Las Vegas Sands v. Eighth Jud. Dist. Ct. , 2014 NV 61 ( 2014 )

130 Nev., Advance Opinion to I
IN THE SUPREME COURT OF THE STATE OF NEVADA
LAS VEGAS SANDS CORP., A NEVADA No. 62944
CORPORATION; AND SANDS CHINA
LTD., A CAYMAN ISLANDS
CORPORATION,
Petitioners,
FILED
vs. AUG 07 20111
THE EIGHTH JUDICIAL DISTRICT
713ME K. LINDEMAN
COURT OF THE STATE OF NEVADA, CL
BY
IN AND FOR THE COUNTY OF CHIEFDEP. RK
CLARK; AND THE HONORABLE
ELIZABETH GOFF GONZALEZ,
DISTRICT JUDGE,
Respondents,
and
STEVEN C. JACOBS,
Real Party in Interest.
Original petition for a writ of prohibition or mandamus
challenging a district court order finding that petitioners violated a
discovery order and scheduling an evidentiary hearing to determine
appropriate sanctions.
Petition denied.
Morris Law Group and Steve L. Morris and Rosa Solis-Rainey, Las Vegas;
Kemp, Jones & Coulthard, LLP, and J. Randall Jones and Mark M. Jones,
Las Vegas; Holland & Hart LLP and J. Stephen Peek and Robert J.
Cassity, Las Vegas,
for Petitioners.
Pisanelli Bice PLLC and Todd L. Bice, James J. Pisanelli, and Debra L.
Spinelli, Las Vegas,
for Real Party in Interest.
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BEFORE THE COURT EN BANC. 1
OPINION
By the Court, GIBBONS, C.J.:
In this opinion, we consider whether a Nevada district court
may properly issue a discovery order that compels a litigant to violate a
foreign international privacy statute. We conclude that the mere
existence of an applicable foreign international privacy statute does not
itself preclude Nevada district courts from ordering foreign parties to
comply with Nevada discovery rules. Thus, civil litigants may not utilize
foreign international privacy statutes as a shield to excuse their
compliance with discovery obligations in Nevada courts. Rather, the
existence of an international privacy statute is relevant to a district court's
sanctions analysis if the court's discovery order is disobeyed. Here, the
district court properly employed this framework when it found that the
existence of a foreign international privacy statute did not excuse
petitioners from complying with the district court's discovery order. And
because the district court has not yet held the hearing to determine if, and
the extent to which, sanctions may be warranted, our intervention at this
juncture would be inappropriate. We therefore deny this writ petition.
'The Honorable Kristina Pickering and the Honorable Ron
Parraguirre, Justices, voluntarily recused themselves from participation
in the decision of this matter.
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FACTS AND PROCEDURAL HISTORY
This matter arises out of real party in interest Steven C.
Jacobs's termination as president and chief executive officer of petitioner
Sands China. After his termination, Jacobs filed a complaint against
petitioners Las Vegas Sands Corp. (LVSC) and Sands China Ltd., as well
as nonparty to this writ petition, Sheldon Adelson, the chief executive
officer of LVSC (collectively, Sands). Jacobs alleged that Sands breached
his employment contract by refusing to award him promised stock options,
among other things.
Almost three years ago, this court granted a petition for a writ
of mandamus filed by Sands China and directed the district court to hold
an evidentiary hearing and issue findings as to whether Sands China is
subject to personal jurisdiction in Nevada. See Sands China Ltd. v.
Eighth Judicial Dist. Court, Docket No. 58294 (Order Granting Petition
for Writ of Mandamus, August 26, 2011). Due to a string of jurisdictional
discovery disputes that have arisen since that order was issued, the
district court has yet to hold the hearing.
Throughout jurisdictional discovery, Sands China has
maintained that it cannot disclose any documents containing personal
information that are located in Macau due to restrictions within the
Macau Personal Data Protection Act (MPDPA). Approximately 11 months
into jurisdictional discovery, however, Sands disclosed for the first time
that, notwithstanding the MPDPA's prohibitions, a large number of
documents contained on hard drives used by Jacobs and copies of Jacobs's
emails had been transported from Sands China in Macau to LVSC in the
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,
United States. 2 In response to Sands's revelation, the district court sua
sponte ordered a sanctions hearing. Based on testimony at that hearing,
the district court determined that the transferred documents were
knowingly transferred to LVSC's in-house counsel in Las Vegas and that
the data was then placed on a server at LVSC's Las Vegas property. The
district court also found that both in-house and outside counsel were
aware of the existence of the transferred documents but had been
concealing the transfer from the district court.
