Tough Mudder faces $4.3 million lawsuit

By Charmaine Little | Feb 22, 2019

BROOKLYN, N.Y. (Legal Newsline) – A minority shareholder in a company that organizes endurance events alleges he has sustained $4.3 million in losses as a result of the company's refusal to honor its contractual obligations.

The minority shareholder, Guy D. Livingstone, alleges Tough Mudder Inc. (TMI) and Active Network LLC, violated contract requirements and instead held its majority shareholder at a higher esteem, casting Livingstone off to the side. The suit was filed in the U.S. District in the Eastern District of New York on Feb. 12. Active is TMI’s lender. 

After Livingstone left his position as a TMI officer in 2013, the suit states the company experienced financial turmoil even though Active gave it an extension for an $18 million credit in 2017 and 2018. At the end of 2018, after a buyer was not found for TMI, the suit states Active "induced" TMI to make payments to TMI’s majority shareholder if the shareholder would resign from TMI’s board of directors. In exchange, Active would appoint designees to TMI’s board, the suit says.

“This resulted in Active – and its ultimate parent company, non-party Global Payments Inc. – gaining control over TMI’s operations and management, and in TMI breaching contractual obligations to Livingstone,” the lawsuit states. 

All of this activity caused Livingstone, who resides in Switzerland, to allegedly lose out on a minimum of $4.3 million.

Livingstone sued TMI over allegations of breach of the redemption agreement after it didn’t pay him the annual payment of $12,000 on Jan. 15 via the terms of the contract. Livingstone alleged because of this, he’s owed $326,084 under this cause of action alone.

He also sued TMI for an alleged breach of note, in which TMI allegedly breached the intercreditor agreement after it failed to pay the amount owed to Livingstone, which he said is $3.3 million. He also sued over an alleged violation of the intercreditor agreement and said he’s owed $675,000 for the amount paid in the masters service agreement. 

His fourth cause of action, tortious interference, was against Active, in which he claimed “Active knowingly and intentionally induced TMI to breach its obligations to Livingstone under those agreements,” the suit states. He alleges he is entitled to a judgment of $3.9 million under that count.

Livingstone is represented by Golenbock Eiseman Assor Bell & Peskoe in New York City.

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Tough Mudder U.S. District Court for the Eastern District of New York

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