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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The Nebraska Supreme Court case of Nimmer v. Giga Entertainment Media, Inc. addresses several key legal principles regarding personal jurisdiction. When a jurisdictional question involves no factual disputes, it is treated as a matter of law, allowing appellate courts to review such issues independently. In cases where a motion to dismiss for lack of personal jurisdiction is granted, the appellate court evaluates whether the nonmoving party has established a prima facie case of personal jurisdiction, examining the facts favorably for that party.

Personal jurisdiction entails the tribunal's authority to bind a specific entity, with two primary considerations: compliance with the long-arm statute and the existence of minimum contacts between the defendant and the forum state. Nebraska’s long-arm statute allows jurisdiction over nonresidents to the extent permitted by the U.S. Constitution. For a court to exercise personal jurisdiction, it must confirm minimum contacts that do not violate due process, ensuring the defendant could reasonably foresee being brought into court in that jurisdiction.

The criteria for due process in establishing personal jurisdiction include evaluating whether the defendant's contacts with the forum state are sufficient to uphold fair play and substantial justice. The nature and quality of the defendant’s activities in the forum state are crucial in determining if minimum contacts exist. Jurisdiction may arise from general personal jurisdiction, where continuous and systematic business activities in the forum state support claims unrelated to those contacts, or specific personal jurisdiction, which is tied to the defendant's activities related to the plaintiff's claim. The purposeful availment standard prevents jurisdiction based merely on random or unilateral actions by others, requiring that the defendant's own conduct create substantial connections to the forum state.

A court may establish specific jurisdiction 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 sought legal fees and a repurchase of shares from Giga Entertainment Media, Inc. (GEM), the surviving entity after DBC's merger with GEM in 2012. After unsuccessful settlement attempts, Nimmer filed a breach of contract claim against GEM, which led to GEM's motion to dismiss due to lack of personal jurisdiction. The trial court granted this motion, allowing Nimmer to amend his complaint. Nimmer subsequently added claims for tortious conversion and a violation of Nebraska’s Uniform Deceptive Trade Practices Act, but GEM's second motion to dismiss was also granted, resulting in dismissal with prejudice. Nimmer appealed the decision. 

In his affidavit, Nimmer provided details of his legal services for DBC and its affiliates, noting DBC’s previous incorporation in Delaware and its prior offices in New York. He referred to a letter confirming that his legal services agreement was governed by Nebraska law, which DBC accepted. Additionally, he mentioned a meeting in 2012 where DBC's board approved the merger with GEM. Nimmer continued to send billing statements to DBC and GEM after the merger. GEM’s vice president stated that GEM, a Nevada corporation with a principal office in New York, has no presence in Nebraska, including no offices, property, revenue, or employees there.

Since its establishment in 2012, GEM has not conducted any business activities in Nebraska, nor has it registered to operate there or contracted for goods or services. On April 1, 2015, GEM instructed DBC shareholders to surrender their shares in exchange for GEM shares, with the process managed by DBC's administrative division and legal counsel, Nimmer. On July 8, 2015, Nimmer refused to surrender his DBC certificates, and later withdrew from representing DBC on November 12, 2015. 

On November 15, 2015, GEM's outside counsel, Abram Pafford, proposed a stipulation acknowledging Nebraska as a litigation forum and GEM's responsibility for legal fees owed by DBC to Nimmer Law Office. Pafford later indicated dissatisfaction with Nimmer's lack of response regarding the stipulation language. 

After negotiations failed, Nimmer filed a pro se breach of contract claim regarding the non-repurchase of his 584,500 DBC shares, seeking their value based on the merger share price. Nimmer's amended complaint, filed on October 28, 2016, argued that GEM is DBC's successor, asserting personal jurisdiction over GEM due to several factors, including billing statements addressed to both DBC and GEM, DBC's representations about merging with GEM, the share-for-share exchange plan, and the stipulation of Nebraska as the litigation venue. Nimmer further claimed that both companies were under common control due to overlapping ownership and management.

GEM has acknowledged its status as the successor to DBC, as evidenced by various communications including early shareholder updates and emails sent by Noska, an officer of both companies. Key documents include an email from April 1, 2015, requesting DBC shareholders to exchange their shares for GEM shares, and a screenshot from November 13, 2015, highlighting GEM's origins related to DBC's business activities. Nerlinger exerted control over both companies by influencing board appointments, managing the IPO process, altering business strategies, overseeing daily operations, and conducting investor communications, among other actions. Nimmer provided legal services to DBC and its affiliate, Sky Cable, and his representation included significant legal matters in Nebraska, where DBC, despite being a Delaware corporation, acknowledged conducting business. Fee agreements with Nimmer specified Nebraska as the venue for legal matters. Nimmer argued that GEM's retention of his services and stipulations regarding venue created sufficient minimum contacts with Nebraska, supporting personal jurisdiction. However, on January 12, 2017, the district court dismissed Nimmer's case, ruling that the alleged contacts were insufficient for jurisdiction. Nimmer is appealing the dismissal, contending the trial court erred in its jurisdictional findings.

