Monday, November 23, 2015

Caesars Entertainment sued over charter flights

Caesars Entertainment Operating Co.'s plan to offer chartered flights to its casinos has flown off course and into a multimillion-dollar legal storm.

Charter operator Aerodynamics Inc. of Michigan filed a $12 million lawsuit in July accusing Caesars, a former executive of a Caesars subsidiary and a charter competitor of stealing trade secrets and breaching a three-year contract worth $85 million.

On Tuesday, U.S. District Court Judge Jennifer Dorsey of Nevada granted Aerodynamics and its parent company, ADI Holdings of Georgia, a partial preliminary injunction in the case, saying the business "is likely to succeed on the merits of its breach of contract and misappropriation claims" and that it could suffer "irreparable harm" without the injunction.

The injunction was "a significant and extraordinary remedy" chosen before any discovery in the case, said ADI's attorney, Dana Hobart, of the Los Angeles law firm of Hobart Linzer. That means the order was based solely on the merits of ADI's claims.

The order prohibits the acquisition, use or disclosure of any of ADI's proprietary information. It applies to former Caesars executive Steven Markhoff; his current business, International Management Solutions; charter-service providers Via Air and Via Airlines; and Via Air Chairman Amos Vizer.

It doesn't apply to Caesars Entertainment, though Caesars remains a defendant in the case.

The law firm representing the defendants, Pisanelli Bice of Las Vegas, disputed the plaintiffs' case and Hobart's comments.

"We strongly disagree with plaintiffs' representations," said attorney Magali Calderon in a statement late Friday. "The court's order granting a limited injunction is a public record and illustrates the false and defamatory statements of both the plaintiffs and their counsel. We intend to pursue all available legal remedies against plaintiffs and their counsel for the false and defamatory statements."

The case's history began in October 2014. That's when ADI said Markhoff, then vice president of Caesars subsidiary ESS Travel Management, asked the company to bid on a contract to fly casino patrons to and from Caesars properties nationwide.

The lawsuit alleges Markhoff sent "an independent forensic accountant identified only as 'Marina'" to ADI's offices in February and "conduct further analysis of ADI's trade secrets." Executives gave the accountant "unfettered access" to confidential documents with the caveat that she look, but not copy, the paperwork.

ADI executives said a subtenant of ADI's offices later told them he saw Marina taking pictures of the documents with her cellphone.

The claim alleges the accountant was actually Marina Morgan, financial director for West Virginia-based Via Air, another operator vying for the Caesars contract.

ADI executives said they confronted Morgan and told her they would force her from the property if she kept taking photos. Morgan left the building for lunch and never returned, they said.

Hours later, ADI said, Markhoff emailed the company to end due diligence. Markhoff sent a letter three days later on behalf of Caesars saying the casino company "has elected to no longer pursue a contract with ADI to operate aircraft for the Caesars air network."

Markhoff then left Caesars to join Via Air. Via subsequently won the Caesars contract, ADI said.

ADI officials allege Markhoff and Via Air obtained sensitive details such as income forecasts, labor and maintenance costs, and aircraft-lease expenses.

And they allege Markhoff told an aircraft leasing agent from a separate company that his plan was to "steal ADI's business and put them out of business."

Caesars Entertainment Operating Co. filed for chapter 11 bankruptcy in January, looking to pare roughly $10 billion from the division's $18.6 billion long-term debt burden.

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