Nimmer v. Giga Entertainment Media

Citation: 298 Neb. 630Docket: S-17-070

Court: Nebraska Supreme Court; January 11, 2018; Nebraska; State Supreme Court

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In the case of Nimmer v. Giga Entertainment Media, the Nebraska Supreme Court addressed issues of personal jurisdiction and the standards for appellate review. Key points include:

1. Jurisdictional questions that do not involve factual disputes are treated as matters of law, subject to independent review by appellate courts.
2. When reviewing dismissals for lack of personal jurisdiction under Neb. Ct. R. Pldg. 6-1112(b)(2), appellate courts assess whether the nonmoving party has established a prima facie case of personal jurisdiction de novo.
3. Courts must view facts favorably to the nonmoving party when granting motions to dismiss.
4. Personal jurisdiction refers to a tribunal's authority to bind a party to its decisions.
5. For a court to exercise personal jurisdiction over a nonresident defendant, it must first confirm that Nebraska's long-arm statute is satisfied, and second, that minimum contacts exist without violating due process.
6. Nebraska's long-arm statute allows jurisdiction over nonresidents to the extent permitted by the U.S. Constitution.
7. The determination of sufficient minimum contacts is based on whether the defendant could reasonably foresee being brought into court in the forum state.
8. Due process requires that the minimum contacts with the forum state do not violate traditional notions of fair play and substantial justice.
9. Courts evaluate the quality and nature of the defendant's activities to establish if minimum contacts are present.
10. Personal jurisdiction hinges on whether the defendant's actions have created substantial connections with the forum state, demonstrating purposeful availment of its benefits.
11. A defendant cannot be subject to jurisdiction based on random or unilateral activities of others; jurisdiction is warranted when the defendant’s actions themselves establish a significant connection.
12. There are two types of personal jurisdiction: general and specific. General jurisdiction applies when the plaintiff's claim does not arise directly from the defendant's contacts, provided the defendant has engaged in continuous and systematic business in the state.

Specific jurisdiction may be asserted over a defendant if their contacts with the forum are not substantial or continuous but are related to the cause of action. John C. Nimmer, an attorney, represented Digital Broadcasting Corporation (DBC) from 1995 until 2015, when he withdrew and demanded legal fees and a repurchase of shares from Giga Entertainment Media, Inc. (GEM), the surviving corporation after DBC's merger in 2012. Following a failed settlement, Nimmer filed a breach of contract claim against GEM, which moved to dismiss for lack of personal jurisdiction. The trial court granted the dismissal but allowed Nimmer to amend his complaint. After he added claims for tortious conversion and a violation of Nebraska’s Uniform Deceptive Trade Practices Act, GEM filed a second motion to dismiss, which the court granted with prejudice. Nimmer appealed, and the appellate court affirmed the dismissal with modifications.

Nimmer's affidavit indicated he had provided legal services to DBC and its affiliates since 1995, receiving shares and cash in return. DBC, a Delaware corporation, was dissolved, while its affiliate, Sky Cable, LLC, was a dissolved Nevada entity formerly based in Omaha, Nebraska. Nimmer included a letter from 2008 confirming that his legal service agreement with DBC was governed by Nebraska law, with DBC submitting to the jurisdiction of Nebraska courts. He also referenced a 2012 board meeting approving DBC's merger with GEM, and noted ongoing communications regarding billing for services involving both companies, including emails from GEM's vice president informing stakeholders of the transition from DBC to GEM.

Lawrence W. Silver, vice president of GEM, affirmed in his affidavit that GEM is a Nevada corporation based in New York, with no presence, assets, or revenue in Nebraska. Since its establishment in 2012, GEM has had no employees or business activities in Nebraska. On April 1, 2015, GEM communicated with DBC shareholders regarding the surrender of their shares for GEM stock. DBC indicated that the surrendered certificates would be recorded and sent to legal counsel, Nimmer. Nimmer later refused to surrender his DBC shares and withdrew as DBC’s legal representative. 

