Gaming accusations found to be libel-proof

Wednesday, June 5, 2002 | 11:18 a.m.

CARSON CITY -- A person who holds or is applying for a state gaming license in Nevada is protected from libel or defamation lawsuits on the information provided to state regulators, even if it is false.

The Nevada Supreme Court on Tuesday ruled that suits are barred even if the information supplied "was made with malice and contains allegedly fraudulent accusations."

The court rejected the appeal of Stephen Hampe, who owns the Lake Mead Lounge in Henderson. He sued Elizabeth Foote and Betty Boal, owners of competitor Our Place, over accusations he was guilty of cheating.

Hampe was in Our Place when he hit a $4,000 royal flush jackpot on a video poker machine. Foote and Boal submitted a letter to the Nevada Gaming Commission accusing Hampe of illegally arranging for a repairman to work on the video poker machine.

Foote and Boal said Hampe knew the repairs would increase the odds of winning a jackpot. State regulators investigated, found no supporting evidence and dismissed the complaint.

Hampe sued, alleging libel, defamation, malicious prosecution and intentional infliction of emotional distress. He said he was harmed, because the allegations will remain on his state gaming license forever, even though the complaint was dismissed.

District Judge Gary Redmon dismissed the suit and the Supreme Court agreed.

Hampe, in his appeal, argued the privilege does not apply to fraudulent and malicious communications made to state regulators.

"Regardless of the motivation behind the respondents' (Foote and Boal) letter, or any allegedly fraudulent assertions, therein, the letter cannot form the basis of any civil liability," the court said.

It noted the law gives broad absolute privilege in these cases. Quoting from a 1985 decision, the court said, "In certain situations it is in the public interest that a person speak freely. Where this is so, the law is willing to assume the risk that from time to time the privilege will be abused."

The court said, "An absolute privilege is an immunity, which protects against even the threat that a court or a jury will inquire into a communication."