While we count down the days before the new blog launches, I thought it would be fun to look back at the nearly 4 years of posts to highlight a few noteworthy ones.

Today, I’ll answer the question: What has been the most popular post ever?

Without a doubt, it is a post I did on a motion to dismiss a lawsuit brought by three wrestlers who claimed that they were employees, not independent contractors of WWE.

Why was it so popular? Well, writing about wrestling didn’t hurt. Turns out that wrestling blogs are even more popular than law blogs. (Go figure).

But beyond that, the post had actual wrestling contracts that had never been seen before through a bit of detective work on my part.  That led to lots and lots of interest. (I had over 20,000 visits in one day!)

I enjoyed writing about that case because it gave companies and human resources representatives an opportunity to see how another company handled a employment situation.  And it played out in a very public forum.

It also was a good example about how seemingly small lawsuits could lead to big publicity.  And it served as a reminder to employers that if you don’t want your business being discussed in public, don’t put the information in a public court filing.

With the campaign for U.S. Senate winding up in Connecticut soon, there’s been lots of chatter about Linda McMahon’s role with the WWE. 

I’ll leave it for others to analyze political issues arising from her relationship with the WWE, if any, but her relationship with the company provides an interesting backdrop to talk about independent contractor agreements. 

Indeed, while Ms. McMahon’s relationship was covered, in part, by an employment contract, part of her relationship was covered under a "Booking Contract" — something the company uses for professional wrestlers.  The contract, effective February 15, 2000, can be downloaded here. 

Yes, Ms. McMahon signed a booking contract in the same fashion that professional wrestlers do.  (Lest you think that Ms. McMahon’s contract was unique, there are also booking contracts for Shane McMahon and Vincent McMahon.

So what services was Ms. McMahon to perform? According to the contract, she granted WWE exclusively "the right to engage [her] performance in wrestling matches at professional wrestling exhibitions, as well as appearances of any type at other events, engagements or entertainment
programs in which [she] performs services as a professional wrestler,entertainer or otherwise directed by [WWE] in its sole discretion…"

The WWE was hardly charged a fortune for her services at least initially. Under Paragraph 7.2, Ms. McMahon was to receive a percentage of gross receipts from any "House Shows" (at no less than $150 per appearance) or $50 for each day of television taping for broadcast.  

The contract mirrors many of the same provisions found in the contracts that various professional wrestlers had with WWE.

Indeed, because of those similarities, there are some unusual interactions. For example, according to Paragraph 9.2, Ms. McMahon was responsible for her own conditioning and training and "maintenance of wrestling skills."  She was also recommended to "obtain health, life and/or disability insurance to provide benefits in the event of physical injury arising out of [her] professional activities", though it is hard to imagine that the WWE didn’t already provide this to her in her role as CEO.

Moreover, because Ms. McMahon was also acting as President and CEO at the time, any notices to the "company" about the agreement had to be sent to the company care of herself (Paragraph 13.6).  Notably, though, the contract was signed by another person on behalf of the company. 

As I’ve commented before, the contracts that WWE uses have been upheld time and again as valid and anyone looking for an example of independent contractor contact that has been crafted to meet the particular position would be well served by reviewing the ones that WWE uses.  Ms. McMahon’s booking contract with the WWE has examples of such provisions and for that reason, it is worth reviewing if you or your company uses independent contractors.

Two of the three wrestlers, whose lawsuit against World Wrestling Entertainment, Inc. ("WWE") was dismissed late last month, have asked a federal court to reconsider the matter and give them another opportunity to plead their case against the WWE.

In a motion to alter/amend the judgment filed late Wednesday (download available here), Scott Levy and Christopher Klucsartis contend that the court should have allowed them to raise claims under the federal law regarding employee benefits (ERISA), after the court made its initial ruling dismissing the matter. They also contend that they should be allowed another opportunity to raise certain state law claims with additional facts.

