DONOR NETWORK WEST v. Nevada Donor Network, Inc. et al
Filing
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AMENDED ORDER to ECF No. 45 - This order only corrects erroneous references to Rule 9(c) on pages 8-9. No other part of the Court's order has been amended. Signed by District Judge Anne R. Traum on 1/29/2025. (Copies have been distributed pursuant to the NEF - DRM)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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DONOR NETWORK WEST, a nonprofit corporation,
Case No. 3:23-cv-00632-ART-CSD
Plaintiff,
AMENDED ORDER to ECF No. 45
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v.
Nevada Donor Network, Inc., a nonprofit corporation,
Defendant.
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This order amends the Court’s prior order, filed September 9, 2024 at ECF
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No. 45, only to correct erroneous references to “Rule 9(c)” on pages 8-9. This order
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corrects those references to say “Rule 9(b).” No other part of the Court’s order has
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been amended.
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Plaintiff Donor Network West (“DNW”) brings this action against Defendant
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Nevada Donor Network, Inc (“NDN”), alleging claims for Intentional Interference
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with Contractual Relations, Intentional Interference with Prospective Economic
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Advantage, and violations of the Nevada Deceptive Trade Practices Act and
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Nevada Unfair Trade Practices Act. Plaintiff DNW’s claims are premised on
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allegations that Defendant NDN illegally interfered with their affiliation agreement
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with Renown Health (“Renown”). Before the Court are Plaintiff’s motion for a
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temporary restraining order and preliminary injunction (ECF No. 2) and
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Defendant’s motion to dismiss (ECF No. 30.)
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I.
FACTS
Plaintiff
DNW
and
Defendant
NDN
are
both
organ
procurement
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organizations (“OPOs”) which operate in Nevada. (ECF No. 28 at 2.) Under federal
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regulations, OPOs are required to serve a Designated Service Area (“DSA”).
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Medicaid and Medicare participating hospitals within that DSA are required to
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have an exclusive agreement with the OPO designated to serve that DSA, unless
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the U.S. Centers for Medicare & Medicaid Services (“CMS”) grants the hospital a
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waiver to use a different OPO. 42 U.S.C. § 1320b-8(a)(1)(C); 42 CFR § 486.308(a).
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(Id. at 8.) Plaintiff DNW is the designated OPO for Reno and the surrounding area.
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(Id. at 2.) Defendant NDN is the designated OPO for hospitals located in southern
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Nevada. (Id.) As the OPO for the northern Nevada DSA, Plaintiff DNW has an
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affiliation agreement with Renown to provide organ procurement services to its
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hospitals in this area. (Id. at 4.) However, in September 2023, Renown applied to
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obtain a waiver from CMS to use NDN as their OPO instead of DNW, and notified
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DNW of an intent to cancel their affiliation agreement. (Id. at 20.)
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Plaintiff alleges that Defendant NDN took several actions to induce Renown
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to terminate the affiliation agreement with DNW by seeking a waiver through CMS
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to name NDN its new OPO. Specific allegations include the following: NDN
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Created a “take it north” campaign, intending to become the only OPO in Nevada.
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(Id. at 12.) NDN entered into an MOU with Renown to provide Renown $6 million
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to build a new National Transplant Institute at Renown, which is illegal under
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state and federal anti-kickback statutes (42 U.S.C. § 1320a-7b; NRS 422.560).
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(Id. at 13, 30). NDN misrepresented to Renown that NDN could work on organ
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transplant operations, which an OPO is not permitted to do under federal
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regulations. (Id. at 13). NDN misrepresented its status and ability to perform
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organ procurement in northern Nevada to numerous hospitals, including
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Renown, while it is not the OPO for that DSA. (Id. at 13, 25.) At a meeting in
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August 2023, NDN misrepresented, contrary to available data showing that DNW
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outperforms NDN, that they are more qualified and successful than DNW, and
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that affiliating with them would increase organ transplants. (Id. at 19, 23-24.) At
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an international organ donation conference in October 2023, NDN’s CEO falsely
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represented that NDN was the sole Nevada OPO. (Id. at 27.) NDN falsely told
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several hospitals that continuing to work with DNW would violate Medicare. (Id.
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at 26.)
