Court says Adelson responsible for Sands workers’ tip income

David Strow

Thursday, April 12, 2001 | 10:05 a.m.

The 9th U.S. Circuit Court of Appeals, in a groundbreaking decision, ruled Wednesday that Las Vegas Sands Inc. must compensate its former workers for tip income lost with the early closure of the Las Vegas Strip's Sands resort in 1996.

The Culinary Union sued Las Vegas Sands in 1996 in federal court on behalf of its members, following the June 30 closure of that property. Sheldon Adelson's Las Vegas Sands is now the parent company of the Venetian, the property opened at the Sands site in 1999.

A second federal lawsuit was filed soon after the Culinary lawsuit by two dealers at the property, who sought to represent all Sands dealers in a class action lawsuit. Both suits claimed that Las Vegas Sands failed to pay employees the full amount required under federal labor law when the Sands closed.

Sands employees received 45 days' notice of the hotel-casino's closure, instead of the 60 days required under federal law. Las Vegas Sands paid employees for the 15 extra days, and offered additional severance packages to keep employees working until the closure, but the Culinary and dealers claimed this wasn't enough.

In his original decision, Judge Philip Pro largely concurred with the plaintiffs' demands, saying that the Sands was obligated to pay the employees a full 15 days' pay, rather than the days they would have worked in that 15-day period. Pro also ordered the Sands to pay employees double-time for the missed July 4 holiday, and ruled the Sands could not reduce back pay by the amount of accrued vacation time. All were upheld by the appeals court Wednesday; however, the court did rule that the Sands made payments to its former employees in a timely fashion, and thus the company wasn't subject to penalties under federal labor law.

But in its most controversial decision, the appeals court upheld Pro's ruling that employees had to be compensated for tip income that was lost because of the early closure. This marked the first time a federal appeals court has made such a ruling; in a press release issued Wednesday evening, Las Vegas Sands argued that the court had "created new law" by issuing such a decision.

The appeals court overruled one decision by Pro, who ruled in 1997 that two Sands dealers could not proceed on behalf of a class of 162 to 215 non-union dealers at the property. The appeals court ruled that this group should be recognized as a class, and sent the case back to Pro for further consideration. Plaintiffs' attorneys estimated in testimony that each dealer could receive as much as $1,330 if a class action suit is successful.

The decision prompted another round of invective between the Culinary and the Venetian in their long-simmering war, with each side accusing the other of mistreatment of the former Sands workers.

"(Adelson) always claims he looks after the best interests of the people who work for him," Jim Arnold, secretary-treasurer of the Las Vegas Culinary local, said in a statement. "This decision shows that he is ready to cheat them in their time of greatest need -- when he throws them out of work."

That triggered a furious response from the Venetian, which claimed the union's lawsuit was largely a failure because the court found payments were made to workers in compliance with state labor laws.

"Rather than allowing (union members) to avail themselves of Mr. Adelson's generosity and permitting them to participate in the severance packages offered by the Sands, the union instead brought, and for the most part lost, this lawsuit in an attempt to smokescreen the fact that they don't take care of their own members and Sheldon Adelson does," said David Friedman, assistant to Adelson.

Las Vegas Sands did not indicate whether it would appeal the decision to the U.S. Supreme Court.