Choo v. Dist. Ct. (Streamline Media Group, Inc.) ( 2022 )

IN THE SUPREME COURT OF THE STATE OF NEVADA
TOMOKO CHOO; LARIAN STUDIOS No. 83527
US INC.; AND LARIAN STUDIOS,
Petitioners,
vs.
THE EIGHTH JUDICIAL DISTRICT
COURT OF THE STATE OF NEVADA, e Lo =
IN AND FOR THE COUNTY OF .
JOANNA KISHNER, DISTRICT
JUDGE, CLERK OF SUPREME COURT
Respondents py___S.*
p ; DEPUTY CLERK
and
STREAMLINE MEDIA GROUP, INC:;
STREAMLINE STUDIOS MALAYSIA
SDN BHD; AND STREAMFRAME
CORPORATION,
Real Parties in Interest.
ORDER GRANTING PETITION FOR WRIT OF PROHIBITION
This original petition for a writ of prohibition challenges district
court orders denying motions to dismiss for lack of personal jurisdiction.
Real parties in interest filed a complaint alleging that
petitioner Tomoko Choo, a Malaysian citizen, breached a separation
agreement with real party in interest Streamline Media Group, Inc.
(Streamline) and conspired with nonparty The Dragon Commander, Ltd.
(TDC), an Irish company, to obtain the confidential and proprietary
information of Streamline and its subsidiaries, real parties in interest
Streamframe Corporation (Streamframe) and Streamline Studios Malaysia
(Streamline Studios).
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Real parties in interest alleged that personal jurisdiction over
petitioners and foreign sister entities, Arrakis Naamloze Vennootschap
(Arrakis),! a Belgian company, and Larian Studios US, Inc. (Larian Studios
US), a Delaware company, was proper under either the agency, alter-ego,
or conspiracy theories of imputation based on the conduct of their nonparty
sister entity, TDC. After both of these petitioners separately moved to
dismiss for lack of personal jurisdiction, the district court denied Larian
Studios US’s motion and exercised personal jurisdiction over it on the basis
that TDC had acted as its agent, alter ego, or co-conspirator with Choo.?
The district court also denied Arrakis’s motion to dismiss, granting
jurisdictional discovery instead. Arguing that the district court incorrectly
decided their motions, Larian Studios US and Arrakis now seek a writ of
prohibition barring the district court from proceeding with the action
against them.
Having considered the petition, answer, reply, and supporting
documents, we conclude that writ relief is warranted because the district
court improperly exercised personal jurisdiction over Larian Studios US
and improperly granted jurisdictional discovery as to Arrakis. See NRS
34.320 (providing that a writ of prohibition is available to arrest or remedy
1Arrakis has been identified in the caption as Larian Studios, which
is the name by which it does business; however, we refer to the entity by its
incorporated name to avoid confusion.
2The district court’s exercise of personal jurisdiction over petitioner
Choo is not implicated in this matter, as she does not seek any relief in this
petition or otherwise challenge the district court’s decision that she
consented to personal jurisdiction pursuant to a separation agreement
between her and Streamline. Thus, our references to petitioners include
only Arrakis and Larian Studios US.
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district court actions taken without or in excess of jurisdiction); Viega
GmbH v. Eighth Judicial Dist. Court, 130 Nev. 368, 374, 328 P.3d 1152,
1156 (2014) (“As no adequate and speedy legal remedy typically exists to
correct an invalid exercise of personal jurisdiction, a writ of prohibition is
an appropriate method for challenging district court orders when it is
alleged that the district court has exceeded its jurisdiction.”). As we
explained in Viega GmbH, a plaintiff who relies on an imputation theory of
personal jurisdiction premised on the corporate relationship between the
defendant and a nonparty entity, as real parties in interest do here, must
make a prima-facie showing that “overcom[es] the presumption of
separateness” between entities “of a carefully structured corporate family.”
130 Nev. at 382, 328 P.3d at 1161. A failure to do so precludes both
jurisdictional discovery and persona] jurisdiction. Jd. (explaining that the
plaintiff did not offer “facts... sufficient ...to allow” it “to proceed with
jurisdictional discovery” to obtain evidence to prove personal jurisdiction
where it had “shown no more than a typical parent-subsidiary relationship,
the separateness of which is a basic premise of corporate law”). We do not
need to decide whether a prima-facie showing for jurisdictional discovery
requires less evidence than a prima-facie showing for personal jurisdiction,
as both issues necessarily require the plaintiff to at least rebut the
presumption of corporate separateness. See id. at 375, 328 P.3d at 1157. It
follows that if, as discussed below, real parties in interest fail to make a
prima-facie showing sufficient in this regard, then the district court erred
both in the decision to grant jurisdictional discovery over Arrakis and to
exercise personal jurisdiction over Larian Studios US.
