Court Opinion

ID: 2716049
Source: CourtListenerOpinion
Date Created: 2014-08-07 18:03:50.808833+00
Date Added: 2024-06-11T09:53:11.735304
License: Public Domain

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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