In subsequent communications, GEM’s counsel, Abram Pafford, proposed stipulations for Nebraska as the litigation venue and acknowledged GEM's responsibility for any legal fees owed by DBC to Nimmer Law Office. Pafford articulated that there had been verbal agreements between GEM and Nimmer Law Office concerning GEM's assumption of DBC's unpaid legal fees. After failed settlement attempts, Nimmer, representing himself, filed claims against GEM for breach of contract, alleging that GEM was the successor to DBC and thus liable for DBC’s obligations. Nimmer’s amended complaint outlined several points to establish personal jurisdiction over GEM, including billing statements addressed to both DBC and GEM, assertions of merger and asset acquisition, and the share-for-share exchange proposal related to the dissolution of DBC.

Nimmer requested cash legal fees and DBC common shares upon resigning from representing GEM. GEM agreed to a payment plan for legal fees, but no agreement was reached regarding a share repurchase. GEM's legal counsel confirmed a Nebraska venue in communication with Nimmer. Both GEM and DBC have shared control, evidenced by overlapping ownership and management. GEM acknowledged its status as DBC’s successor in interest through various communications, including shareholder updates that referenced DBC and emails requiring DBC shareholders to exchange shares for GEM shares.

Nerlinger exercised control over both companies through various means, including recommending board candidates, directing operational processes, and participating in negotiations. Nimmer provided legal services to DBC's affiliate, Sky Cable, until its dissolution. Throughout Nimmer's representation, DBC and GEM's management significantly overlapped, as indicated in their public filings. Fee agreements from 2002 and 2008 established Nebraska as the proper venue for legal matters, and DBC admitted in prior litigation that it conducted business in Nebraska despite being incorporated in Delaware.

Nimmer argued that GEM’s actions justified personal jurisdiction in Nebraska, citing the retention of legal counsel, the stipulation to a Nebraska venue, and claims of tortious acts directed at Nebraska. However, on January 12, 2017, the district court dismissed Nimmer’s case, stating that the alleged contacts, some dating back 15 to 20 years, were insufficient to establish minimum contacts with Nebraska. Nimmer has appealed this decision.

Nimmer contends that the trial court made two errors: (1) it incorrectly determined that Nebraska lacked personal jurisdiction over GEM, and (2) it dismissed Nimmer's complaint with prejudice. The appellate court reviews jurisdictional issues as questions of law, independent of the trial court's conclusions, particularly when there are no factual disputes. In assessing personal jurisdiction under Neb. Rev. Stat. 6-1112(b)(2), the appellate court evaluates whether the nonmoving party established a prima facie case of personal jurisdiction, viewing the facts favorably for that party.

Nimmer argues that specific personal jurisdiction over GEM exists due to GEM's alleged tortious conversion and violations of the Uniform Deceptive Trade Practices Act. Additionally, he asserts general personal jurisdiction based on his provision of legal advice to GEM and alternatively claims it exists due to actions by GEM's predecessor, DBC.

Nebraska's long-arm statute, Neb. Rev. Stat. 25-536, allows jurisdiction over nonresidents with relevant contacts to Nebraska, as permissible under the U.S. Constitution. The court must first confirm the long-arm statute's applicability, then assess if GEM has sufficient minimum contacts with Nebraska to meet due process requirements. For personal jurisdiction to comply with due process, GEM's contacts must be such that it could reasonably anticipate being brought into court in Nebraska, ensuring that jurisdiction upholds "traditional notions of fair play and substantial justice." The analysis of personal jurisdiction focuses on the quality and nature of GEM's activities in relation to Nebraska, verifying that its actions established substantial connections and purposeful availment of the state's benefits, rather than relying on random or indirect contacts.

