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Wynn Resorts Fights Off Investor Suit on Harassment Allegations

May 28, 2020, 7:06 PM

Wynn Resorts Ltd. beat a would-be securities class suit accusing it of misleading investors about sexual misconduct allegations against founder Steve Wynn, after a Nevada federal district judge dismissed the case.

The casino and hotel chain’s investors challenged statements about its code of conduct, legal compliance, and regulatory risk. But the investors didn’t properly allege that Wynn Resorts misled them, the U.S. District Court for the District of Nevada said Wednesday.

Nevada gaming regulators fined Wynn Resorts $20 million in 2019 for failing to investigate and act on sexual harassment allegations against its founder and former CEO. Wynn stepped down from the company’s board in 2018 and has broadly denied the allegations. A judge cleared him to pursue a defamation suit against one accuser in March.

Investors argued that Wynn Resorts misled them when it touted a code of conduct promising serious and prompt investigations of and no tolerance for sexual harassment. But those are “precisely the type of statements which” the U.S. Court of Appeals for the Ninth Circuit “deemed aspirational,” so they aren’t actionable, Judge Gloria M. Navarro’s order said.

Challenged statements about Wynn Resorts’ compliance with all applicable laws aren’t misleading “when viewed in context,” Navarro said. The statements refer to an earlier case involving alleged foreign bribery, not to sexual harassment, the order said.

And the company’s failure to disclose the alleged harassment didn’t contradict its statements about regulatory risks, because those statements dealt generally with gaming regulations, not sexual misconduct, , Navarro said. The statements didn’t create a duty to disclose the latter, the order said.

The investors have 21 days to amend their complaint or else the court will dismiss the suit with prejudice, the order said.

Kirkland & Ellis LLP and Snell & Wilmer LLP represented Wynn Resorts. Latham & Watkins LLP and Campbell & Williams represented Wynn. Pomerantz LLP served as lead counsel to the investors.

The case is Ferris v. Wynn Resorts Ltd., 2020 BL 197863, D. Nev., No. 18-cv-00479, dismissed with leave to amend 5/27/20.

To contact the reporter on this story: Jennifer Bennett in Washington at jbennett@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com