Merits Incentives, Llc, v. The Eighth Judicial District Court Of The State Of Nevada

262 P.3d 720 (2011)

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Nature of the Case

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Facts

Bumble manufactures and sells salon products. Petitioners Merits Incentives, LLC, Ramon DeSage, and Cadeau Express, Inc. (Ps), contracted with Bumble to distribute Bumble's products to the Wynn Hotel in Las Vegas, Nevada. Bumble discovered that some of its products were being sold at unauthorized retailers such as CVS, Rite Aid, and Walgreens. Bumble sued Ps for breach of contract, fraud, and injunctive relief because of the alleged distribution to entities other than those authorized by the parties' contract. Prior to Bumble's suit, Cadeau Express fired one of its logistics engineers, Haidar. Cadeau sued Haidar, alleging that he stole 'confidential and proprietary information and trade secrets.' The district court enjoined Haidar from distributing any of the stolen information to petitioners' 'customers, manufacturers, suppliers, or business partners.' After filing suit against Ps, Bumble received an anonymous package from Lebanon at its New York headquarters. The package contained a disk and a note stating that the package should be forwarded to Bumble's counsel, John Mowbray. Mowbray served on Ps a supplemental NRCP 16.1 mandatory pretrial discovery disclosure (16.1 disclosure). It identified a 'disk received by Bumble from an unidentified source.' The 16.1 disclosure also included a copy of the disk and a copy of the envelope it arrived in, which bore Lebanese stamps and the phrase 'highly confidential.' Bumble served an amended supplemental 16.1 disclosure on petitioners and provided another identical copy of the disk. Ps did not inform Bumble that they objected to Bumble having the disk, and they did not file any motions with the court to preclude Bumble's use of the disk or its contents. Bumble served a second request for production and Ps for the first time objected because it requests information protected by the attorney/client and/or attorney work product privilege. Bumble used some of the documents from the disk to depose one of Ps' employees, and Ps still did not object or argue that the documents were privileged. Nearly eight months after Bumble first disclosed its receipt of the disk, Ps filed a motion for the dismissal of Bumble's case with prejudice or, in the alternative, a motion to prohibit Bumble's use of misappropriated confidential and privileged documents and for disqualification of Bumble's counsel. Ps alleged that Mowbray received the disk from Haidar in violation of the injunction. The court declined to dismiss the case or disqualify Mowbray and his firm. The court excluded one document and then concluded that Bumble's counsel 'acted reasonably and in accordance with the Nevada Rules of Professional Conduct with respect to the documents and the Disk.' Ps seek extraordinary writ relief.