Massachusetts regulators consider next steps in Steve Wynn lawsuit

Members of the Massachusetts Gaming Commission will go into a closed session later Thursday to discuss legal strategies in its courtroom fight with Steve Wynn.

Commissioners were briefed early Thursday about actions in Clark County District Court since November and how they affect the state’s ability to release a report on the suitability of Wynn Resorts to operate a casino resort in Everett, Massachusetts, just outside Boston.

Las Vegas-based Wynn Resorts Ltd. plans to open the $2.6 billion Encore Boston Harbor in June. The commission agreed earlier to stay on a path of anticipating the June 2019 opening while preparing an investigative report for an adjudicatory hearing on the suitability of the company to operate after reports of sexual harassment by Steve Wynn were published in several media outlets in early 2018.

Steve Wynn has denied the harassment allegations and filed a lawsuit Nov. 7 against his former company, the commission and its lead investigator, Karen Wells.

Settlement disclosure at issue

The investigation is expected to show whether the company had a role in failing to disclose a $7.5 million settlement payment to a female Wynn employee who accused Steve Wynn of harassment.

Judge Elizabeth Gonzalez issued a temporary restraining order and a preliminary injunction blocking the commission from using any of the materials gathered by Wells based on Steve Wynn’s contention that their use violated his attorney-client privilege. The company and the commission contended the documents and interviews conducted by Wells were allowable under a common interest agreement between the attorneys.

Over the past two weeks, Gonzalez conducted hearings involving attorneys for Steve Wynn, the commission, Wynn Resorts and Wells.

Dave Mackey, outside counsel for the commission, told the four-member board that he believes Wells didn’t violate any attorney-client privilege in the course of her investigation.

“We absolutely do not believe that Mr. Wynn’s allegation that Director Wells somehow flagrantly invaded the common interest privileges are supported by the facts here,” Mackey said. “To put that in context involves interviews with these lawyers interviewed and involved in certain matters relevant to the (Investigation and Enforcement Bureau’s) investigation. These were lawyers familiar with the issues at stake, they were among the most well-respected members of the Nevada bar, they themselves were represented at those interviews by experienced counsel.

“Counsel for Wynn Resorts also attended those interviews,” Mackey said. “These witnesses were advised by Director Wells that Wynn Resorts, the company, had waived its privilege and was cooperating, but that Mr. Wynn had not waived his privilege and if the witness had any concerns at all about these boundaries of an attorney-client privilege, they should feel free to consult with their counsel, leave the room, have a discussion and that they should only answer the question if they felt like they could. In fact, the witnesses did on occasion raise privilege issues and Director Wells fully respected that and moved on to other questions.”

No Nevada lawsuit

At one point, acting Chairwoman Gayle Cameron asked Mackey why Steve Wynn would sue the Massachusetts commission, but not the Nevada Gaming Control Board, which is conducting a similar investigation of sexual harassment allegations.

“I could conjecture, but I’m not confident enough about it to say publicly what that rationale might be,” he said.

Later in the meeting, representatives of Encore Boston Harbor gave a quarterly progress report on the 671-room resort project, Wynn Resorts has called “the largest private single-phase construction project in the history of the Commonwealth of Massachusetts.”

Encore President Robert DeSalvio told commissioners a floating dock, onsite utilities, plant selection and purchasing are nearly complete and that onsite paving was about 70 percent done.

Wall framing and drywall is nearly finished, but only 10 percent of the carpet is down. The convention area is between 70 and 80 percent complete. Eight of the 27 floors of hotel rooms are finished with paint done up to level 24, wall coverings to level 22, carpet to level 20 and furniture to level 10.

DeSalvio said the company has met or exceeded nearly every design and construction contract goal for the hiring of minority, women and veteran business enterprises.

This is a developing news story. Check back for updates.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.