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Plaintiff alleges that NDN’s conduct has disrupted DNW’s ability to perform
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under the affiliation agreement with Renown. DNW alleges that NDN’s
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misrepresentations have caused confusion with DNW and Renown staff and the
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organ donation community, as well as cancellation of necessary meetings with
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Renown to coordinate services. (Id. at 3, 21-22, 25, 33, 35.) DNW also alleges that
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it has had to dedicate substantial resources to protecting its rights and quelling
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such confusion, making it more expensive for them to perform under the
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affiliation agreement. (Id. at 30-31.)
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On December 8, 2023, Plaintiff filed a complaint (ECF No. 1) and motion
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for temporary restraining order and preliminary injunction (ECF No. 2.) Plaintiff
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then filed a first amended complaint on January 16, 2024 (ECF No. 28.)
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Defendant filed a motion to dismiss (ECF No. 30) on January 30, 2024. Plaintiff
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filed a response (ECF No. 37) on February 13, 2024, and Defendant filed a reply
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(ECF No. 39) on February 20, 2024.
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II.
Plaintiff’s Motion for Injunctive Relief
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Plaintiff’s motion for a temporary restraining order and preliminary
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injunction, filed with Plaintiff’s original complaint, requested injunctive relief
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against both Renown and Defendant NDN. (ECF No. 2.) Because Plaintiff
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subsequently filed a first amended complaint (ECF No. 28) which does not request
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a temporary restraining order or preliminary injunction, the Court denies
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Plaintiff’s motion for temporary restraining order and preliminary injunction as
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moot, without prejudice.
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III.
Defendant’s Motion to Dismiss
Defendant’s motion to dismiss argues that all four claims brought by
Plaintiff should be dismissed under Fed. R. Civ. P. 12(b)(6).
A. Legal Standard
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A court may dismiss a complaint for “failure to state a claim upon which
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relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must
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provide “a short and plain statement of the claim showing that the pleader is
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entitled to relief.” Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S.
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544, 555 (2007). While Rule 8 does not require detailed factual allegations, it
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demands more than “labels and conclusions” or a “formulaic recitation of the
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elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
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Twombly, 550 U.S. at 555). “Factual allegations must be enough to rise above the
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speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to
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dismiss, a complaint must contain sufficient factual matter to “state a claim to
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relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550
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U.S. at 570). Under this standard, a district court must accept as true all well-
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pleaded factual allegations in the complaint and determine whether those factual
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allegations state a plausible claim for relief. Id. at 678-79.
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B. ANALYSIS
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1. Intentional Interference with Contractual Relations
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A claim for intentional interference with contractual relations exists when
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(1) there is a valid and existing contract; (2) defendant has knowledge of the
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contract; (3) defendant’s acts are intentional and intended or designed to disrupt
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the contractual relationship; (4) actual breach or disruption of the contract
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occurs; and (5) plaintiff is harmed by the disruption or breach. Sutherland v.
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Gross, 772 P.2d 1287, 1290 (Nev. 1989); J.J. Indus., LLC v. Bennett, 71 P.3d 1264,
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1267 (Nev. 2003).
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Here, Plaintiff has alleged sufficient facts to state a claim for intentional
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interference with contractual relations. First, Plaintiff states that at all relevant
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times, DNW maintained an affiliation agreement with Renown. (ECF No. 28 at
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29.) Second, Plaintiff alleges that Defendant NDN had knowledge of this affiliation
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agreement, as they were “well-versed in federal regulations regarding OPO-
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hospital relationships in respective DSAs” and were thus aware that DNW was
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the designated OPO for Renown. (Id.)
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Third, Plaintiff alleges that Defendant NDN intentionally induced Renown
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to terminate the affiliation agreement between Renown and Plaintiff DNW via an
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illegal promise of $6 million to form the new Nevada Transplant Institute program
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at Renown, and through several misrepresentations regarding both DNW and
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NDN. (Id. at 13, 19, 23-27, 30.) Along with the specific allegation that the MOU
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violates anti-kickback statutes, Plaintiff alleges many specific instances of
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harmful misrepresentations. (Id. at 13, 19, 23-27.) Drawing all inferences in the
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light most favorable to Plaintiff, it is plausible that these alleged actions were
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intended by NDN to disrupt the affiliation agreement between Plaintiff DNW and
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Renown.
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Fourth, Plaintiff DNW alleges that an actual and significant disruption of
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the agreement with Renown occurred. While at the time of pleadings, the
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affiliation agreement between Plaintiff DNW and Renown had not actually been
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terminated, DNW alleges that NDN’s actions caused dedication of substantial
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resources to protect its rights and quell confusion, as well as cancellation of
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necessary meetings between DNW and Renown, making it more expensive for
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them to perform under the affiliation agreement. (Id. at 3, 21-22, 25, 30-35.)
