                                 129 Nev., Advance Opinion 35
       IN THE SUPREME COURT OF THE STATE OF NEVADA


ROBERT CUCINOTTA, AN                              No. 58727
INDIVIDUAL; AND KARIM
MASKATIYA, AN INDIVIDUAL,
Appellants,
vs.                                                 FILED
DELOITTE & TOUCHE, LLP, A
DELAWARE CORPORATION; AND
LARRY KRAUSE, AN INDIVIDUAL,
Respondents.



           Appeal from a district court order granting summary
judgment in a defamation action. Eighth Judicial District Court, Clark
County; Elizabeth Goff Gonzalez, Judge.
           Affirmed.


Cooper Levenson April Niedelman & Wagenheim, P.A., and Jerry S.
Busby, Las Vegas; Beus Gilbert PLLC and Scot Stirling and Leo Beus,
Scottsdale, Arizona,
for Appellants.

Morris Law Group and Rosa Solis-Rainey, Las Vegas; Paul, Weiss,
Rifkind, Wharton & Garrison LLP and Charles E. Davidow, Washington,
D.C.; Paul, Weiss, Rifkind, Wharton & Garrison LLP and Brad S. Karp
and Andrew J. Ehrlich, New York, New York,
for Respondents.




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                BEFORE THE COURT EN BANC. 1

                                                OPINION
                By the Court, CHERRY, J.:
                            In this opinion, we consider whether information divulged by a
                registered accounting firm in accordance with the Securities Exchange Act
                of 1934, as amended by the Private Securities Litigation Reform Act of
                1995, is subject to an absolute privilege in a defamation action. We
                conclude that an accounting firm should be encouraged to freely
                disseminate information concerning alleged illegal acts as long as the
                disclosure is made pursuant to federal securities law and made to the
                appropriate level of management. In recognition of the reporting
                responsibilities delegated to accounting firms to protect the investing
                public, we adopt the rule set forth in the Restatement (Second) of Torts
                section 592A (1977), and consequently, we conclude that one who is
                required by law to publish defamatory matter is absolutely privileged to
                publish it. Accordingly, we affirm the district court's summary judgment
                albeit on different grounds.
                                                 FACTS
                            In 2007, respondent Deloitte & Touche, LLP, a registered
                public accounting firm, performed a third-quarter financial audit for
                Global Cash Access Holdings, Inc. (GCA), a publicly traded company
                providing cash access services to the gaming industry. Respondent Larry
                Krause, a certified public accountant employed by Deloitte, served as an
                independent auditor for many clients in the gaming industry, including


                      'The Honorable Kristina Pickering, Chief Justice, voluntarily
                recused herself from participation in the decision of this matter.

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                GCA. During the course of a financial audit for another gaming client,
                Krause obtained an intelligence bulletin authored by the Federal Bureau
                of Investigation (FBI) that contained information about alleged illegal acts
                committed by GCA and two members of its board of directors, appellants
                Robert Cucinotta and Karim Maskatiya. Due to the serious allegations in
                the intelligence bulletin, Deloitte's senior management and in-house
                counsel contacted the FBI and the Department of Justice (DOJ) to confirm
                the validity of the document. Although the DOJ advised against further
                dissemination of the document, Deloitte believed it had a duty under
                federal securities law to disclose the allegations within the intelligence
                bulletin to GCA's Audit Committee, which is a subcommittee of GCA's
                Board of Directors. Deloitte's in-house counsel prepared a script
                summarizing the allegations in the intelligence bulletin. Krause, along
                with a senior Deloitte auditor, subsequently communicated the allegations
                in the intelligence bulletin 2 to the Audit Committee via conference call.
                            The script stated, in part, that Deloitte had "learned from a
                credible, confidential source that serious allegations have been made
                regarding transactions and conduct involving Global Cash Access and its
                principals." Deloitte listed the allegations, all of which were serious in
                nature. Deloitte requested that the Audit Committee conduct an
                independent investigation.
                            GCA issued a press release announcing that it would delay
                filing its third-quarter report pending the conclusion of an internal
                investigation. The investigation performed by a national law firm with


                      2A New York state court later ordered Deloitte to provide Cucinotta
                with a copy of the intelligence bulletin.

