Las Vegas Bistro, LLC v. Las Vegas Metro. Police Dep't

535 P.3d 673

In the MATTER OF SEARCH WARRANTS REGARDING SEIZURE OF DOCUMENTS, LAPTOP COMPUTERS, CELLULAR TELEPHONES, AND OTHER DIGITAL STORAGE DEVICES from the Premises of Las Vegas Bistro, LLC, and Little Darlings of Las Vegas, LLC.

Las Vegas Bistro, LLC, d/b/a Larry Flynt's Hustler Club; and Little Darlings of Las Vegas, LLC, Appellants,

v.Las Vegas Metropolitan Police Department, Respondent.

No. 84931-COA

Court of Appeals of Nevada.

Filed August 24, 2023

Fox Rothschild LLP and Deanna L. Forbush and Colleen E. McCarty, Las Vegas; Shafer & Associates, P.C., and Zachary M. Youngsma, Lansing, Michigan, for Appellants.

Marquis Aurbach and Nick D. Crosby and Jackie V. Nichols, Las Vegas, for Respondent.

BEFORE THE COURT OF APPEALS, GIBBONS, C.J., and BULLA and WESTBROOK, JJ.

OPINION¹

By the Court, WESTBROOK, J.:

After the Las Vegas Metropolitan Police Department (LVMPD) executed search warrants at appellants’ business establishments, seizing various documents and electronic devices, appellants filed a motion for the return of that property pursuant to NRS 179.085 on the basis that the property contained privileged materials. In the motion, appellants also sought to quash and unseal the warrants. Citing its ongoing investigation, LVMPD opposed appellants’ motion and proposed to resolve appellants’ privilege concerns by having its own Digital Forensics Lab (DFL) search for any privileged information and redact it before turning it over to LVMPD detectives. The district court determined that it was "not unreasonable" for LVMPD to retain the property under these circumstances and that the proposed search protocol was "a reasonable resolution of" the privilege issue. As a result, the district court denied appellants’ return-of-property motion. The district court also denied appellants’ request to quash and unseal the warrants.

Although we agree that the district court properly denied appellants’ request to quash and unseal the warrants, we conclude that the district court erred when it prematurely denied appellants’ return-of-property motion without giving appellants an opportunity to demonstrate privilege. We also conclude that the district court erred by adopting LVMPD's proposed search protocol, which allowed DFL to disclose potentially confidential communications to law enforcement based on its own unilateral determination of privilege without affording appellants an opportunity to challenge that determination prior to disclosure.

In reaching these conclusions, we recognize for the first time that Nevada's return-of-property statute, NRS 179.085, allows a property owner to seek the return of privileged materials that have been seized pursuant to a valid search warrant, even when the government has an ongoing investigation. When a property owner files a return-of-property motion prior to the initiation of criminal proceedings, the Nevada Rules of Civil Procedure apply. In such cases, the property owner must comply with NRCP 26(b)(5), which requires both an express claim of privilege and a description of the privileged documents in a privilege log. However, the property owner need not produce a privilege log until they have been given access to the seized materials. Accordingly, we affirm in part, reverse in part, and remand.

FACTS AND PROCEDURAL HISTORY

The LVMPD's Special Investigation Section began covertly investigating erotic dance locations for prostitution-related activities, including investigations at Las Vegas Bistro, LLC, dba Larry Flynt's Hustler Club (Hustler Club) and Little Darlings of Las Vegas, LLC (Little Darlings) (collectively, appellants). As part of its investigation, LVMPD sent undercover officers to each establishment in January and March 2022. During each of these visits, one or more entertainers reportedly solicited the undercover officers to engage in illicit prostitution activity.

In April 2022, LVMPD submitted applications and affidavits in support of search warrants for Hustler Club and Little Darlings; those applications were granted by the Las Vegas Justice Court. Both warrant applications indicated an investigation into the crimes of "advancing prostitution" and "living from earnings of prostitution" at these establishments. The warrants for both properties were issued the same day, as well as orders sealing the affidavits for both warrants.