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Allegations of increased cost of performance of contractual duties can be
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sufficient to allege an actual disruption of a contract. See Rimini St., Inc. v. Oracle
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Int’l Corp., No. 2:14-CV-1699-LRH-CWH, 2017 WL 5158658, at *6 (D. Nev. Nov.
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7, 2017) (finding that expenditures to investigate and eliminate confusion caused
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by misrepresentations were sufficient to allege actual disruption); see also
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Chocolate Magic Las Vegas LLC v. Ford, 337 F. Supp. 3d 950, 961 (D. Nev. 2018)
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(finding costly re-assignments and efforts to quell employee confusion caused by
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defendant’s interference sufficient to allege disruption).
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Fifth, Plaintiff has sufficiently pleaded damages. DNW has alleged that they
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have suffered economic harm, costs of mitigation, loss of goodwill and injury to
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reputation, as well as other damages. (ECF No. 28 at 31.)
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Additionally, if an action for intentional interference of contractual
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relations is based upon the termination of an at-will contract, then the
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interference must have been done maliciously or by improper means. Rimini St.,
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2017 WL 5158658, at *7. The parties dispute whether the affiliation agreement
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was in fact terminable at-will. However, even if the agreement was terminable at-
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will, Plaintiff has alleged sufficient facts to demonstrate that NDN’s alleged
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conduct was improper. DNW alleges that NDN’s conduct violated state and federal
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anti-kickback statutes and consisted of several misrepresentations about both
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DNW’s performance and NDN’s own status, both of which constitute improper
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conduct. See id. at *7 (finding that intentional misrepresentations by defendant
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were unjustified).
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2. Intentional Interference with Prospective Economic Advantage
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To state a claim for intentional interference with prospective economic
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advantage, a plaintiff must allege the following: (1) the existence of a prospective
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contractual relationship between themselves and a third party, (2) knowledge of
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this prospective relationship by the defendant, (3) intent to harm the plaintiff by
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preventing or interfering with the prospective contractual relationship, (4) the
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absence of privilege or justification by the defendant, and (5) actual harm to the
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plaintiff. Id. at *8 (D. Nev. Nov. 7, 2017) (citing Leavitt v. Leisure Sports, Inc., 734
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P.2d 1221, 1225 (Nev. 1987)). The only significant difference between the
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elements of a claim for intentional interference with contractual relations and
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intentional interference with prospective economic advantage is the requirement
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that a plaintiff prove the absence of privilege or justification by the defendant.
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Rimini St. v. Oracle Int’l Corp., 473 F. Supp. 3d 1158, 1186 (D. Nev. 2020).
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Privilege can exist if a defendant acted to protect its own interests, but activity is
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not privileged or justified if a defendant “resort[ed]… to unlawful or improper
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means.” Allstate Ins. Co. v. Shah, No. 215-CV-01786-APG-DJA, 2023 WL
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5613493, at *5 (D. Nev. July 17, 2023) (citations omitted).
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Plaintiff has alleged sufficient facts to constitute a claim intentional
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interference with prospective economic advantage. First, Plaintiff alleges that they
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have prospective relationships with Renown, all hospitals in the DSA in northern
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Nevada, and DNW staff. (ECF No. 28 at 31-32.) Second, Plaintiff alleges that NDN
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knew about these prospective relationships because they contacted hospitals to
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attempt to convince them to terminate their agreements with DNW. (Id. at 32.)
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Third, Plaintiff alleges that NDN intentionally interfered with these relationships
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by making false and misleading statements designed to cause confusion and
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disrupt these ongoing and prospective relationships. (Id. at 32-33.) Plaintiff cites
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NDN’s “take it north” campaign as a further demonstration of NDN’s intent. (Id.
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at 12; ECF No. 37 at 16.) Fourth, because Plaintiff alleges that NDN’s actions
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included misrepresentations, they have sufficiently alleged that NDN used
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improper means, and thus that NDN’s actions were not privileged. (ECF No. 28
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at 32-33.) Fifth, Plaintiff alleges that NDN’s misrepresentations have caused them
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to suffer economic harm, costs of mitigation, loss of goodwill and injury to
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reputation, as well as other damages. (Id. at 33.)
