International Game Technology, Inc. v. Second Judicial District Court of the State of Nevada Ex Rel. County of Washoe

127 P.3d 1088, 122 Nev. 132, 122 Nev. Adv. Rep. 13, 2006 Nev. LEXIS 16
CourtNevada Supreme Court
DecidedFebruary 9, 2006
Docket43882, 43953
StatusPublished
Cited by50 cases

This text of 127 P.3d 1088 (International Game Technology, Inc. v. Second Judicial District Court of the State of Nevada Ex Rel. County of Washoe) is published on Counsel Stack Legal Research, covering Nevada Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
International Game Technology, Inc. v. Second Judicial District Court of the State of Nevada Ex Rel. County of Washoe, 127 P.3d 1088, 122 Nev. 132, 122 Nev. Adv. Rep. 13, 2006 Nev. LEXIS 16 (Neb. 2006).

Opinions

[137]*137OPINION

By the Court,

Becker, J.:

These consolidated petitions for extraordinary relief challenge the district courts’ refusals to dismiss actions brought under Nevada’s False Claims Act (FCA) and present issues of first im[138]*138pression in Nevada. Petitioners assert that the district courts wrongfully applied the “good cause” standard by which the Attorney General may move to dismiss false claims actions instigated by private persons on behalf of the state, because these actions are based on complex issues of tax liabilities and thus are improperly maintained under the FCA.

We conclude that, while private plaintiffs may properly bring false claims actions based on tax deficiencies under some circumstances, state law entrusts the primary responsibility for making factual evaluations under, and legal interpretations of, the revenue statutes to the expertise of Nevada’s Department of Taxation. Accordingly, the Attorney General’s assertion that an FCA action implicates issues that are better left, initially, to the tax department’s expertise constitutes a basis for good cause dismissal. As no party demonstrated that the Attorney General acted improperly in moving to dismiss the underlying actions, the district courts manifestly abused their discretion when they refused to dismiss the underlying tax-based false claims actions for good cause.

FACTS AND PROCEDURAL HISTORIES

To expose and combat attempted fraud against the government, Nevada passed legislation in 1999 encouraging private citizens to come forward with information of wrongful claims for governmental funds.1 Nevada’s FCA, codified at NRS Chapter 357, permits persons to become ‘ ‘private attorneys general,’ ’2 granting them the right and financial incentive to sue on behalf of the state and its political subdivisions “if money, property or services provided by the State [or its political subdivisions] are involved.’ ’3 A private plaintiff who files a false claims action on behalf of himself and the state or political subdivision is referred to as a qui tam plaintiff.4 Under the FCA, the qui tam plaintiff is entitled to whistleblower [139]*139protections and between 15 and 50 percent of any recovery,5 the remainder of which goes into the State General Fund.6

When the qui tam plaintiff files an action, he or she must send a copy of the complaint and written disclosure of all material information to the Attorney General.7 The complaint is then sealed until the Attorney General decides whether to intervene;8 the defendants are not served until the complaint is unsealed.9 If the Attorney General decides to intervene “and proceed with the action,” the private plaintiff must cede control of the litigation10 but nevertheless remains a party to the action.11 But if the Attorney General initially decides not to intervene, the private plaintiff may proceed alone, with the same rights as the Attorney General would have had.12 The Attorney General may later intervene only upon timely application and “if the interest of the State . . . in recovery of the money or property involved is not being adequately represented by the private plaintiff.”13 The Attorney General also has authority to settle the action and “may move to dismiss the action for good cause.”14 Generally, a false claims action may not be maintained if administrative or court proceedings involving the same underlying facts and allegations were previously instigated.15

Docket No. 43882 (McAndrews)

In February 2003, on behalf of himself and the State of Nevada, real party in interest James McAndrews filed suit under the FCA against petitioners International Game Technology, Anchor Coin, Inc., and Spin For Cash Wide Area Progressive (collectively, IGT). In his complaint, McAndrews alleged that IGT falsified tax records in order to conceal or decrease the amount of sales and use tax it owed the State. Specifically, McAndrews asserted that while em[140]*140ployed at IGT, where he was involved with tax compliance matters, he discovered IGT’s involvement in numerous tax-evasion schemes. For example, according to McAndrews, International Game Technology and Anchor Coin had engaged in unreported or under-reported retail sales to a nonregistered joint venture entity, Spin For Cash, and had failed to charge and remit taxes on various retail leases of gaming machines, parts and components in Nevada. McAndrews also alleged that IGT had intentionally failed to “charge, collect or remit” sales taxes due on revenues received from the licensing of gaming software used on poker machines sold within Nevada.

