Las Vegas Sun

March 29, 2024

Pinnacle Entertainment sues former CEO over casino proposal

Casino operator Pinnacle Entertainment Inc. of Las Vegas on Friday sued former Chairman and CEO Dan Lee, charging violations of his noncompete agreement because of efforts by Lee to build his proposed Mojito Pointe casino in Louisiana.

The suit, filed in Clark County District Court in Las Vegas, seeks damages that are unspecified but that are more than $10,000. It also seeks an injunction barring Lee from using confidential information and recruiting Pinnacle employees for the Louisiana casino project that would compete with Pinnacle.

A message for comment was left Monday with Lee.

Lee and various other gaming operators are competing for Louisiana’s 15th and final casino license, with projects proposed for both the Lake Charles and New Orleans areas.

Lee resigned from Pinnacle on Nov. 7, 2009, amid criticism of his conduct at a St. Louis County Council meeting where Lee angrily responded to a council vote favoring a competitor. Lee later apologized and was cleared of wrongdoing by Missouri casino regulators over the incident.

Friday's lawsuit charges that thereafter:

-- Lee on May 28 provided information to the Lake Charles Harbor & Terminal District in Louisiana about Pinnacle's Sugarcane Bay and L'Auberge projects in Lake Charles, a city east of Houston and west of Baton Rouge and New Orleans.

-- Lee and an official of the Lake Charles port, General Counsel Michael Dees, talked about meeting to discuss a plan by Lee to develop a casino there that would compete with Pinnacle.

"Dan asked to keep his visit very low key so I think it is best not to advise the board at this point,'' Dees said in a June 24 e-mail to Port Director Bill Rase, according to the lawsuit.

-- Lee and his newly formed company Creative Casinos LLC at some point sent a term sheet for a proposed casino to the port. "This term sheet outlined Lee and Creative Casino's strategies regarding Pinnacle and Mojito Pointe,'' the lawsuit charged.

The Mojito Pointe casino, described as a resort with a Caribbean theme and alongside a new 18-hole golf course, would be on the site of Pinnacle's canceled Sugarcane Bay project adjacent to Pinnacle's existing L'Auberge resort.

The $400 million Mojito Point would open in 2013 with 2,000 employees, have 1,500 slot machines and 40 table games, restaurants, a convention and entertainment center, initially 400 hotel rooms in two hotels with a lavish pool and an adjacent luxury spa, documents filed with the lawsuit say.

A Lee "theoretical term sheet for discussion purposes'' attached to Friday's lawsuit says: "Creative Casinos LLC enters into an exclusive option with the Port of Lake Charles to lease approximately 220 acres of land ... on essentially the same terms as the Sugarcane Bay lease between the port and Pinnacle Entertainment.''

The option is conditioned on approval by the Louisiana Gaming Control Board of Creative Casinos being the successor to the license for the site, approval of the project in a local referendum and other factors.

The term sheet includes some mentions of Pinnacle's arrangement with the port, and in its lawsuit Pinnacle charged: "Lee has violated his nondisclosure duties by advising the Port with his knowledge of Pinnacle's confidential information. Lee has directly interfered in Pinnacle's existing lease and injured Pinnacle's ability to have future business relations with the Port.''

The suit also charged that in April, Lee contacted Pinnacle's director of community and public relations at L'Auberge, Kerry Andersen, regarding Pinnacle's decision to cancel its Sugarcane Bay project there and made disparaging comments about the decision as well as Pinnacle's board of directors and executives.

The suit charges he made flattering comments to Andersen and that he may soon be in business in the Lake Charles, La., market -- comments allegedly suggesting he may want to hire Andersen in violation of his noncompete agreement.

Billy Rimes, a former consultant to Pinnacle, is now working for Lee as government affairs officer for Creative Casinos, the lawsuit says.

The suit claims Lee also attempted to hire the director of construction for Pinnacle's Baton Rouge, La., project, Marty Thomas, who is very familiar with the Sugarcane Bay project; and that former Pinnacle employee Lucien Marioneaux has been doing work for Lee's group.

Pinnacle also complains that Lee, in promoting Mojito Pointe, continually credits his former role as Pinnacle's CEO.

"In that role, Mr. Lee oversaw all the operations and development activities at Pinnacle, including its development of L'Auberge du Lac in Lake Charles,'' says Lee's promotional material included as a lawsuit exhibit.

Several months after Lee resigned from Pinnacle, and amid a deep gaming industry slump, Pinnacle in April canceled Sugarcane Bay, a $350 million project that had been described as Lee's pet project.

In promotional material attached to the lawsuit, Creative Casinos says: "According to the lease between the port and Pinnacle Entertainment, the failure of Pinnacle to develop a casino hotel on such site is an event of default under the lease, leaving the port free to enter into an agreement for a replacement tenant.''

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