Contribution Suit Over Wrestler's Death Settled - British Manufacturer Will Pay $9M To WWE

MO Lawyers Media Staff//November 10, 2003//

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A British manufacturer has agreed to pay $9 million to World Wrestling Entertainment in order to settle a contribution lawsuit filed by WWE.

SETTLEMENT REPORT

The Jackson County suit followed WWE’s earlier $18 million settlement of a wrongful death case involving professional wrestler Owen Hart. Hart died in 1999 during a stunt entry at a match in Kansas City’s Kemper Arena.

The Hart family claimed a trigger-latch shackle made by Lewmar Ltd. opened unexpectedly as he was being lowered into the ring, causing him to fall 78 feet to his death. The Harts had sued Lewmar but later dismissed the company without requiring any payment for the release.

According to Missouri law, tortfeasors who settle a lawsuit are not liable in contribution to co-defendants, provided the settlement was made in good faith.

WWE sought contribution from Lewmar after a court held that the Hart-Lewmar settlement was not entered in good faith.

According to Kansas City attorney Craig O’Dear of Bryan Cave, who represented the WWE, it was a case of first impression, because Missouri courts have not defined “good faith” in the settlement context. “I believe that there is no reported Missouri case where a defendant challenged a settlement like this,” O’Dear said.

Paul Wickens, who represented Lewmar, said the settlement between Lewmar and the Hart family was made in good faith and constituted a valid release of his client’s liability.

Because the contribution case ended with a settlement before any ruling on legal issues by the courts, Wickens said there are “significant issues that will not be resolved by the settlement.” One issue is whether a monetary settlement is required under Sect. 537.060 RSMo, Missouri’s contribution statute, before the protection against co-tortfeasors applies.

Blue Blazer

Hart, known as the Blue Blazer, was killed in 1999 before a televised wrestling event.

Hart’s family filed suit against WWE, then known as the World Wrestling Federation, for negligence. Also named as defendants in the suit were WWE principals Vince and Linda McMahon, Lewmar, the manufacturer of the shackle, Amspec, Inc., the manufacturer of the vest Hart wore, Lift-All Company, manufacturer of a sling used in the stunt, the City of Kansas City, and two stunt riggers. The suit was filed in the Circuit Court of Jackson County.

The plaintiffs alleged in the wrongful death suit that WWE was negligent in failing to provide safe and proper equipment for the stunt. The plaintiffs sought punitive damages on the grounds that WWE ignored safety concerns and engineered risky stunts to boost flagging ticket sales and attract cable viewers.

On Nov. 7, 2000 WWE and the Hart family reached an $18 million settlement, considered at the time to be one of the largest wrongful death settlements in the country. Hart’s wife received $10 million, their two children received $3 million each, and Hart’s parents received $1 million each.

Release

When the Hart family settled their claims with WWE, WWE obtained a release of all the defendants. To bring a contribution claim, all parties must be released in the underlying litigation, O’Dear explained. The settlement agreement entered into between the Hart family and the WWE included the release of all parties in the litigation. “The reason we did that was our desire and intent to continue the lawsuit against Lewmar,” O’Dear said.

Prior to WWE’s settlement with the Hart family, Lewmar was dismissed from the action in a settlement involving no money even though the company had insurance worth $50 million. Initially, the court approved the settlement agreement but later withdrew its approval. The plaintiffs executed a second agreement with Lewmar. The parties did not seek court approval of the second settlement agreement.

Wickens, Lewmar’s counsel, said the release was valid. “We felt that we had good legal authority for the position we took,” Wickens said. He pointed to Missouri case law indicating that a mutual release in itself was valid consideration for a settlement. There was also authority, he said, that Missouri courts favor settlements and will not permit a non-settling party to attack another party’s settlement on the basis of the consideration paid.

When Lewmar settled its action with the plaintiffs, Lewmar maintained that it was dismissed from the suit because its product was not a factor in the accident that led to Hart’s death.

