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Okada v. Eighth Judicial District Court of State of Nevada

Supreme Court of Nevada

January 11, 2018

KAZUO OKADA; ARUZE USA, INC.; UNIVERSAL ENTERTAINMENT CORPORATION; AND ELAINE P. WYNN, Petitioners,
v.
THE EIGHTH JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA, IN AND FOR THE COUNTY OF CLARK; AND THE HONORABLE ELIZABETH GOFF GONZALEZ, Respondents, and WYNN RESORTS, LIMITED; AND ROBERT J. MILLER, Real Parties in Interest.

         Original petition for a writ of mandamus or prohibition challenging a district court order denying a motion to compel discovery. Petition granted.

          Morris Law Group and Steve L. Morris, Akke Levin, and Rosa Solis-Rainey, Las Vegas, for Petitioners Aruze USA, Inc.; Kazuo Okada; and Universal Entertainment Corporation.

          Lewis Roca Rothgerber Christie LLP and Daniel F. Polsenberg, Joel D. Henriod, and Abraham G. Smith, Las Vegas; Greenberg Traurig, LLP, and Mark E. Ferrario and Tami D. Cowden, Las Vegas; Sidley Austin, LLP, and James M. Cole, Washington, D.C., and Scott D. Stein, Chicago, Illinois, for Petitioner Elaine P. Wynn.

          Pisanelli Bice, PLLC, and Todd L. Bice, James J. Pisanelli, and Debra L. Spinelli, Las Vegas, for Real Parties in Interest Wynn Resorts, Limited, and Robert J, Miller.

         BEFORE THE COURT EN BANC. [1]

          OPINION

          HARDESTY, J.

         In this opinion, we consider whether the gaming privilege in NRS 463.120(6), which protects certain information and data provided to the gaming authorities, applies to information requested before the effective date of the statute. NRS 463.120(6) was enacted in 2017 through Senate Bill 376, which provides that the privilege applies to "any request made on or after the effective date of this act." We conclude from the plain language of the act that the privilege applies prospectively only and does not apply to any request made before the effective date of this act. Here, the district court applied the privilege to deny a motion to compel discovery where the information was requested through discovery before the effective date of NRS 463.120(6), but the motion to compel was filed after that date. This was erroneous, as the pertinent inquiry for determining whether the privilege applied to the information was the date of the initial discovery request seeking that information, not the date the requesting party sought an order from the court to compel the opposing party to comply with that discovery request. Because the discovery requests in this case were made before the statute became effective, the gaming privilege in NRS 463.120(6) did not apply to the information sought by those discovery requests. Accordingly, we grant the petition for a writ of mandamus.

         FACTS AND PROCEDURAL HISTORY

         This writ petition arises from litigation between real party in interest Wynn Resorts, Limited, and petitioners Kazuo Okada, Aruze USA, Inc., and Universal Entertainment Corporation (collectively the "Okada Parties"), pertaining to the removal of Okada from Wynn Resorts' board of directors and the forced redemption of his ownership in the stock of Wynn Resorts in February 2012. Before Okada's removal and forced redemption, Wynn Resorts investigated Okada's business dealings in the Philippines to determine whether those dealings rendered him unsuitable to be on the board of directors. In November 2011, Wynn Resorts' board of directors hired former federal judge and FBI director Louis J. Freeh and his firm (the Freeh Group) to investigate Okada's alleged misconduct and report their findings to the board of directors. The board of directors was advised of the results of the Freeh Group's investigation and made the decision to redeem all of the stock shares owned by Okada (through Aruze and its parent company Universal) on February 18, 2012. The 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 Okada Parties filed counterclaims seeking declaratory relief and a permanent injunction rescinding the redemption of the stock and alleged claims for breach of contract, breach of Wynn Resorts' articles of incorporation, and various other tort-based causes of action.

         In August 2014, the Okada Parties served on Wynn Resorts a request for production of documents concerning communications by Wynn Resorts with the Nevada Gaming Control Board (NGCB) about Okada. These communications were alleged to have taken place during Wynn Resorts' investigation into Okada's alleged misconduct, sometime between November 2011 and February 13, 2012. The Okada Parties sought these communications to show that Wynn Resorts' justification for the redemption-that Wynn Resorts' gaming license was at imminent risk with the Nevada gaming authorities based on the Freeh Group's report about Okada's illegal conduct-was false. In February 2016, the Okada Parties deposed Wynn Resorts' director Robert Miller and sought details regarding the communications he had with the NGCB in late 2011 and early 2012, but Miller's counsel claimed that information was privileged and instructed Miller not to provide specifics about the communications. Miller's deposition was not completed, the Okada Parties sought and were granted additional time to complete it, and the deposition was scheduled to resume in October 2017.

