WWE has been sued by Figures Toy Company, the company out of Florida that licenses and makes replicas of the various WWE championship belts. The company filed the suit alleging that WWE tried to get out of the deal earlier this month in order to make a deal with a manufacturer based out of China.
According to the lawsuit, WWE told FTC on August 8th that they were terminating the deal because, as WWE claimed, the toy company had displayed a "pattern of repeated failure to make timely delivery of sufficient quantities of the Licensed Products to customers or retailers" which WWE said damaged the amount of royalties that WWE made off the belts. Those belts sell for between $249 to $750 depending on the title and quality. FTC claims that a new buyer was brought in by WWE named June Jack who has a history of working with Chinese manufacturers. FTC says that Jack told them several times that she was unhappy about an amendment to the deal that was signed in 2012 before she came on board and believed that the company could get a more beneficial deal from a Chinese manufacturer who would charge the company lower prices.
The company claims that Jack came up with a pretext in which WWE was in a position to cut off the deal and "steal the license" for the title belts, which they could then make a deal for with another company. FTC alleges that WWE created an issue with the "spinner belts" after it was taken out of commission and that after they lowered the amount they kept in stock (as sales drop after a belt is decommissioned), WWE ordered 100 of the titles to be sold at house shows. FTC say they explained to WWE that they did not have that level of stock for the aforementioned reasons and would fill the order ASAP and that WWE understood that it was due to their actions.
The company also alleges that on November 14th they told WWE that the company had not placed their usual order for the holiday season, after which WWE placed a huge order that included 100 "spinner" titles. FTC says they filled all other parts of the order except the "spinners" and informed WWE that they had a low stock but would fill the order ASAP. WWE cited the late delivery of those titles as one of the reasons for termination; FTC claims that WWE had purchased additional items this year and had never voiced issues about the shipping problems.
FTC also claims that there were issues with the current championship belt, which they say is a difficult design that includes over 100 jewels that require being hand-placed. WWE placed the first order which was delivered in January without any issues; WWE then allegedly placed an order for over 1,000, which FTC says was triple the amount of any order previously made by WWE for any title. They say that they notified WWE that this would place "FTC's Chinese manufacturer, but that it would use its best efforts to deliver the products." FTC delivered those titles around March 21st of this year and that due to the unexpected size of the order and the rush placed on them, some quality issues came into play. FTC alleges that they attempted to adjust to the best of their ability. WWE then placed an order for more in April and that June Jack told FTX in May that each belt needed a quality inspection, which was an unprecedented step in the thirteen years of the agreement.
The toy company says that they resolved all issues in August and that on August 7th they asked Jack about the most recent WWE Title replicas, receiving word back that all but one had passed their inspection and that "additional orders would be forthcoming." FTC says there were no issues mentioned. The company alleges that the quality issues was another reason that the deal was terminated.
Then, on August 8th, WWE said they were terminating the deal which FTC says had never been previously mentioned as a possibility. The company also claims that Jack "placed additional orders for millions of dollars" worth of belts, knowing that the deal was set to be terminated and that with the manufacturing process already begun, WWE could then pick up the belts for a fraction of the cost.
The company has petitioned for a jury trial asking the court to rule that there is no basis for termination of the contract and for an injunction against WWE interfering with the agreement, that the current agreement remain and that WWE pay damages for the situation.
FTC has until October 27th to file an amended pleading; WWE has until November 28th to file motions to dismiss. WWE has not yet responded.