Pisanelli Bice, PLLC, and Todd L. Bice, James J. Pisanelli,
and Debra L. Spinelli, Las Vegas; Wachtell, Lipton, Rosen
& Katz and Paul K. Rowe and Bradley R. Wilson, New York,
New York; Glaser Weil Fink Howard Avchen & Shapiro, LLP,
and Robert L. Shapiro, Los Angeles, California, for
Law Group and Steve L. Morris and Rosa Solis-Rainey, Las
Vegas; Holland & Hart LLP and J. Stephen Peek, Bryce K,
Kunimoto, and Robert J. Cassity, Las Vegas; Buckley Sandler
LLP, and David S. Krakoff, Benjamin B. Klubes, and Adam
Miller, Washington, D.C., for Real Parties in Interest.
THE COURT EN BANC.
petitions for writs of mandamus or prohibition from district
court orders granting motions to compel the production of
granted (Docket No. 70050)., and petition granted in part,
with instructions (Docket No. 70452).
these related original petitions for extraordinary writ
relief arising from the same underlying district court
action, we consider whether documents otherwise protected by
the attorney-client privilege must be disclosed when the
business judgment rule is asserted as a defense and under
what circumstances a document may be protected by the
work-product privilege even if it is at issue in the
litigation. In Docket No. 70050, we conclude that the
district court erred when it compelled petitioner Wynn
Resorts, Limited, to produce certain documents from its
attorneys with the law firm Brownstein Hyatt Farber Schreck,
LLP (Brownstein Hyatt) based solely on Wynn Resorts'
assertion of the business judgment rule as a defense.
Therefore, we grant Wynn Resorts' petition for writ
relief in Docket No. 70050.
Docket No. 70452, we agree with the district court that Wynn
Resorts waived the attorney-client privilege by placing a
report (the Freeh Report) at issue in the initial litigation.
However, the work-product privilege may apply to some of the
documents compiled in the preparation of the Freeh Report. We
take this opportunity to join the majority of jurisdictions
that utilize a "because of test with a "totality of
the circumstances" standard for determining whether work
was done "in anticipation of litigation, " As such,
we grant in part Wynn Resorts' petition for writ relief
in Docket No. 70452 and direct the district court to apply
the "because of test to determine whether the
work-product privilege applies to the documents underlying
the Freeh Report.
AND PROCEDURAL HISTORY
party in interest Kazuo Okada owned approximately half of
Wynn Resorts' stock through Aruze USA, Inc., of which he
is the principal. Okada also served on Wynn Resorts'
board of directors (the Board). Wynn Resorts alleges in the
underlying litigation that it developed concerns about the
suitability of Aruze, Okada, and Aruze's parent
corporation, Universal Entertainment Corp. (collectively, the
"Okada Parties"), as shareholders of Wynn Resorts
after Okada began developing a casino resort in the
Philippines. In particular, the Board asserts that it
believed that Aruze's continued ownership of its stock
could put Wynn Resorts' gaming licenses at risk.
Board conducted an investigation over several years into the
business climate in the Philippines and Okada's
involvement there. The Board alleges it ultimately determined
that any involvement by Okada in the Philippines was ill
advised; however, Okada advised the Board that he was
proceeding with his project in the Philippines.
retains the Freeh Group
Board hired former federal judge and FBI director Louis J,
Freeh and his firm (the Freeh Group) to investigate and
report on Okada's business in the Philippines. The Freeh
Group's letter of engagement indicates that the Freeh
Group was hired as legal counsel to investigate Okada and
present its findings to the Board in order to determine if
Okada's activities violated Wynn Resorts' policies
and potentially placed Wynn Resorts' gaming licenses in
Freeh Group's investigation resulted in the 47-page Freeh
Report, which included allegations of misconduct by Okada in
the development of his Philippines project. The Freeh Group
presented its findings to the Board, providing all directors
other than Okada with a copy of the Freeh Report. The Board
also received advice from two law firms, including Brownstein
Hyatt, regarding the contents of the Freeh Report and the
Okada Parties' potential suitability issues.
Board ultimately adopted resolutions finding the Okada
Parties to be "[u]nsuitable persons" under Wynn
Resorts' Articles of Incorporation, Article VII, §
l(Z)(iii). It thereafter exercised its "sole
discretion" and redeemed Aruze's Wynn Resorts stock,
pursuant to Article VII, § 2(a) of its Articles of
Incorporation, in exchange for a promissory note with a
principal value of $1.9 billion, which the Okada Parties
allege is only a fraction of the value of the redeemed stock.
next day, Wynn Resorts filed a complaint against the Okada
Parties for declaratory relief, breach of fiduciary duty, and
aiding and abetting breach of fiduciary duty. The complaint
stated that the Board relied on the Freeh Report and the
advice of its gaming attorneys in redeeming Aruze's
shares. The Freeh Report was also attached to the complaint.
The Okada Parties filed counterclaims seeking declaratory
relief and a permanent injunction rescinding the redemption
of the stock, and alleging claims for breach of contract,
breach of Wynn Resorts' articles of incorporation, and
various other tort-based causes of action.
Resorts filed notice of its lawsuit with the Securities and
Exchange Commission, and attached a copy of the Freeh Report.