Based on these findings, the district court found that Sands's
failure to disclose the transferred documents was "repetitive and abusive,"
deliberate, done in order to stall jurisdictional discovery, and led to
unnecessary motion practice and a multitude of needless hearings. The
district court issued an order in September 2012 that, among other things,
precluded Sands from raising the MPDPA "as an objection or as a defense
to admission, disclosure or production of any documents." Sands did not
challenge this sanctions order in this court.
Subsequently, Sands filed a report detailing its Macau-related
document production. Sands's report indicated that, with respect to all of
the documents that it had produced from Macau, it had redacted personal
data contained in the documents based on MPDPA restrictions prior to
providing the documents to Jacobs. In response to Sands's redactions
2 Sandsstated that the presence of the documents in the United
States was not disclosed at an earlier time because the documents were
brought to the United States mistakenly, and Sands had been seeking
guidance from the Macau authorities on whether they could be disclosed
under the MPDPA.
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based on the MPDPA, Jacobs moved for NRCP 37 sanctions, arguing that
Sands had violated the district court's September 2012 order.
The district court held a hearing on Jacobs's motion for
sanctions, at which the court stated that the redactions appeared to
violate the September 2012 order. In its defense, Sands argued that the
September 2012 order had prohibited it from raising the MPDPA as an
objection or defense to "admission, disclosure or production" of documents,
but not as a basis for redacting documents. The district court disagreed
with Sands's interpretation of the sanctions order, noting:
I certainly understand [the Macau government
has] raised issues with you. But as a sanction for
the inappropriate conduct that's happened in this
case, in this case you've lost the ability to use that
as a defense. I know that there may be some
balancing that I do when I'm looking at
appropriate sanctions under the Rule 37 standard
as to why your client may have chosen to use that
method to violate my order. And I'll balance that
and I'll look at it and I'll consider those issues.
Based on the above findings, the district court entered an
order concluding that Jacobs had "made a prima facie showing as to a
violation of [the district] [c]ourt's orders which warrants an evidentiary
hearing" regarding whether and the extent to which NRCP 37 sanctions
were warranted. The district court set an evidentiary hearing, but before
this hearing was held, Sands filed this writ petition, asking that this court
direct the district court to vacate its order setting the evidentiary hearing.
DISCUSSION
A writ of mandamus is available to compel the performance of
an act that the law requires or to control an arbitrary or capricious
exercise of discretion. Aspen Fin. Servs., Inc. v. Eighth Judicial Dist.
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Court, 128 Nev. „ 289 P.3d 201, 204 (2012). A writ of prohibition
may be warranted when thefl district court exceeds its jurisdiction. Id.
Although a writ of prohibition is a more appropriate remedy for the
prevention of improper discovery, writ relief is generally unavailable to
review discovery orders. Id.; see also Valley Health Sys., L.L.C. v. Eighth
Judicial Dist. Court, 127 Nev. , 252 P.3d 676, 679 (2011)
(providing that exceptions to this general rule exist when (1) the trial
court issues a blanket discovery order without regard to relevance, or (2) a
discovery order requires disclosure of privileged information).
Nevertheless, "in certain cases, consideration of a writ petition raising a
discovery issue may be appropriate if an important issue of law needs
clarification and public policy is served by this court's invocation of its
original jurisdiction .. . ." Aspen Fin. Servs., Inc. v. Eighth Judicial Dist.
Court, 129 Nev. „ 313 P.3d 875, 878 (2013) (internal quotation
marks omitted). "The burden is on the petitioner to demonstrate that
extraordinary relief is warranted." Valley Health, 127 Nev. at , 252
P.3d at 678.
In its writ petition, Sands argues generally that this court's
intervention is warranted because the district court has improperly
subjected Sands to discovery sanctions based solely on Sands's attempts to
comply with the MPDPA. Sands has not persuasively argued that either
of this court's two generally recognized exceptions for entertaining a writ
petition challenging a discovery order apply. See Valley Health, 127 Nev.
at , 252 P.3d at 679. Nevertheless, the question of whether a Nevada
district court may effectively force a litigant to choose between violating a
discovery order or a foreign privacy statute raises public policy concerns
and presents an important issue of law that has relevance beyond the
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parties to the underlying litigation and cannot be adequately addressed on
appeal. Therefore, we elect to entertain the petition. See Aspen Fin.
Servs., 129 Nev. at , 313 P.3d at 878.