When a jurisdictional question does not involve factual disputes, it is treated as a matter of law, which an appellate court reviews independently of the lower court's conclusions. In cases of dismissal for lack of personal jurisdiction under Neb. Ct. R. Pldg. 6-1112(b)(2), an appellate court assesses whether the nonmoving party has established a prima facie case of personal jurisdiction de novo, considering the facts in the light most favorable to the nonmoving party.

Nimmer contends that the district court incorrectly concluded it lacked personal jurisdiction over GEM. Personal jurisdiction enables a court to bind a particular entity to its decisions. To establish personal jurisdiction over a nonresident defendant, two conditions must be met: first, compliance with the long-arm statute, and second, existence of minimum contacts that do not violate due process principles.

Nimmer presents three primary arguments for establishing personal jurisdiction over GEM: 1) specific personal jurisdiction based on GEM's alleged tortious conversion and claims under the Uniform Deceptive Trade Practices Act; 2) general personal jurisdiction stemming from Nimmer’s provision of legal advice to GEM; and 3) general personal jurisdiction due to actions by GEM's alter ego predecessor, DBC.

Nebraska's long-arm statute, Neb. Rev. Stat. 25-536 (Reissue 2016), permits jurisdiction over nonresidents with any contact or relation to the state, consistent with federal constitutional limits. If the long-arm statute is satisfied, a court must examine whether minimum contacts exist that allow for personal jurisdiction without breaching due process. The standard for due process is whether the defendant reasonably anticipates being summoned in the forum state, ensuring that the exercise of personal jurisdiction aligns with "traditional notions of fair play and substantial justice."

In evaluating personal jurisdiction, the focus is on the quality and type of the defendant's activities to determine if they have established the necessary minimum contacts with the forum state, which indicates purposeful availment of its benefits and protections. Jurisdiction is appropriate when the defendant's actions create substantial connections with the forum, avoiding reliance on random or attenuated contacts, or actions by third parties.

A court can assert either general or specific personal jurisdiction based on a defendant's contacts with the forum state. General personal jurisdiction requires the defendant to have substantial, continuous, and systematic business contacts with the state, allowing for claims unrelated to those contacts. In contrast, specific personal jurisdiction applies when the claim arises out of or relates to the defendant's contacts with the forum, contingent on the quality and nature of those contacts.

In the case involving GEM Nimmer, Nimmer asserts that specific personal jurisdiction exists due to claims of tortious conversion and violations of the Uniform Deceptive Trade Practices Act, arguing that these intentional torts justify jurisdiction. GEM contests this by claiming insufficient contacts with Nebraska, pointing out that Nimmer has not provided supporting authority for his claims. Nimmer references Neb. Rev. Stat. 8-1112, which establishes that registering as a broker-dealer or offering securities in Nebraska constitutes sufficient contact for personal jurisdiction in related actions.

Nimmer also relies on the precedent set in Abdouch v. Lopez, where the court evaluated specific jurisdiction based on the U.S. Supreme Court's Calder effects test. This test necessitates that the plaintiff demonstrates the defendant's tortious acts were intentional, aimed at the forum state, and caused harm primarily felt in that state. The Abdouch court concluded that merely having effects in the forum state is insufficient for jurisdiction without additional contacts. It was determined that the advertisement in question did not specifically target Nebraska residents, rendering the mention of the state incidental, and emphasized that the defendant must purposefully avail themselves of the privilege of conducting activities within the forum state to invoke its laws.

In RFD-TV v. WildOpenWest Finance, the court examined personal jurisdiction relating to an arbitration clause in a contract between RFD-TV, LLC (RFD), a Nebraska corporation, and Sunflower Broadband Corporation (Sunflower), which stipulated arbitration in Nebraska. After Knology, Inc. acquired Sunflower’s assets and became a subsidiary of WOW! Cable (WOW), the court found RFD failed to establish that WOW and Knology were bound by the arbitration clause, as they were not signatories to the Sunflower Agreement and did not assume it upon acquisition. 

Regarding personal jurisdiction, the court noted that parties engaging in activities across state lines can be subject to jurisdiction in the other state due to their actions. However, mere communications, such as mail and phone calls, do not suffice to establish the necessary contacts for jurisdiction. The court referenced prior negotiations and the nature of the dealings, concluding that despite WOW and Knology's limited interactions with RFD, which included payment of licensing fees and occasional communications over two years, these were insufficient to warrant personal jurisdiction. Consequently, the court dismissed the complaint.

In a related matter, Nimmer argued that GEM's actions in a share-for-share exchange instead of a statutory merger constituted tortious conversion and a violation of the Uniform Deceptive Trade Practices Act, impacting shareholders in Nebraska. Nimmer cited a shareholder letter and an email from GEM as evidence of directed contacts with Nebraska. However, the court found these communications to be generic and not specifically aimed at Nebraska residents. It emphasized that Nimmer did not demonstrate GEM's intent to target Nebraska, paralleling findings in the Abdouch case. The court concluded that minimal contacts through generic communications and limited business dealings were inadequate to establish jurisdiction, leading to a dismissal of the claims against GEM.