When Nevada’s Attorney General received a copy of McAn-drews’ FCA complaint, under seal, he asked the Nevada Department of Taxation (tax department) to conduct an audit of IGT. After having been granted an extension of time, the Attorney General elected to intervene in McAndrews’ action.

Thereafter, the Attorney General moved to dismiss the false claims action. In his motion, the Attorney General argued that the action should be dismissed because (1) the FCA does not apply to tax matters; (2) the administrative tax-collection process, as set forth in NRS Title 32, in effect preempts privately litigated false claims actions based on tax deficiencies; and (3) good cause exists to dismiss the action. In support of the third reason for dismissal, the Attorney General pointed out that the Legislature has demanded that the tax statutes be interpreted and applied in a uniform and consistent manner; accordingly, he noted, the tax department has been granted original authority to execute the state’s tax laws. The Attorney General further pointed out that, as a result, the courts generally give deference to the factual and interpretive determinations made within the tax department’s authority. He then reasoned that the false claims action should be dismissed because the tax department, which was working toward, but had not yet made, a determination in this matter, should have the initial opportunity to address the issues necessarily implicated in resolving McAndrews’ complaint, in order to maintain the uniformity and consistency that is required under the tax laws.

IGT joined the Attorney General’s motion, raising similar arguments, and also separately moved to dismiss for failure to state a claim. In so doing, IGT denied that it had failed to pay any taxes due, as McAndrews had alleged, and pointed out that McAndrews’ action presented complex issues of taxation involving intellectual property, royalties, and mergers and acquisitions. IGT observed that the complaint indicated that McAndrews simply interpreted the revenue laws differently than IGT.

The district court denied the motions to dismiss, concluding that the express language of Nevada’s FCA does not bar tax deficiency [141]*141claims and that the Attorney General had not demonstrated any “legitimate governmental purpose” served by dismissal and had therefore failed to demonstrate good cause for dismissal.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

TIKTOK, INC. v. DIST. CT. (STATE OF NEV.) (CIVIL)
141 Nev. Adv. Op. No. 51 (Nevada Supreme Court, 2025)
Kim, M.D. v. Dist. Ct. (Chisiu)
Nevada Supreme Court, 2022
State, Emp'T Sec. Div. v. Eppinger
Nevada Supreme Court, 2022
Chavez, Jr. Vs. Bennett
489 P.3d 912 (Nevada Supreme Court, 2021)
CITY OF HENDERSON VS. DIST. CT. (SOLID STATE PROPS., LLC)
2021 NV 26 (Nevada Supreme Court, 2021)
KOSOR, JR. VS. OLYMPIA CO.'S, LLC
2020 NV 83 (Nevada Supreme Court, 2020)
Hooper, Iii Vs. Dist. Ct. (Hines)
Nevada Supreme Court, 2020
Ace Cab Llc Vs. Dist. Ct. (Lang)
Nevada Supreme Court, 2020
Flisser, P.T. Vs. Dist. Ct. (Hawk, Jr.)
Nevada Supreme Court, 2020
Umbach, M.D. Vs. Dist. Ct. (Mquown)
Nevada Supreme Court, 2020
STATE, DEP'T OF BUS. AND INDUS. VS. TITLEMAX OF NEV., INC.
2019 NV 44 (Nevada Supreme Court, 2019)

Cite This Page — Counsel Stack

Bluebook (online)
127 P.3d 1088, 122 Nev. 132, 122 Nev. Adv. Rep. 13, 2006 Nev. LEXIS 16, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-game-technology-inc-v-second-judicial-district-court-of-nev-2006.