Case Against Las Vegas Sands Certified as a Class Action

July 11, 2012

On July 11, 2012, Judge Kent J. Dawson of the United States District Court for the District of Nevada certified a plaintiff class and also ruled on defendants’ motion for reconsideration of his order denying much of defendants’ previous motion to dismiss, ensuring that the class action will continue against Las Vegas Sands Corp. (“LVS”), Chairman and CEO Sheldon G. Adelson and former President and COO William P. Weidner.

Lead plaintiffs Pompano Beach Police & Firefighters’ Retirement System and Alaska Electrical Pension Fund, through their lead counsel at Robbins Geller, proposed a class period of August 2, 2007 to November 6, 2008, alleging that the defendants had “knowingly or recklessly made misrepresentations and omissions about LVS, its development plans, and its financial condition.” LVS develops and operates a wide array of resorts and casino properties, including major operations in Las Vegas and Macao. The defendants allegedly made false and misleading statements about LVS’s liquidity and its ability to continue construction of ongoing projects in Macao and the United States while internal company projections showed LVS was running out of cash and sources of cash. Indeed, by November 2008, LVS was forced to announce that it might have to default on some of its loans and that its ability to operate as a going concern was threatened.

Judge Dawson first ruled on defendants’ motion to dismiss the amended consolidated complaint in August 2011, finding that while certain of the defendants’ projections and overoptimistic statements were protected by the Safe Harbor provision of the Private Securities Litigation Reform Act, plaintiffs nonetheless had adequately alleged that the “defendants understated true projected costs for the large development scheme undertaken by LVS in Macao,” where internal documents showed completion cost projections to be “about $4 billion higher than the $12 billion LVS publicly stated.” Likewise, Judge Dawson wrote that plaintiffs “adequately pled facts asserting that investors were misled by statements that liquidity was not an issue and that development was steadily progressing,” and that defendants knew their statements were false. He also refused to dismiss plaintiffs’ allegations regarding operating conditions and visitation rates in Macao, writing that “[t]he pleadings set forth specific facts asserting that investors were misled about LVS’s ability to operate profitably given conditions in Macao,” where VIP volumes and commission rates were declining.

In the July 11, 2012 order, the court certified a class of purchasers from February 4, 2008 to November 6, 2008. However, for purchasers from August 2, 2007 to February 3, 2007, the court reconsidered its prior ruling on the motion to dismiss (August 2011) and dismissed those claims. Nevertheless, he gave plaintiffs leave to amend their complaint to state further details of actionable misconduct prior to February 2008, and if plaintiffs did so he would “entertain a motion to expand the class period accordingly and include individuals who purchased the stock beginning August 2, 2007.” On September 7, 2012, plaintiffs filed an amended complaint with further detail uncovered in discovery.

Partner Spencer A. Burkholz, who together with partner Steven W. Pepich and associates Eric I. Niehaus and Christopher D. Stewart has prosecuted the case, said, “The case is now certified as a class, and we hope the judge will expand the case to include the earlier time period after reviewing our new amended complaint.”

Fosbre v. Las Vegas Sands Corp., No. 2:10-cv-00765, 2012 U.S. Dist. LEXIS 95735 (D. Nev. July 11, 2012).

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