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experience in regulatory and compliance issues revealed no evidence of
misconduct on the part of GCA, Cucinotta, or Maskatiya. GCA accepted
the findings and issued a delayed third-quarter report. GCA's stock price
significantly declined as a result of the delay in reporting. Soon
thereafter, Cucinotta and Maskatiya resigned from GCA's Board of
Directors.
              Subsequently, Cucinotta and Maskatiya filed a complaint for
defamation and tortious interference against Deloitte and Krause. 3 They
alleged that Deloitte published defamatory statements to the Audit
Committee and knowingly interfered with their contractual relationships
and prospective economic advantage with GCA as a result of the
defamatory statements. Upon the completion of limited pre-answer
discovery, Deloitte filed a motion for summary judgment, arguing that
both the defamation and tortious interference claims failed as a matter of
law because its communications with the Audit Committee were
absolutely or conditionally privileged. The district court granted Deloitte's
motion for summary judgment, concluding that Deloitte's communications
to the Audit Committee were protected by a conditional privilege as
Cucinotta and Maskatiya did not present evidence that would permit a
reasonable jury to conclude that Deloitte acted with actual malice. The
district court further concluded that Deloitte's communications were also
privileged for purposes of the tortious interference claim. Although the
district court found that Deloitte had a duty under federal securities law
to disclose the allegations to the Audit Committee in order for the Audit


      3 For   the sake of clarity, we refer to respondents collectively as
Deloitte.



                                      4
Committee to investigate the allegations, the district court found it
unnecessary to reach a conclusion as to whether Deloitte's statements
were absolutely privileged. This appeal followed.
                               DISCUSSION
            At the turn of the twentieth century, Lawrence R. Dicksee,
Professor of Accounting at the University of Birmingham and Lecturer at
the London School of Economics, advocated that auditors ought to be
granted absolute privilege in their reporting obligations. Lawrence R.
Dicksee,   Auditing: A Practical Manual for Auditors              (Robert H.
Montgomery ed., American ed. 1905). He proffered that "[i]f the Auditor is
of the opinion that something which has been done by the Directors, or by
any outside persons, calls for the attention of stockholders, he
should. . . feel no hesitation in expressing his view." Id. at 269.
            Dicksee's theory of candid and forthright disclosure in the
auditing profession is now being encouraged by Deloitte who argued below
and continues to argue on appeal that this court should adopt an absolute
privilege for individuals required by law to publish defamatory statements
as articulated by the Restatement (Second) of Torts section 592A (1977).
The Restatement provides that "[o]ne who is required by law to publish
defamatory matter is absolutely privileged to publish it."    Id. We review
the applicability of an absolute privilege de novo.     See Clark Cnty. Sch.
Dist. v. Virtual Educ. Software, Inc., 125 Nev. 374, 382, 213 P.3d 496, 502
(2009). Although the district court did not reach a conclusion as to
whether Deloitte's communications to the Audit Committee were
absolutely privileged, we have the discretion to address Deloitte's
contention. See Garff v. J.R. Bradley Co., 84 Nev. 79, 81-83, 436 P.2d 428,
430-31 (1968) (resolving an issue that the district court did not reach).



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                             Certain communications, although defamatory, should not
                serve as a basis for liability in a defamation action and are entitled to an
                absolute privilege because "the public interest in having people speak
                freely outweighs the risk that individuals will occasionally abuse the
                privilege by making false and malicious statements."          Circus Circus
                Hotels, Inc. v. Witherspoon, 99 Nev. 56, 61, 657 P.2d 101, 104 (1983)
                (discussing the absolute privilege created by NRS 612.265(7) for
                communications from an employer to the Employment Security
                Department). While we have long recognized the existence of an absolute
                privilege for defamatory statements made during the course of judicial or
                quasi-judicial proceedings, Fink v. Oshins, 118 Nev. 428, 433-34, 49 P.3d
                640, 644 (2002); Sahara Gaming Corp. v. Culinary Workers Union Local
                226, 115 Nev. 212, 218, 984 P.2d 164, 167 (1999); Knox v. Dick, 99 Nev.
                514, 518, 665 P.2d 267, 270 (1983); Nickovich v. Mollart, 51 Nev. 306, 313,
                274 P. 809, 810 (1929), we have yet to consider whether an absolute
                privilege is warranted for communications published under the law. 4
                             Restatement (Second) of Torts section 592A "rests upon the
                principle that one who is required by law to do an act does not incur any
                liability for doing it." Restatement (Second) of Torts § 592A cmt. a (1977).
                Originally developed to be applied to radio and television stations, which
                were required by the Federal Communications Act to provide political
                candidates with equal opportunity to be heard without any ability to
                control what the candidates said, section 592A now applies "whenever the



                      4The  Nevada Attorney General opined that the Restatement
                approach "appears to. . . be sound legal policy likely to be adopted and
                followed in Nevada." 86-7 Op. Att'y Gen. 20, 25 (1986).

