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38 ¦ NOVEMBER 23, 2020 CONNECTICUT OPINIONS

The Connecticut District Court granted a mo- its share priced dropped. Ryan Merholz and
tion to dismiss three shareholder derivative others filed shareholder derivative suits, alleg-
lawsuits, finding that dismissal was warranted ing that the directors had benefited by selling
where no demands had previously been made shares at higher prices before the share price
on the company board and the complaint al- dropped. According to the plaintiffs, the di-
legations failed to allege with particularity rectors benefited from insider knowledge that
that demands would have been futile. World was not made public until months later. Plain-
Wrestling Entertainment, Inc. was engaged tiffs did not make pre-suit demands on the
in providing entertainment-based wrestling defendants. Instead they alleged that demand
matches for home viewing in many countries. would have been futile. Defendants moved
Vincent McMahon and others were WWE di- to dismiss, contending that the allegations
rectors and officers. WWE began expanding did not support demand futility. The district
into markets in the Middle East and North court dismissed all three complaints. Plaintiffs
Africa. As part of this campaign, WWE en- contended that they alleged particular facts
tered into a partnership with a Saudi company that gave rise to a reasonable inference that a
that included a television distribution rights majority of the directors could not consider
agreement with a direct satellite provider serv- a demand disinterestedly. The court was not
ing the region. In 2018, the Saudis announced persuaded. None of the conclusory allega-
that the Saudi company and WWE had en- tions suggested that any of the named outside
tered into a 10-year partnership. McMahon directors had actual or constructive knowl-
allegedly announced that WWE would realize edge that their conduct was legally improper.
record revenues. However, the directors alleg- Plaintiffs merely offered formulaic recitations
edly knew that WWE and the satellite provid- of the elements of their causes of action. They
er had agreed to an early termination of their failed to allege a transfer of corporate assets
media rights agreement. When WWE later that served no corporate purpose, or for which
announced that the agreement had ended, no consideration was received.

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