Wynn Resorts Ltd.

Plaintiffs alleged a decades-long pattern of sexual misconduct by the company’s founder, Stephen (“Steve”) Wynn and a cover-up by its directors. The settlement is the largest – if not the largest – securities class action settlements concerning #MeToo-related allegations. Pomerantz Partner Murielle Steven Walsh led the litigation.

Founded in 2002 by Steve Wynn, Wynn Resorts is a luxury hotel and casino operator known for its high-end destination resorts. The company’s portfolio includes Wynn Las Vegas and Encore in Las Vegas, Nevada; Wynn Macau and Wynn Palace in Macau, China; and Wynn Boston Harbor in Everett, Massachusetts.

On January 26, 2018, The Wall Street Journal published an article titled “Dozens of People Recount Pattern of Sexual Misconduct by Las Vegas Mogul Steve Wynn,” which exposed allegations that Steve Wynn had coerced several female Wynn Resorts employees into performing sexual acts.  According to the article, “dozens of people . . . who have worked at Mr. Wynn’s casinos” reported a decades-long pattern of sexual misconduct. Additionally, it revealed that Mr. Wynn had paid $7.5 million in 2005 to settle a rape allegation by an employee. Shortly after the article was published, Wynn Resorts’ stock price tanked by more than 10%.

Throughout the class period, Wynn Resorts allegedly misled investors by withholding information about Mr. Wynn’s misconduct, which artificially inflated the company’s stock price while risking regulatory scrutiny. The company’s misstatements include a 2016 press release issued in response to claims in a legal filing from Mr. Wynn’s ex-wife and co-founder of Wynn Resorts, Elaine Wynn, that directly corroborated claims of sexual misconduct against at least one employee on company property. The press release vehemently denied any wrongdoing by Mr. Wynn and stated that any claims that the company had concealed information regarding the allegations were “patently false.”

In response to the Wall Street Journal exposé, the company issued another press release claiming that Elaine Wynn had instigated the damning article. It also stated that the company maintained a hotline for fielding claims of misconduct and that the hotline had never received a complaint regarding Mr. Wynn. This claim had already been contradicted by dozens of Wynn Resorts employees, with more to follow.

In spite of the company’s public denials, investigations were soon launched by the Nevada Gaming Control Board and the Massachusetts Gaming Commission. In response, Wynn Resorts’ Board of Directors announced the formation of a Special Committee, comprised solely of independent directors, to investigate the allegations. On February 6, 2018, Steve Wynn stepped down as CEO and Chairman of the Board, with Wynn Resorts announcing his immediate resignation in a press release.

On February 13, 2018, new allegations surfaced as two women filed complaints with the Las Vegas police accusing Mr. Wynn of sexual assault in incidents dating back to the 1970s, both corroborated by a statement from the Las Vegas Metropolitan Police Department. Wynn Resorts’ stock again experienced a sharp decline.

Pomerantz brought the securities class action against Wynn Resorts to hold the company and certain of its executives accountable. Not long ago, sexual misconduct against a corporation’s employees was not considered actionable under U.S. securities laws. In going after Wynn Resorts, the Firm was up against considerable odds and deep-pocketed defendants in a District Court in the State of Nevada, where casinos are the biggest industry.

Throughout the litigation, a total of six judges recused themselves, causing significant delays in the proceedings. Pomerantz defeated the defendant’s attempts to dismiss the claims, shorten the class period (which would limit their damages by hundreds of millions of dollars), and withhold incriminating documents. Ms. Steven Walsh and her team also prevailed against defendants’ premature summary judgment motion. In response to the judge’s ruling in Plaintiffs’ favor on all counts, Wynn Resorts. ultimately agreed to the highly favorable settlement on behalf of defrauded investors.

In addition to the historic financial settlement, Pomerantz’s compelling – and successful – legal arguments in Wynn paved the way for investors to hold corporations and their executives accountable on #MeToo-related issues.

“After years of hard-fought litigation, we have achieved groundbreaking rulings on behalf of Wynn shareholders and now have secured an exceptional $70 million recovery for the Class.” says Ms. Steven Walsh. “This case should serve as a warning to corporations and their officers that talk is not, in fact, cheap. Investors care about corporate integrity and accountability, and companies that make statements to cover up or deny allegations of sexual or other misconduct by executives face a potentially steep financial reckoning.”

Pomerantz’s Wynn Resorts litigation is led by partners Murielle Steven Walsh and Jeremy A. Lieberman, with attorneys Emily C. Finestone and Dean P. Ferrogari.