(Bloomberg) -- Elaine Wynn was handed a setback in her fight with her ex-husband, casino mogul Steve Wynn, to get out of an agreement that prevents her from selling her $1-billion stake in Wynn Resorts Ltd. without his permission.
A Nevada state judge has barred her lawyers from participating in the lawsuit while considering whether to disqualify the attorneys altogether. Wynn Resorts alleges they failed to disclose to the judge and the company's lawyers that they possessed proprietary information about the casino operator that Elaine Wynn had downloaded on her computer.
The ruling came almost a year after Elaine Wynn, who had failed to keep her seat on the company's board in 2015, brought in a new team of lawyers from Los Angeles firm Quinn Emanuel Urquhart & Sullivan LLP to escalate the three-way legal brawl involving her, Steve Wynn and his former business partner, Japanese billionaire Kazuo Okada.
Her Quinn Emanuel team last year alleged that she had been ousted from the board in retaliation for challenging her ex-husband's management style. Among the allegations were claims that Steve Wynn had been forced into a multimillion-dollar settlement with a former employee over allegation of “serious misconduct” on company property. Elaine Wynn also last year claimed she was entitled to whistle-blower protection for disclosing possible securities law violations to Wynn Resorts' external auditors.
At a Jan. 23 hearing, Nevada District Judge Elizabeth Gonzalez issued an order that temporarily blocks the Quinn Emanuel lawyers from participating in the case other than to contest their disqualification. She also said the law firm can't use any confidential information from Wynn resorts in "any way, shape, or form."
‘Multiple Stories'
"I've had multiple stories every time I've dealt with this information," Gonzalez said at the hearing. "The fact that the story changes whenever some new information come up gives me a high level of concern, which is why I am trying to preclude Quinn Emanuel from affirmatively reaching out to anyone."
Representatives of Elaine Wynn and Quinn Emanuel didn't immediately respond Wednesday to requests for comment on the ruling.
The fight started when Wynn Resorts forcibly redeemed Okada's 20 percent stake, saying he bribed gaming officials in the Philippines where he was building a casino. Elaine Wynn filed a separate claim in Wynn's lawsuit against Okada to escape a shareholders agreement that was part of the couple's divorce and that prevents her from selling her shares without her ex-husband's permission.
Case Stalled
The five-year-old lawsuit has been stuck in court over numerous disputes related to the evidence and testimony each side can demand from the other, with numerous trips to the Nevada Supreme Court to try to reverse Gonzalez's rulings. Elaine Wynn's stepped-up attack on her ex-husband has further stalled the case, which had been scheduled to go to trial this month.
“For most of the history of this case, Ms. Wynn's cross-claim against Mr. Wynn has played a minor role in these proceedings,” Okada's lawyers said in a Jan. 11 filing with the Nevada Supreme Court. “Recently, however, this collateral dispute between Ms. Wynn and her former husband has metastasized into a disruptive grudge match that threatens the district court's efforts to efficiently manage and dispose of this case.”
The case is Wynn Resorts Ltd. v. Okada, A-656710, Clark County, Nevada District Court (Las Vegas).
To contact the reporter on this story: Edvard Pettersson in federal court in Los Angeles at epettersson@bloomberg.net. To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net, Peter Blumberg
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