Nimmer has not provided additional evidence of his business dealings with GEM or demonstrated how any alleged tortious effects of a letter were felt in Nebraska. He mentioned in his fee arrangement letters with DBC that he operates a New York satellite office as a licensed attorney, indicating that his impact as a Nebraska resident is incidental. The letter does not establish that GEM purposefully engaged in activities within Nebraska. 

The June 4, 2015, email similarly fails to support Nimmer's tort claims; it merely indicates that GEM informed Nimmer of a change in merger terms, and Nimmer chose not to sign a related stock agreement. Nimmer has not adequately connected Neb. Rev. Stat. 8-1112 to his claims, simply asserting that the offering of securities constitutes minimum contacts without proving GEM's registration as a broker-dealer in Nebraska or any direct offerings in the state. 

Regarding GEM's retention of Nimmer for legal work, Nimmer contends this creates sufficient minimum contacts for personal jurisdiction. GEM counters that it has no significant business presence in Nebraska. Citing Burger King Corp. v. Rudzewicz, it is noted that a contract with an out-of-state party does not automatically establish minimum contacts; rather, the court must consider prior negotiations and the actual course of dealings. 

In Thompson Hine, LLP v. Taieb, it was found that mere retention of a D.C.-based service provider, without deliberate contact with the forum, does not suffice for minimum contacts. While Nimmer argues that a continuing relationship could establish such contacts, no formal contract with GEM exists. He suggests a contract by stating that he represented GEM from its inception in May 2012 until November 2015, asserting that this work included legal advice and compliance related to securities law.

Nimmer's amended complaint indicates that he provided advisory services on disclosures for GEM's filings from 2013 to 2015 and acted as legal counsel in anticipation of a statutory merger, as suggested by a 'Dear Shareholder' letter. However, it is unclear if he completed this service, as he later communicated to GEM that he did not receive the DBC certificates. The ambiguity extends to whether his services were for GEM or DBC, leading to insufficient evidence to establish personal jurisdiction over GEM.

In assessing personal jurisdiction, courts examine the relevance of the timeframe of alleged contacts. Citing Johnson v. Woodcock, the Eighth Circuit determined that minimum contacts must be established around the time of the cause of action or suit filing. Nimmer's claims of representation for Sky Cable, an affiliate of DBC, lack relevance since they occurred over 20 years ago and did not involve GEM, failing to demonstrate a substantial relationship with the forum state or any meaningful connection to Nebraska.

Nimmer argues for general personal jurisdiction over GEM based on its status as DBC’s alter ego, citing similarities in ownership, management, and admissions regarding their relationship. He references cases illustrating corporate successor liability to support his theory for establishing minimum contacts necessary for personal jurisdiction. However, he has not provided sufficient specifics about how his legal work for GEM relates to Nebraska law or disputes, weakening his argument for personal jurisdiction. Thus, the court finds Nimmer's claims unpersuasive.

The court ruled that a corporate merger alone does not establish personal jurisdiction over a defendant corporation. Instead, it examined the defendant's conduct, determining that personal jurisdiction existed because the corporation continued to operate under existing contracts, causing injury in the forum state. The court rejected the argument that a predecessor's contacts could be attributed to its successor for personal jurisdiction, emphasizing the need to analyze the defendant corporation's contacts independently. Comparisons to Clune v. Alimak AB were dismissed as irrelevant since the corporate structures differed—DBC was not a parent corporation of GEM nor was GEM a shell company. The court highlighted that due process requires specific acts demonstrating minimum contacts for jurisdiction, and declined to extend liability theories related to conspiracies to establish personal jurisdiction. Additionally, Nimmer's claim that GEM's counsel stipulated to Nebraska venue was rejected, as the emails discussing settlement did not indicate acceptance by Nimmer, and the lack of a settlement prior to trial negated this assertion.

Nimmer's allegations were found insufficient to demonstrate that GEM had substantial connections with Nebraska, resulting in GEM’s purposeful availment of the state's benefits and protections. Consequently, Nimmer's argument regarding the district court's dismissal of his complaint with prejudice was deemed without merit. The district court dismissed the case with prejudice after Nimmer was allowed to amend his complaint, but GEM contended that this dismissal was appropriate. Citing prior case law, it was noted that dismissals for lack of personal jurisdiction should generally be without prejudice, as a court lacking jurisdiction cannot adjudicate claims' merits. Both parties in this case agreed that a dismissal should have been without prejudice. Therefore, the court reversed the district court’s decision, modifying the dismissal to be without prejudice. This allows for the possibility of pursuing claims in a future lawsuit if circumstances change, although a subsequent suit presenting the same circumstances would lead to the same result. The overall decision was affirmed as modified, with Judge Wright not participating.