A Delaware Chancery ruling sanctions WWE’s leadership for manually shortening Signal’s auto-delete settings after receiving two separate written litigation holds telling them not to, and it applies a standard most litigators don’t realize is different from the federal one: recklessness, not intent. It’s also the sharpest illustration yet of why an individually owned, encrypted messaging app is a harder discovery problem than anything sitting on your company’s own servers, harder to preserve, harder to audit, and easy to weaponize if nobody is checking. Reading time approximately 17 minutes.
Meet and Confer Podcast · Kelly Twigger · 🎧 Listen · 📄 Case in Minerva26: In re World Wrestling Entertainment, Inc. Merger Litigation· No. 2023-1166-JTL · Decision: Sanctions order presuming a limited set of facts about two individual defendants’ motivations and conduct, and raising their burden of proof to clear and convincing evidence, based on a finding of reckless spoliation of Signal messages · Date: May 27, 2026 · Judge: Vice Chancellor J. Travis Laster · Court: Delaware Court of Chancery
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Listen on Meet and Confer → | Read the transcript →
By Kelly Twigger
Podcast | Transcript
Sanctions, Signal, and a Forum Divide Worth Understanding
We’re coming up on six years of doing Case of the Week, and if there’s one rule that’s run through nearly every one of those episodes, it’s Rule 37(e). That’s the rule that governs what happens when electronically stored information gets lost that should have been preserved. It was rewritten in 2015, splitting preservation failures into two tracks: curative measures when a party is merely prejudiced, and much harsher sanctions when a party acted with intent, or, as we’ll see here in Delaware, recklessness. Everything since 2015 has been courts figuring out what those words actually mean, one case at a time, and I’ve been watching it happen in real time on this show.
This week’s decision is a good example of why that tracking matters. It pulls together a Delaware Chancery ruling from this year and three federal cases we’ve already covered, and it shows how differently federal courts and the Delaware Court of Chancery get to a sanctions ruling for the same kind of conduct. Understanding that pattern is what lets you make better, more informed arguments, whichever forum you’re in.
Case of the Week
What This Case Is About
The underlying dispute is stockholder litigation over WWE’s 2023 merger with Endeavor’s UFC business to form TKO. The plaintiffs, led by an Ohio labor union pension fund, allege that WWE’s controlling stockholder, Vince McMahon, steered the deal to Endeavor’s CEO, his longtime friend Ari Emanuel, because Emanuel offered him a continued role at the combined company and help with a federal investigation into his alleged sexual misconduct. McMahon denies the allegations.
Here’s the piece that matters for discovery purposes. Starting in the summer of 2022, McMahon, WWE President Nick Khan, Chief of Staff Brad Blum, Chief Content Officer Paul Levesque, and Stephanie McMahon communicated about the merger using Signal, an encrypted messaging app that can be set to auto-delete. Their use of Signal wasn’t incidental. One of them was later quoted describing why he used it: he said he’d always been told Signal was good for business because no one can trace you, comparing it to the encrypted email service Proton Mail. These aren’t people who stumbled into an ephemeral app. They chose it because of what it does.
Two formal litigation holds were in place before most of the deletions happened. The first, issued June 21, 2022, addressed the misconduct allegations against McMahon specifically, and it’s worth studying the actual approach when you draft your own holds: it named instant messages and text messaging by name, directed recipients to suspend any deletion protocols they controlled, and made clear that if a recipient’s own devices had automatic deletion settings, preserving relevant messages was that recipient’s responsibility. The second hold, issued January 19, 2023, addressed the strategic review and sale process, in equally direct terms.
And starting in early August 2022, one month after the first hold went out, the individuals using Signal began manually shortening their auto-delete windows on chats with McMahon: to one hour, then eight hours, then one day, back down and up again, repeatedly, timed to line up with the deal’s key milestones. Khan changed his settings the same day the DOJ sent WWE a request for information. Stephanie changed hers the day she, McMahon, Khan, and Emanuel first discussed a potential transaction over lunch. The Court found this timing was not incidental, and that the deletions correlated directly with the events at issue in the case. If you’re building a spoliation argument yourself, this is the model: line up the settings changes against the deal chronology and let the pattern speak for itself.
