Four Wynn shareholder suits dismissed, two remain active
AP Photo/Nevada Appeal, Cathleen Allison
9 October 2012
A federal judge on Tuesday dismissed a group of four shareholder lawsuits filed against the board members of Wynn Resorts Ltd. after conflicts broke out this year between the casino-resort company and board member Kazuo Okada.
Two more Wynn shareholder suits remain active in Clark County District Court and have been consolidated there.
The federal suits dismissed Tuesday were filed by the Louisiana Municipal Police Employees’ Retirement System, Maryanne Solak, Excavators Union Local 731 Welfare Fund and Boilermakers Lodge No. 154 Retirement Fund. After they were filed, they were consolidated into one case.
The shareholders claimed in the federal cases that Wynn board members had subjected the company to potential violations of the federal Foreign Corrupt Practices Act.
That's a law aimed at deterring bribes by U.S. business officials and companies to greedy foreign officials.
The shareholders, like Okada, suggested Wynn Resorts improperly agreed to donate $135 million to the University of Macau in China, where the company is a casino operator.
In a Sept. 14 motion that the federal shareholder suits be dismissed, attorneys for the Wynn board members argued the shareholders had failed to allege that the $135 million Macau pledge has resulted in actual liability for the company.
Rather, the shareholders alleged the pledge merely exposed the company to an investigation by the Securities and Exchange Commission, the attorneys for the board members said.
"Plaintiffs do not allege this investigation has resulted in any penalty, judgment or other harm (aside from legal fees). Plaintiffs’ 'exposure' theory alleges nothing more than that the Wynn Resorts board did something controversial, and the company has been forced to retain lawyers as a result," the Wynn dismissal motion said. "But directors cannot be found to have breached their fiduciary duties by making a business decision they believed to be lawful and beneficial to the company simply because that conduct resulted in governmental investigations.''
Some of the shareholders also challenged the company's redemption of Okada's $2.9 billion in stock this year after the company determined he breached his duty as a Wynn director by providing improper benefits to Filipino gaming regulators — an action the company said could expose Wynn Resorts to discipline by gaming authorities.
Some shareholders charged this redemption was aimed at solidifying Wynn CEO Steve Wynn's control of the company — charges denied by attorneys for the board members.
U.S. District Judge James Mahan dismissed the federal suits Tuesday after the shareholders without explanation missed a deadline to respond to the Wynn board members' dismissal motion. The suits were dismissed without prejudice, meaning the shareholders can re-file them if they decide to do so.
Litigation continues, in the meantime, between Okada and the company with Okada planning to appeal a state court ruling rejecting his request that his redeemed Wynn shares be reinstated so he can nominate two new Wynn board members.
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