Challenge to arbitration rejected

Kazuo Okada loses $50M fee in appeal against law firm for Wynn Resorts court fight

Kazuo Okada.
Reading time 1:52 min

Japanese billionaire businessman and former executive at Wynn Resorts Kazuo Okada will have to pay more than $50 million in attorneys’ fees and interest to Chicago-based law firm Bartlit Beck LLP after the Seventh Circuit rejected his challenge to an arbitrator’s 2019 decision. The case involves stakes of Universal Entertainment Corporation, a Japanese manufacturer of pachinko and slot machines co-founded and formerly chaired by Okada.

The firm represented him in a multi-billion-dollar lawsuit against Wynn Resorts and former CEO Steve Wynn. The arbitration award is set to stand because Okada chose to absent himself from the proceeding, the US Court of Appeals for the Seventh Circuit said on Tuesday, according to Bloomberg Law.

The Seventh Circuit, unanimous in its three-judge ruling, declined to set aside the award based on Okada’s claims he was unable to present his case to the panel of arbitrators. While the businessman had participated in the arbitration for more than a year, he stopped prior to an evidentiary hearing.

This absence led the panel to award Bartlit Beck $50 million by default. Okada argued the decision to move forward without him was unreasonable and unfair, and he asserted he was unable to travel due to a medical emergency. However, according to the panel, relevant email communication makes it plain that, “sick or not, Okada was not going to participate.”

Former Wynn Resorts CEO Steve Wynn

Okada attempted to boycott the hearing since he rejected “the validity” of the engagement agreement, and shortly after he announced he was not authorizing his attorneys to participate in the arbitration. The court argues Okada was “not denied any right to be heard” when the panel proceeded without evidence that he never offered.

"Put plainly, Okada took himself out of the race,” Circuit Judge Diane Wood, joined by Circuit Judges Daniel Manion and Ilana Diamond Rovner, wrote, according to Reuters. “He cannot now complain that he was unfairly deprived of the chance to win." 

According to Bartlit Beck, Okada now owes them more than $63 million after accrued interest. Bartlit partner Joshua Ackerman told the cited source on Tuesday the firm was pleased with the ruling. "We plan to pursue him through every means available to us until he pays the fee," Ackerman said.

The Chicago-based firm represented the millionaire in a lawsuit against gaming giant Wynn Resorts, following a decision to force Okada’s Universal Entertainment Corp. to sell back its stake in the company at a discount following an internal anti-corruption investigation.

Okada alleged that Wynn’s fraud accusations were bogus, and the company settled the litigation in March 2018 in favor of the millionaire for $2.6 billion. However, Bartlit Beck argues that the mogul then refused to pay the $50 million contingent fee in the engagement agreement, which led the dispute to go to arbitration.

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