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                one who publishes the defamatory matter acts under legal compulsion in
                so doing." Restatement (Second) of Torts § 592A cmt. b (1977).
                Jurisdictions throughout the country have adopted its rationale in cases
                where a party was compelled by law to publish defamatory information.
                See, e.g., Hill v. Ky. Lottery Corp., 327 S.W.3d 412, 425 (Ky. 2010) (those
                responsible for complying with Kentucky's Open Records Act should not be
                held liable for releasing embarrassing or humiliating information
                prepared in the regular course of business and placed in the appropriate
                file); Johnson v. Dirkswager, 315 N.W.2d 215, 223 (Minn. 1982) (those
                mandated by Minnesota's Data Privacy Act to disclose defamatory
                statements should be afforded an absolute privilege when exercising due
                care in the execution of the law); Crowley v. FDIC, 841 F. Supp. 33, 39-40
                (D.N.H. 1993) (banks should be provided with absolute immunity from a
                defamation action when they obey federal financial law by reporting
                criminal activity).
                            We agree with our sister jurisdictions that those who are
                required by law to publish defamatory statements should be absolutely
                privileged in making such statements. However, we are concerned that
                unfiltered speech to unintended persons could instigate malicious conduct
                that would go unpunished. Therefore, we affirmatively adopt the
                Restatement (Second) of Torts section 592A, but require that (1) the
                communications be made pursuant to a lawful process, and (2) the
                communications be made to a qualified person. The class of absolutely
                privileged communications recognized by this court remains narrow and is
                limited to those communications made in judicial or quasi-judicial
                proceedings and communications made in the discharge of a duty under
                express authority of law.

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                                                                                              U-914,-411
            We now determine whether Deloitte's communication to the
Audit Committee should be subject to an absolute privilege. Registered
public accounting firms are required by federal securities law, specifically
the Securities Exchange Act of 1934, as amended by the Private Securities
Litigation Reform Act of 1995, to take certain actions when, during the
course of a financial audit, the firm "becomes aware of information
indicating that an illegal act (whether or not perceived to have a material
effect on the financial statements of the issuer) has or may have occurred."
15 U.S.C. § 78j-1(b)(1) (2006); see Thomas L. Riesenberg, Trying to Hear
the Whistle Blowing: The Widely Misunderstood "Illegal Act" Reporting
Requirements of Exchange Act Section 10A,        56 Bus. Law. 1417, 1417
(2001) (by enacting section 10A of the Securities Exchange Act—codified at
15 U.S.C. § 78j-1—Congress "intended to require auditors to blow the
whistle on the fraudulent activities of their clients"); Larry Cate. Backer,
Surveillance and Control: Privatizing and Nationalizing Corporate
Monitoring After Sarbanes-Oxley, 2004 Mich. St. L. Rev. 327, 388 (2004)
(section 10A "imposed a duty on a reporting company's outside auditors to
investigate and report to corporate management information indicating
that an illegal act had taken place or might occur"). When an accounting
firm becomes aware of information that an illegal act has occurred or may
occur, then it must adequately inform the appropriate level of
management of the issuer—in this case, GCA's Audit Committee—about
the detected illegal acts as soon as practicable. 15 U.S.C. § 78j-1(b)(1)(B)
(2010).
            Here, Deloitte summarized allegations of illegal acts contained
in an FBI intelligence bulletin to the Audit Committee in accordance with
federal securities law.   See Pegasus v. Reno Newspapers, Inc., 118 Nev.



                                     8
                  706, 714, 57 P.3d 82, 87 (2002) (defamation occurs when a person
                  publishes a false statement of fact). Because Deloitte discharged its duty
                  pursuant to the lawful process set forth in 15 U.S.C. § 78j-1 and its
                  announcement of allegedly defamatory information was made to GCA's
                  Audit Committee, a qualified entity, we conclude that Deloitte's
                  communications are subject to an absolute privilege, precluding
                  appellants' defamation claim. In that regard, we also conclude that
                  appellants' tortious interference claim is precluded because Deloitte's
                  communications and conduct therein is afforded an absolute privilege.
                  Wichinsky v. Mosa,     109 Nev. 84, 87-88, 847 P.2d 727, 729-30 (1993)
                  ("absence of privilege or justification" is a necessary element to a tortious
                  interference claim); Las Vegas-Tonopah-Reno Stage Lines, Inc. v. Gray
                  Line Tours of S. Nev., 106 Nev. 283, 287, 792 P.2d 386, 388 (1990) (same).
                  As no genuine issues of fact remain, we find no error in the district court's
                  grant of summary judgment in Deloitte's favor. Wood v. Safeway, Inc., 121
                  Nev. 724, 729, 121 P.3d 1026, 1029 (2005) (explaining that summary
                  judgment is appropriate when there is no genuine issue of material fact
                  and the moving party is entitled to a judgment as a matter of law).
                                                 CONCLUSION
                              We adopt the Restatement (Second) of Torts section
                  592A and hold that one who is required by law to publish
                  defamatory matter is absolutely privileged to publish it when
                  (1) the communication is made pursuant to a lawful process, and
                  (2) the communication is made to a qualified person.                Deloitte's
                  statement to GCA's Audit Committee is therefore absolutely




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                       privileged as a matter of law because Deloitte communicated information
                       about alleged illegal acts in accordance with federal securities law. We
                       therefore affirm the district court's summary judgment, albeit for different
                       reasons. See Pack v. LaTourette, 128 Nev.        , 277 P.3d 1246, 1248
                        (2012).




                       We concur:



                                                                               4.1L-iat_t     j.
                        Gibbons                                   Hardesty




                        Parrazuirre




                           aitta




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