A court can assert two types of personal jurisdiction: general and specific. General personal jurisdiction applies when a defendant has continuous and systematic business contacts with the forum state, regardless of whether the plaintiff's claim arises from those contacts. Specific personal jurisdiction, however, requires that the plaintiff's claim be related to the defendant's contacts with the forum state, which must be substantial. GEM Nimmer claims specific personal jurisdiction exists over GEM due to his allegations of tortious conversion and violation of the Uniform Deceptive Trade Practices Act, asserting that these intentional torts justify jurisdiction. GEM counters that Nimmer fails to provide supporting authority and lacks meaningful contacts with Nebraska.

Nimmer references Neb. Rev. Stat. 8-1112, indicating that registration as a broker-dealer or offering investment services in Nebraska constitutes sufficient contact for personal jurisdiction in related actions. He also cites the case Abdouch v. Lopez, where specific jurisdiction was evaluated based on the intentionality and targeting of the defendant’s acts towards Nebraska, referencing the Calder v. Jones test. The court in Abdouch determined that mere effects in the state were insufficient for jurisdiction without intentional targeting. It emphasized the necessity for the defendant to purposefully avail himself of the privileges of conducting activities within the forum state.

In RFD-TV v. WildOpenWest Finance, the court examined personal jurisdiction related to an arbitration clause in a contract. RFD-TV, a Nebraska corporation, entered an agreement with Sunflower, which included arbitration in Nebraska. Following the acquisition of Sunflower by Knology, RFD-TV failed to demonstrate that WOW and Knology were subject to the arbitration clause, highlighting the importance of establishing a prima facie case for jurisdiction.

WOW and Knology were not signatories to the Sunflower Agreement and did not assume the agreement upon acquiring Sunflower's assets. The issue of Nebraska's personal jurisdiction over them was addressed, emphasizing that parties engaging in activities that create relationships with citizens of another state can be subject to jurisdiction there. While communications such as mail and telephone calls can establish minimum contacts, simply having a contract or using interstate facilities does not suffice for jurisdiction. In the case of WOW and Knology, despite their payment of licensing fees and limited communications with RFD over two years, their actual business dealings were deemed insufficient to establish personal jurisdiction, leading to the dismissal of the complaint.

Nimmer alleged that GEM's actions related to a share-for-share exchange rather than an agreed statutory merger constituted tortious conversion and a violation of the Uniform Deceptive Trade Practices Act. He argued that these actions resulted in unfavorable tax implications for shareholders in Nebraska. Nimmer cited communications from GEM as evidence of specific targeting of Nebraska. However, the court found that these communications were generic and did not demonstrate an intent to target Nebraska residents. Similar to the precedent set in Abdouch, the court ruled that Nimmer had not shown sufficient specific minimum contacts with Nebraska, as his interactions with GEM were limited and incidental. Thus, GEM was not found to have purposefully availed itself of the privilege of conducting activities in Nebraska.

The June 4, 2015, email does not support Nimmer's tort claims against GEM. It indicates that GEM informed Nimmer of a change from a statutory merger to a share-for-share exchange, while Nimmer chose not to sign the restricted stock agreement. Nimmer has not provided sufficient facts to substantiate his tort claims related to this email, and he fails to connect Neb. Rev. Stat. 8-1112 to his claims, merely asserting that the offering of securities implies minimum contacts without demonstrating GEM's status as a registered broker-dealer in Nebraska or any direct engagement in securities or advisory services within the state. 

Regarding personal jurisdiction, Nimmer argues that GEM's retention of his legal services from Nebraska constitutes sufficient minimum contacts. GEM counters that it has no business operations or contacts in Nebraska. Citing Burger King Corp. v. Rudzewicz, the standard for establishing minimum contacts requires examining the contract terms and the parties' dealings, rather than the mere existence of a contract. The Thompson Hine, LLP v. Taieb case illustrates that simply hiring a service provider in a jurisdiction does not suffice for personal jurisdiction without further deliberate contacts. 

Nimmer alleges that he worked for GEM from its inception in May 2012 until November 2015 and that his services included various legal and transactional tasks. However, no formal contract between Nimmer and GEM is recorded, and Nimmer's assertion of a continuing relationship is implied rather than documented.

