Monday, March 27, 2023 | Back issues
Courthouse News Service Courthouse News Service

Steve Wynn’s Defamation Claim Dismissed

SAN FRANCISCO (CN) - A businessman did not defame casino mogul Steve Wynn by commenting on how Wynn and others run their gambling operations in Macau, a federal judge ruled.

U.S. District Judge William H. Orrick on Dec. 16 dismissed without prejudice Wynn's defamation complaint against James Chanos, owner and manager of a private investment firm, saying Chanos did not make any maliciously false statements.

Wynn, CEO and chairman of the board of Wynn Resorts, accused Chanos of defaming him during an April 25 conference on the Macau gaming industry, at the UC-Berkeley Graduate School of Journalism.

Wynn operates casinos in Macau and the United States. He claimed that Chanos defamed him and his company by saying: "Wynn and Wynn Resorts had violated the Foreign Corrupt Practices Act (FCPA)."

Chanos made the statement when a moderator asked him why he was "shorting Macau in China," according to Orrick's summary.

Chanos responded by saying he "got a little nervous the deeper we dug into Macau," Orrick wrote. Chanos said he "began to really get concerned about the risk I was taking with clients' money under Foreign Corrupt Practices Act and a variety of other, you know, aspects of exactly how business is done there."

Chanos said he was not comfortable with how "U.S. operators like Mr. [Sheldon] Adelson and Mr. Wynn," conducted business in Macau, according to Orrick. Chanos said that while "they might be adhering to every aspect of legal requirements in what they were doing, there was still an attempt to mislead and an attempt to obfuscate.'"

Orrick says that Chanos later added: "Almost any company doing meaningful amounts of business in China probably could be found in violation of the FCPA."

Wynn sued Chanos for slander, citing rulings by the SEC and the Nevada Gaming Control Board that he claimed "exonerated Wynn of all alleged FCPA allegations."

Chanos sought dismissal under the Federal Rules of Civil Procedure, for lack of a claim upon which relief could be granted.

Orrick granted the motion to dismiss, without prejudice, writing: "Chanos's statements regarding Wynn and the FCPA violations do not constitute slander per se and were protected opinions, not assertions of fact. In addition, the complaint does not adequately plead actual malice."

Orrick ruled that "it takes a significant inferential leap to conclude that Chanos's general uncertainty about the questionable business methods in Macau equates to an assertion that Wynn violated the FCPA."

The judge added: "Chanos's statement is not defamatory for the simple reason that it cannot be false. It is possible for companies to comply entirely with the law and yet conduct business in a way that poses an investment risk. In fact, Chanos's subsequent statements express this sentiment."

Wynn has until Jan. 13, 2015 if he wants to amend his complaint.

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.