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Defendant argues that Plaintiff’s claim fails because they failed to name
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specific prospective contractual relationships. (ECF No. 39 at 6.) However, this
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argument has previously been rejected. See Shah, 2023 WL 5613493, at *5. While
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a plaintiff pleading a claim for intentional interference with prospective economic
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advantage must identify a particular relationship that was interfered with, it is
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sufficient that Plaintiff identified a “class of customers” (hospitals in the DSA in
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northern Nevada) with whom NDN’s conduct interfered. Id. (citing In re Amerco
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Derivative Litig., 252 P.3d 681, 702-703 (Nev. 2011) (en banc).
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Plaintiff has adequately stated a claim for intentional interference with
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prospective economic advantage. Thus, Defendant’s motion to dismiss this claim
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is denied.
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//
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3. Violation of Nevada Deceptive Trade Practices Act
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A valid claim under NRS 41.600(1), the Nevada Deceptive Trade Practices
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Act (“NDTPA”) requires “that (1) an act of consumer fraud by the defendant (2)
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caused (3) damage to the plaintiff.” Picus v. Wal-Mart Stores, Inc., 256 F.R.D. 651,
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658 (D. Nev. 2009). Plaintiff’s complaint alleges violations of the NDTPA under
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both NRS 598.0923 and NRS 598.0915(8), which are addressed in turn.
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a. Applicability of Rule 9(b).
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As a preliminary matter, Plaintiff and Defendant dispute whether both of
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Plaintiff’s claims under the NDTPA must meet the heightened pleading standards
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under Fed. R. Civ. P. 9(b), which requires a plaintiff to “state with particularity
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the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). Defendant argues that
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all cases brought under the NDTPA are subject to Rule 9(b), citing Allstate Ins.
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Co. v. Belsky, No. 215-CV-02265-MMD-CWH, 2017 WL 7199651 (D. Nev. Mar.
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31, 2017) (“Consumer fraud claims brought under this statute are subject to Rule
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9(b)'s heightened pleading requirements.” (citing Brown v. Kellar, 636 P.2d 874,
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874 (Nev. 1981))). Plaintiff counters that Rule 9(b) applies only to NDTPA claims
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based on misrepresentations, citing Smallman v. MGM Resorts Int'l, 638 F. Supp.
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3d 1175, 1199-1200 (D. Nev. 2022) (applying Rule 9(b) to claims under
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598.0923(1)(b), which defines the failure to disclose a material fact in a
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transaction as a deceptive trade practice, but seemingly not applying Rule 9(b) to
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claims under 598.0923(1)(c)), which defines violation of state or federal law
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relating to the sale or lease of goods or services as a deceptive trade practice).
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Regardless of whether Rule 9(b) does apply to all of Plaintiff’s claims under
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the NDTPA, Plaintiff’s complaint meets the pleading requirements of Rule 9(b) for
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all NDTPA claims.
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a. Violation of NRS 598.0923(1)(c)-(d)
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Under NRS 598.0923(1)(c), a person engages in a deceptive trade practice
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when they knowingly violate a state or federal statute or regulation relating to the
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sale or lease of goods or services. Under NRS 598.0923(1)(d), a person engages in
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a deceptive trade practice when they use coercion, duress or intimidation in a
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transaction.
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Plaintiff DNW alleges that Defendant NDN violated state and federal anti-
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kickback laws (42 U.S.C. 1320a-7b(b)) and NRS 422.560) when they induced
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Renown to terminate their affiliation agreement with DNW and seek a waiver to
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name NDN their new OPO by promising $6 million in funding for the new Nevada
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Transplant Institute. (ECF No. 28 at 34-35). Plaintiff alleges that this inducement
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caused Renown to notice termination of the agreement with DNW and seek a
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waiver to affiliate with NDN instead. (Id.) Plaintiff alleged the specific timing and
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circumstances of each factual allegation, sufficiently alleging the “who, what,
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when, where, and how” of the fraudulent misconduct. Vess v. Ciba-Geigy Corp.
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USA, 317 F.3d 1097, 1106 (9th Cir. 2003); (ECF No. 28 at 13, 22.) Plaintiff has
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thus made these allegations with sufficient particularity to meet the requirements
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of Rule 9(b).