         In September 2017, the Okada Parties filed a motion to compel Miller's testimony and for production of documents regarding Miller's pre-redemption communications with the NGCB. In opposition, Wynn Resorts claimed that the discovery sought by the Okada Parties was protected by the "absolute privilege" in NRS 463.120(6), which grants licensees and applicants the privilege to refuse to disclose any information or data communicated to the NGCB in connection with its regulatory, investigative, or enforcement authority. The Okada Parties argued that the privilege in NRS 463.120(6) did not apply because the requests for testimony and documents had been made over a year before the statute's effective date of June 12, 2017, and the statute was not retroactive. Specifically, they asserted that they had requested the production of documents in August 2014, they had attempted to depose Miller and obtain documents in February 2016, and they had served Wynn Resorts with interrogatories in April 2017 requesting information on the communications. The district court held a hearing on the motion to compel and denied it, determining that NRS 463.120(6) applied to the motion to compel because the motion was being heard after the effective date of the statute, and that the documents and testimony were confidential and privileged pursuant to NRS 463.120(6). The Okada Parties then filed this petition challenging the district court's order denying the motion to compel discovery.[2]

         DISCUSSION

         The decision to entertain a writ petition lies solely within the discretion of this court. Smith v. Eighth Judicial Dist. Court, 107 Nev. 674, 677, 818 P.2d 849, 851 (1991). "A writ of mandamus is available to compel the performance of an act which the law requires as a duty resulting from an office, trust or station, or to control a manifest abuse or an arbitrary or capricious exercise of discretion."[3] Cote H. v. Eighth Judicial Dist Court, 124 Nev. 36, 39, 175 P.3d 906, 907-08 (2008) (internal quotation marks omitted). Mandamus is an extraordinary remedy, available only when there is no "plain, speedy and adequate remedy in the ordinary course of law." NRS 34.170; see also DM. Horton, Inc. v. Eighth Judicial Dist. Court, 123 Nev. 468, 474, 168 P.3d 731, 736 (2007). Because discovery orders may be challenged on direct appeal from any adverse judgment, we ordinarily will decline to review such orders through writ petitions. However, we have recognized on occasion that the availability of a direct appeal from a final judgment may not always be an adequate and speedy remedy. DM. Horton, 123 Nev. at 474-75, 168 P.3d at 736 ("Whether a future appeal is sufficiently adequate and speedy necessarily turns on the underlying proceedings' status, the types of issues raised in the writ petition, and whether a future appeal will permit this court to meaningfully review the issues presented."). Thus, consideration of a writ petition may be appropriate "when an important issue of law needs clarification and sound judicial economy and administration favor the granting of the petition." Nev. Yellow Cab Corp. v. Eighth Judicial Dist. Court, 132 Nev., Adv. Op. 77, 383 P.3d 246, 248 (2016) (internal quotation marks omitted); see also Aspen Fin. Servs., Inc. v. Eighth Judicial Dist. Court, 129 Nev. 878, 882, 313 P.3d 875, 878 (2013) (exercising discretion to entertain a discovery-related writ petition because it "provides a unique opportunity to define the precise parameters of a statutory privilege that this court has not previously interpreted" (internal quotation marks omitted)).

         Further, we have exercised our discretion to review a discovery order where the district court failed to apply a privilege and required the production of privileged information. See, e.g., Valley Health Sys., LLC v. Eighth Judicial Dist Court,127 Nev. 167, 171-72, 252 P.3d 676, 679 (2011) (explaining that a writ may issue to prevent improper discovery that would result in irreparable harm). We recognize that this petition presents the opposite situation-here, the challenged order applied a privilege to prevent the disclosure of allegedly privileged information. Nevertheless, we conclude that the circumstances of this case warrant a departure from our usual policy of declining to review a discovery order by extraordinary writ. Notably, the discovery inquiries were made early in the litigation, well before the set trial date, and are "reasonably calculated to lead to the discovery of admissible evidence" on an important issue in this case. NRCP 26(b)(1). Given these factors and particularly the impact the challenged discovery order may have on the Okada Parties' ability to prove or defend against claims at trial, we conclude that consideration of the writ petition is necessary so that the discovery dispute may be addressed in a timely manner. Moreover, this petition presents us with the first opportunity to consider the application of the new gaming privilege in NRS 463.120(6), which is an important issue of law that could potentially affect other litigants statewide. We emphasize that generally this court will ...


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