No Quick End to Steve Wynn's Legal Fight With His Ex-Wife

(Bloomberg) -- Steve Wynn’s concession that his ex-wife can control her $1.6 billion stake in the casino operator he founded may not provide a quick end to the three-way court battle between the divorced couple and Wynn’s former business partner Kazuo Okada.

A Nevada state court judge on Monday deferred a decision on whether the claims between Steve and Elaine Wynn are moot after he agreed last week to no longer enforce the stockholder agreement that gives him control over her shares. A potential stumbling block is that Aruze USA, Okada’s former holding company, was also a party to that agreement and argues not only that it’s enforceable, but also that it invalidates Wynn’s forced redemption of Aruze’s shares six years ago.

“Neither Mr. Wynn nor Ms. Wynn can sell their respective shares in Wynn Resorts Ltd. without the required approval of Aruze USA under the terms of the stockholders agreement or until Aruze USA’s claims in this case are resolved," the company said in a court filing Tuesday.

With the question of how Steve Wynn’s changed position affects the lawsuit still unresolved, all parties are spending Tuesday and Wednesday in court in Las Vegas to argue over a slew of issues that will shape the case as it heads for a jury trial in April.

Various Claims

Steve Wynn and Wynn Resorts Ltd., Okada and his former holding company, and Elaine Wynn all have filed requests with Nevada District Court Judge Elizabeth Gonzalez to throw out the other sides’ claims and counter-claims, in whole or in part. If Steve and Elaine Wynn’s claims over her shares are resolved before trial, a jury may still have to resolve disputes between Okada and Steve Wynn.

Steve Wynn won a small victory Tuesday when the judge agreed with him that his ex-wife can’t sue him for breach of fiduciary duty over her ouster from the board of directors in 2015. That still leaves intact her other claims over the validity of the 2010 stockholders agreement she joined when the couple divorced.

One potentially crucial question the judge will be asked to decide is whether Okada got fair value for his investment in Wynn Resorts when the company forced him to cash out his 20 percent stake over allegations he made improper payments to Philippine gaming regulators. While the market value of the shares was $2.7 billion, the Japanese billionaire got a 10-year promissory note for $1.9 billion.

According to Aruze, the actual value of the note was even less, $1.36 billion, because of the terms attached to it. Should the judge agree that Wynn didn’t pay fair value for the stake, the trial may turn on how much the casino company owes Aruze USA and its parent company, Tokyo-based Universal Entertainment Corp., which parted ways with Okada last year.

Steve Wynn, 76, last week stepped down as chairman and chief executive of the company he started with Okada. His resignation followed allegations of sexual misconduct by former employees, some of which were cited by Elaine Wynn in her claims against her ex-husband. He has denied the allegations.

Wynn Resorts’ board of directors announced Monday that it had hired a new law firm, Gibson, Dunn & Crutcher LLP, to assist in an investigation into the sexual misconduct allegations against Steve Wynn. The firm replaced O’Melveny & Myers LLP, which had initially been retained to handle the review.

It’s difficult to tell whether the change has any significance for the company, or for the shareholder dispute, said Ira Matetsky, a partner with Manhattan-based law firm Ganfer & Shore LLP, who isn’t involved in the Wynn case.

“They’re both very strong, well-regarded international firms,” he said in a phone interview. “If they had moved to a smaller firm, you might say they’re trying to save money. This is sort of a bet-the-company situation at this point. It’s not somewhere where they’re looking to economize.”

The case is Wynn Resorts Ltd. v. Okada, A-12-656710-B, Clark County, Nevada, District Court (Las Vegas).

©2018 Bloomberg L.P.

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