Wynn Resorts accuses Elaine Wynn of copying confidential company data
April 12, 2017

Wynn Resorts Ltd. founder and chairman Steve Wynn and his ex-wife will be back in court after the company accused Elaine Wynn in a civil lawsuit of copying confidential company computer files for her personal benefit.

The company filed suit late last month in Clark County District Court seeking punitive damages as well as more than $15,000 in compensatory damages in a three-count complaint.

The lawsuit, filed March 28, accuses Elaine Wynn of breach of contract, breach of fiduciary duty and conversion, defined as the unauthorized assumption and exercise of rights of ownership over personal property belonging to another.

The lawsuit is the latest in seven years of legal battles between the Wynns that began with Steve and Elaine Wynn’s divorce settlement and continued when Steve Wynn filed suit against his former business partner and major Wynn Resorts shareholder Kazuo Okada.

In 2012, Steve Wynn filed suit against Okada, alleging the Japanese slot machine entrepreneur of bribing Philippine gaming officials when he developed what eventually became the Okada Manila, a 993-room hotel-casino that opened in Manila in December. Okada countered with a lawsuit against both Steve and Elaine Wynn. Steve Wynn is not affiliated with the Manila project but when the lawsuit was filed, the Wynn Resorts forcibly redeemed Okada’s 20 percent stake in the company.

Divorce Settlement

The Wynns’ 2010 divorce decree ordered the couple to split their stakes in Wynn Resorts evenly, while Steve, as CEO, agreed to always re-elect his ex-wife to the board of directors. In return, Elaine Wynn agreed to a provision that she wouldn’t sell her shares without the company’s permission.

But when Elaine Wynn was up for re-election to the board in 2015, shareholders rejected her after the board of directors nominating committee did not endorse her. Steve Wynn voted his shares for her, but she only received 26.2 percent of the total shareholder vote.

Based on allegations outlined in the most recent lawsuit, it’s clear now why some shareholders — mostly institutional investors who care most about the company’s financial performance — may not have voted for her.

According to the three causes of action listed in the recent lawsuit, the company is accusing Elaine Wynn of violating the Wynn Resorts’ Code of Business Conduct and Ethics and The Policy Regarding Nondisclosure and Nonuse of Confidential Information that board members are bound by.

Hard Drives Copied

The lawsuit says Elaine Wynn copied information from Wynn Resorts’ hard drives that she had access to as a director and copied them to personal computers and those files were shared with two law firms she had hired in her legal fight against Steve Wynn and the company.

“There are not two sets of rules — one for Elaine and one for everyone else — as Elaine appears to think,” said the lawsuit filed by the Las Vegas law firm of Pisanelli Bice, Wynn Resorts’ outside counsel.

“Elaine Wynn is bound by her fiduciary obligations and her contractual agreements to adhere to Wynn Resorts’ policies and procedures protecting company confidential and privileged information. … In committing the acts alleged herein, Elaine Wynn is guilty of oppression, fraud and malice toward Wynn Resorts. As such, Wynn Resorts is entitled to recover punitive damages from Elaine Wynn.”

Elaine Wynn’s attorney, Washington-based James M. Cole, did not return calls and emails from the Review-Journal, but told Bloomberg News last week she was acting under the advice of her personal attorneys, who were working with the company’s attorneys at the time.

Cole told Bloomberg it was disappointing to see Wynn Resorts “wasting the court’s valuable time by filing a new complaint about a matter they already had before the court and abandoned when the hearing did not seem to go well for them.”

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