Previous posts here, here and here have discussed the battle royale between Wynn Resorts and its Director Kazuo Okada and his companies. The dispute has included Okada accusing Wynn of conduct that could implicate the FCPA and Wynn also accusing Okada of separate and distinct conduct that could implicate the FCPA. It is a rare instance of the FCPA being used offensively to seemingly accomplish business objectives.
Yesterday, attorneys for Kazuo Okada’s companies, Aruze USA, Inc. and Universal Entertainment Corporation, filed a notice of removal (here) in the U.S. District Court, District of Nevada. The notice of removal asserts that the wide-ranging civil complaint previously filed by Wynn Resorts in Nevada state court depends “on the resolution of a substantial, disputed federal question regarding the scope and interpretation of the Foreign Corrupt Practices Act.” The notice of removal states that Wynn’s state court complaint seeks a “judicial declaration confirming [Wynn’s] conclusion that Defendants are ‘unsuitable’ because they violated the FCPA.”
Under the heading “Uniform Interpretation of the FCPA”, the notice of removal states that “there is an important federal interest in the uniform interpretation of the FCPA” and “given the exclusive federal jurisdiction over criminal and injunctive relief for FCPA violations, and the potential for conflicting interpretations of the ambiguous statutory language, [the federal court] should retain subject matter jurisdiction to ensure that the federal law relating to the FCPA is interpreted in a uniform manner.”
FCPA caselaw is sparse. Because of the “carrots” and “sticks’ relevant to resolving criminal FCPA enforcement actions (as well as the SEC’s neither admit nor deny settlement policy), few corporate or individual FCPA defendants put the enforcement agencies to their burden of proof and thus many FCPA enforcement theories escape judicial scrutiny.
This is what makes the Wynn-Okada dispute so tantalizing for FCPA followers. The civil dispute implicating the FCPA is between well funded rivals who are staking out litigation positions (including as to the FCPA) that are likely to result in judicial scrutiny.
Separately yesterday, attorneys for Kazuo Okada’s companies, Aruze USA, Inc. and Universal Entertainment Corporation filed an expansive counterclaim and answer. As to Wynn’s $135 million donation to the University of Macau (see here for the prior post), the counterclaim and answer states as follows. The donation “suspiciously … covers essentially the same 10-year period” as Wynn Macau’s current gaming concession, that Okada was “concerned about the lack of deliberation of the boards of Wynn Resorts and Wynn Macau” in approving the donation, and that the “Chancellor of University of Macau is also the head of Macao’s government, with ultimate oversight of gaming matters.” As to the Freeh Report (see here for the prior post), the counterclaim and answer states that “Freeh was not preparing an objective report of the facts by an ‘independent’ investigator – he was providing the [Wynn] Board with an argumentative document as an advocate against Mr. Okada.”