Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 1 of 16

1 CATHERINE CORTEZ MASTO

Attorney General
2 DAVID J. POPE
Senior Deputy Attorney General
3 Nevada Bar No. 8617
MICHAEL P. SOMPS
4 Senior Deputy Attorney General
Nevada Bar No. 6507
5 EDWARD L. MAGAW
Deputy Attorney General
6 Nevada Bar No. 9111
555 East Washington Avenue, Suite 3900
7 Las Vegas, Nevada 89101-1068
elmagaw@ag.nv.gov
8 Phone: (702) 486-3420
Fax: (702) 486-3906
9 Attorneys for the State Gaming Control Board
10

11 UNITED STATES BANKRUPTCY COURT

12 DISTRICT OF NEVADA

13 In re: )
) Case No. BK-S-07-16504-BAM
14 JOHN L. SMITH, )
) Chapter 7
15 Debtor. )
___________________________________ ) Adversary Case No. 08-01012-BAM
16 )
) GAMING CONTROL BOARDS
17 SHELDON ADELSON, ) OPPOSITION TO DEFENDANTS MOTION
) TO COMPEL RELEASE OF NEVADA
18 Plaintiff, ) GAMING RECORDS
)
19 vs. ) Date: September 30, 2008
) Time: 9:30 AM
20 JOHN L. SMITH )
)
21 Defendant. )
22 COMES NOW, The STATE GAMING CONTROL BOARD (BOARD), by and through its
23 counsel, CATHERINE CORTEZ MASTO, Attorney General, and EDWARD L. MAGAW,
24 Deputy Attorney General, and hereby files its Opposition to Defendant, JOHN L. SMITHs,
25 Motion to Compel Release of Nevada Gaming Records. This Opposition to the Motion to
26 Compel is made pursuant to FED. R. CIV. P. 45 and 26, and Nevada Revised Statutes (NRS)
27 463.120 and 463.3407, and is based on all papers, pleadings and records on file herein, and
28 the following points and authorities.
-1-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 2 of 16

1 POINTS AND AUTHORITIES

2 1. INTRODUCTION

3 The gaming industry in Nevada is one whose integrity and worldwide reputation is a

4 direct result of a strict regulatory environment that is borne out only by meticulous adherence

5 to demanding laws through the tireless vigilance of the BOARD and Nevada Gaming

6 Commission (Commission). One of the primary objectives of the BOARD is to ensure that

7 only those individuals with the necessary moral turpitude and reputation are licensed to

8 conduct gaming within the State of Nevada. In order to meet this objective, the BOARD must

9 be able to review all aspects of an applicants life, both personal and business.

10 To accomplish this, the BOARD relies a great deal on the candid and truthful

11 statements of the applicants and witnesses to ensure that it is provided with a complete and

12 accurate record. Such information can only be guaranteed if applicants and witnesses are

13 given reassurances that their statements are taken in complete confidence and will not be

14 disclosed to individuals outside of the BOARD and Commission. Every time the BOARD is

15 ordered to release such information, the confidence applicants and witnesses have in the

16 BOARD is put at risk, thus putting in jeopardy the ability of the BOARD to effectively regulate

17 the gaming industry.

18 The facts and circumstances surrounding this subpoena served by the Defendant on

19 the BOARD do not rise to the level of necessity that warrants the extraordinary relief the

20 Defendant is requesting. The Defendant is asking this Court to release information gathered

21 by the BOARD through its investigative efforts, which the Nevada State Legislature has

22 deemed confidential and privileged. The Defendant relies on bald, unsupported claims that

23 the BOARD is the only source of this information. In addition, the Defendant gives little

24 specifics as to what documents he believes the BOARD has that he needs.

25 Based on his Motion to Compel, it is clear that the Defendant wants to substitute the

26 BOARDs efforts in gathering the information for his own discovery obligations, in essence

27 relying on the BOARD to conduct his discovery for him. Further, given the lack of specifics in

28 his request, it is clear that the Defendant intends to use the records of the BOARD as fodder
-2-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 3 of 16

1 for a fishing expedition of information that he can use to his advantage in this case. These

2 purposes do not justify this Court ordering the release of the confidential and privileged

3 documents.

