Las Vegas Sands Corp. v. Eighth Judicial Dist. Court of State

• Citation: 331 P.3d 905,130 Nev. Adv. Op. 69
• Decision Date: 07 August 2014
• Docket Number: No. 63444.,63444.
• Parties: LAS VEGAS SANDS CORP., A Nevada Corporation; and Sands China Ltd., A Cayman Islands Corporation, Petitioners, v. The EIGHTH JUDICIAL DISTRICT COURT OF The STATE of Nevada, in and for The COUNTY OF CLARK; and The Honorable Elizabeth Goff Gonzalez, District Judge, Respondents, and Steven C. Jacobs, Real Party in Interest.
• Court: Supreme Court of Nevada

331 P.3d 905

130 Nev. Adv. Op. 69

LAS VEGAS SANDS CORP., A Nevada Corporation; and Sands China Ltd., A Cayman Islands Corporation, Petitioners,

v. The EIGHTH JUDICIAL DISTRICT COURT OF The STATE of Nevada, in and for The COUNTY OF CLARK; and The Honorable Elizabeth Goff Gonzalez, District Judge, Respondents,andSteven C. Jacobs, Real Party in Interest.

No. 63444.

Supreme Court of Nevada.

Aug. 7, 2014.

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, Debra L. Spinelli, and Eric T. Aldrian, Las Vegas, for Real Party in Interest.

BEFORE THE COURT EN BANC.¹

OPINION

By the Court, GIBBONS, C.J.:

In this opinion, we consider whether a former chief executive officer of a corporation, who is now suing his former employer, is within a “class of persons” entitled to access the corporation's privileged documents for use in the litigation. We conclude that a corporation's current management is the sole holder of its attorney-client privilege, and thus, Nevada law does not allow for a judicially created class of persons exception to attorney-client privilege. Accordingly, we grant petitioners' request for a writ of prohibition in part to prevent real party in interest from using the purportedly privileged documents in the underlying litigation.

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 Sands China Ltd. On or near the same day he was terminated, Jacobs gathered approximately 40 gigabytes of documents in the form of e-mails and other communications (the documents), which Jacobs continues to possess.

Approximately three months 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). In the complaint, Jacobs alleged that Sands breached his employment contract by refusing to award him promised stock options, among other things.

Almost nine months after filing his complaint, Jacobs disclosed, as an update on the status of document production, that he possessed the documents at issue in this writ petition. Shortly thereafter, the parties met and conferred regarding the documents, and Sands asserted that the material may be subject to Sands's attorney-client privilege and demanded that Jacobs return the documents. Jacobs, however, refused to return the documents.

LVSC files a motion for a protective order and for return of the documents

Approximately one month after Jacobs disclosed that he possessed the documents, LVSC filed a motion for a protective order and for return of the documents.² Among LVSC's several arguments was that, after he was terminated, Jacobs had no right to possess documents that were subject to LVSC's attorney-client privilege.

The district court expressed concern that it could not consider LVSC's motion in light of the stay that this court had imposed on the underlying litigation in connection with a previous writ petition that Sands China filed in this court.³ LVSC communicated to the district court that if the district court believed that entertaining the motion would violate the stay, then LVSC would withdraw the motion and instead file a second action challenging Jacobs's possession and use of the documents.

LVSC files a second action in district court in an attempt to obtain a ruling on Jacobs's possession of the purportedly privileged documents

Subsequently, LVSC filed a complaint (the second action) against Jacobs in the district court claiming theft/conversion of the documents and seeking preliminary and permanent injunctive relief. LVSC simultaneously filed a motion in the second action for a temporary restraining order and preliminary injunction or, in the alternative, for a protective order, again arguing that Jacobs took company documents containing attorney-client privileged communications without the authority to do so. The district court granted injunctive relief, prohibiting Jacobs from disseminating the documents to third parties for 14 days, in order to allow Sands to return to the original action and file an emergency writ petition with this court requesting a “carve out” from the underlying stay.⁴ Neither party challenged this decision before this court.

Six days after the hearing in the second action, LVSC filed an emergency writ petition with this court requesting a limited lift of the stay in order to pursue a protective order barring the use of the privileged documents and requiring their return. This court denied LVSC's emergency writ petition.

