Las Vegas Sands Corp. and subsidiary Sands China Ltd. suffered another setback Thursday in their lawsuit with fired Macau casino executive Steven Jacobs when a judge refused to put the litigation on hold.
Jacobs, former CEO of Asian gaming giant Sands China, sued the companies in Nevada state court last year after he was fired. The litigation is believed to be responsible for investigations of the companies in the United States and Hong Kong, particularly Las Vegas Sands’ compliance with a U.S. anti-bribery law.
Though Las Vegas Sands is the majority shareholder of Hong Kong Stock Exchange-listed Sands China, Sands China insists it’s not subject to the jurisdiction of the Nevada court and that its due process rights are being violated by it having to even participate in the case.
Its attorneys asked the Nevada Supreme Court on May 6, with a "writ" petition, to overturn a March 15 order by the state judge, Clark County District Court Judge Elizabeth Gonzalez, denying Sands China’s motion to dismiss the lawsuit.
Sands China attorneys argued that complying with certain document requests in the Nevada proceedings could cause it to violate the law in China, putting it in an untenable position.
With the Nevada Supreme Court so far not acting on that request, Sands China attorneys asked Gonzalez on Thursday to stay discovery and other action in the lawsuit until the state Supreme Court acts. That could take many months, attorneys agreed.
Attorneys for Jacobs, however, said Sands China has no hope of prevailing in its appeal to the Nevada Supreme Court and they noted everyone agrees – and it’s common knowledge – that Sands China is controlled by Las Vegas Sands Chairman and CEO Sheldon Adelson from his Las Vegas offices.
Jacobs’ attorneys also said Sands China had failed to specify what documents it could possibly disclose in the Nevada case that would subject it to breaking any laws in China.
"Las Vegas Sands Corp.’s undisputed control over Sands China establishes that Sands China will be required to participate in the discovery process in this action regardless of whether it ultimately succeeds on its writ petition, regardless of whether its production of documents purportedly violates Macau law and regardless of any new theories it may advance to stall the progress of this case," Jacobs’ Las Vegas attorneys with the Las Vegas law firm Campbell & Williams argued in court papers Wednesday.
On Thursday, Gonzalez denied the motion of Sands China that the proceedings be stayed, saying the request was premature since she hadn’t yet made any rulings on the production of documents in the case.
"We’re not there yet," Gonzalez said. "If there’s a dispute (over document production during discovery), someone will file a motion. And then we’ll have a discussion. And then there may be an issue of whether my order conflicts with Macau law, whether there is irreparable harm (to Sands China) and whether I believe a stay is appropriate."
Hearings are set for next month on renewed motions by Sands China and Las Vegas Sands that the case be dismissed.
Jacobs, in the meantime, filed court papers this week denying allegations in Las Vegas Sands' counterclaim against him.
Las Vegas Sands says Jacobs was fired for cause for working on unauthorized deals and violations of company policy and has accused him of extortion for threatening to go public with damaging information after he was fired unless he was paid money.
Jacobs has denied these assertions and says he has been wrongly denied stock options and severance pay after his firing.
Jacobs says he was fired after clashing with Adelson over what Jacobs calls improper and illegal demands by Adelson.
As the lawsuit progresses, it may focus on disputes over what actions Sands China management took to prevent triad organized crime groups and triad-linked junket operators from having influence in its Macau casinos; and whether Sands China and Las Vegas Sands had an appropriate relationship with a Macau lawmaker who did legal work for the company.
Las Vegas Sands owns 70 percent of the shares of Sands China.
With $1.2 billion in net revenue in the first quarter, Sands China is by far the biggest revenue generator for Las Vegas Sands, which also has gaming resorts and casinos in Singapore, Las Vegas and Pennsylvania.
Its Macau properties are the Sands Macao, the Venetian Macao, Four Seasons Macao and the Plaza casino; and it’s developing new properties in the Cotai district of Macau.