4 It is in the best interest of the State of Nevada for the Court to protect the BOARD from

5 becoming a one-stop discovery depository for civil litigants. The relief the Defendant is

6 seeking in this case should be reserved for only those circumstances where the need is

7 extraordinary and no other alternatives are available. The Defendant in this case has not

8 provided any evidence to establish that such a level of need exists in this case or that the

9 BOARD is the only source from which the Defendant could obtain the information he is

10 seeking. Accordingly, for the reasons stated above and the argument presented below, this

11 Court should deny the Defendants Motion to Compel, and quash the balance of the subpoena

12 that the Defendant served on the BOARD.

13 2. STATEMENT OF FACTS

14 The subpoena, referenced as Exhibit A to Defendants Motion to Compel, was served

15 on the BOARD on September 18, 2008. The subpoena seeks the production of the following:

16 Category 1. The application submitted by and/or on behalf

of Sheldon G. Adelson as President/Director and 58.8% owner of
17 Las Vegas Sands, Inc. d/b/a Sands Hotel & Casino in support of
his request to be granted a gaming license in the State of Nevada.
18 By means of clarification, this Subpoena requests the
production of records related to the consideration of licensure
19 considered by the Nevada Gaming Control Board at its open
th
meeting held on the 8 day of February, 1989, beginning at 9:00
20 a.m. and concluding on the 9th day of February, 1989, at 2:38 a.m.
in Carson City, Nevada and designated as Agenda Item Number
21 1, N88-0889.
22 Category 2. Any and all addendums, supplements, answers
to interrogatories, or other information in whatever form (including
23 but not limited to electronically preserved entries) supplied,
shared, or procured by or through Sheldon Adelson in connection
24 with his license application as detailed in category No. 1 above.
25 Category 3. All transcripts, reports, witness interview
summaries and the like relating to any interview conducted of the
26 applicant Sheldon Adelson by any agent or employee of the State
of Nevada in connection with the application detailed in Category
27 Number 1, above.
28 ///
-3-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 4 of 16

Category 4. All information of any kind and in whatever form

1 (including but not limited to electronically preserved entries)
relating to the subject matter of the operation, ownership, funding,
2 lease, sale or other commercial use of vending machines by
Sheldon Adelson.
3
Category 5. All information of any kind and in whatever form
4 (including but not limited to electronically preserved entries)
relating to the operation, ownership funding, leasing, sale or other
5 commercial activity conducted in connection with any bar, tavern
or nightclub with which Sheldon Adelson was in any way alleged to
6 be associated.
7 Category 6. All information of any kind and in whatever form
(including but not limited to electronically preserved entries)
8 relating to the suspension of Sheldon Adelsons real estate license
in the State of Massachusetts.
9
Category 7. All information of any kind and in whatever form
10 (including but not limited to electronically preserved entries)
relating to Henry or Carmine Vara.
11
Category 8. All information of any kind and in whatever form
12 (including but not limited to electronically preserved entries)
relating to Sheldon Adelsons purchase of a home in Cape Cod,
13 Massachusetts from Sanford Sorrentino.
It is contemplated that this production will include all records
14 concerning the forgiveness of a $155,000 debt or obligation owing
to Sheldon Adelson by Sorrentino.
15
Category 9. Any and all copies of or listing of lawsuits in
16 whatever form (including but not limited to electronically preserved
entries) in which Sheldon Adelson or any of his associated entities
17 were involved.
18 See copy of subpoena at Exhibit A.