Foreign international privacy statutes cannot be used by litigants to
circumvent Nevada discovery rules, but should be considered in a district
court's sanctions analysis
The intersection between Nevada discovery rules and
international privacy laws is an issue of first impression in Nevada. The
Nevada Rules of Civil Procedure authorize parties to discover any
nonprivileged evidence that is relevant to any claims or defenses at issue
in a given action. NRCP 26(b)(1). On the other hand, many foreign
nations have created nondisclosure laws that prohibit international
entities from producing various types of documents in litigation. See
generally Note, Foreign Nondisclosure Laws and Domestic Discovery
Orders in Antitrust Litigation, 88 Yale L.J. 612 (1979).
The United States Supreme Court has evaluated the
intersection between these two competing interests and determined that
such a privacy statute does not, by itself, excuse a party from complying
with a discovery order. See Societe Nationale Industrielle Aerospatiale v.
U.S. Dist. Court, 482 U.S. 522, 544 n.29 (1987) ("It is well settled that such
statutes do not deprive an American court of the power to order a party
subject to its jurisdiction to produce evidence even though the act of
production may violate that statute." (citing Societe Internationale Pour
Participations IndustrieIles et Commerciales, S.A. v. Rogers, 357 U.S. 197,
204-06 (1958))). Generally, courts in similar situations have considered a
variety of factors, including (1) "the importance to the investigation or
litigation of the documents or other information requested"; (2) "the degree
of specificity of the request"; (3) "whether the information originated in the
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United States"; (4) "the availability of alternative means of securing the
information"; and (5) "the extent to which noncompliance with the request
would undermine important interests of the United States, or compliance
with the request would undermine important interests of the state where
the information is located." Restatement (Third) of Foreign Relations Law
§ 442(1)(c) (1987); see also Linde v. Arab Bank, PLC, 269 F.R.D. 186, 193
(E.D.N.Y. 2010). But there is some disagreement as to when courts should
evaluate such factors.
Some jurisdictions, including the United States Court of
Appeals for the Second Circuit, generally evaluate these factors both when
deciding whether to issue an order compelling production of documents
located in a foreign nation and when issuing sanctions for noncompliance
of that order. Linde, 269 F.R.D. at 196. 3
The United States Court of Appeals for the Tenth Circuit has
espoused an approach in which a court's analysis of the foreign law issue
is only relevant to the imposition of sanctions for a party's disobedience,
and not in evaluating whether to issue the discovery order. Arthur
Andersen & Co. v. Finesilver, 546 F.2d 338, 341-42 (10th Cir. 1976). The
Tenth Circuit noted that in Societe Internationale, the Supreme Court
3 Even within the Second Circuit, there is some uncertainty as to
when a court should apply these factors. See In re Parmalat Sec. Litig.,
239 F.R.D. 361, 362 (S.D.N.Y. 2006) ("[T]he modern trend holds that the
mere existence of foreign blocking statutes does not prevent a U.S. court
from ordering discovery although it may be more important to the
question of sanctions in the event that a discovery order is disobeyed by
reason of a blocking statute." (quoting In re Auction Houses Antitrust
Litig., 196 F.R.D. 444, 446 (S.D.N.Y. 2000))).
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stated that a party's reasons for failing to comply with a production order
"can hardly affect the fact of noncompliance and are relevant only to the
path which the [d]istrict [c]ourt might follow in dealing with [the party's]
failure to comply." Id. at 341 (quoting Societe Internationale, 357 U.S. at
208). Based on this language, the Tenth Circuit determined that a court
should only consider the foreign privacy law when determining if
sanctions are appropriate. Id.; see also Wright, Discovery, 35 F.R.D. 39, 81
(1964) ("The effect of those laws is considered in determining what
sanction to impose for noncompliance with the order, rather than regarded
as a reason for refusing to order production").
In our view, the Tenth Circuit's approach is more in line with
Supreme Court precedent. 4 See, e.g., Arthur Andersen, 546 F.2d at 341-42;
In re Westinghouse Elec. Corp. Uranium Contracts Litig., 563 F.2d 992,
997 (10th Cir. 1977); Timothy G. Smith, Note, Discovery, of Documents
Located Abroad in U.S. Antitrust Litigation: Recent Developments in the
Law Concerning the Foreign Illegality Excuse for Non-Production, 14 Va.