The warrants were executed on both Hustler Club and Little Darlings on April 5. At both properties, LVMPD seized computers, tablets, thumb drives, documents, and the cell phones of managers present. Two days after the warrants were executed, LVMPD submitted additional applications and affidavits in support of search warrants requesting authority to search the digital storage devices seized from Hustler Club and Little Darlings. The justice court issued both search, warrants the same day, as well as additional orders sealing the affidavits.

Five days later, appellants filed in the district court a motion to (1) unseal the search warrant applications and supporting affidavits, (2) quash the search warrants, and (3) return seized property. The motion was brought pursuant to NRS 179.105 (retention and restoration of property taken on warrant), NRS 179.045(4) (sealing and unsealing of warrant materials), and NRS 179.085(1)(b), (d), and (e) (requesting the return of property). The motion was divided into two main points: a request to quash and unseal the warrant materials based on a lack of probable cause, and a request for the return of property because the warrants were allegedly insufficient and illegally executed and the property seized contained privileged materials.

LVMPD opposed the motion. It argued the warrants were supported by probable cause for the crimes of "advancing prostitution" and "living from earnings of prostitution." LVMPD further argued that additional evidence would potentially be destroyed if the district court were to unseal the warrants and that the ongoing investigation presented a compelling reason against disclosure.

At the time of its opposition, LVMPD confirmed the seized property was in the custody of DFL. No search had yet occurred, as DFL was still in the process of creating mirror images of the electronic contents. To address appellants’ privilege concerns, LVMPD proposed a search protocol whereby appellants would provide DFL with "a list of full names, email addresses, and/or phone numbers that would be considered privileged." DFL would search for the keywords and review the search results for privileged information. Privileged materials would be redacted before the documents were turned over to LVMPD detectives.

LVMPD further argued that the Nevada statute explicitly requiring the return of privileged materials among seized property, NRS 179.105, applied only to search warrants executed on practicing attorneys or law firms. Because the search warrants in this case were not executed on any attorneys or law firms, LVMPD argued that no statute required the return of privileged materials. LVMPD also asserted that the ongoing criminal investigation justified retaining the materials.

At the hearing in district court, appellants asserted there was no evidence of "prostitution" as defined by NRS 201.320 because the undercover officers may have witnessed solicitation, but not prostitution. Appellants further contended that "advancing prostitution" and "living from earnings of prostitution" could not be supported by probable cause because they lacked the material element of "prostitution." With regard to the privileged materials, appellants argued that the proper course would be to return the seized property to them to create a privilege log, and then the parties could engage a special master or third party to determine what was privileged.

The district court ordered LVMPD to provide the sealed warrant materials in camera so the court could determine whether there was probable cause for the warrants and whether appellants presented good cause to unseal them. After conducting its in camera review, the district court entered an order finding that the warrants were supported by probable cause and denying appellants’ request to unseal. Further, the district court summarily found that LVMPD's proposed DFL search protocol was "a reasonable resolution of" the privilege claim.

ANALYSIS

On appeal, appellants argue that the district court erred in finding that the warrants were supported by probable cause and that good cause existed for the warrant materials to remain sealed. In addition, appellants argue that the district court erred in finding LVMPD's proposed DFL search protocol was a proper resolution to the privilege issue, because there must be some mechanism for the return of privileged materials seized from nonattorneys. LVMPD disagrees, arguing that the warrants were supported by probable cause, that good cause did not exist to unseal the warrants, and that LVMPD's retention of the property was reasonable under the circumstances. LVMPD further argues that appellants request for the return of property is now moot because the electronic devices were returned to the property owners (though LVMPD retained a copy of the contents). We address appellants’ arguments in turn.

The district court did not err in finding the warrants were properly supported by probable cause

Appellants argue probable cause for the warrants was lacking because the undercover officers could not have consummated any sexual acts with the entertainers. While there may have been probable cause for solicitation, appellants claim that there could not have been probable cause for prostitution or any crimes that have prostitution as a material element. As a result, appellants argue they are entitled to the return of property under NRS 179.085(1)(b) and (d) because the warrants were insufficient on their face and illegally executed, LVMPD responds that the district court property found that probable cause existed after its in camera review of the warrant materials.

"[T]he proper...