Wynn Resorts also allegedly provided a copy of the Freeh
Report to the Wall Street Journal.
to compel: Brownstein Hyatt documents (Docket No. 70050)
March 2016, the Okada Parties filed a motion to compel Wynn
Resorts to produce documents Brownstein Hyatt generated in
the course of developing and rendering its advice to the
Board. The Okada Parties argued that Wynn Resorts had waived
the attorney-client privilege and the attorney-work-product
protection, claiming that Wynn Resorts placed Brownstein
Hyatt's advice at-issue in the litigation. Wynn Resorts
contended that merely stating that the directors sought and
received legal advice prior to making their business decision
did not place the substance of the legal advice at issue.
district court granted the Okada Parties' motion to
compel, stating that because Wynn Resorts asserted the
business judgment rule as a defense,  Wynn Resorts put the
attorneys' advice at issue, and accordingly ordered Wynn
Resorts to produce all documents that Brownstein Hyatt
provided for the Board's use in considering Okada's
suitability and the possible redemption of
to compel: Freeh Report documents (Docket No. 70452)
September 2015, the Okada Parties filed a motion to compel
Wynn Resorts to produce evidence and documents underlying the
Freeh Report. Wynn Resorts had previously responded to the
Okada Parties' requests for the documents on which the
Freeh Report was based with a privilege log listing
approximately 6, 000 documents that it withheld or redacted
on the basis of the attorney-client privilege or work-product
doctrine. The Okada Parties argued that the Freeh Group's
work was not protected by either the attorney-client
privilege or work-product doctrine because Wynn Resorts
attached the Freeh Report to its complaint and provided it to
a newspaper to broadcast its accusations against Okada.
district court granted, in part, the Okada Parties'
motion to compel the Freeh Report documents. The district
court found that some of the documents may be protected under
the attorney-client privilege, but that because the Freeh
Report documents were not prepared in anticipation of
litigation, the work-product doctrine did not apply. The
district court also noted that when Wynn Resorts attached the
Freeh Report and its appendices to the complaint, it was not
a wholesale waiver of privilege. The district court then
ordered that Wynn Resorts had 15 days to supplement the
privilege log in accordance with the court's findings.
January 2016, the Okada Parties filed a second motion to
compel Wynn Resorts to produce the Freeh Report documents.
The Okada Parties argued that Wynn Resorts was withholding
documents in violation of the district court's prior
order, and that those documents were not privileged due to
either waiver of the attorney-client privilege or at-issue
waiver. After conducting an in camera review of
approximately 25 percent of the documents, the district court
granted the Okada Parties' second motion to compel in
part, ordering that because the work was not done in
anticipation of litigation, the work-product doctrine did not
apply to any Freeh Report documents created prior to February
22, 2012 (the date when preparation of the appendices to the
Freeh Report was completed), and that Wynn Resorts waived any
attorney-client privilege of the documents by public
disclosure of the Freeh Report and under the at-issue waiver
these petitions seeking writs of prohibition or mandamus,
Wynn Resorts argues that the district court erred in
granting, in part, the Okada Parties' motion to compel
the production of the Brownstein Hyatt documents (Docket No.
70050), and by granting, in part, the Okada Parties'
motion to compel the production of the Freeh Report documents
(Docket No. 70452). As part of this argument, Wynn Resorts
contends that the district court erred in concluding that by
claiming the business judgment rule as a defense, Wynn
Resorts waived the attorney-client privilege.
resolve these petitions, we first determine that the business
judgment rule protects action by a board of directors, just
as it protects an individual director's action. We must
then examine whether, by claiming the business judgment rule
as a defense, Wynn Resorts waived any attorney-client
privilege as to the Brownstein Hyatt documents. We then
determine whether Wynn Resorts waived any attorney-client
privilege by placing the Freeh Report at issue in the
underlying litigation and whether the work-product doctrine
applies to the documents underlying the Freeh Report.
relief is appropriate
issuance of a writ of mandamus or prohibition is purely
discretionary with this court, " Smith v. Eighth
Judicial Dist. Court, 107 Nev. 674, 677, 818 P.2d 849,
851 (1991). This court will not exercise that discretion
"unless legal, rather than factual, issues are
presented." Round Hill Gen, Improvement Dist, v.
Newman, 97 Nev. 601, 604, 637 P.2d 534, 536(1981).
of prohibition may issue when the district court exceeds its
authority, NRS 34.320, and it "is a more appropriate
remedy for the prevention of improper discovery than
mandamus." Wardleigh v. Second Judicial Dist.
Court, 111 Nev. 345, 350, 891 P.2d 1180, 1183 (1995). To
that end, "a writ of prohibition is an appropriate
remedy to correct an order that compels disclosure of
privileged information." Las Vegas Dev. Assocs., LLC
v. Eighth Judicial Dist. Court, 130 Nev., Adv. Op. 37,
325 P.3d 1259, 1262 (2014).
petitions merit this court's consideration as they raise
important issues concerning the scope of discovery and
privilege in relation to the business judgment rule. Further,
if the discovery permitted by the district court is
inappropriate, a later appeal would not remedy any improper
disclosure of the information. Wardleigh, 111 Nev.
at 350-51, 891 P.2d at 1183-84. Accordingly, we choose to
entertain these petitions.