There’s a federal thread underneath all of this that explains why the evidence surfaced so late in the merger litigation. Federal authorities seized McMahon’s phone and iPad in mid-2023 as part of a separate criminal investigation into misconduct allegations against him. Those devices weren’t returned until September 2025, more than two years later. Once they came back, McMahon’s own counsel conducted a forensic analysis of the returned devices, identified exactly when each Signal chat was created, who was in it, and whether retention settings had been changed. What the forensic work couldn’t do was recover the actual content of the messages, because that content was already gone. The Court specifically commended defense counsel for their efforts in that work.
Plaintiffs moved for spoliation sanctions in the spring of 2026, after email exchanges between counsel surfaced the defendants’ Signal use and the settings changes. At a May 2026 hearing, McMahon’s team argued there was no real gap in the record: counsel called him “a prolific texter” and pointed to more than 22,000 messages produced across other platforms. Counsel for the other individual defendants argued the merger was negotiated the old-fashioned way, in person, over dinners and phone calls, not primarily through an encrypted app. Plaintiffs’ counsel countered that they didn’t have to prove intent under Delaware’s rule, only recklessness. And that’s exactly the standard the Court went on to apply.
How Signal Works
How Signal actually works matters for how you advise clients, and it’s a distinction I don’t think gets made often enough. Some apps, like Snapchat, are natively ephemeral: there’s no persistent version of the message to preserve in the first place, because the app never stores one. Signal isn’t that. Signal’s native application keeps every message by default. It takes an affirmative action, a person deciding to turn on a setting, for anything to start disappearing. The executives here understood that distinction well enough to use it deliberately, on chats they already had a duty to preserve.
That distinction should change how you think about a preservation obligation. An app that’s natively ephemeral raises a different set of questions than one that’s made ephemeral by a user’s own choice. If a custodian is using Signal, WhatsApp, or Telegram’s Secret Chats, the question isn’t just whether the app can delete messages. It’s whether that custodian, or anyone else in their chats, has turned that feature on, and when.
Why This Is a Harder Discovery Problem
A few episodes back, we covered Valcrum, LLC v. Dexter Axle Co., a case about Microsoft Teams messages. It’s worth being precise about why that case isn’t really the same problem as this one. Teams messages live on the employer’s own infrastructure. IT controls that data, can search it, and can produce it, even when nobody particularly wants to hand it over. Signal is the opposite. It sits on somebody’s personally owned phone, with no employer-side copy sitting in a corporate mailbox or a Teams tenant that counsel can go pull. If the individual who owns the device deletes it, there’s nothing left for the company to search, and no enterprise administrator who can hand it over.
That’s the practical takeaway. Platforms IT can manage need regular audits, but a personally owned device running an app like Signal isn’t something IT can audit at all. Counsel has to suspect the app is in use and specifically ask for the phone, which is exactly what happened here, and only because a federal seizure and forensic review eventually surfaced it. If your custodians are communicating on their own devices, on an app your company doesn’t control, that’s a fundamentally different, harder discovery problem than a Teams or Slack channel your IT department already has visibility into.
How Delaware Got There
Court of Chancery Rule 37(e) walks through the same four questions federal courts ask under Federal Rule of Civil Procedure 37(e): did a duty to preserve exist, was the evidence actually lost, was the loss caused by a failure to take reasonable steps, and was there prejudice. The Court answered yes to all four.
On duty to preserve, the defendants argued the misconduct hold only covered misconduct-related documents, not the merger, so no duty to preserve deal-related Signal chats existed until the second hold went out in January 2023. The Court rejected that on two separate grounds. First, the misconduct allegations and the merger were factually intertwined from the beginning, so the first hold already reached communications touching both. Second, and independently, a common-law duty to preserve arose even before either hold, by August 31, 2022, because sophisticated parties negotiating an M&A transaction in the shadow of a live misconduct investigation should reasonably anticipate litigation before any formal hold goes out.
Loss wasn’t contested. The Signal Users admitted the messages were gone and couldn’t be recovered from any other source. On reasonable steps, the Court found the Signal Users didn’t merely fail to act, they took affirmative steps in the wrong direction, repeatedly shortening retention windows on individual chats after receiving explicit written instructions to do the opposite. And on prejudice, the Court found the timing of the deletions, mapped against the deal timeline, was itself circumstantial evidence that what was destroyed mattered.