19 The subpoena sets a deadline of Monday September 29, 2008 at 9:00 a.m. See id.

20 The only documents the BOARD possesses and controls, which appear to be within the

21 scope of the Defendants subpoena, are as follows:

22 1. The transcript of the BOARDs public hearing held on February 8, 1989;

23 2. Transcript of the Commissions public hearing held on February 23, 1989;
24 3. Las Vegas Sands, Inc.s application for licensure, which includes Mr. Adelson; and
25 4. The BOARDs investigative report regarding Las Vegas Sands, Inc.s application for
licensure, which includes Mr. Adelson.
26

27 See Exhibit B, Affidavit of BOARDs Deputy Custodian of Records. The BOARD does not

28 have any further documents that fall under the scope of the subpoena. Id.
-4-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 5 of 16

1 In response to the subpoena, the BOARDs counsel provided a letter dated September

2 24, 2008, to the counsel for the Defendant. See copy of the letter at Exhibit C. Enclosed with

3 the September 24, 2008, letter were the non-confidential, public documents requested in the

4 subpoena. Specifically, the BOARD provided the first page of Las Vegas Sands, Inc.s

5 application for licensure and the transcripts for the BOARD and Commission hearings relating

6 thereto. See id. The September 24, 2008, correspondence also provided the BOARDs

7 written objection to the production, inspection, or copying of the remaining designated

8 materials in the subpoena pursuant to FED. R. CIV. P. 45. See id.

9 3. ARGUMENT

10 Fed. R. Civ. P. 45(c)(3)(iii) provides that the court must quash or modify a subpoena

11 that requires disclosure of privileged or other protected matter, if no exception or waiver

12 applies. In this case, the facts and circumstances, as argued below, warrant such action by

13 this Court.

14 a. THE FILES SOUGHT BY DEFENDANT ARE CONFIDENTIAL AND

ABSOLUTELY PRIVILEGED PURSUANT TO NEVADA LAW
15

16 The members of the BOARD and the Commission are charged with the awesome

17 responsibility of regulating the gaming industry in Nevada and in keeping undesirable

18 elements out of the industry. Rosenthal v. Nevada, 514 F. Supp. 907, 914 (D. Nev. 1981).

19 Under NRS 463.0129, the Nevada Legislature has declared as the public policy of this state

20 that: (1) the gaming industry is vitally important to the economy of the state and the general

21 welfare of its inhabitants; (2) that the continued growth and success of gaming is dependant

22 upon the public confidence and trust that licensed gaming is conducted honestly,

23 competitively, and free from criminal and corruptive elements; and (3) that public confidence

24 and trust can only be maintained by the strict regulation of all persons, locations, practices,

25 associations and activities related to the operation of licensed gaming establishments. See

26 NRS 463.0129.

27 The very nature of the gaming industry makes it absolutely essential for the State of

28 Nevada to have ready access to the confidential records and information of every applicant.
-5-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 6 of 16

1 Without the guarantee of confidentiality, the regulatory system would be crippled. In order to

2 ensure the free flow of confidential information into and within the BOARD and the

3 Commission, the Nevada Legislature has enacted specific statutory provisions regarding the

4 confidentiality of the BOARDs and Commissions records.

5 Specifically, NRS 463.120(4)(a), (b), (c) and (e) provide that certain records maintained

6 by the BOARD and the Commission are confidential as follows:

7 4. Except as otherwise provided in this subsection and

subsection 5, all information and data:
8 (a) Required by the Board or Commission to be
furnished to it under this chapter or which may be otherwise
9 obtained relative to the finances, earnings or revenue of any
applicant or licensee;
10 (b) Pertaining to an applicants criminal record,
antecedents and background which have been furnished to or
11 obtained by the Board or Commission from any source;
(c) Provided to the members, agents or employees of
12 the Board or Commission by a governmental agency or an
informer or on the assurance that the information will be held in
13 confidence and treated as confidential;
14 ....
15 (e) Prepared or obtained by an agent or employee of the
Board or Commission relating to an application for a license, a
16 finding of suitability or any approval that is required pursuant to the
provisions of this chapter,
17 are confidential and may be revealed in whole or in part
only in the course of the necessary administration of this chapter
18 or upon the lawful order of a court of competent jurisdiction. The
Board or Commission may reveal such information and data to an
19 authorized agent of any agency of the United States Government,
any state or any political subdivision of a state or the government
20 of any foreign country. Notwithstanding any other provision of
state law, such information may not be otherwise revealed without
21 specific authorization by the Board or Commission.
22 (emphasis added).

