SL Green's lawsuit against Delaware North, conveniently timed as the latest round of bidding for the racino at Aqueduct begins, accuses the company of engaging in brazen lies and outright deception, and violating basic contractual agreements as it won the bidding to build and operate the VLT parlor. It also, in my mind, calls SL Green's own judgment into serious question; and reveals what is, at least to me, a surprising twist regarding its racino bid.
It's the dealings between the two companies when they were part of our old Friends at Empire Racing that's at the center of the complaint, which recounts, in sufficient detail, the confidentiality and non-compete covenants that were part of Delaware North's agreement to join the group in 2006.
The key point of the complaint as I see it is this (and you can read the document, in pdf form, here if you scroll down)(and you may notice that this article in the Observer was updated with a correction after yours truly left a comment pointed out a factual error...and they didn't even say thank you!):
As you may recall, Governor Spitzer, upon taking office in January 2007, discarded the work of the Ad Hoc Committee (quite possibly the most transparent process in the history of Albany), which selected Excelsior to run the franchise. He eventually decided, some nine months later, to split the franchise between NYRA and a racino operator to be determined. However, the Senate, led by Joe Bruno, opposed the plan and held new hearings of its own. So, with hope that it still had a shot at the entire franchise, Empire was at the crossroads. Should it abandon its racing bid and shoot for the racino? Or press on for the big prize?
This was a critical decision, as Empire would have to spend additional time and money to develop a stand-alone VLT bid (even though the Legislature appeared to be opposed to the Governor's proposed bidding process). Yet if the Governor did reach agreement with the Legislature on the revised bidding process, Empire wanted to remain in consideration for the award of the VLT Rights.So, according to the Plaintiff, Empire "originally concluded" that it would participate in both of the bidding processes in order to protect its interests. However, Delaware North had something to say about that.
While various members of Empire initially favored participating in the Governor's bidding process, DNC argued against Empire submitting a stand-alone bid for the VLT Rights. Ultimately, DNC -- which was brought into Empire specifically for its VLT experience -- convinced Empire not to submit an expression of interest or to undertake any work to prepare a separate bid for the VLT Rights. On October, 3, 2007, for example, DNC argued to the Empire Executive Committee that Empire could not put together a credible bid for the VLT Rights in the short time permitted under the Governor's bidding process.....Had DNC not urged against it, Empire would have prepared a bid for the VLT Rights at that time.It was just six days later than Delaware North resigned from the Empire board, and "attempted to tender back its ownership interest in Empire." And it was on October 15 that the company announced its new partnership with the Saratoga racino to bid for the racino itself. SL Green accuses Delaware North of having made "statements to the Empire Executive Committee...made solely to wrongfully deceive Empire into refraining from preparing and proceeding with a VLT bid."
Oh man. It's almost difficult to believe that a company could be so audaciously deceptive. But what's harder to believe is SL Green's claim that, even after being double-crossed in this fashion, it still attempted to partner with Delaware North; and not only that, it "gave DNC access to the confidential and proprietary information in support of the VLT bid that Empire and SL Green had continued to develop after DNC's purported withdrawal. That information included SL Green's design and development plans and economic proposals for its bid for the Aqueduct VLT Rights."
Of course, Delaware North went it alone, and "used its access to SL Green's confidential and proprietary information to make DNC's own bid more competitive with SL Green's, thus again breaching its duties to SL Green!" Exclamation point is mine....are you kidding me? If fool me once, shame on you; fool me twice, shame on me is an accepted legal principle, this case will be thrown out on its face.
What came as a surprise to me is the fact that, according to the complaint, Empire Racing "appointed SL Green as the successor-in-interest to Empire for purposes of pursuing" the racino.
In return, among other things, SL Green agreed that should it win the bid for the VLT Rights at Aqueduct, it would make certain monetary payments to Empire.I've never before read of Empire, whatever was left of it, being involved in the SL Green/Hard Rock Cafe bid. I don't recall Empire ever officially disbanding; it suffered some flesh wounds
as partners withdrew. So I wonder which Empire principals would have received what kind of payments (among other things) had SL Green prevailed. And whether this relationship was disclosed to officials in Albany. It's certainly obvious why SL Green wouldn't want to be associated with that brand name given its past relationships and missteps.
Seems as if the Empire That Won't Go Away never completely did. However, we also learn in the summons that "On or about April 17, 2009, Empire ceased operations and is entering dissolution." So the Empire is apparently dead. Maybe.