Sands China fighting lawsuit filed by fired CEO Jacobs

AP Photo/Kin Cheung

The Sands Casino in Macau is seen Oct. 31, 2009.

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Las Vegas Sands CEO Sheldon Adelson.

Macau casino giant Sands China Ltd. is trying again to derail a lawsuit filed against it by fired CEO Steven Jacobs.

Attorneys for Sands China filed papers Thursday asking Clark County District Court Judge Elizabeth Gonzalez in Las Vegas to stay, or put on hold indefinitely, Jacobs’ lawsuit as it relates to Sands China.

After he was fired in 2010, Jacobs sued Sands China and its parent company, Las Vegas Sands Corp., charging he was improperly denied stock options and that his firing came after he clashed with Las Vegas Sands CEO Sheldon Adelson.

Jacobs claims that disputes with Adelson involved Adelson ordering him to commit illegal acts.

Las Vegas Sands denies these allegations and says Jacobs was fired for cause after violating company policy and that after his dismissal, he tried to extort money from the company by threatening to go public with damaging information.

Jacobs’ suit has prompted investigations of Las Vegas Sands’ compliance with an anti-bribery statute, as well as shareholder lawsuits.

Sands China has consistently argued that, as a Chinese company, it’s not subject to the jurisdiction of the Nevada court. After Gonzalez rejected that argument, Sands China filed an appeal to the Nevada Supreme Court in the form of a "petition for writ of mandamus, or in the alternative, writ of prohibition.’’

The Nevada high court has ordered attorneys for Jacobs, the actual party with an interest in the writ, to respond to it.

In their court filing Thursday, attorneys for Sands China said the suit against it should be put on hold while the Nevada Supreme Court decides its writ petition.

The writ, or appeal, argues it would violate the due process rights of Sands China to have to answer to a Nevada court.

Sands China attorneys said that if the suit against it proceeds, the company may have to spend some $1 million finding and sorting through extensive files and databases to comply with Jacobs’ discovery requests.

This process is expensive and cumbersome, Sands China attorneys explained, because under Macau law it has to inform parties about information it intends to disclose about them – and also inform Macau’s Office For Personal Data Protection in order to comply with Macau’s Personal Data Protection Act.

"Strict protocols must be adhered to in order to ensure that no personal data leaves Macau in violation of the Macau act," Sands China attorneys wrote in their filing, adding the company would face civil and criminal penalties if it violated the data protection law.

Because of extensive search terms submitted in Jacobs’ discovery demands, Sands China says it would need to hire 10 attorneys to sort through all the data.

These search terms are likely to include names of junket operators and triad organized crime figures whose names have come up in the litigation.

For instance, a Sands counterclaim against Jacobs alleges he was slow to terminate gambling junket contracts involving organized crime figure Cheung Chi Tai, aka Cheung Chi-tai, identified as a triad member and junket operator by Reuters last year.

In Thursday’s court papers, Sands China attorneys said that if the litigation isn’t stayed, Sands China may end up turning information over to Jacobs – only to see the state Supreme Court later dismiss Sands China from the lawsuit.

They noted the information also could be used by Jacobs in his appeal to the Nevada Supreme Court of Gonzalez’s ruling dismissing his defamation claim against Adelson.

"If the Nevada Supreme Court issues an order dismissing Sands China Ltd. from the lawsuit, how can this process be undone?" the court filing said. "Jacobs will be in possession of information of which he may otherwise not be entitled to receive, with no mechanism in place to 'un-ring the bell.'’’

Gonzalez has not indicated when she may rule on Sands China’s petition to stay its portion of the case.

The case against Las Vegas Sands would proceed if Sands China’s motion is granted. But the case against Las Vegas Sands is likely to be weakened if Jacobs’ attorneys can’t obtain the information they’re seeking from Sands China.

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