Reviewing both decisions de novo, see In re Halverson, 123 Nev.
493, 509, 169 P.3d 1161, 1173 (2007), we agree with Arrakis and Larian
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Studios US that real parties in interest failed to offer sufficient evidence to
overcome the presumption of corporate separateness to support their
imputation theories of personal jurisdiction. Pursuant to Nevada’s long-
arm statute, NRS 14.065, personal “[j]urisdiction over a nonresident
defendant is proper” to the full extent permitted by the Due Process Clause
“under the Fourteenth Amendment.” Viega GmbH, 130 Nev. at 374-75, 328
P.3d at 1156. Accordingly, the defendant must have sufficient “minimum
contacts with the state” such that “the defendant could reasonably
anticipate” litigation in the forum and such that the exercise of personal
jurisdiction comports “with ‘traditional notions of fair play and substantial
justice.” Id. at 375, 328 P.3d at 1156 (internal quotations omitted) (quoting
Arbella Mut. Ins. Co. v. Eighth Judicial Dist. Court, 122 Nev. 509, 512, 134
P.3d 710, 712 (2006)).
Agency theory of personal jurisdiction
Real parties in interest argue that they set forth sufficient
evidence that TDC was the agent of Arrakis and Larian Studios US for the
purpose of competing against them and conspiring to obtain their
confidential information, such that personal jurisdiction is proper under the
agency theory. They rely on three aspects of a pilot agreement between
nonparty TDC and Streamline to support the existence of an agency
relationship between TDC, Arrakis, and Larian Studios US: (1) the
agreement’s identification of Swen Vincke, Arrakis’s founder and director,
as TDC’s CEO and representative for purposes of the agreement; (2) the
agreement’s inclusion of an email address used by TDC that included an
“@larian.com” domain name, which other sister entities or subsidiaries
presumably used; and (3) the agreement's requirement for TDC to send
payment to Streamline’s bank account, which Arrakis and Larian Studios
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US allegedly completed one time on TDC’s behalf.3 We disagree that the
pilot agreement suggests an agency relationship.
The agency theory of personal jurisdiction recognizes the
separate “corporate identity of the parent company” but nonetheless
attributes “the acts of the subsidiary agent” to the parent corporation on the
rationale that the parent directed the subsidiary’s actions. Id. at 376, 328
P.3d at 1157 (alterations omitted) (quoting, in the second phrase, F.
Hoffman-La Roche, Ltd. v. Superior Court of Santa Clara Cty., 30 Cal. Rptr.
3d 407, 418 (Ct. App. 2005)). Even assuming the agency theory extends to
sister entities, the threshold issue is the existence of “an agency
relationship” between the corporate entities. Id. at 377, 328 P.3d at 1158.
3Although real parties in interest attempt to rely on other “facts,”
those facts are either allegations in the complaint or unsubstantiated
assumptions, which we have repeatedly held fail to satisfy the showing
required for personal jurisdiction. See Trump v. Eighth Judicial Dist.
Court, 109 Nev. 687, 693, 857 P.2d 740, 744 (1993) (““However, the plaintiff
must introduce some evidence and may not simply rely on the allegations
of the complaint to establish personal jurisdiction.”). Similarly, their
reliance on the district court’s order does not help, as the district court’s
recitation of the parties’ arguments in a finding-of-facts section does not
transform those arguments into facts.
Although we provisionally granted real parties in interest’s December
22, 2021 motion to supplement the record on March 11, 2022, we now deny
that motion, as the evidence attached was not presented to the district
court; we have not considered that evidence in resolving this writ petition.
Cf. Archon Corp. v. Eighth Judicial Dist. Court, 133 Nev. 816, 822, 407 P.3d
702, 708 (2017) (recognizing, in addressing whether to consider a petition
for mandamus relief, that “in the context of extraordinary writ relief,
consideration of legal arguments not properly presented to and resolved by
the district court will almost never be appropriate”); Vacation Vill., Inc. v.
Hitachi Am., Ltd., 111 Nev. 1218, 1220, 901 P.2d 706, 707 (1995) (declining
to consider evidence that was “never presented to the district court”).