At a subsequent hearing in the second action, the district court made the determination that the subject matter was purely a jurisdictional discovery dispute that could be resolved in this case. Therefore, the district court dismissed the second action without prejudice,⁵ indicating that Sands must pursue its discovery claims in this case. Thereafter, LVSC stopped pursuing its complaint in the second action, and that action has been statistically closed.

The district court subsequently ordered the parties to establish an electronically stored information (ESI) protocol in the instant action that (1) directed Jacobs to turn over copies of the documents to an independent ESI vendor,⁶ (2) allowed Jacobs and Sands to review the documents and assert any privilege, and (3) provided that the district court would then conduct an in-camera review to resolve any privilege disputes.

After providing the documents to a court-ordered ESI vendor pursuant to an ESI protocol, Jacobs files a motion to return the documents

After extensive motion practice, the district court entered a formal ESI protocol in which it appointed an independent ESI vendor, and ordered Jacobs to provide the ESI vendor a full mirror image of the documents. Pursuant to the ESI protocol, Sands received the documents from the independent ESI vendor, reviewed the documents for privileges, and completed a privilege log. Shortly after receiving Sands's privilege log, Jacobs filed a motion for the return of the documents from the independent ESI vendor. Jacobs argued that Sands's privilege log was deficient and asserted several improper privileges. Additionally, Jacobs argued that the “collective corporate client” approach to the attorney-client privilege applied, such that Sands could not “deprive Jacobs of access to the proof, particularly when he was a participant in its creation.” Essentially, Jacobs argued that he was “the client” when he was directly involved in running Sands China, and therefore had a right to access and use any privileged documents that had been created while he was CEO of Sands China.

In opposition, Sands argued that pursuant to NRS 49.045 and 49.095, Sands was the sole holder of the attorney-client privilege, and it had not waived that privilege.

The district court grants Jacobs's motion, ruling that Jacobs is among the “class of persons” legally entitled to view and use privileged documents that pertain to his tenure at Sands China

The district court granted Jacobs's motion to return the documents from the independent ESI vendor based on the legal conclusion that Jacobs was within a class of persons legally allowed to view and use the purportedly privileged documents. The district court order stated that it did not need to address “whether any of the particular documents identified by [Sands] are subject to some privilege ..., whether Jacobs has the power to assert or waive any particular privileges that may belong to [Sands] ... or whether [Sands] waived the privilege.” Rather, the district court ruled:

the question presently before this [c]ourt is whether Jacobs, as a former executive who is currently in possession, custody and control of the documents and was before his termination, is among the class of persons legally allowed to view those documents and use them in the prosecution of his claims and to rebut [Sands's] affirmative defenses and counterclaim, as these were documents that the former executive authored, received and/or possessed, both during and after his tenure.

Based on this “class of persons” exception, the district court granted Jacobs's motion to return the remaining documents from the independent ESI vendor. Two days later, Sands filed this original petition for writ of prohibition or mandamus, asking that this court direct the district court to vacate its order permitting Jacobs to use the documents in the underlying litigation.⁷

DISCUSSION

As a preliminary matter, Jacobs argues that writ relief is unavailable because Sands failed to appeal the district court's ruling in the second action. Jacobs argues that a district court's refusal to grant an injunction is immediately appealable and that “writ relief is not available to correct an untimely notice of appeal.” Pan v. Eighth Judicial Dist. Court, 120 Nev. 222, 224–25, 88 P.3d 840, 841 (2004); see also Bradford v. Eighth Judicial Dist. Court, 129 Nev. ––––, ––––, 308 P.3d 122, 123 (2013).

While this is generally a correct statement, in this case, the district court's interim order actually granted relief by prohibiting Jacobs from disseminating the documents to third parties for 14 days. This afforded Sands the time to use the ESI protocol in the underlying action to review the documents and assert any applicable privileges. In addition, the district court's ruling in the second action did not reach the merits of the “class of persons” exception to the corporate attorney-client privilege issue raised in this writ petition; it instead ruled that Sands needed to pursue its privileges in this case. Thus, any appeal of the district court's ruling in...