Counsel for WWE suspected something else. “It was our belief that the settlements entered into with Lewmar were collusive and not entered into in good faith but were entered into for strategic and tactical reasons to improve and enhance the Harts’ position with WWE,” said O’Dear.

According to O’Dear, plaintiffs’ counsel sought to dismiss Lewmar to suppress Lewmar’s role in the accident. The dismissal further served to isolate WWE as the target defendant, and to strengthen the plaintiffs’ punitive damages claim against it. By dismissing Lewmar, the case against WWE “now was black and white and better than it already was,” said O’Dear.

Before pursuing its claim for contribution, WWE first had to show that the settlement purportedly releasing Lewmar from all liability was not entered in good faith, O’Dear said. Section 537.060 provides that when a settlement agreement is entered in good faith between parties liable in tort, the agreement discharges the tortfeasor to whom it is given from all liability for contribution from any other tortfeasor. If the settlement agreement is not entered in good faith, O’Dear argued, it has no legal effect.

The determination of whether plaintiffs and Lewmar acted in good faith was considered at an evidentiary hearing held last December. Judge Douglas Long permitted counsel for WWE and Lewmar to conduct discovery. A special master, Carl D. Gum, Jr., who was appointed to serve during the original wrongful death action, remained involved.

“In order to have it determined if there was a good faith settlement, we needed to depose the lawyers involved in negotiating the settlement to find out how the settlement came to be,” said O’Dear. Lawyers representing both the plaintiffs and the defendant manufacturers were deposed. Martha Hart, Owen Hart’s wife and the decision-maker designated in the plaintiffs’ fee agreement in the family’s wrongful death action, also was deposed concerning her knowledge of Lewmar’s release.

Attorneys for WWE also subpoenaed documents from the law firm representing the Hart family, Lewmar and the defendants who manufactured the vest and strap used in the stunt, O’Dear said. WWE’s counsel requested and reviewed redacted time sheets and billing records to determine when conversations oc-curred between counsel for plaintiffs and Lewmar and to identify the subject matter of those conversations.

Counsel for the plaintiffs and Lewmar contended that many of these discovery requests were protected by the attorney-client privilege and other privileges. O’Dear successfully argued that settlement ne-gotiations between counsel for the plaintiffs and Lewmar were not privileged, however, because plaintiffs and Lewmar were opposing parties in the litigation.

After the hearing, Judge Long issued an order in January finding that the settlement agreements entered between the Hart family and Lewmar were not good faith settlements under Sect. 537.060 and should not bar WWE’s claims against Lewmar for contribution or indemnification.

In his ruling, Judge Long stated that significant evidence existed at the time of the settlement tending to establish Lewmar’s liability and that the zero-dollar settlement entered into between plaintiffs and Lewmar was “not an amount reasonably related to what a reasonable Plaintiff or a reasonable Plaintiff’s attorney would have estimated Lewmar’s liability to be at the time of the settlement.”

Noting the $50 million in insurance coverage available to Lewmar, the court also found that “a reasonable Plaintiff’s attorney would have recommended, and a reasonable Plaintiff would have made a demand for payment of all or a significant portion of these funds in light of the available evidence concerning Lewmar’s liability.” The court stated that the failure to make a demand, “coupled with the refusal to entertain the suggestion by Lewmar’s counsel that Lewmar would consider making some payment, evidences a motive other than entering into a good faith settlement with Lewmar.”

Wickens, Lewmar’s counsel, maintains that the discovery, briefs and full-day evidentiary hearing did not uncover any evidence of improper dealings. “Our view was that there was absolutely no evidence… that there was any collusion,” Wickens said. In all instances, the record is clear that the settlement was conducted in the usual course of business and as an arm’s length transaction, he emphasized.

Wickens believes that his client would have prevailed on any appeal of the question of a collusive settlement. “It was not just Lewmar that settled,” Wickens pointed out. “It was all three manufacturing defendants. The only reason WWF went after Lewmar was because of their deep pocket.”

