The 9th Circuit Court of Appeals has told Wynn Resorts Ltd. that they have to arbitrate a disputed fee an investment capital firm says it is owed.
In March 2009, Atlantic-Pacific Capital Inc., a Greenwich, Connecticut investment capital firm and Wynn Resorts entered into a written agreement making Atlantic-Pacific Wynn Resorts’ exclusive global agent to raise $1.5 billion in equity capital. Wynn Resorts was being hit hard by the recession, and according to Michael Maddox, Wynn Resorts chief financial officer, the company faced “particular distress as they had capital demands, debt maturities and an ongoing business dispute.” The agreement included a clause that “any dispute, controversy or claim arising from or relating to th[e] Agreement should be submitted to and determined by binding arbitration in Las Vegas, Nevada, conducted by” JAMS. The agreement further provided that it should “be governed by and construed in accordance with the laws of the State of New York.”
By the end of 2009 the economy improved so Wynn Resorts took its properties off the market. Since it no longer needed the services of Atlantic-Pacific, Wynn Resorts terminated its agreement with the investment capital firm. Thereafter, Atlantic-Pacific filed an arbitration claim for $32 million in fees. Atlantic-Pacific argued it was owed the fees because, though Wynn Resorts decided against selling the resorts, Atlantic-Pacific had fulfilled its part of the agreement by lining up to $1.5 billion in investment commitments.
Wynn Resorts responded by filing a complaint in a Nevada state court and requesting a stay of the arbitration proceedings. Atlantic-Pacific then removed Wynn Resort’s action to federal court. The district court stayed the arbitration proceedings and denied Atlantic-Pacific’s motion to compel arbitration. The 9th Circuit Court of Appeals reversed the district court’s holding, remanding the matter back to arbitration. The court held that the fact Wynn Resorts and Atlantic-Pacific incorporated JAMS rules and a broad arbitration clause in their agreement established their “clear and unmistakable intent to submit the issue of arbitrability to arbitration.” Furthermore, a dispute over whether a fee was owed fell within the terms of the arbitration provision.
Wynn Resorts has been involved in a well-publicized shareholder/director dispute with Kazuo Okada, Japanese billionaire and formerly the largest shareholder in Las Vegas’ Wynn Resorts, since January.
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