23 In addition, NRS 463.3407 provides the following:

24 1. Any communication or document of an applicant or

licensee, or an affiliate of either, which is made or transmitted to
25 the Board or Commission or any of their agents or employees to:
(a) Comply with any law or the regulations of the Board or
26 Commission;
(b) Comply with a subpoena issued by the Board or
27 Commission; or
(c) Assist the Board or Commission in the performance of
28 their respective duties,
-6-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 7 of 16

is absolutely privileged and does not impose liability for

1 defamation or constitute a ground for recovery in any civil action.
2 (emphasis added).

3 As indicated above, the only documents in the possession of the BOARD that have not

4 been turned over to the Defendant, and which might be within the scope of the subpoena, are

5 Las Vegas Sands, Inc.s application for licensure (except for the first page of the application),

6 which includes Mr. Adelson, and the corresponding investigative report related to that

7 application. Those documents fall within the provisions of NRS 463.120(4) and NRS

8 463.3407(1) and are therefore not available to Defendant pursuant to Fed. R. Civ. P.

9 45(c)(3)(iii). Further support for objecting to the production of these documents is found

10 within FED. R. CIV. P. 26(b)(1), which provides that [p]arties may obtain discovery regarding

11 any nonprivileged matter that is relevant . . . Defendants subpoena demands that the

12 BOARD produce documents which are clearly confidential and privileged, and therefore

13 outside the scope of permissible discovery.

14 The BOARD is not a party to this action and its only involvement in this matter is to

15 control access and use of confidential and/or privileged gaming records and information. It is

16 well established that a party cannot compel production of documents from a nonparty for

17 general discovery purposes. See Friedman v. Renault, 11 Fed. R. Serv. 2d 787-88 (S.D.N.Y.

18 1967) (per Rule 30(b) of Federal Rules of Civil Procedure, the court vacated an order

19 requiring nonparty witnesses to produce records for a deposition.). Further, [d]iscovery of a

20 non-party is a wholly different matter from discovery of a party to an action . . . one [who is]

21 not a party should not routinely be required to produce his documents or other materials for

22 use by strangers to their litigation. Jones v. Continental Cas. Co., 512 F. Supp. 1205, 1207

23 (E.D.Va. 1981).

24 Additionally, private civil parties should not be entitled to a free peek or to go on a

25 fishing expedition into a nonparty state agencys confidential and privileged files to discover

26 what documents or information might be in the possession of the agency. See U.S. v. Reed,

27 722 F.2d 570, 577 (9th Cir. 1984). Moreover, mere conjecture as to what the material sought

28 may contain does not present a sufficient reason for ordering that it be produced nor
-7-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 8 of 16

1 overriding the policy that protects from public disclosure the files of a government agency

2 which contain the end results of that agencys investigative activity. Hunt v. Local 581, Intl

3 Brotherhood of Elec. Workers, 10 Fed. R. Serv. 2d 1173, 1174 (D.N.J. 1966).

4 Individuals, such as Mr. Adelson, who subject themselves to Nevadas strict regulation

5 of gaming, do so under the statutory guarantee that any and all information they provide to or

6 is obtained by the BOARD will maintain the confidentiality and privileged status which was

7 intended by the Nevada Legislature. See NRS 463.120(4) and NRS 463.3407. If this

8 guarantee of confidentiality is eroded, there is a substantial risk that applicants and witnesses

9 will not be forthright an honest in their interactions with the BOARD. This in-turn could make

10 it more difficult for the BOARD to effectively carry out its responsibilities, and could, as a

11 result, bring harm to the gaming industry and the State of Nevada. Accordingly, under the

12 facts and circumstances of the present matter, the Court should deny the Defendants Motion

13 to Compel and quash the balance of the subpoena.

14 b. THE FILES SOUGHT BY DEFENDANT ARE SUBJECT TO EXCECUTIVE

PRIVILEGE
15

16 In addition to absolute privilege and confidentiality, which has been established by

17 statute, the BOARDs records are also protected by the executive privilege. The executive

18 privilege is a qualified, common law evidentiary privilege which protects governmental

19 agencies from disclosing information, files, reports, or other documents maintained by those

20 agencies, when disclosure would be harmful to the public interest. Martinelli v. District Court,

21 612 P.2d 1083, 1088 (Colo. 1980). The Ninth Circuit Court of Appeals has recognized

22 executive privilege. See Exxon Shipping Co. v. U.S. Dept. of Interior, 34 F.3d 774, 780(9th

23 Cir. 1994). Courts have also recognized a qualified executive privilege, in which the litigant's

24 need for the information is weighed against the government interest in nondisclosure. Id.