It’s worth being precise about where recklessness sits on the culpability spectrum courts actually use, because the label gets thrown around loosely. Ordinary negligence is a failure to exercise reasonable care. Gross negligence is an extreme departure from that, but still doesn’t require the actor to know they’re taking a risk. Recklessness adds an awareness element on top of gross negligence: a conscious disregard of a known risk. Intent to deprive, the highest bar, requires the party to have meant to destroy the evidence specifically to keep the other side from using it. The Signal Users’ conduct here, repeatedly changing settings on specific chats immediately after receiving two written holds telling them not to, was enough for the Court to find they consciously disregarded a known risk. That’s a real finding of recklessness, not a label applied loosely.
Because the Court found that, it imposed two remedies. First, it will presume a limited, specific set of facts to be true about McMahon’s and Khan’s motivations and conduct, rather than deeming those facts established outright. Second, it raised the standard the defendants must meet to rebut those presumed facts, from a preponderance of the evidence to clear and convincing evidence. The defendants can still put on a full case at trial. They just have to do it against a significant headwind they created themselves.
The Federal Standard Is Different, and Harder
Here’s the split that matters most for your own practice, and the mechanical reason it exists. Federal Rule of Civil Procedure 37(e)(2) requires a finding of intent to deprive before a court can impose the harshest sanctions — an adverse presumption or comparable relief. It has never included recklessness as an alternative path. Delaware’s Court of Chancery Rule 37(e) is built differently: it names recklessness directly in its own rule text as a separate, sufficient basis for those same remedies. That’s not Delaware preserving something federal courts lost. It’s Delaware’s rule affirmatively including a lower alternative standard that the federal rule’s text never contained in the first place.
The real fight behind the Federal Rule’s 2015 amendment wasn’t about recklessness at all. It was about closing off negligence and gross negligence as backdoor routes to the same harsh sanctions. Before 2015, the Second Circuit’s Residential Funding Corp. v. DeGeorge Financial Corp. allowed an adverse inference on a showing of ordinary or gross negligence, no intent required. The Advisory Committee Notes to the 2015 amendment name that case directly, making clear the amended rule no longer permits the same relief on a mere showing of negligence or gross negligence. Litigators shouldn’t rely on Residential Funding anymore. The rule’s own Committee Notes say by name that it’s no longer the standard.
That doesn’t mean federal plaintiffs need a smoking gun. Several federal courts have found that a body of circumstantial facts, specific enough that no innocent explanation survives, is sufficient for an intent finding, even in circumstances less obviously intentional than the ones here. For the full case-by-case walkthrough of how each court actually got there, listen to the podcast. Here’s the short version.
The Eleventh Circuit’s 2023 decision in Skanska USA Civil Southeast, Inc. v. Bagelheads, Inc. is the clearest statement of the standard, and it isn’t a messaging case at all: five custodians lost cell phone data in five different ways, and the court held that a pattern of unexplained losses sitting on top of an active hold can establish intent without any single admission. Worth knowing before you rely on it: the panel was candid that a fresh look would have made this a close call rather than an obvious one, and it affirmed only because Skanska could offer no other explanation for what happened to five different phones. That’s a real ceiling on how far circumstantial evidence carries an intent finding, not a guarantee.
Signal cases follow the same logic. In FTC v. Noland, which we covered in Episode 40, a defendant’s sharp pivot to Signal the day he learned of an investigation, followed by deletion right before a forensic exam, was itself enough for a federal court to find intent from the timing alone. In Hunters Capital v. City of Seattle, the same inference landed against a defendant, the City of Seattle, whose officials lost thousands of texts in different ways after receiving preservation letters naming them. Both cases built intent the same way Skanska did: circumstantially, fact by fact, with no single admission required.
Notably, the plaintiffs here didn’t even ask the Delaware court to find intent. They only argued recklessness, and in federal court, they could have argued intent instead, on facts this strong. That’s the whole point of knowing your forum. Same technology, same kind of conduct, a meaningfully lower bar to clear in Delaware Chancery than in federal court, and the reason is the actual text of the rule, not just how strictly courts have chosen to read it.
