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Court rules in favor of Wynn Resorts in long-running legal dispute

CARSON CITY — Wynn Resorts Ltd. does not have to turn over legal documents to Japanese billionaire Kazuo Okada in a long-running legal dispute over his ouster as a majority shareholder, the Nevada Supreme Court ruled Thursday.

The unanimous decision from five participating justices prohibits Clark County District Judge Elizabeth Gonzalez from compelling the production of attorney-client-privileged documents produced by the legal firm of Brownstein Hyatt and provided to Wynn shareholders.

In a second petition relating to other documents in the case, the court directed Gonzalez to consider whether work product information that led to a document called the Freeh report should remain confidential based on the court‘s ruling on the matter.

The confidential information was used by the Wynn board of directors in February 2012 to determine that Okada and his related companies were unsuitable parties that could jeopardize Wynn Resorts’ gaming licenses.

The board voted to redeem all of the outstanding shares of Wynn Resorts stock held by Okada in exchange for a promissory note with a principal value of approximately $1.9 billion.

Okada has challenged the board’s decision.

In oral arguments in the combined cases heard in February, Wynn’s attorney Todd Bice said Gonzalez erred when she required some confidential information used by the board in its decision be turned over to Okada, Aruze USA Inc. and its parent corporation, Universal Entertainment Corp., known as the Okada Parties.

Bice argued that Gonzalez’s ruling went against Nevada’s “business judgment rule” that says directors are presumed to act in good faith.

The court ruled that the business judgment rule applies a corporate board as well as individuals. The court ruled this did not compel the disclosure of the information.

But the court agreed with Gonzalez on the second petition, finding that Wynn Resorts waived its attorney-client privilege by placing the Freeh report in the initial lawsuit. Wynn Resorts attached the Freeh report to its complaint and provided it to a newspaper to broadcast its accusations against Okada.

The report was produced by Louis Freeh, a former federal judge and director of the Federal Bureau of Investigation. It found that Okada and his associates had “engaged in a longstanding practice of making payments and gifts to his two chief gaming regulators at the Philippines Amusement and Gaming Corporation” in substantial amounts.

“However, the work-product privilege may apply to some of the documents compiled in the preparation of the Freeh report,” the court said.

The court directed Gonzalez to review and determine if the work-product privilege applies to the documents.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-461-3820. Follow @seanw801 on Twitter.

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