‘Draconian Sanctions’|Against Sands Upheld

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     LAS VEGAS (CN) – The Nevada Supreme Court affirmed sanctions against Las Vegas Sands Corp. and Sands China in a case involving the casino operator’s dealings in Macau.
     Clark County Judge Elizabeth Gonzalez ordered the sanctions after approving an obstruction motion by Steven C. Jacobs, who in October 2010 filed an employment complaint against Las Vegas Sands and Sands China. Jacobs said the Sands obstructed discovery proceedings.
     Jacobs, who was president and CEO of the Sands’ Macau operations, said in his lawsuit that he was fired because he objected to his boss’s demands to use improper “leverage” against senior government officials.
     He claimed that Las Vegas Sands chairman and CEO Sheldon Adelson made “repeated and outrageous demands” of Jacobs to secretly investigate high-ranking members of the Macau government to use as leverage to advance the Sand’s interests.
     Jacobs said he refused and Adelson “repeatedly threatened” to fire him, and did fire him in July 2010.
     On March 16, the Sands sought relief from Gonzalez’s sanctions, claiming they denied the company constitutional rights to due process, and objecting to an order that it pay $250,000 to legal organizations.
     Five of seven Nevada Supreme Court justices agreed with the ruling, but said they will consider the Sands’ objection to being forced to cough up the $250,000. Justices Kristina Pickering and Ron Parraguirre recused themselves.
     “Relief is an extraordinary remedy” but “solely within this court’s discretion,” Chief Justice James W. Hardesty wrote.
     “The only portion of the district court’s March 6 order that may warrant relief is the portion directing Sands China to make contributions of $50,000 to each of five different legal organizations,” Hardesty said.
     Sands attorney Steve Morris called Judge Gonzalez’s sanctions “unprecedented in Nevada law by barring a foreign corporation from presenting any witnesses or introducing any evidence in a jurisdictional hearing scheduled to begin [April 20].”
     “The district court imposed these Draconian sanctions – which effectively reduce Sands China to the status of a gagged participant in its own jurisdictional proceeding – because the company redacted certain personal data from discovery documents in compliance with the laws of its home nation [Macau],” Morris wrote in his March 16 emergency motion to stay.
     The “excessively punitive evidentiary sanctions” will create an “equally unprecedented ‘show trial,’ contrary to the due process of law,” Morris argued.
     He said the sanctions order precludes Sands China “from calling any witnesses on its own behalf or introducing any evidence on its behalf.”
     “The district court’s excessive and punitive sanctions are the result of a foreign entity’s effort to comply with both the laws of its home country and excessive discovery obligations imposed on it,” Morris said.
     Gonzalez ordered the sanctions after Sands China initially did not produce any documents and later produced them with personal identification information redacted to comply with the Macau Data Privacy Act, Morris said.
     Sands China asked for relief from the sanctions because “under Macanese law, it could not produce unredacted documents from Macau without violating Macau civil and criminal laws,” Morris claimed.
     “These issues are important not only to [Sands China] but also to other Nevada companies that have significant investments in Macau or other countries that have similar data privacy laws. Furthermore, how the Nevada courts resolve those issues … may well impact the ability of Nevada companies to continue to make and grow such investments in foreign countries and in Nevada,” Morris argued.
     He claimed Sands China’s “constitutional right to due process will be irretrievably lost.”
     But the state supreme court upheld the sanctions.
     Officials for Las Vegas Sands were not available for comment Wednesday.
     Jacobs is represented by Donald Campbell, with Campbell & Williams.