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Mei-Gsr Holdings, LLC v. Peppermill Casinos, Inc.

Supreme Court of Nevada

May 3, 2018

MEI-GSR HOLDINGS, LLC, A NEVADA LIMITED LIABILITY COMPANY, D/B/A GRAND SIERRA RESORT, Appellant,
v.
PEPPERMILL CASINOS, INC., A NEVADA CORPORATION, D/B/A PEPPERMILL CASINO, Respondent.

          Appeal from a final judgment in a trade secrets action and post-judgment orders awarding attorney fees and costs and denying a post-judgment motion for a new trial. Second Judicial District Court, Washoe County; Patrick Flanagan, Judge.

          Cohen Johnson Parker Edwards and H. Stan Johnson, Las Vegas; Law Offices of William E. Crockett and William E. Crockett, Encino, California, for Appellant.

          Robison, Sharp, Sullivan & Brust and Kent R. Robison and Therese M. Shanks, Reno, for Respondent.

         BEFORE THE COURT EN BANC. [1]

          OPINION

          CHERRY, J.

         Under Nevada's Uniform Trade Secrets Act (NTSA), NRS 600A.030 defines a "[t]rade secret" as information that "[dlerives independent economic value, actual or potential, from . . . not being readily ascertainable by proper means by the public or any other persons who can obtain commercial or economic value from its disclosure or use." In this appeal, we are asked to determine whether NRS 600A.030 precludes a defendant from demonstrating that certain information is readily ascertainable and not a trade secret even though the defendant acquired the information through improper means. We conclude that it does not, and thus, the district court did not err in instructing the jury concerning trade secrets under NRS 600A.030. We further conclude that appellant's other assignments of error lack merit. We therefore affirm.

         FACTUAL AND PROCEDURAL HISTORY

         In July 2013, nonparty Ryan Tors, then employed by respondent Peppermill Casino, Inc. (Peppermill), went to the Grand Sierra Resort and Casino, owned by appellant MEI-GSR Holdings, LLC (GSR). There, GSR caught Tors using a slot machine key to access several GSR slot machines. GSR detained Tors and contacted the Nevada Gaming Control Board (NGCB), who thereafter investigated the matter and discovered that Tors accessed GSR's slot machines to obtain their "theoretical hold percentage information" (par values).[2] NGCB's investigation further revealed that, since 2011, Peppermill executives condoned Tors' conduct in obtaining par values from GSR and other casinos. However, NGCB found no evidence of Peppermill using par values from GSR or other casinos to adjust its own slot machines. Peppermill stipulated to a $1 million fine with the NGCB.

          On August 2, 2013, GSR filed suit against Tors and Peppermill, asserting violation of the NTSA. The parties engaged in discovery and motion practice regarding PeppermiU's production of emails sent and received by its executives that were obtained by the NGCB in its investigation of Peppermill. Thereafter, an 11-day jury trial was held, during which GSR proffered a jury instruction concerning the ascertainableness of information pursuant to NRS 600A.030's definition of a "trade secret." GSR's proposed jury instruction read as follows:

To be readily ascertainable, the information asserted to be a trade secret must be ascertained quickly, or so self-revealing to be ascertainable at a glance.
A trade secret is not readily ascertainable when the means of acquiring the information falls below the generally accepted standards of commercial morality and reasonable conduct, even if means of obtaining the information violated no government standard, did not breach any confidential relation, and did not involve any fraudulent or illegal conduct. Even if the information which is asserted to be a trade secret could have been duplicated by other proper means, the information is not readily ascertainable if in fact it was acquired by improper means.

         The district court rejected GSR's proposed jury instruction and instructed the jury, over GSR's objection, that (1) "[i]f the information is in fact obtained through reverse engineering, however, the actor is not subject to liability, because the information has not been acquired improperly"; and (2) "[a] trade secret may not be readily ascertainable by proper means/' and that "[p] roper means include . . . [d]iscovery by 'reverse engineering.'"

         The jury returned a special verdict in favor of Peppermill and found that GSR's stolen par values did not constitute a "[t]rade secret" under NRS 600A.030 because GSR had failed to prove "by a preponderance of the evidence that its par information obtained by [Peppermill] was not readily ascertainable by proper means." Thereafter, Peppermill moved for costs and attorney fees due to GSR's rejection of Peppermill's offer of judgment and failure to obtain a more favorable judgment under NRCP 68. The district court awarded Peppermill its requested amount of $963, 483 in attorney fees incurred since Peppermill's offer of judgment. The district court then entered an amended judgment on jury verdict in favor of Peppermill. GSR moved for a new trial, which the district court denied. This appeal followed.

         DISCUSSION

         On appeal, GSR argues that the district court erred in instructing the jury concerning trade secrets under NRS 600A.030. We first address this issue, and hold that the district court did not abuse its discretion in rejecting GSR's proposed instruction, before turning to GSR's remaining arguments that the district court erred in (1) denying GSR's motion to amend complaint, (2) denying GSR's motions to compel Peppermill to produce all emails obtained by the NGCB in its investigation of the underlying matter, (3) denying GSR's motion for case-concluding sanctions, (4) excluding evidence of Peppermill stealing par values from other casinos, and (5) awarding Peppermill attorney fees under NRCP 68. Whether the district court erred in instructing the jury concerning trade secrets under NRS 600A.030

         GSR argues that the district court erred in failing to instruct the jury that NRS 600A.030 precludes a defendant from demonstrating that information is readily ascertainable and therefore not a trade secret when the defendant acquired the information by improper means, including means that fall below accepted standards of commercial morality and reasonable conduct. We disagree.

         This court "review[s] a decision to admit or refuse jury instructions for an abuse of discretion." D & D Tire, Inc. v. Ouellette,131 Nev. 462, 470, 352 P.3d 32, 37 (2015). However, "whether a jury instruction accurately states Nevada law" is reviewed de novo. Id. "Although a party is entitled to jury instructions on every theory of its case that is supported by the evidence, the offering party must demonstrate that the proffered jury instruction is warranted by Nevada law." Id. at 470, 352 P.3d at 38 (internal quotation marks and citation omitted). This court further reviews questions of statutory interpretation de novo. D.R. Horton, Inc. v. Eighth Judicial Dist. Court,125 Nev. 449, 456, 215 P.3d ...


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