Mm Dev. Co., Inc. v. Tryke Companies So Nv, Llc

IN THE SUPREME COURT OF THE STATE OF NEVADA
MM DEVELOPMENT COMPANY, INC., No. 81938
D/B/A PLANET 13, A NEVADA
CORPORATION,
Appellant, FILED
vs. - APR 27 2022
TRYKE COMPANIES SO NV, LLC, A
NEVADA LIMITED LIABILITY
COMPANY,
Respondent.
ORDER OF REVERSAL
This is an appeal from a district court order granting a
preliminary injunction. Eighth Judicial District Court, Clark County;
James Crockett, Judge.
Appellant MM Development Company, Inc. and respondent
Tryke Companies SO NV, LLC are competitors in the Las Vegas cannabis
industry, operating dispensaries located across the street from each other.
MM Development operates a dispensary known as "Planet 13" and Tryke
operates a dispensary known as "Reef."
Tryke sued MM Development for civil conspiracy, aiding and
abetting, and intentional interference with economic advantage, taking
issue with Planet 13's policy of paying, as relevant here, rideshare drivers
to bring passengers to its dispensary. Tryke alleged MM Development was
working with rideshare drivers to unlawfully divert passengers from Reef
to Planet 13. Tryke based these allegations on word of mouth and a "secret
shopper" investigation, in which it found that some rideshare drivers were
taking passengers to Planet 13 instead of their original intended
destination, Reef.
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After the district court denied MM Development's motion to
dismiss, Tryke moved for a preliminary injunction, which the district court
granted. Under the preliminary injunction, (1) "Planet 13 is enjoined from
paying any fee or commission to rideshare service drivers in exchange for
bringing passengers to Planet 13 rather than another cannabis dispensary;
and" (2) "Planet 13 is enjoined from advertising to rideshare drivere that it
will pay them for such actions. MM Development appeals this preliminary
injunction order.
MM Development contends the district court erred by issuing
the preliminary injunction because it argues that Tryke is not likely to
succeed on the merits of its claims and that Tryke is not threatened by
irreparable harm. MM Development also asserts the district court erred by
not holding an evidentiary hearing and by issuing an injunction with overly
broad terms.
We review a district court's order granting a preliminary
injunction for an abuse of discretion. Labor Comm'r v. Littlefield, 123 Nev.
35, 39, 153 P.3d 26, 28 (2007). A district court can abuse its discretion if it
disregards controlling law. Shores v. Global Experience Specialists, Inc.,
134 Nev. 503, 505, 422 P.3d 1238, 1241 (2018).
Pursuant to NRS 33.010, a court may grant a preliminary
injunction when the moving party proves "a reasonable probability of
success on the merits and that the defendanes conduct, if allowed to
continue, will result in irreparable harm for which compensatory damage is
an inadequate remedy." Dixon v. Thatcher, 103 Nev. 414, 415, 742 P.2d
1029, 1029 (1987). This court has "determined that acts committed without
just cause which unreasonably interfere with a business or destroy its credit
or profits, may do an irreparable injury." State, Dep't of Bus. & Indus., Fin.
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tO) 1947A agEbe)
Insts. Div. v. Nev. Assn Servs., Inc., 128 Nev. 362, 370, 294 P.3d 1223, 1228
(2012) (internal quotation marks omitted). Such a situation may arise when
a business creates a situation for a competitor that causes "public confusion,
infring[es] on goodwill, and damag[es] reputation in the eyes of creditors."
See Sobol v. Capital Mgmt. Consultants, Inc., 102 Nev. 444, 446, 726 P.2d
335, 337 (1986).
The district court concluded Tryke was likely to succeed on the
merits of its claims and that Tryke was faced with irreparable harm if the
court did not issue the preliminary injunction. The court determined that
Planet 13's practice of paying rideshare drivers was "causing substantial
damage and irreparable harm to Tryke's sales and customer acquisitions
that cannot be fully ascertained or redressed solely through money
damages." It further concluded that Planet 13's business practices, if
allowed to cont.inue, would "lead to irremediable loss of Tryke's brand value,
consumer loyalty, and inherent goodwill of the dispensary itself."
