UPDATE 10/8/08 – I have posted a FAQ on the lawsuit this morning due to the extraordinary interest in this subject. You can find it here.
UPDATE 10/7/08 – Welcome various wrestling fans (who are visiting by the thousands this morning)! The links to the contracts are below.
One note to clarify some of the reports on this: These contracts were not "leaked". They were filed by WWE in federal court in Connecticut and are publicly available on the court’s website. I have merely downloaded them and have them available here since many people don’t know how to access the court system. If you have any questions or comments, please feel free to use the comment box.
As expected, WWE filed its motion to dismiss (download here) the lawsuit brought by three wrestlers who claimed that they were improperly classified as "independent contractors" and not employees. (For prior blog coverage, see prior posts here and here.)
The argument is lengthy but fortunately the WWE has prepared a "summary of argument". The gist of the argument is that the wrestlers don’t have a a legal claim and that even if they did, those claims are barred by statute of limitations. But reading it, one is also left with the impression that WWE’s arguments have been developed over time and nuanced to withstand judicial scrutiny.
First, … the plain and unambiguous language of the Booking Contracts does not obligate WWE to pay plaintiffs’ taxes or make withholdings to pay such taxes, nor obligate WWE to provide plaintiffs with the “rights, incidents and benefits of employment.” Second, plaintiffs’ unjust enrichment claims fail as a matter of law because all aspects of plaintiffs’ relationships with WWE are governed by their Booking Contracts, including specifically those aspects of the relationship at issue in the present litigation. Third, plaintiffs’ breach of contract and unjust enrichment claims are barred by the applicable statutes of limitation. Fourth, plaintiffs’ state law claims are disguised attempts to create a private cause of action based upon the application of federal and/or state tax law and to circumvent the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq. …
Fifth, even if plaintiffs sought leave to amend their state law claims as direct claims under ERISA, such an amendment would be futile since their claims must be dismissed for failure to file their Complaint within the applicable limitations period, for failure to allege exhaustion of administrative remedies, and for failure to allege any facts to support standing to bring direct claims under ERISA. Finally, because plaintiffs’ individual claims against WWE fail, plaintiffs cannot, as a matter of constitutional standing, continue to assert putative class claims on behalf of absent class members.
The wrestlers will now have several weeks to respond, though don’t be surprised to see them ask for an extension of time of at least 30 days to respond further to it.
While the legal brief may be of interest to in-house counsel and others in the entertainment industry, the exhibits to the motion will be of much greater interest to most. Why? Because the exhibits contain the booking contracts of each of the wrestlers.
Wrestler Scott Levy’s contract in 2000 (download here) appears to be the richest with guarantee minimums of $75,000, $150,000 and $200,000 for the first three years. By comparison, wrestler Michael Sanders’ contract in 2001 (download here), called for guarantees of $52,000 and $75,000 in the first two years. And Chris Klucsarits’ contract in 2002 (download here) called for a guarantee of $100,000 in each contract year.
Wrestling fans may enjoy reading about their favorite wrestlers but for human resource professionals and others, the contracts are useful to read because they show a serious attempt by WWE to keep the wrestlers as independent contractors and not employees.
In fact, paragraph 13.1 of the agreement specifically addresses this issue. That provision states "WRESTLER is an independent contractor" and "Nothing in this Agreement shall be construed to constitute WRESTLER as an employee…" Will this be dispositive? Probably not since parties cannot avoid legal obligations just by language of a contract, but it will be an obstacle for the wrestlers to overcome.
Who will ultimately prevail? It’s too early to tell, particularly without seeing the wrestlers’ response. But one thing is certain — even WWE can’t script the outcome to this fight.