Law firms compete to lead suits against Las Vegas Sands directors
Likely hoping for a big award of attorney’s fees, law firms are competing to be named lead counsel in the current batch of securities lawsuits against the directors of Las Vegas Sands Corp.
Three shareholder lawsuits have been filed in federal court in Las Vegas against Las Vegas Sands Chairman and CEO Sheldon Adelson and his fellow directors since April 1. Two more suits were filed in Clark County District Court in Las Vegas since March 9.
All the suits claim the company has been damaged by wrongdoing as alleged in a lawsuit filed against Las Vegas Sands by its fired Macau CEO, Steven Jacobs.
The shareholder lawsuits say Jacobs’ allegations have harmed the company and its stock price by prompting regulatory investigations in the United States and China – and the Sands directors are responsible for these problems.
One of the shareholder lawsuits alleges "violations" that include the company "engaging in extortion with regard to certain Macau and Chinese officials, hiring a conflicted general counsel for Sands China, which constitutes a violation of the Foreign Corrupt Practices Act, encouraging the patronage of unsavory characters in its Macau facilities, such as members of China’s triads, groups associated with organized crime; money laundering and engaging in other conduct which is violative of Macau and Nevada regulations and the U.S. Foreign Corrupt Practices Act of 1977."
"The company is now at risk of losing significant amounts of business and its licenses in both Macau and Nevada, and/or the loss of its gaming and casino operations to the government of Macau for no compensation," says that suit, filed in Clark County District Court on behalf of shareholder Ira J. Gaines and others.
Las Vegas Sands has vigorously denied these and other allegations of wrongdoing by Jacobs and has hit him with a counterclaim charging he was slow to separate the company from an organized crime figure and that Jacobs engaged in extortion when he threatened to go public with damaging information after he was fired.
As "derivative" lawsuits, these five shareholder suits seek to force Las Vegas Sands to sue its own directors to recover damages to benefit all shareholders.
Las Vegas Sands hasn’t yet answered the five lawsuits in court, but said in its first quarter earnings report it would vigorously defend against all of them.
Now, in the three federal cases, two competing law firms have asked the court to consolidate the cases there and appoint them lead counsel.
--Kendall Law Group of Dallas, headed by former federal judge Joe Kendall. It represents shareholders including Nasser Moradi and says its plaintiffs are willing to serve as lead plaintiffs.
--Kessler Topaz Meltzer & Check LLP, headquartered near Philadelphia. The Kessler Topaz client, Las Vegas Sands shareholder the Louisiana Municipal Police Employees’ Retirement System, is also petitioning to be lead plaintiff in the case.
The San Diego law firm involved in the third federal case, Robbins Umeda LLP, also specializes in shareholder cases. It hasn’t yet responded to the motion that the cases be consolidated and it has not indicated if it wants to be lead counsel in the event they are consolidated. Its client is shareholder John Zaremba.
It’s unknown if the two state court cases, in Clark County District Court, would be consolidated with the three federal cases.
Those plaintiffs and their attorneys are:
Shareholder Benyamin Kohanim -- Aldrich Law Firm in Las Vegas, Pomerantz Haudek Grossman & Gross LLP of New York and Glancy Binkow & Goldberg LLP of Los Angeles.
Shareholders Ira J. Gaines, Sunshine Wire and Cable pension plan and Peachtree Mortgage Ltd. -- Aldrich Law Firm, The Grant Law Firm PLLC of New York.
This group of five lawsuits filed in 2011 is on top of two derivative lawsuits filed last year and still pending in federal court in Las Vegas.
In those cases, disgruntled investors are seeking to recover damages over a decline in the price of Las Vegas Sands stock from $144 in 2007 to less than $2 per share in early 2009. The stock fell during that period as the recession hit the worldwide gaming industry and Las Vegas Sands faced liquidity problems related to its massive expansion in Asia.
Investors struck out with a similar suit in state court in 2009, when Clark County District Court Judge Allan Earl ruled shareholders failed to show mismanagement by board members or that they breached their fiduciary duties.
Earl noted it was Adelson who rescued the company by pumping more than $1 billion of his personal fortune into Las Vegas Sands in late 2008 to help it work through the liquidity crunch.