In a significant development in the football arena, Vince McMahon, the sports entertainment mogul, suffered a setback as his bid to dismiss claims from the XFL’s former commissioner was rejected. These claims pertain to attempts to retrieve $11.1 million of the former commissioner’s salary in bankruptcy court. U.S. District Court Judge Victor A. Bolden denied McMahon’s motion to dismiss, providing a much-needed lifeline for Oliver Luck, the former XFL Commissioner. The ongoing litigation underscores the complexities of contractual obligations, bankruptcy proceedings, and employment disputes within professional sports leagues.
The original news was reported by Vince Sullivan for Law360.
In Judge Bolden’s Friday order, he highlighted that the complaint filed by Luck sufficiently establishes its foundation, which includes demonstrating that the XFL’s plan administrator in the Delaware bankruptcy case is endeavoring to claw back amounts paid to Luck under his employment agreement.
Judge Bolden mentioned, “Luck has also shown that his claims involving a guaranty executed by McMahon should survive, as he seeks to have McMahon indemnify him for any amounts he has to pay to the XFL in the clawback actions, including his legal costs and interest.”
McMahon, owner of World Wrestling Entertainment Inc., founded the XFL as a spring football league in 2001. However, the league faced challenges and ended after a single season. A 2020 revival attempt was curtailed by the COVID-19 pandemic, leading to Alpha Entertainment, the parent company of XFL, filing for bankruptcy. The XFL returned for the 2023 season under new ownership, which includes actor and former WWE wrestler Dwayne “The Rock” Johnson.
Luck was dismissed as the commissioner and CEO of the XFL days before Alpha filed for bankruptcy in April 2020. McMahon’s legal filings contended that Luck agreed to waive any possible recovery claims from the Chapter 11 case, a notion seemingly endorsed by the Delaware bankruptcy court, which stated he would be “forever barred” from doing so.
Luck finds himself in the crosshairs of Peter Hurwitz, the bankruptcy plan administrator, who has lodged a complaint against him, accusing him of fraudulent and preferential transfers. The complaint seeks to recover all or part of the $11.1 million in salary and bonuses Luck received in the two years leading up to Alpha’s bankruptcy filing. Judge Bolden also stated, “Luck has not released his claims against McMahon in the complaint,” because the terms of a settlement agreement with Alpha Entertainment and McMahon “includes an exception to the indemnification section of his employment contract.”
This ruling emphasizes the ongoing legal challenges that surround the bankruptcy case and underlines the importance of scrutinizing employment contracts and indemnification clauses within the realm of professional sports.