25 (citing 8 Wright & Miller, Federal Practice and Procedure, 2019, at 166-69). In addition, the

26 Nevada Supreme Court has also recognized the validity of the executive privilege. See

27 Labastida v. State, 112 Nev. 1502, 1506 (1996).

28 ///
-8-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 9 of 16

1 As discussed earlier, the Nevada Legislature has made a strong statement as to the

2 interests of the State of Nevada and the policy of the State of Nevada in regards to the control

3 and regulation of the gaming industry. See NRS 463.0129. In addition, the Nevada

4 Legislature has recognized the important role the gaming industry plays for Nevada. See id.

5 These policy considerations should not be lightly set aside. Defendants interest in obtaining

6 access to the BOARDs records in this case does not come close to outweighing the strong

7 interest the State of Nevada has in maintaining their confidentiality.

8 In his Motion, the Defendant asks this Court to set aside Nevadas statutory protection

9 of confidentiality and absolute privilege to serve his interests in the underlying civil lawsuit.

10 See Exhibit A. Defendant cites to Laxalt v. McClatchy, 109 F.R.D. 632 (D. Nev. 1986) (Laxalt

11 I) and Laxalt v. McClatchy, 116 F.R.D. 455 (D. Nev. 1986) (Laxalt II) to support his position.

12 In Laxalt II, the court upheld the Magistrates order regarding the production of certain

13 documents in the possession of the BOARD. Arguably, the Laxalt II case is relevant to the

14 instant matter. However, in that case, the court did not end up compelling the BOARD to

15 produce confidential and privileged documents, as suggested by Defendant. Laxalt v.

16 McClatchy, 116 F.R.D. 455, 459 (D. Nev. 1986). Instead, the court noted that, [i]n all cases

17 where a claim of privilege has been asserted, the Magistrate has found either that the

18 documents are only slightly relevant, that the information can be obtained elsewhere, or that

19 the governmental operations will be significantly harmed by disclosure of the documentary

20 evidence. Id. The court recognized that the BOARDs documents were shielded by various

21 governmental privileges, including the statutory privileges created for the Gaming BOARDs

22 records under NRS 463.120(4), 463.144, and 463.341, as well as the common law of

23 executive privilege. Id. at 458.

24 The court in Laxalt II relied on Federal Trade Commission v. Warner Communications,

25 Inc., 742 F.2d 1156 (9th Cir. 1984). In Federal Trade Commission, the Ninth Circuit held that

26 certain documents of the Federal Trade Commission should have been protected under the

27 deliberative process privilege. The Ninth Circuit noted that the deliberative process privilege

28 is a qualified one, thus a litigant may obtain materials shielded by government privilege only if
-9-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 10 of 16

1 the need for the materials and the need for accurate fact-finding override the governments

2 interest in non-disclosure. Id. at 1161. The Ninth Circuit applied a four-part test to help

3 make this determination: (1) the relevance of the evidence, (2) the availability of other

4 evidence, (3) the governments role in the litigation, and (4) extent to which disclosure would

5 hinder frank and independent discussion regarding the agencies contemplated decisions and

6 policies. Id. Unlike the deliberative process privilege, the statutory privilege asserted by the

7 BOARD is an absolute privilege. See NRS 463.3407.

8 In the present matter, it is the BOARDs position that the documents sought by the

9 Defendant, are clearly protected by this absolute privilege and thus it is unnecessary to assert

10 the deliberative process privilege. Accordingly, there is no need for the Court to go through

11 the relevant balancing test. The Nevada Supreme Court determined that a balancing test

12 was improper in the context of a confidentiality and privilege statute relevant to the

13 superintendent of banks, which is similar to the situation in the present matter. See State ex

14 rel. Tidvall v. Eighth Judicial Dist. Court, 91 Nev. 520, 525, 539 P.2d 456, 459 (1975)

15 ([S]tatute authorizing the exercise of privilege against disclosing government information is

16 unequivocal and specific. In other jurisdictions such a privilege exists only if the interest in

17 maintaining the secrecy of the information out-weighs due process considerations . . . [h]ere

18 revelation of the information asserted to be privileged may not be compelled in order to

19 determine whether or not it is privileged because the legislature has granted the privilege

20 under the statutes relied upon by the petitioners.).