The Precedent Behind This Ruling
This ruling comes on the heels of another decision laying out the same framework, also written by Vice Chancellor Laster. Back in January 2024, he authored Goldstein v. Denner, the case that gave Delaware its modern framework for ESI spoliation under Court of Chancery Rule 37(e). In Denner, a hedge fund principal and two colleagues lost their text messages under explanations the Court didn’t find credible, including a thirty-day auto-delete setting that had been running the whole time. Vice Chancellor Laster found that conduct at least reckless, shifted the burden of proof, and awarded fees. This case takes that exact framework and applies it to a far higher-profile fact pattern, decided by the same judge less than two and a half years later, this time involving Signal specifically. He isn’t improvising here. He’s applying the same four-part structure and the same recklessness threshold he built in Denner, and that consistency is itself the lesson: the playbook applies with just as much force to sophisticated corporate defendants with well-resourced counsel as it did to an individual hedge fund principal.
What to Watch
This case never went to trial. The parties reached a settlement in principle on the last business day before trial was set to begin, and the full figure, $147.5 million, became public in court filings this August. As of this writing, the settlement stipulation has been submitted but is not yet finally approved, and the Court still has to hold a fairness hearing before it’s final. I’m watching two things from here. First, whether that fairness hearing surfaces any further detail about how much this sanctions ruling actually drove the number, since the burden-shift and elevated standard of proof landed less than three weeks before the case settled. Second, whether other courts start treating a Signal chat’s per-participant, changeable auto-delete setting as its own discrete fact pattern worth separate analysis, the way this opinion does, rather than folding it into generic ephemeral-messaging doctrine.
What to do this week
Know your forum and your judge before you build a spoliation argument. Delaware’s Court of Chancery Rule 37(e) names recklessness directly in its own text as an alternative to intent. Federal Rule 37(e)(2) never has, and the 2015 amendment’s real fight was closing off negligence and gross negligence as backdoor routes, not recklessness. If you’re in federal court, build your argument the way Skanska, Noland, and Hunters Capital all did: fact by fact, circumstantially, closing off every innocent explanation, rather than looking for a single smoking gun that will probably never exist.
Treat individually owned devices as a fundamentally different discovery problem than a corporate collaboration platform. If your custodians are communicating on their own devices, on an app the company doesn’t control, your hold has to say so specifically, and you have to verify compliance directly with that person, because there’s no institutional safety net behind them the way there is with Teams or Slack.
A legal hold is not self-executing. Circulating the notice is the beginning of the obligation, not the end of it. Somebody has to follow up and confirm that auto-delete settings, on every application a custodian actually uses, have been checked and suspended. The Court was clear that individuals can’t claim ignorance after receiving a hold; they have an obligation to find out what compliance requires. If your hold process stops at delivery, build in auditing and verification.
Understand how Signal works, and talk to your clients about it directly. Whether they use it, the settings they’ve changed, what messages do and don’t exist, all of that is discoverable. Err on the side of telling them, and follow up on the phone rather than in writing. It’s an uncomfortable conversation, but it’s privileged, and the alternative can be a death knell to a case. We’re seeing this issue more and more in discovery disputes, not less.
Listen to the full episode
This week’s Case of the Week walks through the full In re World Wrestling Entertainment decision: the Signal mechanics, the timing evidence, the four-part Rule 37(e) analysis, and the federal-versus-Delaware split that decides whether the same conduct gets you an adverse inference or a burden shift. Listen on Meet and Confer →
See Minerva26 in action
Minerva26 is the discovery intelligence platform that connects case law, rules, and real-world workflows. We tag decisions like this one under Instant Messaging and Mobile Device, with sub-filtering by platform, so when you’re building a spoliation argument or drafting a hold that actually covers Signal, WhatsApp, or Telegram, the rulings courts have already issued are organized for you. Book a 30-minute demo
Related on Minerva26: Goldstein v. Denner · Valcrum, LLC v. Dexter Axle Co. · Skanska USA Civil Southeast, Inc. v. Bagelheads, Inc. · FTC v. Noland · Hunters Capital, LLC v. City of Seattle
This decision is available on the Minerva26 platform with full issue tagging. If you’re a litigator navigating discovery strategy and want to stay ahead of decisions like this one, visit Minerva26.com to learn more or schedule a demo. Every decision covered on Case of the Week is searchable by issue, jurisdiction, and judge.
Kelly Twigger is CEO and founder of Minerva26 and Principal at ESI Attorneys. She has been a discovery strategist and practicing attorney for nearly 30 years. Case of the Week is a segment of the Meet and Confer podcast, breaking down one recent ESI discovery decision each week into practical strategy you can use.
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