When asked for his comment on the court’s order and the contribution settlement, Gary Robb, the Hart family’s attorney, said, “Over three years ago the wrestling company paid $18 million to buy it peace with the Hart family. We have had no involvement in the case since that time. We congratulate the defendants for settling the contribution dispute and wish everyone well.” He added that it was a devastating loss to the Hart family and it is their desire to move on with their lives.

Evidence

After Judge Long’s ruling, WWE proceeded to take its contribution claim against Lewmar to trial in September. The parties reached a settlement in the fourth week of that trial.

O’Dear said Lewmar’s agreement to settle was prompted by the court’s decision to admit evidence concerning Lewmar’s settlement with the Hart family. He said Lewmar argued in opening statement and on cross-examination that the Hart plaintiffs never made a settlement demand on Lewmar because they never considered Lewmar a liable party. Lewmar further contended that the $32 million settlement demand that plaintiffs made on WWE was evidence of Lewmar’s non-involvement.

This raised a misleading impression that Lewmar was dismissed from the wrongful death action because plaintiffs’ counsel had conducted a full investigation and analysis of Lewmar’s involvement and released Lewmar based on that investigation, said O’Dear. To rebut that inference, the court permitted O’Dear to introduce evidence relating to the settlement agreement between plaintiffs and Lewmar and Judge Long’s order issued in January.

In a written statement issued after the settlement was announced, Lewmar Group CEO Arthur MacMillan stated, “The decision to settle was made by our insurers based on their own commercial considerations. It is in no way an admission of liability by our company.” MacMillan also said in the statement that the use of the Lewmar-manufactured trigger-latch shackle by the WWE and its stunt coordinators was a gross misuse of a product designed for a specific sailing application.

Lewmar’s counsel continues to maintain that its settlement with the Hart plaintiffs was made in good faith. One of the terms of the settlement agreement entered with WWE is a provision requesting the court to exclude from its January order any references suggesting that Lewmar acted in collusion with plaintiffs in settling the wrongful death action, said Wickens.

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SETTLEMENT REPORT

[NOTE: The following information was provided by the counsel for the winning party and represents the attorney’s characterization of the case.]

$9 Million Settlement

World Wrestling Entertainment, Inc. sued a co-defendant in a wrongful death case for contribution after WWE settled the case with the plaintiffs.

In 1999 Owen Hart, known as the Blue Blazer, was killed while performing a stunt entry in a wrestling match at Kansas City’s Kemper Arena. Hart fell 78 feet to the arena floor when the trigger-latch shackle used to lower him into the ring unexpectedly opened. The Hart family reached an $18 million settlement with WWE, then known as the World Wrestling Federation, in November 2000.

Prior to that settlement, the family released the manufacturer of the shackle, Lewmar Ltd., from the case without payment. Missouri’s contribution statute, Sect. 537.060 RSMo, provides that after a good-faith settlement is made in a tort case, the settling defendant is discharged from liability for contribution with any other tortfeasor.

WWE later sued Lewmar for contribution, claiming that the Sect. 537.060 discharge did not apply because the settlement between the family and Lewmar was not made in good faith. Instead, WWE argued, the settlement was made in order to gain a strategic advantage for the plaintiffs in the lawsuit against WWE.

After an evidentiary hearing the trial judge ruled in favor of WWE on the discharge issue. The judge concluded that there was evidence tending to establish that Lewmar had some liability in the wrongful death case and that the zero-dollar settlement was “not an amount reasonably related to what a reasonable Plaintiff or a reasonable Plaintiff’s attorney would have estimated Lewmar’s liability to be at the time of the settlement.” The judge noted that Lewmar had $50 million in liability coverage.

The contribution suit then went to trial. WWE said Lewmar failed to warn prospective users that the shackle had a history of inadvertent release. In addition, it said that both a design and a manufacturing defect worked together to cause the shackle to release prematurely.

After four weeks, Lewmar agreed to a $9 million settlement with WWE, al-though it denied any liability.

Type of Action: Contribution