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b. Violation of NRS 598.0915(8)
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Under NRS 598.0915(8), a person engages in a deceptive trade practice
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when they “knowingly disparage the services or business of another by false or
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misleading representation of fact.” Plaintiff alleges that, among other actions,
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Defendant made specific false and misleading statements regarding DNW’s
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performance to community members, and falsely represented that NDN would be
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replacing DNW as Renown’s OPO for the DSA in northern Nevada. (ECF No. 28
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at 23-24, 26.) Plaintiff specified the timing and circumstances of both alleged
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events. (Id.) Thus, Plaintiff pleaded the alleged conduct with sufficient
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particularity under Rule 9(b).
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As with its other claims, Plaintiff alleges that the above actions by
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Defendant NDN caused economic harm, costs of mitigation, loss of goodwill and
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injury to reputation, as well as other damages. (Id. at 35). Because Plaintiff has
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sufficiently plead that (1) an act of consumer fraud by the defendant (2) caused
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(3) damages to the plaintiff, Defendant’s motion to dismiss Plaintiff’s NDTPA
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claims under NRS 598.0923(1)(c)-(d) and NRS 598.0915(8) is denied.
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4. Violation of Nevada Unfair Trade Practices Act
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Plaintiff alleges that Defendant’s actions violated the Nevada Unfair Trade
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Practices Act (“NUPTA”) by attempting to monopolize trade or commerce in
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Nevada under NRS 598A.060(1)(e). (ECF No. 28 at 36.) In their motion to dismiss,
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Defendant argues that Plaintiff’s claims under NUPTA are barred because (1)
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NUPTA does not apply to conduct which is expressly authorized, regulated or
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approved by a state or federal statute or administrative agency under NRS
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598A.040(3) and (2) the implied immunity doctrine shields Defendant’s conduct
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from antitrust suit because there is an alternative regulatory scheme which
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impliedly repeals antitrust laws. (ECF No. 30 at 15-18.)
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Plaintiff failed to address either of these arguments in their response (ECF
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No. 37.) Local Rule 7-2(d) provides that “failure of an opposing party to file points
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and authorities in response to any motion shall constitute a consent to the
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granting of the motion.” LR 7-2(d). As Defendant correctly points out, the Court
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may apply LR 7-2(d) to dismiss a claim when a party fails to respond to an
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argument in their opposition brief. See Kearns v. Comba, No. CV-N-03-0207-LRH-
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RAM, 2005 WL 8165235, at *2 (D. Nev. Sept. 27, 2005). Accordingly, the Court
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dismisses Plaintiff’s cause of action under NUPTA pursuant to LR 7-2(d).
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5. Punitive Damages
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Defendant also asserts that Plaintiff has failed as a matter of law to allege
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facts supporting an award of punitive damages. (ECF No. 30 at 23-24.) Under
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Nevada law, punitive damages are available “where it is proven by clear and
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convincing evidence that the defendant has been guilty of oppression, fraud or
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malice, express or implied . . .” NRS 42.005. At the motion to dismiss stage,
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Plaintiff only need state the “bare minimum” of facts that could plausibly give rise
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to punitive damages. Lewenz v. State Farm Ins. Co., No. 220-CV-01994-KJD-EJY,
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2021 WL 4341940, at *2 (D. Nev. Sept. 22, 2021). Plaintiff has at the least alleged
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several factual instances of fraud in their complaint. Furthermore, dismissal of a
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request for punitive damages would be premature at the motion to dismiss stage.
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See AC Media Grp., LLC v. Sprocket Media, Inc., No. 216-CV-02145-APG-GWF,
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2017 WL 1458198, at *4 (D. Nev. Apr. 24, 2017). Thus, Defendant’s motion to
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dismiss Plaintiff’s request for punitive damages is denied.
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IV.
Conclusion
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For the foregoing reasons, the Court DENIES Plaintiff’s motion for a
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temporary restraining order and preliminary injunction as moot, without
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prejudice (ECF No. 2.)
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The Court GRANTS in part and DENIES in part Defendant’s motion to
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dismiss (ECF No. 30.) Defendant’s motion to dismiss is granted as to Plaintiff’s
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claim under the Nevada Unfair Trade Practices Act and is denied as to Plaintiff’s
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claims of Intentional Interference with Contractual Relations, Intentional
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Interference with Prospective Economic Advantage, violations of the Nevada
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Deceptive Trade Practices Act, and Plaintiff’s request for punitive damages.
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DATED THIS 29th day of January, 2025.
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ANNE R. TRAUM
UNITED STATES DISTRICT JUDGE
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