Reaffirming the Regulatory Safe Harbor & Contractual Limitations on Utility Customers:
Commentary on Garmong v. Sierra Pacific Power Company, Inc., Supreme Court of Nevada (2025)

1. Introduction

The Supreme Court of Nevada’s decision in Garmong v. Sierra Pacific Power Company, Inc. (Aug. 14, 2025, No. 88865) addresses the increasingly common friction between utility customers who oppose “smart” technology and utilities operating under comprehensive regulatory regimes. Gregory Garmong, owner of four northern-Nevada properties, objected to Sierra Pacific Power Company’s (“SPPC”) replacement of analog electrical meters with “smart” meters. After SPPC installed the meters pursuant to Public Utilities Commission of Nevada (“PUCN”) authority, Garmong sued on eight theories ranging from breach of contract to Nevada civil RICO. The district court dismissed six claims and ultimately granted summary judgment on the remainder. The Supreme Court affirmed in full.

Beyond resolving a specific dispute, the Court articulates a clear principle: a public utility acting in compliance with regulator-approved tariffs and orders falls within the Nevada Deceptive Trade Practices Act (“NDTPA”) safe harbor, and customers cannot unilaterally impose contractual obligations or property charges that contravene those tariffs.

2. Summary of the Judgment

The Court performed a two-step review:

• Rule 12(b)(5) Dismissal. It upheld dismissal of the claims for implied warranty, breach of the implied covenant, common-law fraud, Nevada civil RICO, and (unchallenged) IIED.
• Summary Judgment. It affirmed summary judgment against the remaining breach-of-contract, NDTPA, and statutory-fraud (NRS 41.600) claims.

Central to the ruling were SPPC’s PUCN-filed tariff provisions:

• Rule 16(B) & (D) – grants SPPC an irrevocable easement and “right of access” to customer premises to install or replace company-owned meters.
• Rule 6(B)(2)(c) – allows service termination for violation of utility rules approved by PUCN.

Because SPPC’s conduct was expressly permitted, the Court concluded:

1. No breach of implied duties or warranties occurred.
2. Garmong’s “$500 per day” letters could not form a unilateral contract; SPPC’s silence did not constitute acceptance, and past consideration is legally insufficient.
3. The NDTPA does not apply to conduct complying with a regulatory order (NRS 598.0955(1)(a)); hence, the derivative NRS 41.600 “statutory fraud” claim fails.
4. Threatened service termination was not “extortion” for civil-RICO purposes because tariffs explicitly authorize such enforcement.

3. Analysis

3.1 Precedents Cited and Their Influence

• Shea v. State, 138 Nev. 346 (2022) – Established the rigorous de-novo standard for reviewing NRCP 12(b)(5) dismissals; dictated the appellate lens through which Garmong’s pleadings were examined.
• Hilton Hotels v. Butch Lewis Prods., 107 Nev. 226 (1991) – Articulated the “justified expectations” test for breach of the implied covenant; used to reject Garmong’s covenant claim.
• Virgin Valley Water Dist. v. Paradise Canyon, LLC, 141 Nev. Adv. Op. 19 (2025) – Recently reiterated that no implied-covenant breach exists where the contract expressly allows the challenged act; reinforced SPPC’s tariff defense.
• In re Amerco Derivative Litigation, 127 Nev. 196 (2011) – Cited for NRCP 9(b)’s heightened fraud-pleading requirement.
• Nevada Power Co. v. Monsanto Co., 891 F. Supp. 1406 (D. Nev. 1995) – Emphasized the necessity of actual reliance in fraud; fatal to Garmong’s sparse fraud allegations.
• Allum v. Valley Bank of Nevada, 109 Nev. 280 (1993) – Clarified civil-RICO standing; applied to dismiss the extortion-based RICO claim.
• Golden Gate/S.E.T. Retail of Nevada, LLC v. Modern Welding Co., 141 Nev. Adv. Op. 12 (2025) – Restated de-novo review of summary judgment and burden shifting; framed the Court’s analysis of the late-stage claims.
• County of Clark v. Bonanza No. 1, 96 Nev. 643 (1980) – Cited for the rule that past consideration cannot support a present bargain; foreclosed Garmong’s unilateral-contract theory.
• Restatement (Second) of Contracts § 69 – Offered doctrinal support for the principle that silence ordinarily is not acceptance.

