Dennis Culloton, President and CEO
MGM Resorts International announced last week they had sued 1000’s of plaintiffs who had sued the company after last fall’s bloody Mandalay Bay Las Vegas shooting. On October 1, Stephen Paddock fired his semiautomatic rifles out his 32nd floor Mandalay Bay Hotel room onto country music goers below killing 58 people and injuring 500 others. The hotel claims their security vendor, Contemporary Services Corp, followed all correct security procedures and are not liable.
This is an aggressive litigation tactic designed to win the battle to avoid liability for damages. While MGM may win the legal battle, they have already lost the hearts and minds of the public. Risky, considering legal experts say it’s an untested strategy, relying on a post September 11 federal law designed to protect companies employing anti-terrorist technologies.
In the past, when brands have faced disasters, a frequent strategy has been to go the route of alternative dispute resolutions and agreeing to settlements managed by special masters. But even these settlements are enormously expensive.
MGM Resorts is instead rolling the legal dice. MGM has an experienced top communicator in the executive ranks. The question is did she argue against this strategy in the board room? Was she outflanked by the legal team or the CEO or both?
In an ironic twist, earlier this year, MGM Resorts boasted of its ranking as one of the world’s most admired companies according to Fortune. With this legal strategy, the public has already rendered its verdict on the reputation of the brand, launching a boycott of MGM properties.