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When Legal Strategy Sparks Outrage and Torches Your Reputation

[by Howard Fencl, Hennes Communications]

A lunatic methodically hauls a massive weapons cache into an MGM Resorts International hotel, the Mandalay Bay in Las Vegas. Over six days, unknowing hotel staff politely help him schlep his disguised gunnysacks to his suite. Thirty-two floors below, a country music festival on the Vegas Strip is in full swing in an outdoor venue, also owned by MGM Resorts. In an unrelenting 10-minute spree of mayhem, the gunman takes aim at the concertgoers below, squeezes off thousands of rounds of gunfire and kills 58 people. More than 800 others are injured. It’s the worst mass shooting by a solo gunman in U.S. history.

Now, MGM Resorts is suing 1,000 survivors, claiming it has no liability for the shooting. The company claims that because it hired a security vendor for the concert certified by the Department of Homeland Security, it has no liability under the federal 2002 Safety Act.

The legal strategy prompted immediate outrage that inflamed media coverage and social media platforms. An attorney for some of the shooting victims called the move a “reprehensible” one that victimizes survivors twice.

As a publicly traded company with billions of dollars in revenue, why would MGM Resorts make this move knowing its reputation would be immediately scorched and perhaps impact future revenues in the wake of public outrage?

Facing more than 2,500 lawsuits (or threats of lawsuits) that could drag out across a number of states for many years, MGM wants the lawsuits moved from state courts to federal court to make its case that because it complied with the Safety Act, it should not be held liable for the mass shooting.

There are times when legal strategy trumps reputation management. We have advised clients that sometimes it’s smarter to take it on the chin and write checks to better ensure an organization’s reputation (and perhaps survival) going forward. When a company faces an existential threat, survival may depend on closing your eyes and taking the reputation hit, hoping the damage can be healed later. Crisis managers have a duty to push back when they see their client’s good name going down in flames over a cliff, but they also have a duty to support legal strategies – even unpopular ones – when the client ultimately decides that is what it must do. Company leadership, attorneys and crisis managers must have these difficult conversations.

Rather than hide behind the lawsuit, MGM Resorts dealt with the development head-on, and said in a statement:

“From the day of this tragedy, we have focused on the recovery of those impacted by the despicable act of one evil individual. While we expected the litigation that followed, we also feel strongly that victims and the community should be able to recover and find resolution in a timely manner. Congress provided that the Federal Courts were the correct place for such litigation relating to incidents of mass violence like this one where security services approved by the Department of Homeland Security were provided. 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.”

This was the right thing to do. It’s a carefully drafted statement, reflecting outrage. It has an element of empathy – MGM Resorts is trying to bring this to a quick resolution so the tragedy does not need to be replayed over and over again in state courts. Of course, to survivors and to many in the general public following the story, it will sound like spin – a smokescreen the company is deploying to protect its shareholders and its bottom line. But MGM must continue to communicate proactively throughout the legal process and resist the urge to hide behind the “we can’t comment on active litigation” smokescreen.

Will revenues for its resorts and casinos tank because of the company’s unpopular legal move? There is no shortage of travel and recreation competition for consumers to choose. Only time will tell – and time will be needed to begin repairing the reputation MGM Resorts knows it is risking with its court filing.


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