Cordish Co. has sued the Seminole Tribe of Florida, accusing it of secretly colluding with the management of the Hard Rock Cafe to rig the bidding for the legendary restaurant and casino chain and shut out the Baltimore developer.
Cordish and its affiliate, Power Plant Entertainment LLC, allege that Hard Rock USA conspired with the tribe months before Hard Rock's parent company, the Rank Group, announced Dec. 7 that it would sell the chain to the Seminoles for $965 million.
Hard Rock USA managers, including chief executive Hamish Dodds, excluded Cordish and others from bidding in exchange for the tribe agreeing to keep Hard Rock USA management in place, according to the lawsuit, filed late Friday in Circuit Court in Broward County, Fla.
"Because of these personal incentives and conflicts, Hard Rock management ... interfered with plaintiffs' likelihood of purchasing the Hard Rock Business," the suit claims. "Defendants' conduct in colluding to preclude plaintiffs from bidding ... was unfair and deceptive."
The deal was widely heralded as a first for a Native American tribe.
Yesterday the Seminole Tribe and its new company, Seminole Hard Rock Entertainment, said the Cordish suit had "no merit."
The suit is the latest escalation of a high-stakes legal feud that has erupted between the Seminoles and Cordish, whose Power Plant Entertainment unit developed the tribe's hotel-casinos in Tampa and Hollywood, Fla., under the Hard Rock brand.
Cordish has developed many retail and entertainment projects with Hard Rock Cafes as anchor tenants. These include the Power Plant in Baltimore's Inner Harbor and projects in Louisville, Ky., Houston and Niagara Falls, N.Y.
But the very success of the Florida casinos, which have generated more than $1 billion in profit so far and are expected to make billions more, apparently soured the Seminoles.
The tribe sued Cordish in May, seeking to overturn the agreement it says is on track to pay Power Plant Entertainment LLC, a Cordish Co. subsidiary, as much as $2.2 billion. In its suit, the tribe said Cordish, headed by Chairman David Cordish, is collecting excessive fees after putting very little of its own money at stake in the deal and "doing absolutely nothing' once the casinos opened in 2004.
David Cordish, who partnered with a former associate of Donald Trump to secure the deal, has said the lawsuit is without merit and has filed a motion for dismissal.
In its statement yesterday, Seminole Hard Rock Entertainment said the lawsuit was part of a pattern of Cordish obstructing the successful enterprises of Seminole Hard Rock and the Seminole Tribe.
"This is just David Cordish being a sore loser," the statement said. "It arises out of the tribe's ongoing litigation with the Cordish and Power Plant Entertainment companies. The lawsuit has no merit. The tribe was awarded the right to buy Hard Rock International after a lengthy and open bidding process which included Permira, TDR Capital and Apollo Management."
John Gogarty, a spokesman for Hard Rock Cafe International Inc., which was also named as a defendant in Friday's suit, said no one at the restaurant chain had yet been served with court papers, so "it would be completely inappropriate to comment on it."
Late yesterday, David Cordish called the tribe's statement "nonsense."
"The Cordish Co. was denied by the defendants the opportunity to bid for Hard Rock," he said in an e-mail. "To be a 'loser,' one has to have been allowed to bid."
According to the lawsuit, Cordish, Power Plant and its adviser, Goldman Sachs & Co., attempted to bid for Hard Rock and were refused bid documents by Rank's banker, Merrill Lynch.
Cordish says in the suit that the company and its partners were capable of offering more for Hard Rock than the Seminoles ultimately paid.
"Plaintiffs had the financial means and experience to complete the purchase of the Hard Rock asset and had the intent to submit a bid materially in excess of the accepted office," the lawsuit says. "If defendants had not interfered with plaintiffs' right to bid, plaintiffs would have provided such a bid and prevailed in the bidding to purchase Hard Rock."
According to the suit, Goldman Sachs and Cordish made a preliminary, all-cash offer in August 2005 to purchase the Hard Rock business. Michael Smith, Rank's chief executive officer, responded in a letter saying the London company had never considered selling Hard Rock and that the Cordish/Goldman offer "falls far short of what we would consider to be sensible."
But at the time Rank was dismissing the Cordish offer and denying selling Hard Rock, the tribe and Hard Rock were in active discussions, according to the lawsuit.
After Rank announced it would assess whether to sell Hard Rock, Cordish Vice President Jonathan Cordish sought a prospectus for the sale.
He was told that Rank management had specifically instructed Merrill Lynch International, which was managing the sale, not to provide Cordish with documents and that Rank would not consider a bid from Cordish, the lawsuit says.
"Why would anybody want a competitive bidder who is well-financed not to bid?" asked Marty Steinberg, the attorney who filed the lawsuit in behalf of Cordish and Power Plant Entertainment.
"Cordish has had a long relationship with Hard Rock. They created the Seminole Casino hotel and made it into a fabulously successful gambling venue and put the Seminoles in the position they are today to be able to make a bid like this."
Rank shareholders are scheduled to vote on the Hard Rock sale to the Seminoles on Monday.
Assuming approval, the 3,300 members of the Seminole Tribe will become the owner of one of the world's biggest brands: 68 Hard Rock Cafes, licensing and franchise agreements for 56 other restaurants and five hotels, plus two Hard Rock Live! concert venues and a big collection of rock 'n' roll memorabilia.
lorraine.mirabella@baltsun.com
The South Florida Sun-Sentinel contributed to this article.