The wrestlers attach a copy of a proposed amended complaint that they would file, if the court gives them an opportunity to do so and propose that the matter be seen again as a class action claim. The amended complaint has some new details about the extent that the wrestlers contend that the WWE "controlled" their behavior. It’ll be of interest to wrestling fans to see what allegedly happens "behind the scenes". 

As followers of this story will recall, there were originally three wrestlers who brought suit against the WWE, with Michael Sanders being the third. He is apparently not involved in this latest request and the proposed amended complaint drops him as a named plaintiff.  The materials submitted by the two remaining wrestlers are silent as to the reasons why Mr. Sanders has decided not to pursue this matter further at this time.

Even if these claims were allowed to proceed, WWE has previously argued that the claims (even if amended) are barred by a statute of limitations.  I would suspect that the WWE will argue that the amendments here would be futile because the claims would ultimately be dismissed. 

WWE will have until the end of March to respond to this latest motion and a decision from the court can be expected no earlier than mid April 2009. 

In a closely-watched case, a federal district court last week threw out claims by three wrestlers that they were employees, rather than independent contractors of the World Wrestling Entertainment, Inc. (WWE) in a thorough repudiation of their claims.

The decision in Levy v. WWE (download here) is based, in part on the language of the wrestlers’ contracts (which can be found here). I’ve discussed this case extensively in a variety of posts here.

If there were any doubt that the WWE is entertainment, not a sport, the court readily dismisses that at the outset:

Though wrestling is a sport in which two combatants engage in efforts to throw each other, as presented by defendant it is not a competitive engagement but is a staged pseudo-match, scripted, choreographed by agents of defendant and executed by wrestlers assigned by defendant which directs and controls the wrestlers’ conduct and the outcome.

Alas, the rest of the decision is not nearly as theatrical as a WWE match. Indeed, it is more akin to the Olympic-style wrestling matches you might see — methodical with only flashes of action.

The court dismisses the claim that WWE breached the wrestlers’ contracts by not doing tax withholdings (assuming they were employees) because the court finds that the wrestlers weren’t harmed by that action.  Indeed, the court also finds that the claim that the wrestlers were deprived of benefits connected to the withholdings to be "fabricated":

The allegation of a deprivation of benefits "paid for by such withholding" is fabricated of whole cloth as withholding is subtracted from an employee’s compensation and paid to the government for application to an employee’s tax liability. It accrues no added earnings which plaintiffs make no claim were not paid in full to them. No particular benefits are claimed to have been lost.

As to the unjust enrichment claim, the court dismisses that claim because there is an express contract (namely the booking contracts) that prevents such claims from being raised. The court also finds that the statute of limitations on many of the wrestlers’ claims also applies.

The wrestlers can move to have to decision reconsidered or can take an appeal.  However, given the court’s thorough dismissal of their claims, it’s difficult to see that they have any real good options left.  

The WWE has filed its reply brief (download here) in further support of its motion to dismiss yesterday contending that three former wrestlers "cannot escape the clear language of the booking contracts". For background on the case involving "Raven" and two other former wrestlers, click here. 

The brief is filled with lots of "smackdowns" (to borrow a wrestling phrase) chiding the wrestlers about not doing their research before filing their claims (p2, footnote 1),  about conducting a "fishing expedition" (p2, footnote 2), about pursuing futile claims (p3), about using "sleight-of-hand tactics" (p7, footnote 5), and, well, just about everything else.

The brief is a lawyers’ dream — and a wrestling fan’s cure for insomnia. (The new movie, "The Wrestler" may be a better entertainment choice.) The arguments are thick with legal analysis that frankly will only excite those with an interest in this arcane area of law. But the gist of the argument is that the claims are filed too late and are barred by various legal theories.  And even when there might be viable claim under ERISA, the wrestlers never amended their complaint to add it (and WWE contends that it is too late to do so now).

Is there anything all that new or revealing? No, not really,  At the end of the day, the plain language of the booking contracts is what should control the outcome of the case, argues the WWE. It’s not very different from the argument it made in its first brief.

Zach Lowe, of the AmLaw Daily blog, provided this delicious update on the case (and welcome to readers of the blog as well).