21 Nevertheless, even if the Court were to apply the factors set forth in Federal Trade

22 Commission, it becomes clear, under the facts and circumstances of this case, that the harm

23 to the BOARD and the State of Nevada in producing the requested records far outweighs the

24 harm the Defendant faces in not obtaining them.

25 i. Relevancy of the Evidence

26 In his Motion, the Defendant makes several bald, conclusive assertions that his interest

27 in relevant facts, which may reveal relevant information to his case, far outweighs any

28 possible interest the BOARD might have in the confidentiality of the requested records. See
-10-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 11 of 16

1 Defendants Motion to Compel, p. 13. However, the Defendant makes no attempt to go

2 through the documents sought through his subpoena and state the potential relevancy of

3 those documents to the claims being pursued in his litigation. While the Defendant cites case

4 law related to libel actions, which the BOARD assumes is the type of litigation the Defendant

5 is involved in, he provides nothing to indicate what the alleged libelous statements are and

6 how the documents in the BOARDs possession may aid in the underlying litigation.

7 In Laxalt II, the court recognized that the standards for discovery from a nonparty

8 require a stronger showing of relevance and necessity than for a simple party discovery, and

9 that nonparties enjoy greater protection from discovery than normal parties. Laxalt, 116
th
10 F.R.D. at 457; see also Dart Industries Co. v. Westwood Chemical Co., 649 F.2d 646 (9 Cir.

11 1980). The rule is thus well established that nonparties to litigation enjoy greater protection

12 from discovery than normal parties. Id. at 458. Since the BOARD is not a party to this

13 action, Defendant must establish that its need for access to the confidential information

14 requested by the subpoena satisfies this heightened level of relevancy and necessity. In the

15 present matter, the Defendant has failed to make such a showing.

16 Based on the substance of his request, it appears that the Defendant is simply fishing

17 around for information and documents, and in doing so he is seeking access to the highly

18 confidential and privileged files of the BOARD and the Commission. See U.S. v. Reed, 726

19 F.2d 570, 577 (9th Cir.1984) (requesting entire files instead of specific documents indicates a

20 fishing expedition); see also Bowman Dairy Co. v. U.S., 341 U.S. 214, 221 (1951) (specificity

21 in subpoena prevents fishing expedition to see what may turn up). Such action is

22 inappropriate, especially when it involves a nonparty. Accordingly, the Relevancy of the

23 Evidence part of the Federal Trade Commission test weighs in favor of the BOARD.

24 ii. Availability of Other Evidence

25 Defendant again makes a bald, conclusive statement that the BOARD is the only entity

26 that possesses the information he is seeking, yet he offers little to no evidence to support this

27 assertion. The Defendant puts forth no evidence, other than his deposition of Mr. Adelson

28 that he made any efforts to track down the information from any other available source.
-11-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 12 of 16

1 Categories 1 and 2 In his Motion, the Defendant does not indicate what information

2 may be in Mr. Adelsons application, and documents related to his consideration for licensure,

3 that is not available from other sources. In addition, there is no indication that the Defendant

4 has made any efforts to try and secure the requested information from other sources. For

5 example, in his Motion, the Defendant states that during Mr. Adelson examination in a

6 deposition, Mr. Adelson had stated that the requested documents may possibly be located in

7 Boston. See Defendants Motion to Compel, p. 5. However, there is no indication in the

8 Motion that the Defendant made any effort to track this information down in Boston before

9 looking to the BOARD for the information. The Defendant appears to want to avoid exerting

10 any efforts on his part to conduct discovery, but instead wants to use the BOARD to save him