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While “[glenerally, an agency relationship” gives “one person... the right
to control the performance of another,” corporate relationships “necessarily
include[] some elements of control.” Jd. at 377-78, 328 P.3d at 1158.
Accordingly, jurisdiction over the foreign parent company based on an
agency relationship requires “a degree [of control] ‘more pervasive than
common features’ of ownership” under corporate law. Id. at 378-79, 328
P.3d at 1159 (alterations omitted) (quoting F. Hoffman-La Roche, 30 Cal.
Rptr. 3d at 418).
Real parties in interest failed to demonstrate the type of
pervasive corporate control required to impute contacts from a nonparty to
a defendant for an agency theory of personal jurisdiction. See id. at 379,
328 P.3d at 1159 (explaining that the control exercised by the principal
must “move[ ] beyond the establishment of general policy and direction for
the subsidiary and in effect take[ ] over performance of the subsidiary’s day-
to-day operations in carrying out that policy” (quoting F. Ho/fman-La
Roche, 30 Cal. Rptr. 3d at 419)). The fact that Vincke serves as an officer
or director of Arrakis, Larian Studios US, and TDC, coupled with the use of
the same corporate-family email domain, shows at most “the amount of
control typical in a” corporate family and thus fails to demonstrate an
agency relationship. See id. at 380, 328 P.3d at 1160 (deeming evidence
that subsidiaries and foreign parents shared a board member, corporate
logo, and website sufficient only to “show the amount of control typical in a
parent-subsidiary relationship” and thus “insufficient to demonstrate
agency’). Moreover, real parties in interest point to only one instance in
which Arrakis and Larian Studios US together wired payment to
Streamline’s Nevada bank account on behalf of TDC, but one isolated
payment made on behalf of a sister entity in connection with one agreement
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838 (Ct. App. 2000)). Thus, real parties in interest’s evidentiary showing
falls short of what we require to demonstrate control beyond the existence
of a typical corporate relationship. Without more, it was improper for the
district court to rely on the agency theory to exercise personal jurisdiction
over Larian Studios US and to allow jurisdictional discovery with respect to
Arrakis.
Alter-ego theory of personal jurisdiction
Real parties in interest argue that the same aspects of the pilot
agreement they relied on to assert an agency theory of personal jurisdiction
also establish that TDC acted as the alter ego of Arrakis and Larian Studios
US, such that the court may exercise personal] jurisdiction under the alter-
ego theory. We disagree.
The alter-ego theory permits a party “to pierce the corporate
veil to impute a subsidiary’s contacts to the parent company by showing
that the subsidiary and the parent are one and the same” on the rationale
that the entities are effectively the same. Viega GmbH, 130 Nev. at 376,
328 P.3d at 1157. Even assuming the alter-ego theory extends to sister
entities, the existence of an alter-ego relationship requires evidence that
(1) The corporation . . . [is] influenced and governed
by the person asserted to be its alter ego; (2)
There ... [is] such unity of interest and ownership
that one [entity] is inseparable from the other; and
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(3) The facts... [are] such that adherence to the
fiction of separate entity would, under the
circumstances, sanction a fraud or promote
injustice.
Truck Ins. Exch. v. Palmer J. Swanson, Inc., 124 Nev. 629, 635, 189 P.3d
656, 660 (2008) (quoting Ecklund v. Nev. Wholesale Lumber Co., 93 Nev.
196, 197, 562 P.2d 479, 479-80 (1977)).
As with the agency theory, real parties in interest failed to show
that an alter-ego relationship exists to impute contacts from a nonparty to
a defendant for an alter-ego theory of personal jurisdiction. The existence
of a unified corporate-family identity, such as shared leadership and email
domains, shows at most just that, i.e., the organizations form a corporate
family, but it does not establish that Arrakis and Larian Studios US
influenced or governed TDC. Cf. id. at 636, 189 P.3d at 660-61 (explaining
that “[t]he mere fact that” the same party “owns a 100-percent interest in”
one entity and “a 50-percent interest in” another entity, “while relevant, is
insufficient to show that” one entity influences and governs the other
entity). Additionally, the fact that Arrakis and Larian Studios US together
made one isolated payment to Streamline’s Nevada bank account on behalf
of TDC in connection with one, short-term agreement does not support that
the three entities were financially or commercially intertwined to such an
extent that they collectively “share[d] a unity of interest.” See id. at 636,
189 P.3d at 661 (explaining the type and extent of evidence that may
demonstrate “a unity of interest” necessary for an alter-ego relationship).