Both parties presented evidence to the district court to
demonstrate that many other dispensaries and businesses in Las Vegas
engage in this practice of paying rideshare drivers to bring passengers to
their locations. As this court has stated, "[p]erhaps the most significant
privilege or justification for interference with a prospective business
advantage is free competition." Crockett v. Sahara Realty Corp., 95 Nev.
197, 199, 591 P.2d 1135, 1136 (1979); see also Restatement (Second) of Torts
§ 767 cmt. a (Am. Law Inst. 1979) ([T]here is a requirement that the
interference be both intentional and improper."); Restatement (Second) of
Torts § 768(1) & cmt. a (Am. Law Inst. 1979) (recognizing that "competition
is not an improper basis for interference with a prospective relationship
when certain conditions are present). Businesses are free to compete for
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potential customers through all fair and reasonable means. Crockett, 95
Nev. at 199, 591 P.2d at 1136.
However, we need not resolve the issue of whether the district
court erred in determining Tryke was likely to succeed on the merits of its
tort claims because we conclude Tryke failed to meet its burden to prove
that it will, absent injunctive relief, suffer irreparable harm for which
compensatory damages would be an inadequate remedy. Notably, Tryke
did not present evidence of harm from actual or prospective customers to
prove any alleged irreparable harm. Mere conjecture about possible loss of
business and reputation due to a competitor engaging in a business practice
that is common in the local industry is insufficient to prove irreparable
harm. See Dixon, 103 Nev. at 415, 742 P.2d at 1029 (providing that a
plaintiff must prove that "the defendanes conduct, if allowed to continue,
will result in irreparable harm for which compensatory damage is an
insufficient remedy') (emphasis added). Thus, we conclude Tryke failed to
show that any alleged harm could not be remedied by monetary damages.
We additionally conclude Tryke failed to prove monetary
damages would be difficult to calculate. See Dixon, 103 Nev. at 415, 742
P.2d at 1029; see also Basicomputer Corp. v. Scott, 973 F.2d 507, 511 (6th
Cir. 1992) ("[A]n injury is not fully compensable by money damages if the
nature of the plaintiffs loss would make money damages difficult to
calculate."). During oral argument, this court inquired as to how Planet
13's actions created irreparable harm that could not be remedied by
calculable monetary damages. Tryke could not identify any specific
difficulty in how it could calculate damages, and instead continued to
speculate that it might suffer generalized harm to its reputation for which
monetary damages would be insufficient. In its rebuttal, MM Development
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(0) 1947A 116 Nev. 455, 469, 999 P.2d 351, 360 (2000) (explaining that "a
party seeking damages may utilize an expert economist to assist in the
calculation of the total damages sustained" and "that damages need not be
proven with mathematical exactitude," so long as the calculations are based
on facts known to the expert).
Any potential harm here is compensable and MM
Development's tax records, under the circumstances presented here, are
both discoverable and form an adequate basis to calculate damages. See
NRCP 26(b)(1); NRCP 34; see also Hetter v. Eighth Judicial Dist. Court, 110
Nev. 513, 519, 874 P.2d 762, 765 (1994) (noting that there are various
circumstances in which tax records may be discoverable). Therefore, we
conclude the district court abused its discretion by issuing the preliminary
injunction, and we
ORDER the judgmer4 of the district court REVERSED.
, J.
Hardesty
aire,
, J. J.
Stiglich Herndon
1Because we conclude the district court incorrectly determined that
Tryke will suffer irreparable harm and therefore abused its discretion in
issuing the preliminary injunction, we need not consider MM
Development's remaining arguments.
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cc: Chief Judge, Eighth Judicial District Court
Ara H. Shirinian, Settlement Judge
Kemp Jones, LLP
Hone Law
Conant Law Firm
Eighth District Court, Department 24
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