I would expect that a decision on the matter will not be forthcoming for several more months. Until then, the matter is likely to remain fairly quiet. 

Many weeks after the WWE filed its motion to dismiss the lawsuit brought by three former WWE wrestlers ("Raven" and "Kanyon" and others — otherwise known as Scott Levy, Chris Klucsartis and Michael Sanders ), the wrestlers have fired back filing their papers opposing WWE’s motion.  (For full coverage of this lawsuit, click here.) 

The papers, filed late Wednesday afternoon, are available for download here.  There aren’t, as some much have hoped for, any more source documents attached to it (such as the wrestlers contracts that were attached to WWE’s original motion) so readers will just have to make do with legal arguments.see prior posts for credit -

For those following the matter, the opposition papers use much of the same theory that was advanced in the complaint — that the WWE is pure entertainment, not sport, and the WWE controls everything about it.

Specifically, the wrestlers claim that the WWE exercises:

virtually complete dominion and control over its wrestlers — determining when and where the wrestlers will perform, where and how they will train, scripting the fight and wrestlers’ pre- and post-fight interviews, controlling the wrestlers’ costumes, props and personas and pre-ordaining the results of each fight.

The wrestlers argue that the court should look to the specifics of the relationship, not the contracts themselves.  They contrast themselves with professional boxers, an interesting comparison.   Moreover, they argue that its too early for the court to decide the issues — and that the case should proceed with discovery (in other words, each party asking the other party questions and for certain documents). 

Interestingly, the wrestlers also bring up the fact that in 2001 WWE argued that a former wrestler (Nicole Bass) should be barred from bringing certain claims because she was an employee, not an independent contractor — the reverse position argued here.   

However, the wrestlers highlight an interview given to a British newspaper in August 2008 about the case that suggests a bit more complicated of a picture. While the result is the same — she was treated as an employee, not an independent contractor, it appears the WWE argued that she was not an employee. 

In the interview, K&L Gates attorney Jerry McDevitt noted that the only time WWE litigated the issue – it actually lost on the legal argument (though ultimately prevailed in the case on other grounds).

The independent contractor v employee situation has only come up once before in litigation in the long history of the WWE, when they were sued for sexual harassment by former female wrestler Nicole Bass.

Jerry reveals: “The sexual harassment laws, of the United States at least, are purposely designed to protect employees and do not extend to independent contractors.

“However the interpretation given under Title VII of the Civil Rights Act which covers sexual harassment is very broad, as it wants to include in it as many people as possible.So a preliminary issue that came up was whether she was an employee, for Title VII purposes, or an independent contractor. 

She was determined to be an employee.

As I’ve often said, you can’t do complete justice to an argument in a short post, so review it for yourself to get a complete picture.

The WWE will now have 10 days to file a reply to this, if it wishes (and I can’t imagine that it will leave this argument unchallenged). After that, the court will rule on the motion. Don’t expect a decision overnight, however. It is likely that a decision won’t be forthcoming for at least 2-3 months.

Here’s a quick update on some items and topics that have been covered by the blog over the past year:

Whether individuals believe in performance reviews or not, organizations are increasingly looking to hold managers accountable for accurate, timely and unbiased appraisals which help manage performance and head off legal issues.

“A lot of people are asking questions, given the financial crisis, about what HR or human capital programs companies should be focused on and performance management would definitely make my short list,” said Laura Sejen, Watson Wyatt’s global practice director for strategic rewards in New York. “It’s more important than ever to make sure that employees and managers are clear about organizational goals and priorities.”

 

My post on the WWE lawsuit involving three former wrestlers known as Raven, Kanyon and Mike Sanders has drawn extraordinary interest. (Although I used to follow things when I was younger — Jimmy "Superfly" Snuka was among my favorites — I must say I haven’t followed it closely lately.)

But along with the interest, I’ve seen rampant speculation about what the lawsuit is about and what the WWE’s motion means. So here’s a quick guide to some FAQs:

1) WWE Filed a Motion to Dismiss That Sounds Pretty Good. Is It Likely that WWE Will Win?