Accordingly, we conclude that it was improper for the district court to rely
on the alter-ego theory to exercise personal jurisdiction over Larian Studios
US and to allow jurisdictional discovery with respect to Arrakis.
Conspiracy theory of personal jurisdiction
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Finally, real parties in interest assert that personal jurisdiction
over Arrakis and Larian Studios US is proper under a conspiracy theory of
personal jurisdiction based on two agreements that allegedly show a
conspiracy between Arrakis, Larian Studios US, TDC, and Choo to harm
real parties in interest: (1) the pilot agreement between Streamline and
TDC and (2) a separation agreement between Streamline and Choo, which
contains a noncompete clause. We disagree.
“A conspiracy theory of personal jurisdiction provides that a
nonresident defendant who lacks sufficient minimum contacts with the
forum may be subject to personal jurisdiction based on a co-conspirator's
contacts with the forum.” Tricarichi v. Coop. Rabobank, U.A., 135 Nev. 87,
95, 440 P.3d 645, 653 (2019). The court attributes one conspirator’s acts
“with the forum” done “in furtherance of the conspiracy” to the other co-
conspirators on the rationale that “co-conspirators are deemed... each
other’s agents.” Id. at 96, 440 P.3d at 653 (quoting In re LIBOR-Based Fin.
Instruments Antitrust Litig., No. 11 MDL 2262 NRB, 2015 WL 6243526, at
*29 (S.D.N.Y. Oct. 20, 2015)). The conspiracy theory gives the court
jurisdiction where (1) a conspiracy exists, “(2) the acts of co-conspirators
meet minimum contacts with the forum, and (8) the co-conspirators could
have reasonably expected at the time of entering into the conspiracy that
their actions would have consequences in the forum state.” Id. at 97, 440
P.3d at 654.
Here, even assuming sufficient evidence supports a conspiracy
between Choo and TDC, the pilot agreement and separation agreement
provide no through line from Arrakis and Larian Studios US to Choo and
TDC, and thus, they do not establish the threshold requirement of the
existence of a conspiracy between Arrakis, Larian Studios US, TDC, and
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Choo. See Guilfoyle v. Olde Monmouth Stock Transfer Co., 130 Nev. 801,
813, 335 P.38d 190, 198 (2014) (explaining that a “civil conspiracy arises
where two or more persons undertake some concerted action with the intent
‘to accomplish an unlawful objective for the purpose of harming another,’
and damage results” (quoting Consol. Generator-Nev., Inc. v. Cummins
Engine Co., 114 Nev. 1304, 1311, 971 P.2d 1251, 1256 (1998))). Because
Choo entered into the separation agreement with Streamline after she
allegedly conspired with TDC during her consultation services for TDC, the
alleged breach of this agreement by violation of the noncompete clause does
not establish a conspiracy between the entities that allegedly arose months
earlier. Moreover, the fact that Larian Malaysia, a nonparty entity distinct
from Arrakis and Larian Studios US, subsequently hired Choo to head its
operations in Malaysia in alleged breach of the separation agreement does
nothing to establish an agency or alter-ego relationship with Arrakis and
Larian Studios US such that those actions may be imputed to Arrakis and
Larian Studios US.
As to the pilot agreement, real parties in interest failed to show
personal jurisdiction based on Arrakis’s and Larian Studios US’s alleged
participation in the conspiracy based on that agreement, as the significance
of their evidence necessarily relies on their unsuccessful agency or alter-ego
imputation theories to attribute both Larian Malaysia’s actions in hiring
Choo and TDC’s actions in acquiring confidential information to Arrakis
and Larian Studios US. Accordingly, we conclude that the district court
improperly relied on the conspiracy theory to exercise personal jurisdiction
over Larian Studios US and to permit jurisdictional discovery as to Arrakis.
Accordingly, we
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OF THIS COURT TO ISSUE A WRIT OF PROHIBITION instructing the
court to grant the motions to dismiss based on lack of personal jurisdiction
filed by Larian Studios US and Arrakis.4
cc:
ORDER the petition GRANTED AND DIRECT THE CLERK
Silver
(opi—K.
Cadish
fs >
Prebor vi od.
Pickering )
Hon. Joanna Kishner, District Judge
Hutchison & Steffen, LLC/Las Vegas
McDonald Carano LLP/Las Vegas
Eighth District Court Clerk
2022.
4In light of this disposition, we vacate our stay entered on May 18,
1d