Question of the Day - 02 August 2018

MGM Resorts has filed a counterclaim in federal court against all the lawsuits they're facing that stem from the October 1 atrocity, essentially shopping for a friendly judge.

The nub of MGM’s argument is that since the security outfit contracted for the Route 91 Harvest festival, Contemporary Services Corp., was government-approved for counter-terrorism work, MGM must be held harmless for any harm that occurred on October 1, 2017. The federal certification in question was pursuant to a 2002 law that, as the Las Vegas Review-Journal put it, “... extends liability protection to any company that uses ‘anti-terrorism’ technology or services that can ‘help prevent and respond to mass violence.’”

The FBI hasn't classified Stephen Paddock’s shooting as terrorism, but litigation often hinges on hair-thin distinctions such as this.

Furthermore, Contemporary Services’ security work, which covered the festival, hasn't been the bone of contention. Rather, MGM’s own in-house security team’s performance has been at the center of the controversy, most recently in a lawsuit filed by seven Arizona residents (and unaffected by MGM’s counterclaim).

According to AzCentral’s synopsis of that filing, Mandalay Bay “has a no-weapons policy, the lawsuit claims, and yet housekeeping staff did not mention those in Paddock’s two-room suite. In addition, the lawsuit alleges that security and staff ignored the bolts Paddock used to close off a stairwell door and the surveillance cameras he placed on a room-service cart in the hallway and in a hotel room door’s peephole."

“MGM claims that the victims, through actual and threatened lawsuits, have implicated the security-company’s services, because they involve concert security, including training, emergency response and evacuation,” explained the Las Vegas Review-Journal's Todd Prince. The counterclaim reads in part, "If defendants were injured by Paddock’s assault, as they allege, they were inevitably injured both because Paddock fired from his window and because they remained in the line of fire at the concert. Such claims inevitably implicate security at the concert — and may result in loss to CSC [Contemporary Services Corp.]”

Yes, such claims implicate Contemporary Services, but it also appears that MGM is suggesting that all the victims had to do was step out of the line of fire and they'd have been fine.

Beyond that, MGM’s counterclaim argues that since Contemporary Services was protected from liability by the 2002 law, that implies such protection extends to MGM itself.

However, the FBI’s disinclination to identify Paddock as a terrorist could run a cart and horses through MGM’s case, since the 2002 law in question, while broadly drawn to include “mass destruction, injury or other loss” is an explicitly anti-terrorism measure. We expect this to be a major pivot point, should the case go to trial.

The endgame of the MGM countersuit is to have all the lawsuits of the victims (also known as "defendants" in the MGM suit) tossed. The company wept crocodile tears for the shooting victims and their relatives in a statement that read, “The Federal Court is an appropriate venue for these cases and provides those affected with the opportunity for a timely resolution. Years of drawn-out litigation and hearings are not in the best interest of victims, the community, and those still healing.” (We can't help commenting that it strikes us as ironic that the “best interests” of the victims might be served by having their court claims quashed.)

Robert Eglet, a Las Vegas personal-injury attorney for some of the victims and their families, issued a statement in rebuttal. "The MGM Complaint does not mention the fact that CSC did not provide any security services at the Mandalay Bay on the night of the shooting, or the days leading up to October 1. Although video footage shows Mandalay Bay employees assisting the gunman in bringing his arsenal of weapons to his 32nd-floor suite by using the service elevator, MGM's Complaint is noticeably silent regarding the security or lack thereof at Mandalay Bay."

Eglet said in the statement, "I believe that MGM did this because they did not like the Nevada federal judge who is currently assigned to our case." Eglet further argues that MGM — as a Nevada company — deserves to be held to account in a Silver State court. That would render the 2002 federal law irrelevant. 

Maybe so, but MGM has clearly found a legal loophole that could allow it to escape all pending and future litigation over the massacre, regardless of any sour public-relations aftertaste it could leave.

And “sour aftertaste” could describe the public reaction, which spurred a #BoycottMGM backlash on Twitter. Read one tweet, “Please remove me from your players list. I won’t be playing at any MGM casino going forward. Your lawsuit against victims of a mass shooting is disgusting.”

The company did a semi-backpedal, trying to make its case in the court of public opinion. “We have filed what is known as an action for declaratory relief. All we are doing, in effect, is asking for a change in venue from state to federal court. We are not asking for money or attorney’s fees. We only want to resolve these cases quickly, fairly and efficiently.”

The most benign spin on the MGM lawsuit came courtesy of NBC News: "While this 'lawsuit' by MGM will be perceived as an aggressive, offensive maneuver, it’s the opposite. It’s really a request to determine the extent of MGM’s proposed defense.” If it plays out according to plan, the hundreds of threatened lawsuits will be rolled into one omnibus case and decided not in a trial full of emotional witness testimony, but by a judge before an almost-empty courtroom, far removed from the passions of the myriad filings against MGM.

Englander Knabe & Allen crisis-management consultant Eric Rose predicted a near-term hit to MGM’s bottom line, in part because the company was trying to thread a legal needle with its countersuit, something that can’t be explained via Twitter or Facebook. “They couldn’t explain the lawsuit in a sound bite, and therefore they are suffering the consequences with bad headlines. It makes it look like they are going after the victims. It is going to hurt their brand,” Rose told the R-J.

The reactions to the lawsuit has been somewhat short-lived and has had no effect on MGM stock so far. How much and for how long this lawsuit might hurt the MGM brand remains to be seen; we won't know anything until the corporation's third-quarter SEC filing. 

Our bottom line in all of this is, this was the worst mass shooting by a lone gunman in U.S. history. The aftermath of the horror of it, and the havoc it wreaked on everyone involved, will be playing out for a long time to come.