No.  Lawyers file these motions routinely and their job is to be an advocate, not necessarily spell out the other side’s arguments. Wait until the wrestlers file something before making that determination.

 In fact, winning a motion to dismiss is pretty tough this early in the case. The courts have a fairly high standard that parties need to reach in order for cases to be dismissed this early.  Courts typically like to allow parties to develop the facts about a case, than dismiss it this early. 

2) If WWE Loses Its Motion to Dismiss, Does That Mean that the Wrestlers Win?

No. In fact, the issues that the court will decide now won’t really go to the underlying facts; it’ll rest more on what the law is.  Again, the standard to defeat a motion to dismiss is pretty low so don’t be surprised to see the WWE’s motion fail.  All that means, however, is that the parties will engage in discovery (taking depositions, exchanging documents), etc. Then WWE can file a "motion for summary judgment" that will say there is no dispute on certain facts and based on those facts, we should win.  Even if WWE loses that motion, the case will still just proceed to a trial.

3) What Is the Difference Between an Independent Contractor and an Employee? And Why Does This Matter?

There are a variety of tests that courts use to look at the issue, but the IRS has set forth a variety of factors to look at to make that determination.  But it’s pretty much fact specific (which tends to mean that courts frown upon motions to dismiss). The IRS’ general rule is that "an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result." (You can read all of the factors here.)

It matters because employees are typically entitled to certain terms and conditions of employment, such as benefits, vacation days, etc.  It’s unclear from the papers filed on behalf of the wrestlers exactly what they are seeking.  Because the wrestlers are asking to represent a class of other wrestlers, a court ruling court affect ALL of WWE’s wrestlers under booking contract. But it’s much too early to predict whether that will be the case.

4) Can You Tell Me More About the Attorneys and Judge Involved?

The main attorney for WWE is Jerry McDevitt, from the lawfirm of K&L Gates in Pittsburgh, PA.  He’s well-respected in the field and the firm has over 1700 attnew haven connecticut courthouse where can will be heardorneys world-wide.  (I should note that the local attorneys in the case are from Day Pitney, a prior employer of mine and well-respected in the Connecticut area as well.) 

The wrestlers are represented by David Golub and Jonathan Levine of Silver, Golub and Teitell LLP.  They are hardly slouches either and many Connecticut readers will remember that they brought suit on behalf of thousands of state workers earlier this decade affected by state layoffs.  They’ve handled sophisticated before and this case is certainly not out of their league. 

The judge is United States District Court judge Peter Dorsey, his bio is available here. Judge Dorsey was appointed United States District Judge for the District of Connecticut on July 29, 1983 and became Chief Judge in August 1994. (He has since moved on to Senior Judge status.)  He received a Bachelor of Arts degree in 1953 from Yale University and an LL.B. (law) degree in 1959 from Harvard University School of Law.  Although he’s handled thousands of cases, he may be best known for his handling of various criminal cases, including the corruption charges against former Connecticut governor John Rowland. As for the timing of deciding motions, he has indicated in his chambers practices that he does not have any internal guidelines regarding the time for disposing of motions.

5) What’s Likely to Happen Next?

The wrestlers will likely file their papers opposing WWE’s motion by mid-November.  WWE will then have the opportunity to respond to that brief as well. A court decision on the motion to dismiss may take weeks or months to decide. Anyone anticipating a quick outcome on this will likely be disappointed.

6) Why Is This Case Important to Other Employers?

There are plenty of other companies (in the sports/entertainment industry and elsewhere) that rely on booking contractors or similar contracts to try to keep individuals from attaining employment status.  An end result of this case (and this might be a LONG way away) might be that the court says that the booking contracts notwithstanding, the individuals should’ve received employment benefits and the other privileges associated with employment.  This could send a message to other employers to review the relationships that they have with various individuals.

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 ancourtesy wikipedia commonsd 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.

The Jewish holidays starting tonight encourage reflection. So, it seems particularly appropriate to do some quick updates on earlier posts:

Wishing all a happy and healthy new year.