11 the necessary time and effort. Clearly, in regards to the documents falling under Categories 1

12 and 2 of the subpoena, the test for availability of other evidence weighs in favor of the

13 BOARD not disclosing the documents.

14 Category 3 In his Motion, the Defendant does not indicate what information may

15 have been obtained from Mr. Adelson during interviews with him by the BOARD that could not

16 similarly be obtained by Defendant through a deposition of Mr. Adelson. Again, it appears

17 that the Defendant wants to use the BOARDs efforts to substitute for him having to conduct

18 discovery in his own case. In regards to the documents falling under Category 3 of the

19 subpoena, the test for availability of other evidence weighs in favor of the BOARD not

20 disclosing the documents.

21 Category 4. Again, the Defendant offers no evidence that he was unable to obtain

22 this information through his own efforts. It seems logical, that if Mr. Adelson operated,

23 owned, funded, leased or sold vending machines, Mr. Adelson would be the appropriate

24 source of any information related to such a venture, not the BOARD. In regards to the

25 documents falling under Category 5 of the subpoena, the test for availability of other evidence

26 weighs in favor of the BOARD not disclosing the documents.

27 Category 5. As with the previous categories, the Defendant offers no evidence that

28 he was unable to obtain this information through his own efforts. Like with category 4, if Mr.
-12-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 13 of 16

1 Adelson operated, owned, funded, leased or sold any bar, tavern or nightclub, Mr. Adelson or

2 the government records office in the applicable state is the appropriate source of any

3 information related to such a venture not the BOARD. In regards to the documents falling

4 under Category 5 of the subpoena, the test for availability of other evidence weighs in favor of

5 the BOARD not disclosing the documents.

6 Category 6. The State of Massachusetts suspended Mr. Adelsons real estate

7 license, Defendant should seek the information related to such suspension from Mr. Adelson

8 and/or the State of Massachusetts not the BOARD. He provides no evidence that he made

9 any inquiry of the State of Massachusetts. In regards to the documents falling under

10 Category 6 of the subpoena, the test for availability of other evidence weighs in favor of the

11 BOARD not disclosing the documents.

12 Category 7. If the Defendant wants information about Henry or Carmine Vara and

13 their relationship with Mr. Adelson, the Defendant should depose those individuals. Like with

14 the other categories, the Defendant has offered no evidence as to why he could not obtain

15 that information directly from those individuals. In regards to the documents falling under

16 Category 7 of the subpoena, the test for availability of other evidence weighs in favor of the

17 BOARD not disclosing the documents.

18 Category 8 If Mr. Adelson purchased a home in Cape Cod, Massachusetts, from

19 Sanford Sorrentino, or forgave any debt, Mr. Adelson, Mr. Sorrentino, or the records of the

20 appropriate governmental and banking institutions of Massachusetts would be the appropriate

21 source for any such information, not the BOARD. The Defendant provides no evidence that

22 he ever attempted to obtain that information from those sources. In regards to the documents

23 falling under Category 8 of the subpoena, the test for availability of other evidence weighs in

24 favor of the BOARD not disclosing the documents.

25 Category 9 If Mr. Adelson or his associated entities were involved in lawsuits, Mr.

26 Adelson is the appropriate source for any such information as well as the courts wherein

27 those lawsuits were filed not the BOARD. The Defendant offers no evidence as to why such

28 information cannot be obtained from those sources. In regards to the documents falling
-13-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 14 of 16

1 under Category 9 of the subpoena, the test for availability of other evidence weighs in favor of

2 the BOARD not disclosing the documents.

3 The BOARD is not a repository of documents and information, to be accessed

4 whenever a litigant needs information that may be in the possession of the BOARD. The

5 Defendant appears to have made little effort to track down the information he seeks on his

6 own from the various available sources for the information. In addition, the Defendant seems

7 to be pursuing the information as an effort to test the information he has already obtained

8 from Mr. Adelson through the discovery process. The Defendant sees the BOARD as the

9 easiest means to obtain the information he believes is relevant to his litigation. This,

10 however, is not an appropriate justification for him to access to the BOARDs highly

11 confidential and privileged records. Accordingly, the Availability of Other Evidence part of

12 the Federal Trade Commission test weighs in favor of the BOARD.