Nimmer's amended complaint indicates that he provided legal advice to GEM regarding disclosures for filings from 2013 to 2015 and acted as legal counsel in anticipation of a statutory merger, as suggested by the 'Dear Shareholder' letter indicating he would receive DBC certificates. However, ambiguity surrounds whether he actually performed this service, as he later communicated to GEM that he had not received any certificates, and it remains unclear if his services were intended for GEM or DBC. Consequently, Nimmer has not sufficiently demonstrated that any contract with GEM supports personal jurisdiction.

In assessing personal jurisdiction, courts consider the timing of alleged contacts, as demonstrated in Johnson v. Woodcock, where prior contacts were deemed too distant to warrant jurisdiction. Nimmer asserts he represented Sky Cable, a DBC affiliate, but acknowledges this representation occurred over 20 years ago and did not involve GEM, rendering those contacts irrelevant to the current claims.

Nimmer fails to establish a substantial relationship between GEM and the forum state based on his legal services, lacking details about any disputes involving Nebraska law or connections beyond the location of one of his offices. Therefore, GEM should not reasonably anticipate being subject to court proceedings in Nebraska.

Regarding general personal jurisdiction, Nimmer argues that GEM is an alter ego of DBC, citing several reasons including GEM's creation for reincorporation purposes, shared ownership and management, and admissions made by GEM regarding its continuity with DBC. He references case law supporting successor liability theories to argue for applying these principles to establish minimum contacts for jurisdiction. However, he cites an unrelated Delaware case involving contractual successor liability to support his argument, which may not directly apply to the current situation.

The court determined that a corporate merger alone does not establish personal jurisdiction. It assessed the defendant corporation's actions, concluding that personal jurisdiction existed because the corporation continued to operate under existing contracts. Previous case law, including Clune v. Alimak AB, was referenced to illustrate that personal jurisdiction can arise from sufficient contacts by a parent corporation in wrongful death actions. However, the court clarified that the facts of the current case did not align with Clune, as the defendant was neither a parent corporation nor a shell company. Instead, the court emphasized that personal jurisdiction must be based on the defendant's own contacts, not those of predecessors or related entities.

The court reiterated that due process requires specific acts by the defendant to establish minimum contacts with Nebraska for jurisdiction to be valid. The possibility of establishing jurisdiction through conspiracy was dismissed, as it conflates jurisdictional issues with the case's merits. Consequently, the court declined to recognize successor liability as a basis for establishing personal jurisdiction. Lastly, the claim that GEM's legal counsel had stipulated to Nebraska venue was rejected, as the evidence presented (emails regarding a potential settlement) did not confirm acceptance of any settlement offer by Nimmer.

Nimmer's allegations were evaluated under the assumption of their truthfulness, but it was determined that his amended complaint did not demonstrate GEM's significant connections to Nebraska that would support GEM's purposeful engagement with the state's benefits and protections. Consequently, Nimmer's assignment of error was deemed meritless. 

Regarding the dismissal of Nimmer's complaint with prejudice, he contended that the district court erred in this decision, while GEM defended the dismissal as appropriate since Nimmer had the opportunity to amend his complaint. Citing the case RFD-TV v. WildOpenWest Finance, it was clarified that there is no statutory discretion for dismissals with or without prejudice in cases of lack of personal jurisdiction. A dismissal with prejudice suggests a rejection of claims on the merits, preventing further litigation, but the Full Faith and Credit Clause mandates that a judgment only be recognized if the issuing court had proper jurisdiction. Thus, a dismissal due to lack of personal jurisdiction should not bar future claims in a competent forum, even if labeled with prejudice.

Both parties acknowledged during proceedings that the dismissal should have been without prejudice. The court ultimately agreed, stating that dismissals for lack of personal jurisdiction generally should not be adjudicated on the merits. Therefore, the district court's dismissal with prejudice was reversed and modified to dismissal without prejudice, allowing for the possibility of future jurisdiction in a subsequent lawsuit. The overall decision of the district court was affirmed as modified.