J. Int'l L., 747, 753 (1974) (noting that Second Circuit cases failed to
observe the Supreme Court's distinction between a court's power to compel
discovery and the appropriate sanctions if a party failed to comply). We
4That is not to say that Nevada courts should never consider a
foreign privacy statute in issuing a discovery order. Certainly, a district
court has wide discretion to consider a number of factors in deciding
whether to limit discovery that is either unduly burdensome or obtainable
from some other sources. NRCP 26(b)(2). Thus, it would be well within
the district court's discretion to account for such a foreign law in its
analysis, but we decline to adopt the Second Circuit's requirement of a full
multifactor analysis in ordering the production of such documents.
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are persuaded by the Tenth Circuit's approach, and conclude that the
mere presence of a foreign international privacy statute itself does not
preclude Nevada courts from ordering foreign parties to comply with
Nevada discovery rules. Rather, the existence of an international privacy
statute is relevant to the district court's sanctions analysis in the event
that its order is disobeyed. Arthur Andersen, 546 F.2d at 341-42.
Here, Sands argues that the district court never purported to
balance any of the relevant factors before concluding that its MPDPA
redactions were sanctionable. But in our view, the district court has yet to
have that opportunity. The district court has properly indicated that it
would "balance" Sands's desire to comply with the MPDPA with other
factors at the yet-to-be-held sanctions hearing. Thus, Sands has not
satisfied its burden of demonstrating that the district court exceeded its
jurisdiction or arbitrarily or capriciously exercised its discretion. Aspen
Fin. Servs., 128 Nev. at , 289 P.3d at 204; Valley Health, 127 Nev. at
252 P.3d at 678. Because we are confident that the district court will
evaluate the relevant factors noted above in determining what sanctions,
if any, are appropriate when it eventually holds the evidentiary hearing,
we decline to preempt the district court's consideration of these issues by
entertaining the additional arguments raised in Sands's writ petition. 5
5 The majority of Sands's briefing argues that the district court
improperly (1) ordered discovery of documents that had no relevance to
the issue of personal jurisdiction, and (2) concluded that Sands violated
the technical wording of the September 2012 sanctions order. Although
this first contention arguably falls within Valley Health's first exception,
see 127 Nev. at , 252 P.3d at 679, the documentation accompanying
Sands's writ petition does not clearly support the contention. Id. at ,
continued on next page . . .
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CONCLUSION
Having considered the parties' filings and the attached
documents, we conclude that our intervention by extraordinary relief is
not warranted. Specifically, we conclude that the mere presence of a
foreign international privacy statute does not itself preclude Nevada
district courts from ordering litigants to comply with Nevada discovery
rules. Rather, the existence of such a statute becomes relevant to the
district court's sanctions analysis in the event that its discovery order is
disobeyed. Here, to the extent that the challenged order declined to
excuse petitioners for their noncompliance with the district court's
previous order, the district court did not act in excess of its jurisdiction or
arbitrarily or capriciously. And because the district court properly
indicated that it intended to "balance" Sands's desire to comply with the
foreign privacy law in determining whether discovery sanctions are
warranted, our intervention at this time would inappropriately preempt
. . . continued
252 P.3d at 678 ("The burden is on the petitioner to demonstrate that
extraordinary relief is warranted."). In fact, the district court specifically
noted that Sands may withhold all documents that were only relevant to
merits discovery and thus irrelevant to the district court's jurisdiction over •
Sands China. Sands's second contention does not fall within either of
Valley Health's two exceptions, and Sands does not argue otherwise. Id. at
252 P.3d at 679. Further, neither issue raises public policy concerns
or presents an important issue of law that has relevance beyond the
parties to the underlying litigation. Aspen Fin. Servs., 129 Nev. at ,
313 P.3d at 878. As a result, we decline to entertain Sands's remaining
arguments.
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the district court's planned hearing. As a result, we deny Sands's petition
for a writ of prohibition or mandamus.
C.J.
Gibbons
We concur:
.7—StA^ J.
Hardesty
p.x-E
Dithglas '
J.
Saitta
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CHERRY, J., concurring in the result:
I agree with the majority that our intervention by
extraordinary relief is not warranted at this time. However, I do not
believe that a lengthy opinion by four members of this court on the
conduct leading up to the sanctions hearing, or on the factors that the
district court should consider when exercising its discretion in imposing
future sanctions, is necessary or appropriate at this juncture of this case,
when a thorough and fact-finding evidentiary hearing has not yet been
conducted by the district court.
It is premature for this court to anticipate, project, or predict
the totality of findings that the district court may make after the
conclusion of any evidentiary hearing. At such time as findings of fact and
conclusions of law are finalized by the district court, then—and only
then—should an appropriate disposition be rendered in the form of a
published opinion and made public.
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