13 iii. Governments Role in Litigation

14 The third factor set forth in Federal Trade Commission, regarding the governments

15 role in the litigation, likewise weighs in favor of nondisclosure of this confidential and

16 privileged information. The BOARD is not a party to this action. Neither the BOARD nor the

17 State of Nevada have any interest in the outcome of this litigation.

18 iv. Extent Disclosure Would Hinder Discussion

19 The fourth factor speaks to the heart of the issue and clearly weighs in favor of the

20 BOARD. Any order from this Court compelling the BOARD to produce confidential and

21 privileged documents would substantially impair the BOARDs continued ability to acquire

22 confidential information from future applicants; accordingly, the Court should only do so for

23 extremely compelling reasons. Such reasons do not exist in the present case.

24 Human experience teaches that those who expect public dissemination of their

25 remarks may well temper candor with a concern for appearances and for their own interests

26 to the detriment of the decision making process. United States v. Nixon, 418 U.S. 683, 705

27 (1974). The gaming industry in Nevada is by far the most strictly and intensely regulated

28 industry in this state, and the effective regulation of this industry absolutely requires the
-14-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 15 of 16

1 BOARD to maintain a free flow of the confidential information required by the Nevada Gaming

2 Control Act.

3 The Nevada Supreme Court has previously recognized the need for regulatory

4 agencies to acquire information and to maintain the confidentiality of that information. In a

5 case involving similar provisions requiring confidentiality of reports submitted to the

6 superintendent of banks, the Nevada Supreme Court held that, [i]t is in the public interest to

7 promote acquisition by the superintendent of banks of full information regarding the matter

8 within the purview of his official duties, and it is obvious that without some such protection the

9 information so obtainable would be greatly curtailed. State ex rel. Tidvall v. Eighth Jud. Dist.

10 Ct., 91 Nev. 520, 525, 539 P.2d 456, 459 (1975). The Nevada Supreme Courts rationale in

11 Tidvall is equally applicable to information acquired by the BOARD and Commission.

12 Curtailing the BOARDs ability to acquire complete and accurate information would severely

13 hamper the BOARDs ability to maintain public confidence and trust in licensed gaming

14 through strict regulation of all persons, locations, practices, associations and activities. See

15 NRS 463.0129.

16 Based on the above, should the Court apply the factors set forth in Federal Trade

17 Commission, it becomes clear, under the facts and circumstances of this case, that the harm

18 to the BOARD and the State of Nevada in producing the requested records far outweighs the

19 harm the Defendant faces in not obtaining them. The Defendant has not met his burden.

20 The Court should therefore deny his Motion to Compel and quash the balance of the

21 subpoena.

22 4. CONCLUSION

23 Based on the foregoing, the BOARD respectfully requests that this Court deny

24 Defendants Motion to Compel. All the documents and information requested by the

25 subpoena served on the BOARD, which have not already been produced, are protected by

26 Nevada law as confidential and privileged, and therefore do not fall within the scope of

27 permissible discovery pursuant to FED. R. CIV. P. Rules 45 and 26. In addition, the Defendant

28 failed to cite to any authority which upheld an order requiring the BOARD to disclose
-15-
 Case 08-01012-bam Doc 102 Entered 09/29/08 10:06:59 Page 16 of 16

1 confidential and privileged information. Any such order would be contrary to the Nevada

2 Legislatures declared policy for this state, and would effectively stifle the BOARDs continued

3 ability to effectively regulate the gaming industry in Nevada. The BOARD is not a party to this

4 action, and simply has no interest whatsoever in its outcome. The facts and circumstances of

5 this case do not warrant such extraordinary relief that the Defendant is seeking.
th
6 DATED this 26 day of September, 2008.

7 Submitted by:
8 CATHERINE CORTEZ MASTO
Attorney General
9

10 By: /s/ David J. Pope

For: EDWARD L. MAGAW
11 Deputy Attorney General
Gaming Division
12 (702) 486-3420

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28
-16-