Court Opinion

ID: 6335679
Source: CourtListenerOpinion
Date Created: 2022-04-28 10:06:42.029084+00
Date Added: 2024-06-11T09:24:00.846626
License: Public Domain

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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(01 1947A asata,                                                                  2,-   13320
               „
                                    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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                                                                                %.6
                         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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401 i947A    4VAD

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