3.2 Legal Reasoning of the Court

The opinion’s logic can be distilled into five interlocking propositions:

1. Tariff Supremacy. Filed tariffs carry the force of law; they create contractual terms binding on both utility and customer. Rule 16’s irrevocable easement negated trespass or improper entry theories.
2. Regulatory Safe Harbor. NRS 598.0955(1)(a) immunizes conduct “in compliance with” governmental orders. Because PUCN expressly approved smart-meter deployment, SPPC’s actions fell squarely within this safe harbor.
3. No Unilateral Contract by Silence. Under contract principles, silence rarely equals acceptance unless a course of dealing or duty to speak exists—conditions absent here. SPPC’s statutory right to install meters defeats any suggestion of consideration for leaving meters in place.
4. Heightened Pleading and Substantive Elements. Fraud and civil-RICO claims require detailed allegations of misrepresentation, reliance, predicate acts, and damages. Garmong’s complaint, even when taken as true, did not meet those thresholds.
5. Summary-Judgment Burdens. After SPPC showed regulatory authorization, the burden shifted; Garmong failed to produce evidence creating a genuine issue of material fact regarding contract formation, statutory applicability, or damages.

3.3 Likely Impact on Future Litigation and Regulatory Law

• Utility Litigation Shield. The decision solidifies NDTPA’s safe-harbor scope for Nevada-regulated entities, making consumer claims harder where utilities strictly follow PUCN directives.
• Property-Access Disputes. By affirming the tariff-based irrevocable easement, the Court curtails trespass or conversion theories predicated on meter replacement—a frequent flash point in smart-meter controversies nationwide.
• Unilateral-Contract Tactics. Customers (or activists) sometimes mail “fee schedules” purporting to bind utilities or government agencies. The Court’s rejection of silence-as-acceptance and past consideration undermines such tactics in Nevada.
• Pleading Standards Reinforced. The opinion underscores that generalized allegations of fraud, emotional distress, or RICO violations will not withstand Rule 9(b) scrutiny absent specific facts.
• Guidance to PUCN & Utilities. While utilities enjoy broad protection when following orders, the opinion implicitly encourages clear, customer-facing communication to pre-empt disputes and fraud claims.

4. Complex Concepts Simplified

• Filed-Rate/Tariff Doctrine: A tariff approved by the regulator functions like a statute; neither party may alter its terms privately.
• Irrevocable Easement (in tariff): A continuing right allowing the utility to access a customer’s property for meter work without needing additional permission.
• NDTPA Safe Harbor (NRS 598.0955): Shields entities from deceptive-trade-practice liability when they act under government-approved rules or orders.
• Unilateral Contract: A contract accepted by performance (e.g., reward cases). Silence alone is usually insufficient to accept, unless the offeree benefits by retaining goods or services or another exception applies.
• Implied Covenant of Good Faith and Fair Dealing: Even when not written, each contract requires parties to act to honor the contract’s purpose; however, acts expressly permitted cannot breach the covenant.
• Civil RICO: A federal (and Nevada) statute imposing treble damages for harm caused by a pattern of racketeering. “Extortion” must meet statutory definitions, not merely assert economic pressure.

5. Conclusion

Garmong v. Sierra Pacific Power Company, Inc. adds significant clarity to Nevada utility law and consumer-protection litigation. The ruling: (1) cements the NDTPA safe harbor for regulator-compliant utilities; (2) affirms tariff supremacy over unilateral customer demands; (3) reiterates strict pleading and evidentiary standards for fraud-based claims; and (4) forecloses creative contract theories premised on silence or past performance. Practitioners representing utilities will cite Garmong to defeat claims arising from conduct authorized by regulatory bodies. Consumer advocates should scrutinize whether the challenged practice deviates from (or exceeds) regulatory permission before invoking the NDTPA or similar statutes. Ultimately, the decision reinforces the rule of law in heavily regulated industries: when regulators speak, compliance is not merely a defense—it is a legal shield.