting for that artificial inflation of its viewership, WWN’s numbers proved far less than originally represented."

The Flosports contract with WWNLive required Flosports to promote the WWNLive events promising they would  "provide $250,000 of advertising value per year on FloSports (i.e. custom digital display, email newsletters, social media, editorial previews/coverage/recaps, etc.)."   How that amount of advertising value may have been tallied is not directly explained in any of the court documents, but Flosports' amended lawsuit claimed, "FloSports performed on the Agreement and spent hundreds of thousands of dollars pursuant to its terms, including on its advertising spend for WWN and in the fees paid directly to WWN—all in reliance on WWN’s breached warranty and misrepresentations."

Back in September 2017, after news of the lawsuit broke, PWInsider.com reported we had been "told that in actuality, in 2016, WWN (on average) was doing in the area of 1,300 iPPV buys for EVOLVE, 600-700 for SHINE and less than 200 buys for FIP events while selling those events. The year before, which they also provided to FloSports, those numbers were lower and the EVOLVE numbers were said to have been way up from the year before because WWE was promoting that brand."

Numbers released in lawsuit filings matched up with what WWNLive sources claimed to PWInsider.com, making it appear Flosports had simply overpaid for the content based on the records provided to them.

Flosports claimed in their lawsuit that "During the first year of the Agreement’s term, FloSports became suspicious that WWN’s data was inaccurate. Over the course of several months, FloSports repeatedly asked WWN to send FloSports more detailed data to support the original spreadsheet. WWN failed to comply, alleging that the information was lost or deleted.    On August 18, 2017, WWN finally emailed the detailed viewership records, which contained additional misrepresentations: the records listed customers more than once and added purchasers of DVDs to the records, rather than limiting its numbers to the broadcast subscribers as it had promised were reflected in the original spreadsheet. Even with this fraudulent inflation of its data, the records showed viewership numbers far less than those reflected in the October 2016 spreadsheet, proving that WWN’s original representations were false."

WWNLive responded, claiming, "That data was pulled from and compiled by a now-defunct third-party company named Fineline Hosting that was based in Florida." 

Based on the two page agreement between the companies that was filed with the cout as part of the lawsuit, WWN was to produce events, handling the management of the video production (at no cost to Flosports) including Planning, Logistics and Production Teams, required video equipment including a two camera shoot, an Encoder to deliver the live stream to Flosports, personnel to "manage and run the video production for all events", Internet with a minimum upload speed of 5 mbps for all events, delivery of a fully produced live stream via RTMP feed to Flosports and that WWNLive would produce and deliver five live events per month (with the exception of December, where they were only required to produce three events).  The agreement noted, "The quality of the events should be reasonably similar or better than the same events in 2015 and 2016 through the Term of the Contract."

While Flosports' lawsuit had alleged that "In fact, WWN contractually promised that “all data [it] provided . . . regarding financial performance of events [it] put on . . . was accurate, reliable and truthful.” - the legalese in the two page agreement between the two sides that was filed with the court on 11/27 does not appear to cover any other sort of termination of the deal, including whether the deal could be halted or terminated if the records provided by WWNLive Inc. actually turned out to be incorrect. 

The FloSlam streaming service officially launched in October 2016.   At that point, FloSlam was hoping to make deals with WWN, Ring of Honor and New Japan Pro Wrestling.  In the end, WWN signed with FloSports first and the other companies passed.  The majority of the content on the streaming service came from WWNLive until their relationship was severed in September 2017.  Since then, Flosports has shuttered the entire service, laying off the staff that had been hired to operate it.

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